A number of passengers sued RINA in its home state, Italy, for negligently certifying the vessel fit to sail, relying on what is now Art.4 of Brussels I Recast (the case actually concerned the previous 2001 jurisdiction regulation). RINA however had a trick up its sleeve. It pleaded sovereign immunity, on the basis that although it had been chosen and paid by the owners of the vessel, it had been acting on behalf of the Panamanian government. For that reason it argued that the Italian court had no jurisdiction over it in this respect, and that the Brussels Regulation was beside the point since this was not a civil or commercial matter. The Tribunale di Genova, faced with interesting issues of EU and public international law, understandably made a reference to the CJEU on the matter; was the claim covered by the Regulation?
The court, following the Advocate-General, had no doubt that RINA’s plea was misconceived. Even if the society had been acting for the Panamanian authorities in certifying the vessel so that those authorities in turn could, as the organs of the state of registration, give her the necessary clean bill of health, this was a matter governed by private law principles. According to the generally accepted rules of public international law, there was no way this could be construed as an act iure imperii; it was therefore covered by the Regulation.
It follows that in so far as it is sought to make a classification society liable for damage, loss or injury (a matter on which European and other legal systems differ considerably, and which we have no intention of going into here), lawyers can at least sleep easy on this point: as regards jurisdiction, it is simply a matter of looking up the relevant provisions of Brussels I Recast. It is a fair inference that the same also goes for other certification bodies (something likely to be relevant for international product liability cases) and probably state licensing bodies such as the CAA in so far as they are sued under private law provisions.
So much for the easy bit. Now for the harder one. Does this mean that state immunity law has now been quietly Europeanised as a matter of principle? This issue is not dealt with as such, and was explicitly left open by the Advocate-General in Para  of his opinion. The original Jurisdiction Regulation said nothing about it either; and although the Recast version adds a further few words to Art.1.1 saying explicitly that it does not apply to acts done iure imperii, this takes us little further.
The answer seems to be that we do have de facto Europeanisation, but only partly. RINA, read closely, says merely that in so far as Brussels I applies to an EU-based defendant, it is not open to a member state to apply a more generous home-grown version of state immunity and decline jurisdiction. It does not state the converse; namely, that if EU law regards a matter as covered by state immunity then an EU domestic court must not take jurisdiction at all. Why the case ended up in the CJEU in the first place is apparent only from a careful look at the facts: Italy indeed does as a matter of domestic law apply a very generous doctrine of state immunity, and it was this that the claimant sought, successfully, to sideline.
So for the moment – and, assuming Lugano or something similar to Brussels I applies after the transition period – English lawyers can breathe easy on this point too. There’s life yet in their well-thumbed copies of the State Immunity Act 1978.
The Irish Court of Appeal has recently decided in The Almirante Storni  IECA 58 that a claim against the demise charterer by a ship’s agent in respect of disbursements made to the vessel on the orders of the time charterer does not constitute a “maritime claim” within the meaning of article 1 of the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships done at Brussels on 10 May 1952 (The Arrest Convention). Insofar as the claim involved “disbursements” they were not disbursements made by the master but by the ship’s agents.
Article 1(n) of the Arrest Convention did not entitle an agent to maintain a claim against the owner of the vessel for disbursements made by such agent “on behalf of a ship”, in the absence of any personal liability on the part of the owner. The argument that the time charterer ordered services from the plaintiff as agent of the owners was not tenable. There was no evidence of any actual or ostensible authority to support a finding of agency.
Whilst the adoption of the 1976 Limitation Convention has brought much clarity to the implementation of limitation rights, it is not a complete code and there are a number of important issues that are not regulated by the Convention and which are left to be determined by the lex loci of the place where the fund is constituted. Article 14: Governing Law, of the Convention specifies that:
“Subject to the provisions of this Chapter the rules relating to the constitution and the distribution of a limitation fund, and all rules of procedure in connection therewith, shall be governed by the law of the State Party in which the fund is constituted”.
In the recent case of As Fortuna Opco BV and another v Sea Consortium Pte Ltd and Others the Singapore High Court has given helpful guidance in relation to two such issues.
