“My wife may capture my heart”. Off hire and capture by pirates.

 

Owners time chartered the “Eleni P” on an amended NYPE 1946 form and during a voyage from Ukraine to China the vessel was routed via the Suez Canal and the Gulf of Aden. After transiting the Gulf of Aden without incident she was attacked and captured by pirates in the Arabian sea and released some seven months later.

Owners claimed US$ 4.5 million hire for this period. The Tribunal rejected the claim on the grounds that two additional typed clauses, clauses 49 and 101, excluded it. Owners appealed in respect of the correct construction of each pursuant to s69 of the Arbitration Act 1996. In Eleni Shipping Limited v Transgrain Shipping BV (“The ELENI P”) [2019] EWHC 910 (Comm) Popplewell J held that the appeal succeeded in respect of clause 49, but failed in respect of clause 101.

Clause 49 – Capture, Seizure and ArrestShould the vessel be captures [sic] or seized or detained or arrested by any authority or by any legal process during the currency of this Charter Party, the payment of hire shall be suspended for the actual time lost […]

Owners contended before Popplewell J that Clause 49 only applied when the Vessel was captured, seized, detained or arrested by any authority or any legal process – it therefore did not apply to capture by pirates. Charterers argued that only the word “arrested” was qualified by the phrase “by any authority or by any legal process” andnot  the word “captured” , and therefore as a matter of ordinary language, the Vessel had been captured.

Popplewell J held that the clause only applied to capture by an authority or legal process, and therefore not to capture by pirates. The words “any authority or any legal process” applied to the whole preceding list of events. To limit it to arrest would be superfluous. The tribunal had stated that ‘capture’ was not something that an ‘authority’ could be involved with. Not so, Popplewell J stating “capture does not necessarily connote the use of force. Unoccupied land or undefended goods may be captured. My wife may capture my heart. I see no difficulty as a matter of the ordinary use of language in the concept of a governmental authority or ruler capturing a vessel.”

Clause 101 – Piracy ClauseCharterers are allowed to transit Gulf of Aden any time, all extra war risk premium and/or kidnap and ransom as quoted by the vessel’s Underwriters, if any, will be reimbursed by Charterers. […] In case vessel should be threatened/kidnapped by reason of piracy, payment of hire shall be suspended. It’s remain understood [sic] that during transit of Gulf of Aden the vessel will follow all procedures as required for such transit including but not limited the instructions as received by the patrolling squad in the area for safe participating to the convoy west or east bound.

Did the suspension of hire only operate if the vessel were threatened or kidnapped by reason of piracy while transiting the Gulf of Aden, as owners argued, or did it operate wherever the Vessel was threatened in the Gulf of Aden or as an immediate consequence of her transiting or being about to transit the Gulf, a charterers argued? The Tribunal had accepted charterers’ argument and so did Popplewell J. The purpose of the Clause was to allocate the risks associated with such trade, not solely within a specifically defined geographical area. Its first sentence allocates the burden of an extra war risk premium and the sentence concerning hire suspension allocates the risk of delay from detention as a consequence of the transit which the first sentence requires.

Accordingly, owners were unable to claim hire for the seven months during which the vessel was held by the pirates.

Brandt v Liverpool implied contract falls outside art. 25 of Brussels Regulation (Recast).

 

In Pan Ocean Co. Ltd v China-Base Group Co. Ltd & Anor [2019] EWHC 982 (Comm) (16 April 2019) Christopher Hancock QC (Sitting as a Judge of the High Court) has held that an implied contract arising out of the conduct of the parties at the port of discharge did not fall within art.25 of the Brussels Regulation (Recast) 2012.

