Voyage charter. Liability of disponent owner for delays caused by arrests of bunkers on board pursuant to arbitrations unconnected with the vessel.

Rhine Shipping DMCC v Vitol SA [2023] EWHC 1265 (Comm) involved a counterclaim by Vitol under a voyage charter with Rhine for breach of the charter by way of delay to the Vessel in proceeding to one of the load ports resulting from an arrest by third parties of the bunkers and stores on board at one of the loading ports, in Ghana. The vessel was on bareboat charter to Al-Iraquia who had time chartered it to Rhine with whom it was connected. Delay  resulted from the detention of the vessel for some days as security which was alleged to have led to delays in loading the vessel at its next load port in Congo with the result that Vital had to pay an increased price of US$3,692,106.72 to the seller of the cargo loaded there. The arrest in Ghana did not concern the vessel in the voyage charter between Rhine and Vitol. It concerned claims by six vessel owners under other charters with Al-Iraquia.  Vitol claimed under an indemnity clause in the charter and also for breach of warranty that at the date of the charter the vessel was free of encumbrances and legal issues that could affect the performance of the charter.

(1) The indemnity.

Clause 13 provided: “Third Party Arrest

In the event of arrest/detention or other sanction levied against the vessel through no fault of Charterer, Owner shall indemnify Charterer for any damages, penalties, costs and consequences and any time vessel is under arrest/detained and/or limited in her performance is fully for Owner’s account and/or such time shall not count as laytime or if on demurrage, as time on demurrage.”

Although the arrest was of the property on board, not of the Vessel, the vessel was detained as the inevitable consequence of the property on board being arrested, in the sense of being constrained or prevented from freely continuing on its voyage. Clause 13 imposed no additional requirement that the detention be “levied against” the vessel in any sense other than that the vessel was detained.

A further issue arose as to whether the indemnity was subject to the rules on remoteness of loss

that apply to a claim in damages. Given his finding in relation to the breach of warranty claims, that the losses claimed by Vitol were not too remote to be recoverable as damages for breach of contract, the amount recoverable here did not turn on this issue. However, Simon Birt KC set out his view that nothing in the terms of the indemnity to suggested that it intended to incorporate the rules on remoteness of damage for breach of contract. If, as a result of a detention, for example, the charterer had suffered a penalty, there would be no reason to conclude that fell outside the scope of the indemnity, even if unforeseeable. He emphasised  that his conclusions were based on the terms of clause 13 and the facts and circumstances of this case and did suggest that an express indemnity in any contract will always be interpreted to include losses that would fall outside the remoteness rules for breach of contract, nor did they deal with anything in relation to the scope of the implied indemnity under a time charter.

(2). The breach of warranty.

Vitol could also claim their losses by way of a breach of a warranty in the charter  that “at the time of and immediately prior to fixing the charter, the vessel, owners, managers and disponent owners are free of any encumbrances and legal issues that may affect vessel’s approvals or the performance of the charter. Al-Iraqia were held to fall within the warranty by virtue of their description as “managers” within the clause, and, had it been necessary to determine, whether they also fell within the clause as “owners” or “disponent owners” Simon Birt KC would have held that they did fall within that description. At the time of and immediately prior to fixing the charter, Al-Iraqia was not “free of any encumbrances and legal issues that may affect the Vessel’s approvals or the performance of the charter.” When the charter was agreed on 27 March 2020, London arbitration was already on foot in relation to vessels other than the one subsequently arrested in Ghana. The word ‘may’ imposed a low bar and the London arbitration was a legal issue affecting Al-Iraqia at the relevant and it was possible that issue could affect the performance of the Charter, and indeed did so.

The Congo bills of lading were dated 12 May 2020 and Vitol claimed a loss of on the basis that had there been no delay due to the arrest Congo bills of lading would have been dated 6 May 2020 and Vitol would have paid its seller a lower price for the cargo. Rhine put forward three arguments as to why it should not be liable. First, it put Vitol to proof that, even without the arrest in Ghana, the vessel would have loaded at the Congo port in sufficient time to obtain bills of lading dated 6 May 2020 for the cargo loaded there. Second, any loss Vitol had suffered had been reduced by Vitol’s hedging arrangement and so insofar as so reduced it was not recoverable from Rhine. Third, even if Vitol’s loss had not been so reduced in fact, the only loss that was recoverable as not too remote was loss that would still have been suffered if those hedging arrangements had so reduced the loss.