Limitation fund interest
Article 11 of the Convention specifies that a limitation fund should include interest “from the date of the occurrence giving rise to liability until the date of the constitution of the fund” but makes no provision for subsequent interest. This is, presumably, since the fund has traditionally been established by way of deposit and it was assumed that the fund would continue to earn its own interest thereafter in accordance with the law of the country of deposit. However, this assumption has been undermined by the fact that the courts of (at least some) countries are now prepared to allow a limitation fund to be established by the provision of security in the form of a guarantee or P & I letter of undertaking (LOU) if satisfied of the sufficiency of that security. In such circumstances, a fund constituted by a LOU would not automatically earn interest during the period of its currency.
In the As Fortuna Opco case the parties agreed that:
the LOU should include interest from the date of the incident to the date of the constitution of the fund at the same rate as that which would have applied if the fund had been constituted by payment into court; and that
provision ought to be made for post-constitution interest where a limitation fund is constituted by way of a guarantee or LOU.
The Convention itself does not specify what rate of interest should apply to the constitution of the fund. Accordingly, the rate is to be determined pursuant to Article 14 in accordance with the law of the place where the fund is constituted. In the case of the UK the relevant rate is that specified by the Secretary of State in the Merchant Shipping (Liability of Shipowners and Others (New Rate of Interest) Order 2004. i.e. one per cent more than the base rate quoted from time to time by the Bank of England. Since there was no equivalent legislation in force in Singapore, the Singapore court held that the pre-constitution interest rate should be that which corresponded to the statutory interest rate on judgement debts in Singapore, namely 5.33%.
However, the parties disagreed regarding the rate of post-constitution interest. The ship owners argued that the rate should approximate that which would actually be earned by a payment into court, which they considered to be 2%. However, the cargo interests argued that a fair interest rate should be that which applied to the pre-constitution period (i.e. 5.33%) since by not making a payment into court, the ship owners would gain an advantage by their ability to benefit from the higher interest rate that the money could probably earn on deposit in the open market.
In determining this issue the court was guided by the fact that article 11.2 of the Convention provides that the guarantee or LOU should be “acceptable under the legislation of the State Party where the fund is constituted and considered to be adequate by the Court or other competent authority” . In considering what is “acceptable” and/or “adequate” the judge held that:
“…it should place the claimants in a position no worse than if the limitation fund had been constituted by payment into court. I therefore considered that an LOU ought to make provision for post-constitution interest at a rate which approximates the interest which could be earned on a limitation fund paid into court during the period that the fund remains in court.”
The court also opined that since the ship owners were entitled under the Convention to establish a limitation fund by the provision of a guarantee or LOU rather than by a payment into court, the court’s role was to ensure that the claimants against the fund should not be in a worse position in such circumstances. However, provided they were not put in a worse position, there was no reason why the court should restrict any benefit that the ship owners might incur as a result of proceeding in this manner. Consequently, having made enquiry as to the rate of interest earned previously on moneys paid into court pursuant to other types of proceedings, held that the appropriate post- constitution interest rate should be 2.5%.
Limitation proceedings Costs
The fundamental principles relating to the allocation of costs in a limitation action brought under the 1976 Convention were described by Clarke J in the “Captain San Luis” At pages 578-9 of the judgement the judge emphasised the difference that has been brought by Article 4 of the 1076 Convention as follows:
“There is a radical difference between the case where the shipowner must prove that the damage occurred without his actual fault or privity before he is entitled to a decree and the case where the shipowner is entitled to a decree unless the claimant proves either that he intended to causethe loss or that he acted recklessly and with knowledge that damage would probably result.”
He then went on to conclude:
“a fair balance is struck between the parties if it is held that the shipowner must pay the costs of proving those matters which he must prove in order to obtain a decree and that the claimant must pay the costs of investigating and determining the facts which the Convention provides that he must prove if, at the end of the day, he fails to establish those facts.
However, the Captain San Luis was a case in which the shipowner’s right to limit was contested and in the As Fortuna Opco case the Singapore High Court considered allocation of costs in a case in which the right to limit was uncontested. Having distinguished the Captain San Luis on this ground he court made the following detailed order:
36 “In the light of the foregoing discussion, the following principles should apply to costs of uncontested limitation decrees:
(a) The shipowner should pay the claimants’ costs in relation to those matters for which the burden of proof lies on the shipowner. These would include establishing the shipowner’s prima facie right to limit liability pursuant to Arts 1, 2 and 3 of the 1976 Convention and determining the limitation amount pursuant to Arts 6 and 7 of the 1976 Convention. Where an LOU is used to constitute the limitation fund, it will also include establishing the LOU’s adequacy and acceptability.