A cif contract was concluded between Gunvor and China-Base, loadport to be any port in Indonesia, Malaysia, or the Philippines with delivery in China.  A bill of lading was issued recording the loading of about 36,360 mt of light cycle oil and gas oil at Zhoushan, China and Taichung, Taiwan. Pan Ocean, the demise charterer of the vessel voyage chartered the vessel to Clearlake shipping a company said to be associated with Gunvor. The charterparty provided for English law and Jurisdiction. Pan Ocean issued bills of lading which accurately reflected the loadports and nature of the cargo and the vessel then loaded further cargo of gasoil in the Philippines. No bills of lading were issued for this cargo but in accordance with Clearlake’s instructions, it is said that an agent of Pan Ocean issued switch bills of lading falsely naming the loadport for the entire cargo as Subic Bay, Philippines and mis-describing the entire cargo as light cycle oil. The Vessel discharged the cargo into bonded shore tanks in Nansha, China. China-Base/Beihai neither presented any bills of lading nor gave any letter of indemnity to Pan Ocean or their agents. The cargo was impounded by the Chinese authorities on grounds of customs irregularities.

The buyers arrested the vessel in Singapore claiming damages for alleged misrepresentations in the cargo documentation. The demise charterers sought an anti-suit injunction in the English High Court to prevent the buyers proceeding with their claim in Singapore and claimed that the English court had exclusive jurisdiction over their claim under art. 25(1) of the Brussels Regulation (Recast) which provides

  1. If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. The agreement conferring jurisdiction shall be either:

(a) in writing or evidenced in writing;

(b) in a form which accords with practices which the parties have established between themselves; or

(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.”

The demise charterers argued that an implied contract had come into existence between themselves and the buyers at the discharge port on the terms of the bill of lading. The Judge addressed this issue on the assumption that there was an implied contract between the parties. He held that although the bill of lading which would constitute the terms of the putative implied contract was in writing, the agreement itself had to be in writing in accordance with Art 25(1)(a) ““The agreement conferring jurisdiction shall be … (a) in writing or evidenced in writing”).” This was not the case where the agreement contended for was an implied contract based on the actions of the parties in taking delivery of the cargo at the port of discharge.

Had it been established that the English court had exclusive jurisdiction, the court, applying the approach laid down in Ecobank v. Tanoh [2016] 1 WLR 2231. would not have granted an interim anti-suit injunction. The application for an injunction had neither been sought promptly, nor before the proceedings were too far advanced. Over 9 months had passed since the warrant of arrest in Singapore was served, with several hearings in Singapore during that period.

IISTL Member to present paper at ASDEM’s 14th International Oil Industry Laytime and Demurrage Conference on 16/17 May

 

 

IISTL member Professor Simon Baughen will be presenting a paper “LEGAL ISSUES OF DEMURRAGE AND PUMPING WARRANTIES” at Asdem’s 14th International Oil Industry Laytime and Demurrage Conference on 16/17 May at the Le Meridien Piccadilly Hotel in London.

Pumping warranties are the norm in tanker charters and apply a separate laytime and demurrage regime to the period of discharge, and sometimes to the period of loading as well. They have also generated many disputes between owners and charterers as to how this separate regime operates and how it fits in with the demurrage time bar clauses that are invariably found in tanker charters. Professor Baughen will be looking at the pumping clauses found in oil charterparties from the wide range of additional clauses that are necessary for Asbatankvoy to the standard warranties in widely used modern forms and examining the legal issues they give rise to.

The full speaker line-up and topic list for this event, can be found in Asdem’s brochure which you can download by clicking here.

To register immediately on-line, please click here.

 

 

 

 

 

From Borstal boys to Parent Companies. Tort liability for the acts of third parties.

 

2017 saw three ‘anchor defendant’ cases before the High Court involving tort claims against a UK parent corporation in respect of the activities of its overseas subsidiary. The claimants sought leave to serve the subsidiary out of the jurisdiction under the ‘necessary and proper party’ gateway for service out of the jurisdiction in paragraph 3.1 of Practice Direction 6B in the Civil Procedure Rules (“CPR”). In two cases, AAA v Unilever and Okpabi v Shell, leave was refused but was granted in the third case, Vedanta Resources PLC and another v Lungowe. The key issue was whether there was a triable issue against the UK parent corporation. Lungowe involved alleged pollution from toxic emissions from a copper mine in Zambia owned by a Zambian company, KCM, whose ultimate parent company is Vedanta Resources Ltd which is incorporated and domiciled in the UK.