Simon Birt KC rejected all three arguments. First, had there been no delay due to the arrest in Ghana, there was certainly a real or substantial chance that Vitol’s Congo seller or the Congo terminal would have acted in such a way as to lead to the issue of  a bill of lading dated 6 May. There would be no discount to be applied for any “chance” that the bills of lading might not have been dated 6 May. Second, the transactions by which the Swaps were rolled were not external transactions, but were internal to Vitol. The rolling of the internal Swaps by which the pricing risk on the Congo sale contract arising from the delay was transferred between Vitol portfolios, did not make good any loss to Vitol. Unlike an external hedge, one transaction would not have been entered into for the purpose of managing the specific pricing risk arising from an identified risk from an existing transaction. Third, the loss claimed by Vitol was of a type that was usual in respect of a charter such as this, and was reasonably within the contemplation of the parties at the time of contracting. there was no evidence to the effect that there was a “general expectation” in the market that shipowners would not expect to bear this type of loss, such as had been the case in The Achilleas [2009]1 AC 61 (HL).

It’s now Official. Shipping and the ETS.

On 16 May 2023 the Official Journal published Directive 2023/959, amending the 2003 ETS Directive, and Regulation 2023/957 amending the 2015 MRV Regulation. Shipping will enter the ETS as from 1 January 2024 as regards CO2 emissions, and from 1 January 2026 as regards emissions from two other greenhouse gases, Methane and Nitrous Oxide. The reporting obligations under the MRV will be extended from CO2 to these other two greenhouses gases as from1 January 2024. The emissions in both measures will be calculated on a tank to wake basis rather than on a wake to wake basis.

The amended ETS Directive

Vessels over 5000 gross tonnage for transporting for commercial purposes cargo or passengers will come within the scope of the EU ETS as from 1 January 2024, with a phased introduction of obligations for the shipping company to surrender each year 100% of allowances for verified CO2 emissions for intra-EU voyages within the ETS and emissions occurring at berth in an EU port, and 50% of verified CO2 emissions for extra-EU voyages from and to a port within the jurisdiction of a Member State. The phase-in means that 40% (20% for extra-EU voyages) allowances will need to be surrendered for calendar year 2024, 70% for 2025 (35%) and 100% (50% for extra-EU voyages) for 2026 and onwards. There will be no free allocation of allowances to shipping companies, which are defined as the shipowner, or the bareboat charterer or ship manager, that has assumed the responsibility for the operation of the ship from the shipowner and that, on assuming such responsibility, has agreed to take over all the duties and responsibilities imposed by the IMO’s ISM Code.

 Emissions are calculated on a tank to wake basis as defined in amended Article 3 ‘(b)“emissions” means the release of greenhouse gases… from ships performing a maritime transport activity listed in Annex I of the gases specified in respect of that activity”. Offshore vessels of 5000 gross tonnage and above will be included in the ETS from 2027. There will be a review in 2026 of whether to included general cargo vessels and off-shore vessels between 400-5000 gross tonnage in the ETS.

The amended MRV Regulation

The 2015 MRV Regulation sees the following changes. As from 1 January 2024 the Regulation will apply to greenhouse gas emissions, CO2, Methane and Nitrous Oxide, from vessels of 5000 gross tonnage and above transporting for commercial purposes cargo or passengers on voyages from a port of call in the EU to their next port of call and from their last port of call to a port of call in a State in the EU as well as to intra EU voyages.

Three months from adoption on 5 June 2023, an updated ship monitoring plan which shall describe the method for monitoring and reporting of Methane and Nitrous Oxide must be verified by an accredited verifier and submitted to the administrating authority of the company. Greenhouse gas emissions are reported on a tank to wake basis. Offshore vessels of 5000 gross tonnage and above will be included in the ‘MRV’ Regulation from 1 January 2025, as will general cargo vessels and off-shore vessels between 400-5000 gross tonnage.