(b) In respect of matters for which the burden of proof lies on the claimant (eg, facts required to break limitation pursuant to Art 4 of the 1976 Convention), while the claimant is entitled to seek and be given such information as to enable it to decide whether or not to dispute the shipowner’s right to limit its liability, each party should bear its own costs in this regard.
(c) Where an application for discovery is made pursuant to O 70 r 37(6), the costs of such discovery application should follow the event.
(d) The foregoing principles are subject always to costs being in the discretion of the court.
37 For the foregoing reasons, I ordered the Plaintiffs to pay the Defendants’ costs in relation to:(a) the establishment of the Plaintiffs’ prima facie right to limit liability pursuant to Arts 1, 2and 3 of the 1976 Convention;(b) the calculation of the size of the limitation fund; and(c) the consideration of the adequacy and acceptability of the draft LOU”
Such clarification is sensible and welcomed albeit that there may still inevitably be cases in which the demarcation line between the various heads of costs will be blurred.
The cost of providing the fund
A more complex problem which was not considered in the As Fortuna Opco case arises in relation to the cost of establishing a limitation fund particularly where that fund has to be established in the form of a cash deposit or guarantee.
Article 11 of the Convention provides that:
“Any person alleged to be liable may constitute a fund”
“A fund constituted by one of the persons (that are entitled to limit pursuant to Article 1) or his insurer shall be deemed constituted by all (such) persons…
In most cases the fund will be established by the shipowner since that is the “person” that is most vulnerable to arrest. However, once established, the fund will be available to protect the interest of any of the other “persons” that are entitled to limit pursuant to Article 1. For example, cargo claims may be brought against both ship owners and charterers and charterers may wish to limit their liability by relying on a limitation fund that has been constituted by the ship owners.
David Steel J, observed at first instance in the “CMA Djakarta” that whilst the Convention provides expressly that the limitation fund would protect the “common exposure” of the various parties that were defined under the rubric of “shipowner”:
“no provision is made for allocation of the cost of putting up the fund among the members of the class.”
and again at para 60:
“Not only are questions of responsibility for supplying funds outside the convention…”
Therefore, how is the cost of providing and subsequently administering the fund to be allocated if it is proved in due course that parties other than the “person” that has constituted the fund seek to take advantage of the fund either wholly or partly in order to limit their liability? Since the Convention does not regulate this issue it is presumably to be determined pursuant to article 10 in accordance with the law of the forum, and the answer to the problem may, therefore, differ depending on what that law provides.
If the issue were to be determined in accordance with the law of England and Wales it may be that the most fruitful avenue to follow is the law relating to unjust enrichment. In a nutshell, there is unjust enrichment when one person acquires a benefit at the expense of another in circumstances which are unjust and is required to make restitution to the person that has provided the benefit.
In the case of Benedetti v Sawiristhe Supreme Court held that four factors must usually be established in order to establish a case of unjust enrichment, namely:
the defendant has been enriched; and
this enrichment is at the claimant’s expense; and
this enrichment at the claimant’s expense is unjust; and
there is no applicable bar or defence.
The provision of a limitation Fund that is intended to protect the interests of “persons” other than those of the ship owners is likely to satisfy requirements 1 and 2. However, requirements 3 and 4 may be more difficult to justify. On the one hand, it was held in Owen v Tateand McDonald v Coys of Kensington (Sales) Ltd that the person that has benefitted need not have specifically requested the benefit and it is sufficient that he has freely accepted the benefit.
However, it may be argued that by electing to establish a limitation fund, the ship owners do so fully appreciating and accepting that such a fund will automatically benefit not only them but also all the other “persons” identified in articles 9 and 11.3 of the Convention and that, consequently, although there is enrichment of such “persons”, there is no ”unjust” enrichment. Or, to make the same point differently, it cannot be said that the enrichment is “unjustified” if it is simply a voluntary bestowal of a benefit.
