Month: May 2017

Detention damages. At net or gross demurrage rate?

In London Arbitration 17/17 the tribunal had to decide on what compensation the owners were available in respect of detention at the discharge port. The vessel was chartered for a voyage from Rotterdam to 1-2 safe berths, Iskenderun.  NOR was tendered outside Iskenderun and was therefore invalid. The vessel was unable to enter the port because charterers, who were the owners of the cargo, had been unable to complete their on-sale of the cargo. Six weeks later the charterers ordered the vessel to proceed to another port in Turkey, Mersin.

 

Owners had agreed to the direction to discharge at Mersin and were entitled to compensation by way of detention from the time laytime would have commenced, had the Iskenderun NOR been valid,to completion of discharge at Mersin. The usual method of calculating damages for detention would be the applicable net demurrage rate plus the cost of bunkers for periods the vessel was underway. Here owners claimed only damages for detention, but at the gross demurrage rate.

 

The tribunal held charterers could offset their allowed laytime at the discharge port against their liability in detention once the vessel reached Mersin, even though Mersin was not a permitted discharge port under the charter. The owners were entitled to compensation for their actual loss and if that was based on the demurrage rate, it would be based on the net rate, after deduction of 4% brokers’ commission, and not the gross rate, as owners had claimed. This was so even though the charter did not provide for commission on detention claims.

IUU Fishing – Regulatory & Insurance Aspects

eventbright - fisheries

IUU fishing is a global problem that threatens ocean ecosystems and sustainable fisheries. Various public law measures have been taken by the international community and the European Union to combat IUU fishing, but while these efforts, combined with those of various NGOs, have yielded positive results, it is believed that the insurance market could play a more active role in the fight against IUU fishing.

The primary object of this Symposium is to raise awareness of IUU fishing among stakeholders within the London insurance market. To facilitate discussion and inspire engagement from attendees, case studies within the context of the legal and insurance perspective will be presented by experts in the field. 

Speakers and Chairpersons include:

  • Lasse Gustavsson (Senior Vice President and Executive Director, Ocean Europe, Madrid)
  • Associate Professor George Leloudas (IISTL, Swansea University, Swansea)
  • Dana Miller (Marine Scientist, Oceana Europe, Dublin)
  • Kjetil Saeter (Investigative Journalist, Oslo)
  • Professor Barış Soyer (IISTL, Swansea University, Swansea)
  • David Vajnai (Vice President, Marsh Global Marine Practice, London)

Registration and other details:

The Seminar will be held at the Hallam Conference Centre (44 Hallam Street, London, W1W 6JJ) starting at 13:30.

A reception will be held directly after the event from 17:00 – 18:00. 

Register HERE 

Participation is free but please note that places are limited.

Unsafe ports. The Ocean Victory in the Supreme Court.

The Ocean Victory involved a Capesize vessel which became a constructive total loss at the discharge port of Kashima. The quay at Kashima was vulnerable to long waves which can result in a vessel being required to leave the port. The only route in and out of Kashima is by a narrow channel, the Kashima Fairway, which is vulnerable to northerly gales. There was no meteorological reason why these two events should occur at the same time, but on this occasion the two events did coincide when the vessel had to leave port due to long waves, and subsequently became a constructive total loss. The vessel was demise chartered on Barecon 89 form and sub-time chartered. Both charters contained a safe port warranty.  One of the vessel’s hull insurers took assignments of the owners’ and demise charterer’s rights and claimed for breach of the safe port warranty.

The Supreme Court which gave judgment yesterday, [2017] UKSC 35,  held that there had been no breach of the safe port undertaking.  The test for breach of the safe port undertaking was whether the damage sustained by the vessel had been caused by an “abnormal occurrence”, and the date for judging the breach of the safe port warranty was the date of nomination of the port. The Supreme Court unanimously upheld the decision of the Court of Appeal. The combination of long waves and the exceptional nature of the storm at Kashima constituted an abnormal occurrence. Accordingly, there had been no breach of the safe port warranty under the demise charter and the sub-time charter.

The Supreme Court also dealt with two further questions that would have arisen if there had been a breach of the safe port undertaking under the two charters.  The first was whether the provisions for joint insurance in clause 12 of the Barecon 89 form precluded rights of subrogation of hull insurers and the right of owners to recover in respect of losses covered by hull insurers against the demise charterer for breach of an express safe port undertaking. The majority view was that clause 12 did preclude such a claim and provided a comprehensive scheme for an insurance funded result in the event of loss of the vessel by marine risks. This scheme was not altered by the safe port undertaking.  The second was whether liability under the two charters could be limited under art. 2(1)(a) of the LLMC 1976. The Supreme Court unanimously agreed with the Court of Appeal in The CMA Djakarta [2004] 1 Lloyd’s Rep 460 that Article 2(1)(a) of the 1976 LLMC  which allows owners or charterers to limit liability for loss or damage to property “occurring on board the ship” or “in direct connexion with the operation of the ship” did not include loss or damage to the ship itself.