Author: Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to seven editions (soon to be eight) and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

Shipping Law and ‘that referendum’. Part Two. Regulations.

With the repeal of the European Communities Act 1972, EU Regulations will cease to be part of UK law. There are three important Regulations of concern to shipping practitioners.

The Brussels Recast Judgment Regulation 1215/2012
The Rome I Regulation on choice of law for contracts
The Rome II Regulation on choice of law i in non contractual matters.

If these are not re-implemented into domestic law, then this we are back to the common law as regards jurisdiction. When suing a defendant domiciled in the UK it would once again become possible to seek to stay proceedings on grounds of forum non conveniens.

As regards choice of law, we would be back to the Contracts (Applicable Law) Act 1990 whose provisions are quite similar to those in Rome I. For tort it would be back to the Private International Law (Miscellaneous Provisions Act) 1995 whose provisions contain significant differences from Rome II.

If losing the three Regulations is regarded as non conveniens then Parliament needs to re-enact them into domestic law. Rome I and Rome II could be re-enacted without the need for any action from the remaining 27 EU Member States, although Parliament may choose to amend parts of the Regulations. Possible candidates for amendment of Rome II would be:(a) clarification that it does not apply to torts on the High Seas and; (b) providing that the applicable law where limitation proceedings are brought before the courts of the UK is that of the UK. Some thought would have to be given as to whether the ECJ should be treated as having any authority as regards interpretation of the domestic legislation which re-enacts the two Regulations.

With the Brussels Recast Judgment Regulation the position is more complex if it is thought to be desirable to maintain a common jurisdiction framework with the remaining EU Member States. They would need to amend the Regulation to include the UK, perhaps with a simple definition clause ‘Member state includes the United Kingdom’ and similar amendment, mutatis mutandis, with references to a ‘non-Member State’. The UK would also have to agree to the authority of the ECJ as regards the domestic legislation reimplementing the Regulation.

An alternative would be for the UK to ratify the 2007 Lugano Convention which tracks the provisions of the 2001 Brussels Regulation (the ‘unrecast’ version). However, this would require the UK first to become a member of the European Free Trade Associaton, or to obtain the agreement of all the Contracting Parties, the European Community and Denmark, Iceland, Norway and Switzerland.

The UK could also ratify the Hague Convention on Choice of Court Agreements 2005 (Hague Convention), which came into force as between the Member States and Mexico on 1 October 2015 ( for intra EU matters the Recast Regulation prevails). The Convention deals with exclusive jurisdiction clauses in favour of a Contracting State and for recognising and enforcing judgments within Contracting States in respect of contracts with such clauses.

In our next blog I shall address some of the shipping related Directives that will cease to have effect following repeal of the European Communities Act 1972.

UK Referendum Result. Implications for shipping law?

As a result of the vote to leave the EU, the UK will cease to be a member of the EU probably around November 2018 after the new prime minister has invoked article 50 and Parliament has repealed the European Communities Act 1972. How will this affect shipping law?

Substantively, not a great deal. English dry shipping is based on common law, and a few key statutes, such as COGSA 1992, and the implementation of international carriage conventions through domestic legislation – such as COGSA 1971 with the Hague-Visby Rules. Nothing European here, so no change.

With wet shipping, the CLC and the Fund are part of our national law through domestic law implementing international conventions. Similarly, the Wreck Removal Convention, the Salvage Convention, and the 1976 Limitation Convention. Again, nothing European here, so plus ca change.

However, procedurally, we are very much affected by European legislation – and this is something we shall return to in a later post. As a starting point, bear in mind the two sources of EU legislation.

Directives which are implemented by and Act of Parliament. On our leaving the EU it will be up to Parliament to decide whether to repeal or amend the implementing legislation.
Directives which are implemented as statutory instruments pursuant to s.2 of the European Communities Act 1972. These will cease to be a part of national law once the European Communities Act 1972 has been repealed. If we want to keep them we need to enact them as part of our domestic law.
Regulations which have direct effect. These will cease to be a part of national law once the European Communities Act 1972 has been repealed. If we want to keep Regulations we need to enact them as part of our domestic law.