And then there is the FuelEU Maritime Regulation which is nearing the conclusion of its legislative journey. On 23 March  2023 the European Parliament and the Council agreed on the amendments to the Commissions 2021 proposed FuelEU Maritime Regulation and in the European Parliament, the Committee on transport and tourism (TRAN) approved the provisional agreement on 24 May 2023. The new rules will be published in the Official Journal of the European Union and enter into force 20 days after publication, with the Regulation to apply from 1 January 2025.

FuelEU Maritime sets maximum limits on the yearly greenhouse gas intensity of the energy used by a ship, with targets will becoming increasingly ambitious over time to stimulate and reflect the expected developments in technology and the increased production of renewable and low-carbon fuels. The Regulation applies to commercial vessels of 5000 gross tonnes and above, regardless of flag, with exemptions for naval vessels, fishing vessels, ships using non-mechanical propulsion. It covers all energy used on board when the ship is at port in the EU or EEA , all energy used by the ship on voyages between EU or EEA ports and 50% of the energy used on voyages departing from or arriving at an EU or EEA port. The schedule of reduction from a 2020 baseline is: -2% from 2025; -6% from 2030; -14.5% from 2035;-31% from 2040; -62% from 2045; -80% from 2050.

Emissions are calculated on a wake to wake basis, rather than the tank to wake basis in the amended ETS Directive and the amend MRV Regulation. The targets cover not only CO2, but also Methane (CH4) and Nitrous Oxide (N2O).

A podcast on the implications for Shipping of the EU’s ‘Fit for 55’ agenda can be found at

Hague-Visby time limit applies to claims for misdelivery after discharge.

Yesterday in TheGIANT ACE”, FIMBank PLC v KCH Shipping Co Ltd, [2023] EWCA Civ 569 (24 May 2023), the Court of Appeal upheld the judgment of Sir William Blair J last autumn that the one year time limit under the Hague-Visby Rules applies to claims for misdelivery where the cargo is delivered outside the tackle to tackle ambit of the Hague Visby Rules, after discharge has been completed.

Three issues arose for decision, with Males LJ giving the principal judgment of the Court of Appeal, with whom Popplewell LJ and Nugee LJ agreed.

(1) Does Article III, rule 6 of the Hague Visby Rules apply to a claim for misdelivery occurring after discharge of the cargo has been completed?

The Court of Appeal considered that the Rules do not apply to misdelivery of cargo stored on land after discharge, whether or not such misdelivery is a breach of the contract evidenced by the bill of lading, at least where the misdelivery is not related to the discharge operation. However, the natural meaning of Article III, rule 6 of the Hague Rules is that if suit is not brought in time, the carrier will be discharged from all liability of any kind arising during the Hague Rules period of responsibility.

Article  III (6) of the Hague-Visby Rules  in paragraph 3 provides “Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods unless suit is brought within one year of their delivery or of the date when they should have been delivered. (emphasis added).” This contains a change from the phrase in the Hague Rules “all liability in respect of loss or damage” to “all liability whatsoever in respect of the goods” which weakened or even removed the nexus with loss or damage to the cargo which was previously required. If, the natural meaning of Article III, rule 6 of the Hague Rules was that the carrier will be discharged from all liability of any kind arising during the Hague Rules period of responsibility, it was a reasonable inference that the new rule was intended to apply even in cases outside the sphere of application of the Rules.

Reference to the travaux préparatoires in accordance with Article 32 of the Vienna Convention confirmed that Article III, rule 6 of the Hague Visby Rules was intended to apply to misdelivery claims. It was put before a plenary session of the CMI on June 14, 1963, with the explanation (p. 500) that: ‘The object of the aforesaid amendment is to give the text a bearing as wide as possible, so as to embody within the scope of application of the one year period, even the claims grounded on the delivery of the goods to a person not entitled to them, i.e. even in the case of what we call a wrong delivery.’ This constituted an interpretative ‘bulls-eye’. Although misdelivery can occur during the voyage or simultaneously with discharge, misdelivery after discharge is the paradigm case which would have been understood by the drafters of the Visby amendments to the Hague Rules. Had they intended to limit the new Article III, rule 6 to cases of misdelivery occurring during the carriage by sea (including the discharge operation itself), they could have been expected to say so. However, there was no indication in the travaux that they intended to limit the new rule in this way. Although two decisions from Hong Kong (Cheong Yuk Fai v China International Freight Forwarders (H.K.) Co Ltd [2005] 4 HKLRD 749 and Perfect Best Asset Management Inc v ASL Express Ltd [2021] HKCFI 2310) have held that Article III, rule 6 of the Hague Visby Rules does not apply to a claim for misdelivery occurring after discharge, two cases from one jurisdiction were not capable of amounting to an international consensus on the interpretation of the provision. Further, the two judgments in those cases did not consider either the significance of the language used in the Visby amendment to Article III, rule 6 or the impact of the Visby travaux préparatoires.