Nevertheless, it is noteworthy in this regard that Scarman LJ said the following in Owen v Tate:
“The fundamental question is whether in the circumstances it was reasonably necessary in the interests of the volunteer or the person for whom the payment was made, or both, that the payment should be made – whether in the circumstances it was “just and reasonable” that a right of reimbursement should arise.”
The underlined words would seem to suggest that there is a case for unjust enrichment even if the relevant voluntary act benefits the volunteer as well as the receiver of the benefit.
The concept that since there is a “common exposure” and a “common interest” of all “persons” that are entitled to limit, such “persons” should share the cost of providing the fund was emphasised by David Steel J at first instance in the “CMA Djakarta”:
“These provisions are only consistent with all those identified as within the class of shipowner having a common potential exposure to the relevant claims and a common interest in funding the limit of liability,…”
Furthermore, given the references to, the “just result” and the “fair balance” for allocating costs that was adopted in the “Captain San Luis”, it would appear that a creditable argument could be raised to satisfy criteria numbers 3 and 4.
 The Court of Appeal of |England and Wales recognised the sufficiency of a limitation fund established by a P and I letter of undertaking in the case of the “Atlantic Confidence”
 For a more detailed commentary see Chapter 10 entitled “Limitation of Liability: Recent important developments in the United Kingdom other common law jurisdictions” of Maritime Liabilities in a Global and Regional Context, Informa 2019
On April 28, 2020, the global trade union movement urged governments and occupational health and safety bodies around the world to recognise SARS-CoV-2 as an occupational hazard, and COVID-19 as an occupational disease.
In practice, this means that the employer’s duty to take reasonable measures to protect the health and safety of their employees will cover COVID-19 related risks. Furthermore, it means that employees will be able to benefit from compensation schemes provided for those injured, or the dependants of the deceased, whenever there has been injury or death due to work-related accidents or occupational diseases.
Recognising COVID-19 as an occupational disease will be crucial to ‘key workers’, such as seafarers. For that it will ensure that adequate preventive measures are adopted and, if they contract COVID-19 at work, that existing compensation and liability regimes remain applicable.
Trafigura time-chartered the Miracle Hope, a big (320,000 dwt) VLCC, from Ocean Light. They voyage-chartered her to Clearlake and Clearlake sub-voyage-chartered to Petrobras, both charters being back-to-back under Shellvoy 6. Petrobras demanded that the cargo be delivered without production of the bill of lading; the demand was passed up the chain and the cargo (worth, before the recent oil debacle, something over $70 million) released.
Thereupon Natixis, a Dutch bank which had financed Petrobras’s buyers, emerged brandishing a bill of lading apparently issued by Ocean Light, demanded the value of the cargo, and arrested the ship in Singapore. Ocean Light immediately demanded an indemnity from Trafigura: Trafigura, relying on a duty in the charterer in such cases to “provide an LOI as per Owners’ P&I Club wording”, demanded an LOI from Clearlake and Clearlake did the same from Petrobras. Following clear practice (e.g. The Laemthong Glory  EWHC 2738 (Comm);  1 Lloyd’s Rep. 632), Henshaw J granted mandatory orders down the line requiring the charterers to provide such bail or other security required to secure the release of the vessel.
Unfortunately at this point problems arose. Clearlake and Petrobras negotiated with Natixis; the result was deadlock. Furthermore, owing to the worldwide contagion the Singapore courts could not break the deadlock for some weeks. And, of course, all the time the Miracle Hope was mewed up in Singapore: something which, with tanker hire rates now sky-high, would not do.
In other words, Henshaw J’s order was unworkable. As a result the matter came back to the Commercial Court. To order the provision of a guarantee satisfactory to Natixis would be unsatisfactory: furthermore, since the matter was likely eventually to reach the Singapore courts, it risked prejudging the issue in that forum.
The solution reached was workmanlike. The court had to do something. Security to obtain the release of a vessel could take the form of a payment into court; and, faute de mieux, Teare J ordered just that. Clearlake and Petrobras were ordered to arrange for payment into the Singapore court of $76 million within 8 days, no doubt with Petrobras bound to indemnify Clearlake, who in the circumstances were little more than piggy-in-the-middle. If this was necessary to secure the release of the vessel, this would be what was ordered.
