Hague Convention 2005. After the transition period.

As expected the UK government has made a fresh declaration agreeing to be bound by the Hague Convention on Choice of Law 2005 in its own right from the end of the transition period at 11pm, UK time, on 31 December  2020. It states “With the intention of ensuring continuity of application of the 2005 Hague Convention, the United Kingdom has submitted the Instrument of Accession in accordance with Article 27(4) of the 2005 Hague Convention. Whilst acknowledging that the Instrument of Accession takes effect at 00:00 CET on 1 January 2021, the United Kingdom considers that the 2005 Hague Convention entered into force for the United Kingdom on 1 October 2015 and that the United Kingdom is a Contracting State without interruption from that date.”

It has also made a reservation under art 21 of the Convention that it will not apply the Convention to insurance contracts except as stated below.

(a) where the contract is a reinsurance contract;

(b) where the choice of court agreement is entered into after the dispute has arisen;

(c) where, without prejudice to Article 1 (2) of the Convention, the choice of court agreement is concluded between a policyholder and an insurer, both of whom are, at the time of the conclusion of the contract of insurance, domiciled or habitually resident in the same Contracting State, and that agreement has the effect of conferring jurisdiction on the courts of that State, even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that State;

(d) where the choice of court agreement relates to a contract of insurance which covers one or more of the following risks considered to be large risks:

(i) any loss or damage arising from perils which relate to their use for commercial purposes, of, or to:

          (a) seagoing ships, installations situated offshore or on the high seas or river, canal and lake vessels;

          (b) aircraft;

          (c) railway rolling stock;

(ii) any loss of or damage to goods in transit or baggage other than passengers’ baggage, irrespective of the form of transport;

(iii) any liability, other than for bodily injury to passengers or loss of or damage to their baggage, arising out of the use or operation of:

         (a) ships, installations or vessels as referred to in point (i)(a);

         (b) aircraft, in so far as the law of the Contracting State in which such aircraft are registered does not prohibit choice of court agreements regarding the insurance of such risks;

         (c) railway rolling stock;

(iv) any liability, other than for bodily injury to passengers or loss of or damage to their baggage, for loss or damage caused by goods in transit or baggage as referred to in point (ii);

(v) any financial loss connected with the use or operation of ships, installations, vessels, aircraft or railway rolling stock as referred to in point (i), in particular loss of freight or charter-hire;

(vi) any risk or interest connected with any of the risks referred to in points (i) to (v);

(vii) any credit risk or suretyship risk where the policy holder is engaged professionally in an industrial or commercial activity or in one of the liberal professions and the risk relates to such activity;

(viii) any other risks where the policy holder carries on a business of a size which exceeds the limits of at least two of the following criteria:

          (a) a balance-sheet total of EUR 6,2 million;

          (b) a net turnover of EUR 12,8 million;

          (c) an average number of 250 employees during the financial year.

2. The United Kingdom of Great Britain and Northern Ireland declares that it may, at a later stage in the light of the experience acquired in the application of the Convention, reassess the need to maintain its declaration under Article 21 of the Convention.”

Times’ up. NBF gets s.12 extension.

The fate of Times’ anti-suit injunction against National Bank of Fujairah was reported in this blog on May 6 2020 –  they got their injunction on condition not to take any time bar point in any subsequent arbitration against them commenced by NBF.

Shortly afterwards, in National Bank of Fujairah v Times Trading Corp [2020] EWHC 1983 (Comm) Foxton J came part two of the saga. NBF had commenced arbitration against the registered owners, Rosalind, within the one year time limit under the Hague Rules, in respect of misdelivery. This expired on 20 June 2019. Shortly after receiving a copy of the bareboat charter, after months of asking, on 20 March NBF then made an application under s.12 of the Arbitration Act 1996, in respect of its claim against bareboat charterer, Times, on the assumption that the one year time bar applied to that claim.