Know your defendant when commencing arbitration.

In London Arbitration 13/16, reported in LMLN, the claimants commenced arbitration against X and Y under a Conline booking form containing a London arbitration clause. The form evidenced a contract between X, as merchants, and the claimant. The claimants alleged that during the voyage an accident occurred due to alleged misdescription of the cargo by X and Y at the port of loading. A claim under the booking note could clearly be made against X, but what about Y? They were described in the booking note as the merchant’s representative at the loading port and were also named as the shipper in the bill of lading that was eventually issued. Y objected to the jurisdiction of the tribunal as they were not a party to the booking note, an objection accepted by the tribunal who declared that it had no jurisdiction and ordered the claimants to bear Y’s costs and the costs of the award. Claims against Y might exist in tort or under the bill of lading, but Y was not a party to the booking note. The position was not changed by the contemplation of the claimants and X that the booking note was an interim contract which would be superseded by the bill of lading.

Containers a-weigh! 14 days to go.

On 1 July 2016 new amendments to the Safety of Life at Sea (“SOLAS”) convention that will apply to international shipments come into effect. For all containers to which the IMO’s convention for safe containers apply there must be a verified gross mass (‘VGM’) prior to loading of a container. The party named as shipper on the ocean bill of lading must provide the maritime ocean carrier and the terminal operator with the verified gross mass of a packed container. Until this has been received, the carrier and the terminal operator cannot load a packed container aboard a ship until the verified gross mass for that container has been received. Ship stowage plans should use VGMs for all packed containers loaded on board. Weight verification is not required for an empty container, and there is no requirement that the shipper’s declaration be verified by the ocean carrier or the container terminal.

The shipper may weigh, or arranged for a third party to weigh, the entire packed container, alternatively the shipper, or a third party, may weigh all packages and cargo items individually, including pallets, dunnage and other packing and securing material, and add the resulting mass to the tare mass of the container. The shipper must clearly specify the “verified gross mass,” through the shipping instructions or by a separate communication, such as a declaration, including a weight certificate. In the UK the Competent Authority for implementing these requirements is the Maritime and Coastguard Agency.

OK, YAR? BIMCO gives thumbs up to York Antwerp Rules 2016.

BIMCO has decided that all new and revised BIMCO charter parties, bills of lading and waybills will refer to general average being adjusted in accordance with the YAR 2016 adopted by the CMI earlier this month. The main features of the new rules are as follows.

The new rules revert to certain key provisions of the 1994 rules, as regards:

– salvage (art VI),

– inclusion of wages and maintenance of the master, officers and crew during the period a vessel is in a port or place of refuge undergoing repairs recoverable in general average (rule XI).

– removal of the cap, introduced in the YAR 2004, on the cost of temporary repairs of accidental damage at a port of refuge (rule XIV)

The new rules retain the time bar introduced in rule XXIII of the YAR 2004 and the abolition of the 2 per cent commission on owners’ disbursements under YAR 2004. However, rule XXI now provides for interest on general average expenditure, sacrifices and allowances to be calculated at an annual rate of LIBOR plus 4 percentage points.

Rule XVII now permits adjusters to exclude low value cargoes from contribution to general average where the cost of inclusion would be likely to be disproportionate to its contribution.

Loading illegal cargo by ‘Stealth’. Charterer’s libaility for the wrongs of sub-charterers.

In The CV Stealth [2016] EWHC 880 (Comm) time charterers sought permission to appeal against the award of an arbitrator who had found them liable to the shipowners in respect of the consequences of the vessel’s detention following an attempt by the sub charterer to load a cargo of oil from Venezuela without the necessary export permission. The finding was on the basis of an indemnity under cl. 13 of Shelltime 4 form, off hire under cl. 21, and for breach of cl.28 which provided … No voyage shall be undertaken, nor any goods or cargoes loaded, that would expose the vessel to capture or seizure by rulers or governments.” The appeal was on the basis that the arbitrator had committed an error of law in not construing cl.28 as having prospective effect at the time the relevant order was given by the charterer. Popplewell J found that the arbitrator had construed the clause prospectively and found that the risk of loading the unauthorised cargo had existed at the date the order was given. He also expressed the view that by analogy with the charterer’s obligation to nominate safe ports, if the risk arises whilst the vessel is en route, the owners would be entitled to refuse to continue to comply with the order, if they were aware of it. In the event of continued compliance, the charterers would be in breach of provided that the risk arose before it became impossible for the charterers to give fresh orders which could be complied with in time to avoid the risk.