(2) If not, was there an implied term in the bills of lading to the effect that the Hague Visby Rules including Article III, rule 6 would apply to govern the parties’ relationship after discharge of the cargo (referred to in argument as “the Carver implied term”)? This derives from the following passage in the fifth edition of Carver on bills of lading at para 9-135 -“It is submitted therefore that as a matter of the English law of contract it may well be appropriate to state the position as being that the Rules may apply as implied terms after receipt of the goods but before loading, and after discharge but during the period before delivery or up to the time of the operation of any separate warehousing arrangements, except insofar as this result has been excluded or modified by the parties.”

Given the decision on the first issue, it was not necessary to reach a final conclusion on this issue. Males LJ had considerable doubt whether a term to the effect suggested could be implied. If such a term rested on an implication in fact, there were no factual findings in the award on which such an implication could be founded. To the extent that it was an implication in law, it seemed difficult to imply a term that the Rules should apply if, on their own terms, they do not.

(3) If the answer to either of these questions is “yes”, does clause 2(c) of the Congenbill form have the effect of disapplying the time bar in Article III, rule 6?

 Clause 2 (c) provides:

“The Carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising prior to loading into and after discharge from the Vessel of [sc. or] while the cargo is in the charge of another Carrier, nor in respect of deck cargo or live animals.”

The issue was rather artificial as if the clause did exclude liability, something which was not in issue, the issue of time bar would not arise. cl.2 On the other hand, if the carrier remains liable for misdelivery after discharge despite clause 2(c),  there was no reason why the one-year time limit for such a claim should not apply.

The Appeal was therefore dismissed.

Climate Change litigation update (2). The UK.

So far, 2023 has seen three claims in the English courts involving the treatment of scope 3 greenhouse gas (GHG) emissions, two involving judicial review, and one involving a derivative action against the board of directors of Shell. Scope 1 concerns direct emissions from sources that are fully or partly owned or controlled by the organisation (such as a refinery). Scope 2 is for indirect emissions from third-party sources from which the organisation has purchased or acquired electricity, steam, or heating for its operations. Scope 3 includes all other indirect emissions resulting from activities of the organisation, but occurring from greenhouse gas sources owned or controlled by third parties such as other organisations or consumers, including emissions from the use of third-party purchased crude oil and gas. 

1. R (Friends of the Earth Limited) v. The Secretary of State for InternationalTrade/UK Export Finance [2023] EWCA Civ 14 

The main issue before the Court of Appeal was whether the UK Government acted unlawfully in deciding to approve UKEF’s £1.15 billion investment in a liquified natural gas project in Mozambique. UKEF’s final climate change report on the project (the CCR) concluded after a detailed analysis that “[g]as from the [project] is … considered by the Government of Mozambique to be an important contributor to the energy transition of Mozambique in line with its NDC [nationally determined contribution] and its Paris Agreement commitments” and that “[t]his aligns with the UK Government’s commitment to support developing countries to respond to the challenges and opportunities of climate change as part of its own Paris Agreement obligations”. The CCR concluded that the project’s Scope 3 emissions would significantly exceed its Scope 1 and Scope 2 emissions. The case involved three issues:

i) Was the UK Government required to adopt the correct, rather than merely a tenable, meaning of the Paris Agreement?

ii) Had the UK Government behaved irrationally in concluding that the decision was compatible with article 2(1)(c) of the Paris Agreement?

iii) Had the UK Government breached its duty of enquiry by failing to quantify the project’s Scope 3 emissions? These are all indirect emissions from the gas extracted by a project not included in Scope 1 (direct emissions) and Scope 2 (indirect emissions from the generation of purchased electricity).