In the first period before 18 January 2019 Times, through their solicitors, Waterson Hicks (WH), communicated in a manner which implied, and contributed to the belief of R&T, acting for NBF, that WH acted for the carrier liable under the Bills of Lading, and for the entity to whom the claims were appropriately addressed. WH acted innocently but Times knew the true position. In the second period after 18 January 2019, the conduct of WH, and of Times, was open to more criticism. The objective effect of the communications of WH and Holman Fenwick and Willan, solicitors for charterers Trafigura who became responsible for handling NBF’s misdelivery claims on behalf of Rosalind and Times, conveyed an impression which did not accord with the facts as Times and the parties acting for them understood them.

The question before Foxton J was whether the effect of this conduct such as to render it unjust hold NBF to the strict terms of the time bar. As regards the first period, the impression given on Times’ behalf, in ignorance of the true position up to 18 January 2019 and with knowledge of it thereafter, was a significant factor in NBF missing the time bar, such that the requisite causative nexus is established which made it unjust to hold NBF to the strict terms of the time bar. The jurisdictional threshold under s.12(3)(b) – whether the respondent’s conduct makes it unjust not to extend time – was satisfied.

On the matter of discretion, it was right to say that there had been significant culpable delay by NBF in failing to seek s.12 relief before it did – delay measured in months rather than merely weeks or days. The delay was particularly difficult to justify from early November 2019, when NBF did not appear to have taken the possibility that Times might be the carrier seriously. However, this was not a case in which it could be said that Times itself played no part in NBF’s delay in the period after 18 July 2019 when Reed Smith sent its letter advising that Rosalind was not the carrier, and that it was Times. However, the continuing refusal to provide a copy of the demise charter could be regarded as a continuation of the approach which had been adopted by or on behalf of Times before 18 July 2019, and which made it unjust to enforce the strict time bar against NBF. Its clear contribution to NBF’s delay in seeking s.12 relief was seen in the fact that, once the Bareboat Charter was produced for the purposes of Times application for an anti-suit injunction, NBF prepared and issued its s.12 application within short order.

The fault of NBF was not a reason for denying its application for relief under s.12, and NBF got its extension.

His last bow. As Teare(s) go by.

On 5 October 2020, Sir Nigel Teare gave his last judgment in the Admiralty Court, in a three handed collision case involving a pile up of three laden bulk carrier vessels in the Suez Canal in 2018. The Panamax Alexander (PA) was the final vessel in an eight vessel southbound convoy that halted some two hours after the initial convoy vessel suffered an engine breakdown and blocked the canal. The other vessels had to take emergency anchoring and/or mooring action. The sixth and seventh vessels managed to do this. About fifteen minutes later PA collided with the first of these, the Sakizaya Kalan (SK) which led to PA and SK drifting downstream and colliding with the Osios David (OD), over an hour after the initial collision. For a few minutes all three vessels were locked together and a further two sets of collisions took place.

PA was held 100% to blame in failing to appreciate that there was a risk of collision and, not mooring earlier to avoid that risk of collision. These were causative breaches of Rules 5, 7 and 8 of the International Collision Regulations (Colregs).

Although OD was at fault in that she had failed to inform SK and PA behind of her intention to moor, that fault had no causative potency as the duty to inform was owed mainly to the vessel immediately behind, which had already stopped before the first collision. Were the subsequent collisions caused by the initial collision for which PA was wholly to blame? Teare J stated:

“That question of causation depends upon whether the effect of the first collision was continuing in such a way as not merely to provide the opportunity for the later collisions but as to constitute the cause of them. The courts have answered questions of this nature (which usually arise where there has been intervening negligence) by the use of metaphors. Was the hand of negligent navigator on board PA still heavy on SK and OD at the time of the later collisions? Were those on board SK and OD not free agents by reason of the hard necessities imposed on them by the first collision? Were those on board SK and OD still in the grip of the first collision? These metaphors and their source are described by Brandon J. in The Calliope at p.101. Such questions are to be approached in a broad common sense way; see p. 102.[298].”