Permission to appeal was refused because the statutory criterion in s. 69(3)(a) of the Arbitration Act 1996 was not fulfilled.

The case also raised a procedural issue as to the effect of cl. 41 of the charter which provided “The parties hereby agree that either party may –(a) appeal to the High Court on any question of law arising out of an award;” The clause was clearly drafted with the terms of section 69 of the 1996 Arbitration Act in mind. It scope was limited to a question of law whose determination by the Court may serve a useful purpose for the parties, on a question that will substantially affect the right of the parties.

More from the OWB bunker saga. Agency and conversion.

In The Cosco Felixstowe Shipowners ordered bunkers from D2, a bunker trader in Singapore who had contracted with OWBS to supply the bunkers. OWBS had in turn contracted with OWBC who had contracted with the plaintiff who physically supplied the bunkers to the vessel. Leave was granted pursuant to serve a writ out of the jurisdiction on D2 and OWBC under Order 11 rule 1(1)(f) of the Rules of the High Court that D2 had committed a tort (ie the tort of conversion) within the jurisdiction, and/or under rule 1(1)(d) on the basis that it was arguable that OWBC had entered the contract with P as agent for D2.

The Hong Kong Court of First Instance (Deputy High Court Judge Le Pichon) [2016] HKCFI 492 – 18 March 2016, has now denied D2’s application to set aside the grant of leave. It was arguable that there was a material difference between the terms of OWB’s contract in The Res Cogitans and P’s standard terms in the present case in that the latter provided no unambiguous authorisation to consume the bunkers for propulsion purposes prior to payment. The conversion would be constituted by OWBS’ contractual obligation to procure use of the bunkers before payment had been made. A clause in P’s contract that the buyer and the vessel owner would only use the bunkers for the operation of the vessel did not amount to consent by P to immediate consumption of the bunkers.

It was also arguable that there was an agency chain running from D2 to OWBC who contracted with the physical supplier, in which case there would be a contract with P made by an agent within the jurisdiction.

Greenhouse gas and shipping. Still no emissions targets for global shipping.

Shipping and aviation are both excluded from the 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change. The Protocol left it to the IMO to pursue measures to reduce greenhouse gas emissions from shipping. At its meeting on 21/22 April the IMO’s Marine Environment Protection Committee (MEPC) approved mandatory requirements for ships to record and report their fuel consumption. However, a proposal by the Marshall Islands to set emissions targets for global shipping by 2017, with implementation in 2018, has been deferred until the next MEPC meeting in October 2016.

Vessel in drydock might still be ‘in navigation’ under Jones Act.

In Gold v. Helix Energy Solutions Group, Inc., No. 14-15-00123-CV, (Tex. App. Dec. 15, 2015) the Texas Court of Appeals has held that a drill ship that had been in dry dock for conversion for 20 months might still be regarded as being ‘in navigation’ and so within the Jones Act. The case arose out of an injury to a seaman on board the vessel while in drydock in Singapore. The Court of Appeals reversed the grant of summary judgment sought by the shipowners.

Trip charterers tell shipowners what they can do with their ship.

In The Wehr Trave [2016] EWHC 583 (Comm) Sir Bernard Eder, sitting as a Judge of the High Court, has held that a trip charterer can legitimately order a further voyage after the conclusion of the primary voyage when that voyage is within the charter trading limits and will be completed within the specified duration of the charter.

Owners submitted that the charter was for a “trip”, ie a journey or voyage from one place or range of places to another. The charterers said that they were free to employ the vessel as they saw fit during the charter period, subject to any restrictions in the charter on the vessel’s employment. Sir Bernard Eder rejected this argument and concluded that under a time charter, including a trip time charter, the vessel would generally be under the directions and orders of the charterer as regards her employment for the charter period.