The Supreme Court, [2019] UKSC 20, in which Lord Briggs gave the lead judgment, has upheld the findings at first instance and in the Court of Appeal that there was a triable issue as regards Vedanta on the basis of a plausible case that its involvement in the activities of KCM gave rise to a duty of care to those affected by those activities.

There were four issues before the Supreme Court on which the claimants succeeded on 1,2, and 4 but not on 3.

(1) whether it is an abuse of EU law to rely on article 4 of the Recast Brussels Regulation for jurisdiction over Vedanta as anchor defendant so as to make KCM a “necessary or proper party”.

The EU case law suggests that the abuse of law doctrine is limited to situations where EU law is invoked collusively to subvert other EU provisions. In light of the decision in Owusu v Jackson (C-281/02) [2005] QB 801 (CJEU), arguments based on forum conveniens cannot justify derogating from the primary rule of jurisdiction in article 4.1 The concern about the wide effect of article 4.1 in this case is best addressed under the domestic law on the “necessary or proper party” gateway.

(2) whether the claimants’ pleaded case and supporting evidence disclose no real triable issue against Vedanta

The assertion that the negligence claim against Vedanta raises a novel and controversial legal issue was misplaced, as the liability of parent companies in relation to the activities of their subsidiaries is not, in itself, a distinct category of negligence unsuited to summary determination. The relevant principles for determining whether A owes a duty of care to C in respect of the harmful activities of B are not novel and can be traced back to the decision of the House of Lords in Dorset Yacht Co Ltd v Home Office [1970] AC 1004, the case involving Home Office responsibility for damage caused by absconding borstal boys when they boarded a yacht and collided with the plaintiff’s yacht. The duty  would arise from a sufficiently high level of supervision and control of the activities  at the mine with sufficient knowledge of the propensity of those activities to cause toxic escapes into the surrounding watercourses. This was a question for Zambian law, which it was agreed followed English tort law, but the question what that level actually was is a pure question of fact. On the facts, there was sufficient material identified by the judge in support of the view that the claimants’ case was arguable and the judge made no error of law in assessing this issue, so his decision on the negligence claim must stand.

The Judge had identified the following evidence as establishing that there was an arguable case that Vedanta owed a duty of care. There was part of the published material, namely a report entitled “Embedding Sustainability” which stressed that the oversight of all Vedanta’s subsidiaries rested with the board of Vedanta itself, and which made particular reference to problems with discharges into water and to the particular problems arising at the Mine. There was the management services agreement between Vedanta and KCM , and a witness statement of Mr Kakengela.

Lord Briggs stated[61]:

“For my part, if conducting the analysis afresh, I might have been less persuaded than were either the judge or the Court of Appeal by the management services agreement between the appellants, or by the evidence of Mr Kakengela. But I regard the published materials in which Vedanta may fairly be said to have asserted its own assumption of responsibility for the maintenance of proper standards of environmental control over the activities of its subsidiaries, and in particular the operations at the Mine, and not merely to have laid down but also implemented those Page 23 standards by training, monitoring and enforcement, as sufficient on their own to show that it is well arguable that a sufficient level of intervention by Vedanta in the conduct of operations at the Mine may be demonstrable at trial, after full disclosure of the relevant internal documents of Vedanta and KCM, and of communications passing between them.”

(3) whether England is the proper place in which to bring the claims;

The domestic law ‘proper place’ test requires a search is for a single jurisdiction in which the claims against all defendants may most suitably be tried. The courts have treated the risk of irreconcilable judgments as a decisive factor in favour of England as the proper place for the claim against the non-EU defendant as well. The judge in this case applied that approach but that was a legal error in circumstances where Vedanta had by the time of the hearing offered to submit to the Zambian jurisdiction, so that the whole case could be tried there. The risk of irreconcilable judgments would be the result of the claimants’ choice to exercise their article 4 right, rather than because Zambia is not an available forum for all the claims. The risk of irreconcilable judgments was still a relevant factor but was no longer a trump card such that the judge made an error of principle in regarding it as decisive. Looking at the relevant connecting factors in the round, Zambia would plainly have been the proper place for this litigation as a whole, provided substantial justice was available to the parties in Zambia

(4) if Zambia would otherwise be the proper place, whether there was a real risk that the claimants would not obtain access to substantial justice in the Zambian jurisdiction.