Teare J concluded that the initial collision “not merely provided the opportunity for the later collisions but constituted the cause of” those subsequent collisions, even though they took place over an hour after that and recognized the difficulties faced by the master of SK and of OD on the horns of a dilemma created by the fault of PA. Accordingly, PA was found wholly responsible and liable for all the collisions.   

Understanding TSR and its “curious provision”

Lord Justice Arnold

Giving judgement in the Court of Appeal case Shenzhen Senior Technology Material Co Ltd v Celgard, LLC [2020] EWCA Civ 1293 Lord Justice Arnold has shone a further light on the UK Trade Secrets (Enforcement, etc.) Regulations 2018 (SI 2018/597) [TSR].

Dividing his analysis into pre/post the EU Trade Secrets Directive (EU Dir. 2016/943) Arnold LJ noted, “under English law prior to the implementation of the Trade Secrets Directive, trade secrets constituted a particular category of confidential information. The principal distinguishing characteristic of trade secrets, as opposed to other forms of confidential information, was that a former employee could be restrained from using or disclosing their former employer’s trade secrets after the termination of the employment”. [24]

“The Trade Secrets Directive harmonises the protection against the unlawful acquisition, use and disclosure of trade secrets in the European Union. It is not an exhaustive harmonisation: Article 1(1) provides that Member States may provide for more far-reaching protection than that required by the Directive provided that compliance with a number of provisions of the Directive is ensured. Thus the Directive provides both a floor and a ceiling.”[25]

Moreover, it was noted that whilst TSR might implement the Trade Secrets Directive, it does not transpose Articles 3, 4 or 5 of the Directive.

Turning to the “curious provision” of Regulation 3 Wider Protection, Arnold LJ surmised “… it appears to be primarily intended to ensure that, if and in so far as English law prior to the implementation of the Trade Secrets Directive was more favourable to the trade secret holder…then that greater level of protection shall continue to be available…”.[29]

Conversely it was noted that Regulation 3 does not appear to address the position if the Directive confers greater protection than English law did previously. In such a situation the solution advocated by Arnold LJ would be to interpret and apply TSR consistently with the Directive and again offer the trade secret holder the higher protection.

Despite its somewhat inauspicious start at IPEC it seems clear that our Judges are starting to get to grips with TSR.

Preliminary Issue on A Question of Construction- What Happens Next?

Daewoo Shipbuilding & Marine Engineering v Songa Offshore Equinox Ltd [2020] EWHC 2353 (TCC)

A claimant seeks a preliminary issue on a question of construction. It states that it accepts that if the point is decided against it, then that will be the end of all claims by it in respect of the project in question. The other party on this basis agrees and the tribunal makes a consent order. The claimant loses the preliminary issue and leaves it too late for a s.69 appeal. Can it then amend to run a different legal case on more or less exactly the same facts complained of, which it could have run in the alternative to its primary case, if wrong on its primary case on construction?

Can it resist reliance on res judicata on the basis that that principle cannot apply to amendments in the same set of proceedings as those in which the preliminary issue decision was made?

Or can the other party preclude the claimant from re-opening any claim on those matters, and, in addition, to defending its counterclaim by seeking to rely on the matters as defences?

Indeed can the other party contend that a binding agreement came into effect concerning the preliminary issue which meant that the claimant had contracted out of its rights (if any) to make any other claims if it lost on the issue? These stark facts arose in Daewoo Shipbuilding & Marine Engineering (DSME) v Songa Offshore Equinox Ltd [2020] EWHC 2353 (TCC). The Court (Jefford J.), dismissing DSME’s double-barrelled s.69 and s.68 Arbitration Act 1996 applications, held that DSME was estopped per rem judicatam from trying to relitigate matters which it could and should have raised before, that it made no difference that this all took place in the same set of proceedings rather than in two separate sets of proceedings and that this preclusion extended to relying on the same matters not only as claims in their own right but also as defences to the respondent Songa’s counterclaims.