On the first two issues the Court of Appeal found that the Paris Agreement was pre-eminently an unincorporated international treaty that did not give rise to domestic legal obligations. The respondents here chose, but were not compelled by domestic law, to take into account the UK’s obligations under an unincorporated treaty. The question of whether funding the project was aligned with the UK’s international obligations under the Paris Agreement was accepted to be justiciable. The Paris Agreement was, however, only one of a range of factors to which the respondents decided to have regard in reaching the decision.

The Court held that there had been no error of law in that it was tenable for UKEF to reach the view that funding the project was aligned with the UK’s obligations under the Paris Agreement. Article 2(1)(c) contains the aims and purposes of the Paris Agreement, including “holding the increase in the global average temperature” and “making finance flows consistent with a pathway towards low greenhouse gas emissions”. However, it did not create an obligation on the UK to demonstrate that its overseas funding was was consistent with a pathway towards limiting global warming to well below 2°C and pursuing efforts to 1.5°C. The CCR’s view was that on balance it appeared more likely than not that, over its operational life, the gas from the Project would at least replace some and/or displace some more polluting fuels, leading to some net emissions reduction. Therefore, it could not possibly have been irrational for the respondents to decide to provide finance for the project, when they were being advised that the project could, in some scenarios, align with the UK’s obligations under the Paris Agreement. That was at least a tenable view.

On the third issue the Court of Appeal held that the UK Government  had not breached its duty  of inquiry because it was not possible to say that it was irrational to take the funding decision without quantifying the Scope 3 emissions. UKEF’s decisions as to the quantification of the Scope 3 emissions and the adequacy of the Climate Change Report it had obtained were well within the substantial margin of appreciation allowed to the decision-makers.

2. Greenpeace Ltd v (1) Secretary of State for Business, Energy and Industrial Strategy and (2) the Oil and Gas Authority; and Uplift v (1) SSBEIS and (2) the OGA (North Sea oil and gas licensing)

In October 2022 the NSTA, pursuant to its powers under Part 1 of the Petroleum Act 1998, launched the 33rd Offshore Oil and Gas Licensing Round. This is expected to result in the grant of a further 100 licences. In December 2022 separate claims for judicial review were launched by environmental charities Greenpeace and Uplift. In April 2023 both claims were granted permission to proceed to trial.  Both challenges include arguments on the assessment of end-use emissions, i.e. from when the oil and gas is ultimately used, for example in fuelling cars.

The challenges will potentially be impacted by outcome of the appeal in R (Finch on behalf of the Weald Action Group & Others) v. Surrey County Council (& Others) which the Supreme Court will hear on 21 June 2023. In 2019 Surrey County Council’s granted planning permission to Horse Hill Developments Limited to expand an existing site to add four new wells for the production of crude oil hydrocarbons over a 20 year period. The developer’s environmental statement provided an assessment of the direct (scope 1 and 2) greenhouse gas (GHG) emissions associated with the project but not its scope3 emissions, those  would subsequently be produced as a result of using the product.  The claimant argued that SCC’s failure to consider these emissions in determining whether to approve the project was a breach of the UK’s obligations under European Union Law (Directive 2011/92/EU, the EIA Directive) as implemented in domestic law by the EIA Regulations, and also that scope 3 emissions should have been considered in relation to the UK’s net zero target.  At the end of 2020 the High Court dismissed the case on the basis that the assessment of scope 3 emissions was as a matter of law incapable of failing with the scope of the EIA. In February 2020 the Court of Appeal by a 2-1 majority upheld the dismissal, finding that the decision maker had a discretion whether or not to include scope 3 emissions in the EIA.

3. ClientEarth v Shell Plc and others [2023] EWHC 1137 (Ch))

On February 9, 2023, ClientEarth filed a derivative action against Shell’s Board of Directors alleging mismanaging of material and foreseeable climate risk and breach of company law. The claim alleged that Shell’s 11 directors had breached their legal duties under the Companies Act by failing to adopt and implement an energy transition strategy that aligns with the Paris Agreement. Shell claims that its “Energy Transition Strategy,” which includes a net zero emissions plan with a 2050 target, is consistent with the 1.5°C temperature goal of the Paris Agreement. ClientEarth, based on a third-party assessment done by Climate Action 100+, claims that the strategy excludes short to medium-term targets to cut the emissions from scope 3 emissions despite these accounting for more than 90% of the company’s overall emissions.