Even if the court concludes that a foreign jurisdiction is the apparently the proper place, the court may still permit service of English proceedings on the foreign defendant if cogent evidence shows that there is a real risk that substantial justice would not be obtainable in that foreign jurisdiction. In this case, the judge identified two “access to justice” issues in Zambia First, the practicable impossibility of funding such group claims where the claimants are all in extreme poverty, because they could not obtain legal aid and because conditional fee agreements (CFAs) are unlawful in Zambia. Secondly, the absence within Zambia of sufficiently substantial and suitably experienced legal teams to enable effective litigation of this size and complexity, in particular against a well-resourced opponent like KCM.

The claims will now proceed against the parent company and its Zambian subsidiary in the English High Court.

PM gets extension to article 50.

 

The EU last night agreed to extend the period referred to in Article 50 as follows.

Conclusions – 10 April 2019
EUCO XT 20015/19 1
EN
1. The European Council takes note of the letter of Prime Minister Theresa May of 5 April 2019 asking for a further extension of the period referred to in Article 50(3) TEU.
2. In response, the European Council agrees to an extension to allow for the ratification of the Withdrawal Agreement. Such an extension should last only as long as necessary and, in any event, no longer than 31 October 2019. If the Withdrawal Agreement is ratified by both parties before this date, the withdrawal will take place on the first day of the following month.
3. The European Council underlines that the extension cannot be allowed to undermine the regular functioning of the Union and its institutions. If the UK is still a Member of the EU on 23-26 May 2019 and if it has not ratified the Withdrawal Agreement by 22 May 2019, it must hold the elections to the European Parliament in accordance with Union law. If the United Kingdom fails to live up to this obligation, the withdrawal will take place on 1 June 2019.
4. The European Council reiterates that there can be no opening of the Withdrawal Agreement, and that any unilateral commitment, statement or other act should be compatible with the letter and the spirit of the Withdrawal Agreement and must not hamper its implementation.
5. The European Council stresses that such an extension cannot be used to start negotiations on the future relationship. However, if the position of the United Kingdom were to evolve, the European Council is prepared to reconsider the Political Declaration on the future relationship in accordance with the positions and principles stated in its guidelines and statements, including as regards the territorial scope of the future relationship.
6. The European Council notes that, during the extension, the United Kingdom will remain a Member State with full rights and obligations in accordance with Article 50 TEU, and that the United Kingdom has a right to revoke its notification at any time.

 

Accordingly, provided Parliament approves the necessary statutory instrument to amend ‘exit day’ in the EU Withdrawal Act 2018 in time, the UK will not leave the EU at 11pm  on 12 April 2019. The requisite SI is The European Union (Withdrawal) Act 2018 (Exit Day)
(Amendment) (No. 2) Regulations 2019.

Is half a deal better than a no-deal exit in a fortnight? Parliament votes today.

29 March. The government today is putting forward a motion to pass part of its withdrawal agreement with the EU, the withdrawal agreement, but not the political declaration. If this passes there will be an extension to exit day to 22 May in accordance with the agreement reached between the PM and the EU last week. If not, exit day will be 12 April unless a further extension is requested by the PM, whoever that may be. In the meantime Parliament votes again on indicative votes on Monday after the failure of any of the proposals put forward on Wednesday to obtain a majority.

 

MPs  voted by 286 to 344 to reject the government’s withdrawal agreement.

 

9 April. The House of Commons has just approved the government motion that the Prime Minister requests an article 50 extension until 30 June. Leaders of the 27 EU Member States will consider the request tomorrow at the meeting of the  Council of Ministers. If there is no unanimous agreement to extend article 50 then the UK leaves the EU without a withdrawal agreement on Friday at 11pm.