The judgment contains a detailed and valuable analysis of the circumstances in which it will be an abuse of process to seek to raise new arguments in the same proceedings.

The competing arguments

Songa’s case was that the situation fell exactly into the situation described in Henderson v Henderson (1843) 3 Hare 100: “the court requires the parties to that litigation to bring forward their whole case … and will not permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward”. The result was that the determination of the preliminary issue and of DSME’s responsibility for design (FEED) in respect of the project and delays and costs relating to issues with that design meant that the award decided against DSME all issues of liability arising out of the design and as to which party bore the delay and costs associated with design problems. DSME had put its case on one ground only, had sought a preliminary issue on the basis that if it lost that was the end of the case and could not now re-open the question under a different legal guise. If it had run the case which it now wished to run, there could and would have no possibility of a preliminary issue. It sought such an issue representing that there were no other issues which could make a preliminary issue inappropriate.

Songa submitted that for DSME to try to re-introduce the new alternative factual case was an example of abuse of process res judicata estoppel, analysed by the House of Lords in Johnson v Gore Wood [2002] 2 AC 1. Given the very wide restatement of Henderson v Henderson by the House of Lords (as Lord Bingham put it “one cannot comprehensively list

all possible forms of abuse, so one cannot formulate any hard or fast rule to determine whether, on given facts, abuse is to be found or not”: 31E), Songa submitted that it made no difference that the estoppel was invoked in one set of proceedings to stop an amendment in those proceedings rather than to stop a later separate claim in separate proceedings. The critical question was simply: “Whether in all the circumstances, a party is misusing or abusing the process of the court [or the arbitral tribunal] by seeking to raise before it the issue which could have been raised before”.

DSME advanced various arguments before the Tribunal (Stewart Boyd QC, Sir David Steel, John Marrin QC). But its principal case was that Henderson v Henderson abuse of process estoppel had no place and could not apply to amendments in the same set of proceedings. That was dealt with on ordinary amendment principles which looked at costs and prejudice.

Subject to such matters, it was always open to a party to amend, paying costs. In the present case given that this was an early preliminary issue, amending to run a new alternative case based on the legal findings in the preliminary issue award could hardly be said to be late, or to occasion prejudice.

The battle of the authorities

DSME relied on the decision of Jackson J. in Ruttle Plant Hire Ltd v Secretary of State for the Environment [2007] EWHC 1733 (TCC). He had stated “the rule in Henderson v Henderson cannot be invoked in order to prevent a party from pleading at a later stage in the litigation issues which might have been pleaded earlier” (at [36]). But no reasoning and analysis was given for that view.

In particular the Court in Ruttle did not appear to have been referred to an earlier decision of the Court of Appeal in Tannu v Moosajee [2003] EWCA Civ 815 in which the Court of Appeal had said “Whilst it might be unusual to apply the principle in Henderson v Henderson in relation to separate stages of the same litigation, it is not conceptually impossible” (perArden LJ at [40]). Tannu was relied upon and followed in refusing amendments relating to liability after a “liability hearing” in Seele Austria GmbH v Tokio Marine Europe Insurance [2009] EWHC 255 (TCC)

Other cases, post Ruttle, all at first instance had shown the clear application of Henderson v Henderson in the same litigation: BT Pension Scheme Trustees v BT plc [2011] EWHC 2071 (Ch), a case involving preliminary issues; Gruber v AIG Management France SA [2019] EWHC 1676 (Comm), in which Andrew Baker J. had made clear that it was a “strong

thing” to shut someone out from running a point which had not actually been determined and “even stronger in relation to different stages of a single action” but that determinations within the action, e.g. by way of preliminary issues or a summary judgment on a particular claim could have just such an effect. See also Kensell v Khoury [2020] EWHC 567 (Ch).

The Judgment

Jefford J. concluded that there was no principled basis for the contention that Henderson v Henderson estoppel could not apply within the same proceedings or to different stages and determinations within a single set of proceedings [128]. Accordingly, the Tribunal was right to embark upon a “broad, merits based judgment” of the situation (in Lord Bingham’s words in Johnson v Gore Wood) and there was no error of law.