The High Court has now refused ClientEarth permission to bring a derivative action against Shell’s directors, and found that ClientEarth had not demonstrated a prima facie case that either Shell’s directors had breached their duty of care to the company or the remedy sought from the court – mandatory injunctions specifying actions to be taken by the directors – would serve a useful purpose. It was for the company’s directors, acting in good faith, to determine how best to promote the success of a company for the benefit of its members as a whole. A court would not generally look behind this unless there is a prima facie case that the directors could not reasonably have determined that their decision was in the best interests of the company as a whole.

Climate change litigation update. (1) The US.

At the end of April 2023 the Supreme Court rejected ExxonMobil and Suncor’s petition for certiorari seeking to force three Colorado communities — who sued the companies for their role in the climate crisis and the local impacts the communities suffer — into federal court. The result of the Supreme Court’s denial is that the cases brought by Boulder County, San Miguel County, and the City of Boulder will proceed in Colorado state court.

On 15 May 2023 The Supreme Court also rejected a similar petition for certiorari in  Delaware v BP America. The order also sends a similar case against fossil fuel companies filed by the City of Hoboken, NJ, back to New Jersey state court.

The oil company defendants had hoped that the cases would be remitted to the Federal Courts where it is likely that they would be dismissed due the decision of the Supreme Court in American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011) (AEP),  and that of the Ninth Circuit in Native Village of Kivalina v. ExxonMobil Corp., 696 F.3d 849 (9th Cir. 2012), that such actions, at least when they relate to domestic GHG emissions caused by the defendant, are pre-empted by the Clean Air Act.

Meanwhile the trial in the Montana State courts in Held v Montana has been scheduled for 12-23 June. Youth plaintiffs are seeking declaratory relief alleging that by supporting a fossil fuel-driven energy system, which is contributing to the climate crisis, Montana is violating their constitutional rights to a clean and healthful environment; to seek safety, health, and happiness; and to individual dignity and equal protection of the law. The youth plaintiffs also argue that the state’s fossil fuel energy system is degrading and depleting Montana’s constitutionally protected public trust resources, including the atmosphere, rivers and lakes, and fish and wildlife. 

Accrual of claim for purposes of six year tort limitation period. Offshore oil spill not a conintuing nuisance.

The Supreme Court has recently given judgment in Jalla and another (Appellants) v Shell International Trading and Shipping Co Ltd and another (Respondents) [2023] UKSC 16.

The case involved two Nigerian citizens who sued two companies within the Shell group in private nuisance in respect of damage to their land alleged to have resulted from an oil leak on 20 December 2011 lasting six hours during a cargo operation in the Bonga oil field, approximately 120km off the coast of Nigeria. An estimated equivalent of at least 40,000 barrels of crude oil leaked into the ocean. The defendants are alleged to be liable for the operation behind the Bonga Spill.

The appeal concerned the application of the limitation period for torts, which is usually six year, in respect of the claims for private nuisance. The claimants issued their claim form on 13 December 2017, just under six years after the spill occurred on 20 December 2011. In April 2018, over six years after the spill, the claimants purported to amend their claim form including changing one of the parties being sued from Shell International Ltd (a company which they had initially sued) to STASCO. In April, June and October 2019, they issued a series of applications to amend their claim form and particulars of claim. The claimants argue that so long as undue interference with their land is continuing, because oil on their land has not been removed or cleaned up, there is a continuing cause of action for the tort of private nuisance that is accruing afresh from day to day.

At first instance it was declared that declared that the nuisance as alleged by the Claimants in their original Particulars of Claim and/or their draft Amended Particulars of Claim and on the evidence before the Court at the hearings in September and October 2019 could not constitute a continuing nuisance and that accordingly the limitation period should not be extended by reference to the concept of a continuing nuisance. This was upheld by the Court of Appeal who found that the judge had been correct to decide that the claimants’ cause of action accrued when the oil struck their land. The Supreme Court have now unanimously rejected the appeal on the issue of whether there was a continuing nuisance.