And rightly so, in our view. As the title of this blogpost implies, an obligation to secure the release of a vessel has to be given effect. As with Coronavirus, so with the release of a ship: it is a case of doing all that it takes. Even if that takes a slightly unorthodox form.
Ever since January 2020, it became evident that COVID-19 will place significant hurdles on cruise ship operators. The quarantine of approximately 2,500 passengers on board Diamond Princess off the coast of Japan that led to 700 confirmed cases of coronavirus was the first hard knock on the cruise industry. However, this was not enough to urge cruise ship operators to temporarily suspend their activities to minimise new transmissions on cruise vessels, or at the very least, to implement policies to prevent similar outbreaks.
Cruise ship operators continued their business as usual for more than a month. It was only mid-March, when some of the major cruise ship operators announced the voluntary suspension of scheduled cruises amid the severity of the public health crisis. Arguably, this delayed response on the part of cruise ship operators led to more passengers being exposed to COVID-19 with several passengers testing positive on cruise vessels around the world.
It now comes as no surprise that several claims have been brought against cruise ship operators over their response to COVID-19 outbreak. In early April, former passengers of the cruise ship Grand Princess filed lawsuits against the ship’s operators in federal courts of the US, claiming negligence on the part of the company in failing to ensure the health and safety of its passengers. The claims ask for compensatory and punitive damages for lost earnings, medical expenses and mental distress.
The Grand Princess departed on February 21 for a cruise from San Francisco to Hawaii. Before sailing to Hawaii, the ship made a 10-day round-trip to Mexico, and 62 passengers and more than 1,000 crewmembers continued on the voyage to Hawaii. On February 25, a man, who had been on the Mexico trip, died of the coronavirus. At this point, some members of the ship’s crew had already shown COVID-19 related symptoms. The Grand Princess turned back to the US mainland and skipped a planned stop in Mexico. On 5 March, passengers were quarantined in their cabins. However, COVID-19 had already been spreading on the ship, and 103 would ultimately test positive, with two passengers and one crew member now dead. On 9 March, passengers were moved into quarantine ashore.
The claims allege that the cruise ship operators were negligent in failing to inform Hawaii passengers that several passengers on the Mexico trip had shown COVID-19 related symptoms, failing to disinfect the ship thoroughly after the Mexico trip, and failing to screen passengers and crew before departing for Hawaii. In this respect, the claims mention that on the Grand Princess, the ship’s crew only asked passengers boarding the ship to ‘fill out a piece of paper confirming they were not sick’. The claims further allege that the cruise ship operators were negligent during the cruise in failing to inform passengers about the former passenger’s death and failing to quarantine passengers in their cabins on February 25.
Like in all personal injury claims, the liability of cruise ship operators for a passenger’s illness, injury or death will turn upon two legal questions. The first is whether the company was in any way negligent. In this respect, the claimants will have to prove that the ship operators did not exercise reasonable skill and care to ensure the health and safety of their passengers. On the facts, this may be possible, especially if it is proven that the company knew that several passengers on the Mexico trip had contracted COVID-19 and failed to disinfect the ship or at least to warn passengers boarding the ship in San Francisco.
The second is whether the company’s negligence caused the passenger’s illness. That is more problematic because it is hard to trace the exact moment when a person is infected with COVID-19. According to the official guidance of the WHO, the incubation period of COVID-19 (i.e. the time between catching the virus and beginning to have symptoms of the disease) ranges from 1 to 14 days, most commonly around 5 days. It is, thus, possible that some passengers had already been infected with COVID-19 when boarding the Grand Princess on February 21. Nevertheless, an argument may revolve around the fact that the company allowed 1,000 potentially infected people to share confined space with approximately 2,000 potentially uninfected passengers.
Assuming that both these questions will be answered in favour of the claimants, then a further question will arise as to whether the passengers of Grand Princess were in any way negligent in contracting COVID-19. If so, the company will be able to benefit from the defence of contributory negligence.
It is, thus, interesting now to see whether these claims will actually reach the courts or whether they will be settled in private.
In response to the IMO recommendations for governments and relevant national authorities on the facilitation of crew changes and repatriations during the COVID-19 pandemic, the European Commission has now taken steps to facilitate and coordinate the efforts of Member States to enable crew changes in their ports.