Interestingly, by a majority, the Tribunal had also held that DSME’s conduct in representing repeatedly that the claim was over if it lost on the preliminary issue which it proposed, in order to induce Songa to agree to it amounted to a contractually binding arrangement under which DSME had given up any other claims, while recognising that a binding

contract springing from a consent order was “less usual but not unknown”. An attempt to argue that the majority had erred in law also failed [95].

Lessons for the future?

When proposing a preliminary issue, parties should have in mind that if it is portrayed as determinative if decided in one way, then that is likely to set the foundation for an argument that later attempts to amend to run a new case amounts to a Henderson v Henderson abuse, and that the party should have brought forward all of its arguments.

When on the receiving end of an application for a liability only hearing or the determination of preliminary issues, a party should consider carefully defining what the result of that will be for the claims and the proceedings generally and tying the applicant down to the dismissal of the claim etc in the event of a particular determination.

IISTL Member (Simon Rainey QC) Has Argued in Historical Collision Case

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

This is the first collision case to reach the highest court on land since 1976. This appeal concerns the International Regulations for Preventing Collisions at Sea 1972, as amended (“the Collision Regulations”). The issues in the appeal are:

(1) The proper construction of the Collision Regulations. In particular whether the crossing rules are inapplicable, or whether they should they be disapplied where an outbound vessel is navigating within a narrow channel and has a vessel on her port (or starboard) bow on a crossing course approaching a narrow channel with the intention of and in preparation for entering it.

(2) On the proper construction of the Collision Regulations, in determining whether the crossing rules are applicable, whether there is a requirement for the putative give-way vessel to be on a steady course before the crossing rules can be engaged.

Facts

This appeal concerns a collision at sea between the appellant’s vessel (“EVER SMART”) and the respondent’s vessel (“ALEXANDRA 1”). The collision took place on 11 February 2015 just outside the dredged channel by which vessels enter and exit the port of Jebel Ali in the United Arab Emirates. ALEXANDRA 1 was inbound; EVER SMART was outward bound. The damage suffered by ALEXANDRA 1 amounted to over US$9.3 million and the damage suffered by EVER SMART amounted to over US$2.5 million.

The Admiralty Court determined that the appellant’s vessel, EVER SMART, should bear 80% of the liability for the collision and the respondent’s vessel, ALEXANDRA 1, should bear 20%. The judge held that the crossing rules (Rules 15-17 of the Collision Regulations) did not apply and therefore that ALEXANDRA 1 did not navigate in breach of Rule 16, the crossing rule which was said by the appellant to have applied to the ALEXANDRA 1. The Court of Appeal dismissed the Appellant’s appeal [2018] EWCA Civ 2173. The Appellant now appeals to the Supreme Court.

Damage to Alexandra 1’s bow

International Shipping gets closer to the rocks of the EU Emissions Trading System

Earlier this year this blog reported on the implications for international shipping of the EU ‘Green Deal’, the topic of two papers at the IISTL’s recent Colloquium.

Things are now moving on apace. On 16 September the European Parliament voted in favour of a 40% reduction in CO2 by 2030 for all maritime transport and for the inclusion of ships of 5000 grt and over in the EU Emissions Trading System (ETS), with the establishment of an “Ocean Fund” to run from 2022 -2030 to contribute to protecting marine ecosystems. The Parliament is now ready to start negotiations with member states on the final shape of the legislation.

Where the EU goes, the IMO may follow – on which note in another interesting development, on 25 September, the major charterer, Trafigura, have submitted a proposal to the IMO for a partial “feebate” system to decarbonise global shipping. Trafigura’s press release states, “We propose a self-financing system where a levy is charged on the use of fuels with a CO2-equivalent intensity above an agreed benchmark level, and a subsidy is provided for fuels with a CO2-equivalent profile below that level. It is now time to put a price on carbon emissions in the shipping industry Our own in-depth analysis and commissioned independent research indicates that the levy should be between $250-$300 per tonne of CO2-equivalent. While primarily bridging the cost gap between carbon intensive and low or zero carbon fuels, this partial “feebate” would also raise billions of dollars for research into alternative fuels and could help assist small island developing states and other developing countries mitigate the impact of climate change.”