For the purposes of the appeal it was it was assumed that some quantity of oil reached the Nigerian Atlantic shoreline within weeks of 20 December 2011 and that the tort of private nuisance may be committed where the nuisance emanates from the sea or is a single one-off event. The tort of private nuisance is committed where the defendant’s activity, or a state of affairs for which the defendant is responsible, unduly interferes with (or, as it has commonly been expressed, causes a substantial and unreasonable interference with) the use and enjoyment of the claimant’s land and is actionable only on proof of damage which is satisfied by establishing the undue interference with the use and enjoyment of the land.

A continuing nuisance is in principle no different from any other continuing tort or civil wrong and is one where, outside the claimant’s land and usually on the defendant’s land, there is repeated activity by the defendant or an ongoing state of affairs for which the defendant is responsible which causes continuing undue interference with the use and enjoyment of the claimant’s land. The cause of action therefore accrues afresh on a continuing basis.

However on the assumed facts of this case, that oil is still present on their land and has not been removed or cleaned up, there was no continuing nuisance. This is because outside the claimant’s land, there was no repeated activity by the defendants or an ongoing state of affairs for which the defendants were responsible that was causing continuing undue interference with the use and enjoyment of the claimants’ land. The leak was a one-off event or an isolated escape. The cause of action accrued and was complete once the claimants’ land had been affected by the oil. Accepting the claimants’ submission would be to extend the running of the limitation period indefinitely until the land is restored.

About turn on the Retained EU Law (Revocation and Reform) Bill

The Retained EU Law (Revocation and Reform) Bill originally proposed sunsetting all retained EU law by the end of 2023 unless a case was specifically made for its retention. After pressure from the House of Lords the Government has recently tabled an amendment which will replace the automatic revocation of all retained EU law on 31 December 2023, with the production of a list of 600 pieces of retained law that are to go by into the sunset at the end of the year. So what retained law in the maritime sphere is on the list?

The Port Services Regulation (EU) 2017/352 is to go – no surprise there.

Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU not surprisingly goes as well.

Various EU legislative instruments relating to compliance with the STCW have gone as they have been superseded by the Merchant Shipping (Standards of Training, Certification and Watchkeeping) Regulations 2022.

The Merchant Shipping (Flag State Directive) Regulations 2011 (S.I. 2011/2667) go as they have become inoperable as the UK is no longer an EU state.

Rome I and Rome II and legislation around the Environmental Liability Directive 2004 and the Offshore Safety Directive 2013 are NOT on the list.

Life after novation. Indorsee’s consent to discharge of cargo without production of bill of lading.

The Sienna, Unicredit Bank AG v Euronav NV [2023] EWCA Civ 471 involved a claim by a financing bank against shipowners for delivery of cargo without production of a bill of lading. The cargo had been carried under a charter with BP who were the initial holder of the bill of lading as shipper. The charter was novated, and subsequently BP indorsed the bill of lading to the bank who received it after the cargo had been discharged against an indemnity in the charter, without production of the bill of lading.

Moulder J found that the bank could not sue the owners under the bill of lading because the bill of lading lost its potential contractual status when there was a novation of the charter with BP. She also found that if there had been a contract with the indorsee as the lawful holder of the bill of lading, there would have been no breach. The indorsement and transfer of the bill of lading to the Bank was being held up largely due to the effect of the first Covid lockdown in the UK in March 2020. She found that had the shipowner refused to deliver the cargo without production of the bill of lading it would have sought instructions from BP who would have referred to the Bank as the intended indorsee and the Bank would have agreed that the cargo be discharged without production of the bill of lading.

On appeal the Court of Appeal overturned the first basis of the decision, but upheld the second.

On the first ground, it was clear that where a shipper is also the charterer, the bill of lading is generally not a contract of carriage but a mere receipt, but when indorsed to a third party, it attains contractual status upon indorsement on the basis that “a new contract appears to spring up between the ship and the consignee on the terms of the bill of lading” (Tate & Lyle Ltd. v Hain Steamship Co. (1936) 55 Lloyd’s Rep 159, 174). However, Moulder J had found that this was not the case as regards the indorsee when the bill of lading had remained in the hands of the charterer after the charterer ceased to be a party to the charterparty. Popplewell LJ giving the judgment of the Court of Appeal, characterised the ‘mere receipt’ rule as follows. In issuing a bill of lading, the carrier usually contracts with the holder on those terms save only for so long as the holder is a charterer, and save to the extent thereafter (if at all) that the contractual relationship with the carrier for performance of the carriage remains governed by the charterparty (as it was for pre Novation Agreement conduct in the present case). The bill of lading will not otherwise be a mere receipt but will contain or evidence a contract of carriage. This reflects the presumed intention of the parties. Popplewell LJ found that the bill of lading was not a mere receipt in BP’s hands at the time of discharge as it had become a document containing or evidencing a contract with BP from the date of the Novation Agreement, and remained so at the date of discharge.