On guidelines published 8 April 2020, the European Commission urges Member States to designate ports for fast-track crew changes. The ports should be geographically dispersed so as to cover the Union and should be connected to operational airports and rail stations.
Given that transport connections are now heavily affected, the European Commission further urges Member States to envisage the possibility of dedicated flights and rail operations to ensure the transport connections for crew changes, allowing for swift travel and repatriations of seafarers.
Regarding the characteristics of these designated ports, the European Commission highlights that they should have nearby accommodation where seafarers could wait for arrival of the ship they should board or for their flight, train or ship if it does not leave on the same day. This accommodation should have adequate facilities to allow seafarers to undergo 14 days of quarantine before embarking and after disembarking if the Member State at hand requires this to protect public health. Finally, the ports should have accessible and adequate medical services available to seafarers when they embark, disembark and during their quarantine periods.
The European Commission clarifies here that seafarers who are nationals of third countries should also have access to adequate medical care and accommodation until their repatriation becomes possible. However, Member States may be entitled to request compensation from the shipowner. In this respect, the provisions of the Maritime Labour Convention, 2006, apply to ensure that accommodation and medical care should, in principle, be provided at no cost to seafarers.
The European Commission has also commented on the practice of extending the usual 11 months duration of a SEA stating that this should be the last resort, if repatriation is not possible. This is essential to ensure that fatigue does not detrimentally affect the mental health of seafarers and maritime safety.
As a final note, the European Commission stresses the need for the practice of designating ports where crew changes can take place safely during the COVID-19 pandemic to be shared with third countries to be implemented worldwide.
The COVID-19 pandemic is a global public health crisis, which places unprecedented restraints to the movement of seafarers for the purposes of crew changes and repatriations. In a circular letter issued on the 27th of March 2020, the IMO has distributed a preliminary list of recommendations for governments and relevant national authorities on the facilitation of crew changes and repatriations during the COVID-19 pandemic. Amongst other things, the IMO specifically urges governments to:
designate seafarers, regardless of nationality, as ‘key workers’ providing an essential service;
grant seafarers with any necessary and appropriate exemptions from national travel or movement restrictions in order to facilitate their joining or leaving ships;
accept, inter alia, official seafarers’ identity documents, discharge books, STCW certificates, seafarer employment agreements and letters of appointment from the maritime employer, as evidence of being a seafarer, where necessary, for the purposes of crew changes;
permit seafarers to disembark ships in port and transit through their territory (i.e. to an airport) for the purposes of crew changes and repatriation;
implement appropriate approval and screening protocols for seafarers seeking to disembark ships for the purposes of crew changes and repatriation; and
provide information to ships and crews on basic protective measures against COVID-19 based on World Health Organisation advice.
While these preliminary recommendations point towards the right direction, still there is a lot that needs to be considered. As recognised ‘key workers’, seafarers will be able to travel to and from a vessel, provided they carry at all times their professional documentation. However, seafarers, who sign off their ships at foreign ports, might not be able to be repatriated, despite their ‘key workers’ status. That is because many countries have now closed their international borders, and so commercial flights have been cancelled until further notice. In these circumstances, it will be up to the seafarers’ country of residency to take appropriate measures for their repatriation.
Furthermore, many countries have now adopted mandatory measures requiring people to self-isolate before they enter their territory depending on whether they had recently visited an affected country. Seafarers will have to adhere to these mandatory measures, irrespective of their ‘key workers’ status. That raises the question as to who should bear the cost for any expenses incurred by seafarers during self-isolation. According to regulation 2.5 of the MLC, 2006, shipowners should cover the costs of repatriation (i.e. travel expenses, food, clothing, accommodation, medical treatment etc) until seafarers are landed at the place of return (i.e. the agreed place under the SEA, the place at which seafarers entered into the SEA or the seafarers’ country of residency). Thus, seafarers who have to self-isolate awaiting repatriation at a foreign country should not bear any costs. It is, however, likely that seafarers who have to self-isolate at the place of return will have to bear the cost for any additional expenses.
Given these complexities, many shipowners now prefer to extend the SEAs instead of signing-off and repatriating crewmembers. However, this cannot be done without the consent of seafarers, unless, of course, the SEAs include a clause to that effect. In any case, any decisions as to the extension of the SEAs should not be taken lightly and should not prejudice the seafarers’ mental health and wellbeing.