Rather more than the $2 per tonne bunker levy for financing R&D into alternative green fuels that various shipowner organisations proposed earlier this year.

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The Legal Effect of “Subject-to” in Charterparty Contracts

When negotiating charterparties, it is very common to make such negotiations “subject to” a variety of conditions. Justice Foxton in Nautica Marine Ltd v. Trafigura Trading (The Leonidas) [2020] EWHC 1986 (Comm) offered a valuable guidance on the legal effect of such clauses in charterparty contracts.

In the case, the owners entered into negotiations between 8-13 January 2016 to conclude a voyage charterparty for their crude carrier, the Leonidas, with Trafigura. These negotiations were initially subject to “Charterers’ Stem/Suppliers’/Receivers’/Management Approval” latest 17.00 Houston time, Tuesday 12 January, 2016. The loading ports were to include Aruba and St. Eustasius (collectively referred to as Statia). The intended loading terminal rejected the Leonidas on the basis that the vessel was too large to load at that particular berth (the vessel could have been able to load from the Statia SBM- another nearby terminal not chosen by the charterers).

The owners brought an action against Trafigura arguing that this was a performance condition, meaning that it is a condition which does not prevent a binding contract coming into existence, but if not satisfied the contract would cease to be binding. Building up on that, the owners argued that it was an implied term of the charterparty that Trafigura would take reasonable steps to satisfy the suppliers’ approval subject. It was maintained that Trafigura took no such steps to obtain that approval, or alternatively, that Trafigura bearing the burden of proof, would have to show that the suppliers’ approval would not have been obtained even if reasonable steps had been taken.

Foxton, J, held that the “Suppliers’ Approval Subject” was a pre-condition to a contract (condition precedent to contract) and, therefore, Trafigura was not required to take steps to obtain its suppliers’ approval. A few factors led him to conclude in this manner:

  • a “subject” is more likely to be a pre-condition than a performance condition where the subject involves the exercise of a personal or commercial judgment of one of the potential parties to a contract. Here, it was a commercial choice for Trafigura to determine who the relevant supplier would be and which terminals and berths/tanks within terminals, cargo would be loaded from;
  • the particular negotiating language of the parties referring to agreements as “on subjects” and “lifting” subjects, point towards a subject in the chartering context being more likely to be a pre-condition because it connotes that the subject is resolved by one or both parties removing it, rather than the subject being resolved automatically on the occurrence of an external event; and       
  • based on previous authority, the “Stem Subject” and “Management Approval Subject” were both pre-conditions; where “subjects” appear as a compendious phrase, it is more likely that they are all intended to have the same effect.

Obiter dictum, Foxton, J, considered how damages were to be assessed if the clause had been a performance condition. He held that because the alleged lost benefit (loss of profit under a concluded charterparty) was dependent on the decision of a third party (supplier) to approve the vessel, damages in that case had to be assessed on a “loss of chance” basis (Wellesley Partners v. Withers [2015] EWCA 1146)

Two points emerge from the judgment that have implications for the market. First, the judgment strongly indicates that a “subject to” clause in a charterparty will normally be construed as a condition precedent to a contract given that such clauses often involve the exercise of a personal or commercial judgment of one of the parties to the contract. Obviously, it is still possible that a “subject to” clause could be treated as a performance clause if it depends on the approval or performance of those other than the parties to the contract; e.g. “subject to the approval of the Ministry”. In that case, the question may arise whether or not one of the parties to the contract must act reasonably or in good faith in taking steps to ensure that the condition is lifted (See, The John S Darbyshire [1977] 2 Lloyd’s Rep 457). Second, there was a disagreement in the case as to whether the suppliers referred to in the subject were only terminals from which cargo was intended to be loaded or included the charterers’ contractual suppliers. Foxton, J was adamant that the phrase encompassed all those approvals which the charterer commercially wished to obtain on the supply side. This sounds sensible but naturally makes such conditions more challenging from the shipowners’ perspective.          