Furthermore, dealing with an argument not raised before Moulder J, he found that the indorsee is put in the same position as if he had been a party to a contract on the terms of the bill from the date of its issue: Monarch Steamship Co Ltd v A/B Karlshamns Oljefabriker [1949] AC 196, 218. The language of s. 2(1) makes clear that it operates retrospectively. The position is no different for an indorsee from a charterer from that which applies to an indorsee from a non-chartering shipper. The position would be the same where indorsement takes place after discharge than it is where indorsement takes place before provided the indorsee takes pursuant to pre-existing contractual arrangements,  as required by s2 (2) of COGSA 1992, which is what the Bank did in this case.

Turning to the second ground of Moulder J’s decision, although the indorsee would not be affected by any agreement between the owners and the charterer that the cargo could be delivered against a letter of indemnity in the absence of a bill of lading, the indorsee itself could consent to this. The bill of lading in this case was on its way to the bank and was held up due to administrative reasons largely connected with the initial COVID lockdown in the UK, rather than commercial ones. Had Owners initially complied with the obligation not to discharge without production of the Bill, they would have sought and obtained express consent to do so from both the holder and the bank as intended indorsee. Delivery without production of the bill of lading would no longer have been a breach of the contract and so the initial breach would have caused no loss.

Accordingly, the Court of Appeal upheld Moulder J’s findings on causation and owner’s appeal was dismissed.

EU The ‘Fit for 55” package and shipping. It’s getting closer.

The EU’s ‘Fit for 55’ package, aimed at achieving a 55% reduction of greenhouse gases within the Union by 2030 over a 1990 baseline, was first published on 14 July 2021. Three proposed pieces of legislation will have an impact of shipping trading into and out of ports in an EU Member State and are coming very close to adoption.

1. Inclusion of shipping in the Emissions Trading Scheme. The Commission’s initial proposal included in the “Fit for 55” package was subject to amendments, on which a preliminary agreement was reached by the Council and Parliament on 18 December 2022,, with full publication of the amended Directive on 8 February 2023

On 18 April 2023, the legislative proposals were approved by the European Parliament, and on 25 April 2023 they were adopted by the Council. Once the new provisions are published in the Official Journal of the European Union, they will become law. The ETS will then apply to Shipping as from 1 January 2024.

2. FuelEU Maritime Regulation

The Commission proposed a Regulation mandating cuts from 2025 to 2050 to GHG intensity of energy used on board ships calling at ports within Member States of the European Union. The TRAN committee adopted the draft report of the TRAN rapporteur on the proposal on 3 October 2022. While keeping the Commission’s proposed cuts for 2025 and 2030, the report introduced higher cuts to GHG intensity of energy used on board ships than proposed by the Commission from 2035 onwards – 20% as of 2035, 38 % from 2040, 64 % as of 2045 and 80% as of 2050. It also introduces a target of 2% for the use of renewable fuels of non-biological origin from 2030. A dedicated Ocean Fund should be established to improve the energy efficiency of ships and support investment aimed at helping decarbonise maritime transport. Parliament adopted the report in Plenary on 19 October 2022.

On 23 March 2023, Parliament and Council reached a provisional agreement on the text of the new rules, which now needs to be formally approved by both institutions.

3. Regulation for the deployment of alternative fuels infrastructure (AFIR).

Maritime ports that see at least 50 port calls by large passenger vessels, or 100 port calls by container vessels, must provide shore-side electricity for such vessels by 2030. The amended AFIR is now consistent with the provisions in the FuelMaritime EU Regulation on shore-side electricity.

On 28 March 2023 the European Council and the European Parliament came to a provisional political agreement on the AFIR and is subject to formal approval by the two co-legislators.