The sequel to the Atlantik Confidence debacle hit the Supreme Court this week. That court determined that UK courts won’t be doing any more deciding on the affair.
To recap, the Atlantik Confidence, a medium bulk carrier, was scuttled by her owners just over seven years ago in an insurance scam. Her hull underwriters, who had paid out some $22 million in all innocence to Credit Europe, the bank assignee of the policy, understandably asked for their money back. Unfortunately the bank was Dutch, and stood on its right to be sued in the Netherlands under Art.4 of Brussels I Recast, and also under Art.14, which says that insurers can only sue a policyholder or beneficiary in his own jurisdiction. Teare J held (as we noted here) that in so far as the underwriters could prove misrepresentation by the bank (which they had a chance of doing) they could sue in tort in England, since the effects of the misrepresentation had been felt here. Art.14 was no bar, since although this was a matter relating to insurance that provision was predicated on the person sued by the insurer being a weaker party (see Recital 18 to the Regulation), and no sensible person could think Credit Europe needed to be protected from the foul machinations of overbearing insurers. The Court of Appeal agreed (see Aspen Underwriting Ltd & Ors v Credit Europe Bank NV  EWCA Civ 2590), citing the Advogate-general’s view in Kabeg v Mutuelles Du Mans Assurances (Case C-340/16)  I.L. Pr. 31 that Art.14 could be disapplied to a subrogee “regularly involved in the commercial or otherwise professional settlement of insurance-related claims who voluntarily assumed the realisation of the claim as party of its commercial or otherwise professional activity”.
The Supreme Court was having none of it: see Aspen Underwriting Ltd & Ors v Credit Europe Bank NV  UKSC 11. It was brief and to the point. This was a matter related to insurance; there was no agreement binding on the bank to submit to English jurisdiction; and Art.14, as so often in the case of Euro-law, should be interpreted as seeking bureaucratic certainty rather than nuanced determination. Any reference to relative weakness was merely background, there to explain why the EU has a bright line rule that insurers can’t ever be allowed to sue except in the defendant’s domicile.
Where from here? On present indications our final Brexit disentanglement from the EU will be no escape, since the present intention is for the UK to jump sideways from Brussels I to Lugano, which also has identical provisions about insurers (for Art.14 read Art.12).
But remember that in the case of marine insurance Art.14 can be ousted; and the sting of this decision might well be able to be drawn by some nifty drafting. Obviously every policy must have a provision under which the policyholder submits expressly to the jurisdiction of the English courts. There needs to be added to this a provision that no assignee can enforce payment except against the giving of an express undertaking to submit to English jurisdiction in the event of any dispute; and a cast-iron practice of never making payment to any assignee except against receipt of such an undertaking by the underwriter.
Of course we don’t know what the ECJ would say about this (though it’s difficult to see how it could object). But that may not matter. By the time the issue comes to be tested, we are likely to be outside the clutches of that court anyway.
After twenty bids had been received by the Admiralty Marshal during the sale process, Qatar National Bank QPSC applied to the Court for an order to set aside the order for the sale. While the Admiralty Court declined to grant such order, it suspended the sale to enable a proper hearing to take place on notice to the interested parties.
On 20 March 2020, the hearing took place by telephone as a result of the COVID19 pandemic, making Qatar National Bank QPSC v Owners of the Yacht Force India  EWHC 719 (Admlty) the first case to be heard by the Admiralty Court remotely.
The Court decided to set aside the order for sale in the present case. That is because an independent third party paid the sums secured by the mortgage. As a result, the judicial sale of the yacht Force India was rendered unnecessary.
It may be worth noting here that the case at hand is exceptional in that the mortgage had been granted as additional security for a €27 million loan to finance the acquisition of a company which owned a property on an island off the coast of France. Thus, when the loan secured by the charge on the property was paid to Qatar National Bank QPSC, the smaller sum secured by the mortgage on the yacht was also discharged.
Indeed, the Admiralty Court emphasised the need for orders setting aside judicial sales of vessels to remain the exception rather than the norm, with a view to protecting its reputation and its ability in future cases to achieve a vessel’s market value when an order for sale is made.