One breach, two losses. Does demurrage cover both?

Andrew Baker J today has said that it does not. In K Line PTE Ltd v Priminds Shipping (HK) Co, Ltd [2020] EWHC 2373 (Comm) the vessel was kept at the anchorage for some 31 days due to port congestion and lack of storage space ashore for the cargo. In consequence when the cargo of soyabeans was discharged it exhibited substantial mould and caking. This led to a cargo claim against owners who then settled and sought to recover from voyage charterers by way of damages for breach of their obligation to discharge within the laydays.

 Dicta of Sargant LJ in Reidar v Arcos [1927] KB 352, not the easiest of cases from which to extract a ratio, suggested that demurrage was the sole remedy for breach of that obligation, but that the case before him involved a breach of a separate obligation, a proposition applied by Potter J in The Bonde [1991] 1 Lloyd’s Rep 136). By contrast, Webster J in The Altus [1985] 1 Lloyd’s Rep 423 held that demurrage only had the effect of providing liquidated damages for a specific type of loss, the economic loss suffered by owners in the charterers exceeding the laydays for which they had paid in the freight. It did not cover other types of loss flowing from this breach. This was the view of Bankes LJ in Reidar. The contentious point was whether Atkin LJ had been with Sargant LJ or with Bankes LJ.

The academic writings were divided: Carver on Charterparties , Voyage Charters, and Shipping Law for the view of Sargant LJ; Scrutton contra for that of Bankes LJ; Schofield undecided; and Summerskill nowhere to be seen. After a long discussion as to whether precedent required him to follow The Bonde – it did not – Andrew Baker J held that damages could be claimed for the cargo claim resulting from the delayed discharge, notwithstanding the demurrage provision. He added that had he come to a different conclusion, there would have been no scope for implying an indemnity -owners’ second string to their bow.

One suspects this will come as an unpleasant surprise to charterers, but perhaps the bigger surprise is what owners were doing settling a claim which under the Hague Rules they would have had a good chance of resisting under Art IV (2)(q)  which provides an exemption as follows: “Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.”  Deterioration of the cargo due to delay in discharge due to congestion would very likely constitute such a cause.

This looks like one for the Court of Appeal, and, maybe, the Supreme Court.

Double-bad news for Mauritius. It’s the wrong type of pollutant.

 

On July 26 the “Wakashio” grounded off Mauritius, breaking up on 16 August. So far about 1200 tonnes of bunker fuel has been released into the sea. For Mauritius this is an environmental disaster.

Civil liability for bunker oil pollution falls under the Bunker Oil Pollution Convention 2001, to which Mauritius is a party. The good news is that under the Convention, the shipowner is strictly liable and there is mandatory insurance, with a direct right of action against the liability insurance, in this case the Japan P&I Club.

The bad news is that art. 6 provides that owners may limit their liability in accordance with the Convention for Limitation of Liability for Maritime Claims 1976 or as amended.

The 1996 Protocol, significantly increases the  original limits in the 1976 Limitation Convention. However, it seems that Mauritius has not signed up to the 1996 Protocol.

Based on the gross tonnage of the vessel, apparently 101,932 tonnes, the limit for third-party claims including costs of prevention and clean up would be around $18m. Under the 1996 Protocol the limit would be $65m, based on the 2012 amendment to the LLMC 1996 limits, which entered into force in June 2015 and applied automatically unless objected to.

Had the oil spilled been from a laden oil tanker, the CLC and Fund regimes would have kicked in, with substantially higher limitation figures. Under the CLC the shipowner’s limitation figure would be around 65 million SDR,  US $91.65 million, with the Fund’s limitation figure being 203 million SDR, US $ 324.3 million.