Brexit. Parliament takes control of the process but no deal exit on 12 April still a real possibility.

Last night MPs voted to take control of the Brexit process, and indicative votes will be held on Wednesday to endeavour to find a majority view in Parliament as to what form Brexit should take. This cannot affect the withdrawal process but can only give guidance as to the future negotiation after withdrawal of the relationship between the EU and the UK.

The PM stated she would introduce a statutory instrument to amend ‘exit day’ in the EU Withdrawal Act 2018 and this would be laid on Wednesday, so no exit on 29 March. Mrs Leadsom has now stated that this will take place after the indicative votes on Wednesday.

A further extension beyond 12 April can only be granted if the PM asks for one.  If the withdrawal agreement is passed then the extension would be to 22 May. If not then the UK would leave the EU on that date. It is possible that this might be forestalled by a vote of no confidence in the government followed by the appointment of a temporary PM with the mandate of requesting a further extension and ensuring the UK participates in the elections to the European Parliament on 23 May.

Brexit. UK leaves EU on 29 March?

Yes, unless ‘exit day’ in the EU Withdrawal Act 2018 is amended by statutory instrument. The procedure for this is set out here https://www.hansardsociety.org.uk/blog/changing-eu-exit-day-by-statutory-instrument. This states “Normally, from laying to making the SI, the draft affirmative procedure takes around six weeks.

However, given the steps outlined above, the process could be accelerated. We see no insuperable procedural obstacle to proceedings on the ‘exit day’ SI being completed by 29 March if the draft SI were laid, for example, on Friday 22 or Monday 25 March.”

 

No draft SI has yet been laid.

PM wins article 50 extension from EU

The PM asked for an extension of article 50 to 30 June.

The PM got a two-tier extension.

22 May if Parliament passes the withdrawal agreement

12 April if it doesn’t.

Much talk of ‘indicative votes’ in Parliament next week. If this leads to a consensus on the type of Brexit to be achieved, this could only affect the political declaration as to the  negotiation of the UK’s future relationship with the EU. The withdrawal agreement, backstop and all, cannot be changed and if it is not passed the UK leaves the EU on 12 April, subject to amendment by Statutory Instrument next week of “exit day” in the EU Withdrawal Act 2018, unless a further extension is granted. This would almost certainly require the UK to hold elections for the European Parliament on 23 May.

Brexit. Nine days to go. PM seeks short extension.

The Prime Minister has just written to the EU requesting an extension to article 50 up to 30 June. A common refrain among EU Members has been that for an extension to be granted there needs to be a plan. As Michel Barnier stated yesterday any extension must be “linked to something new, a new political event, a new political process”. It is by no means certain that the extension requested will be granted by leaders of all 27 Member States. It is possible that an extension may be granted subject to conditions, such as UK participation in the elections for MEPs on 23 May. The possibility of a no-deal exit on 29 March remains.

 

The European Commission has taken the following position on the request for an extension beyond 23 May, according to this report from Reuters a few hours ago.

The European commission opposes extending British membership of the European Union to June 30, as British prime minister Theresa May proposed on Wednesday, according to an EU document seen by Reuters.

In a note on the Brexit process reviewed by the commission at its weekly meeting on Wednesday, officials wrote that leaders meeting May at a summit on Thursday faced a “binary” choice of a short delay of  Brexit from 29 March to before 23 May or a long delay to at least the end of this year, with Britain obliged to hold an election on 23 May for European parliament lawmakers.

“Any extension offered to the United Kingdom should either last until 23 May 2019 or should be significantly longer and require European elections,” the document said. “This is the only way of protecting the functioning of the EU institutions and their ability to take decisions.”

EU states which were due to receive additional legislative seats after Brexit would need to know by mid- to late-April if they would be denied those seats because Britain was staying.

The note also said that in any extended membership, Britain should, “in a spirit of loyal cooperation”, commit to “constructive abstention” on key issues, such as the EU’s long-term budget and filling top EU posts after the May election.

 

So, that looks like a ‘no’.