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We are delighted that the book that emerged from our 2022 Colloquium “Damages, Recoveries and Remedies in Shipping Law! is now out (November 2023)! Edited by Professors Soyer and Tettenborn the book is published by Informa Law (you can get 20 % discount with the code attached).

Contents:
Part 1

Damages

Chapter 1
Limitations to and Deductions from Contractual Damages
By Jonathan Webb, Florian Schacker, George Lawrence

Chapter 2
The Reflective Loss Doctrine and Shipping Law Can We Write It Off Yet?
Andrew Tettenborn

Chapter 3
Mitigation – Is It Relevant When Assessing Damages for Breach of Charterparty?
Simon Croall KC

Chapter 4
Prospects of Recovering Damages for Delay in Shipping Cases
Andrew Preston

Chapter 5
Limits on a Shipowner’s Right to Refuse Early Redelivery of a Time-Chartered Vessel
Ceren Cerit Dindar

Chapter 6
Ship Seller’s Potential Duty of Care in Respect of Buyer’s Dismantling of Vessel
Grace Asemota

Chapter 7
Judgments in Bitcoin?
Josephine Davies

Part II
Emerging Liability Regimes and Damages

Chapter 8
Remedies for Smart Legal Contracts- Rectification and Rescission Reconsidered
Adam Sanitt

Chapter 9
The Internet of Things in the Commercial Insurance Context – A Case for Regulation, or for Commercial Shrewdness and Judicial Creativity?
Barış Soyer

Chapter 10
Digital Banking and Liability Issues
Andrea M.

Chapter 11
Control Centres in the Context of Unmanned Ship Operations – Their Status and Potential Liabilities*
Prof Bülent Sȍzer

Chapter 12
Shipping Operators’ Obligations and Liabilities Under the International and EU Emission Reduction Strategy
Lia Athanassiou

Chapter 13
Damages for Late Payment of Insurance Claims
Peter MacDonald Eggers

Part III
Other Remedies and Third Parties

Chapter 14
Specific Remedies in Shipping – Specific Performance, Specific Enforcement and the Interaction of “Negotiating Damages”
Chris Kidd, Ben Moon, Waled Salih, Jack Maxted

Chapter 15
The Rebirth of the European “Anti-Suit Injunction” Issue Post-Brexit
Dr Aygun Mammadzada

Chapter 16
Punitive Damages in Maritime Cases – A View From Across the Pond
Michael Sturley

Chapter 17
Limitation of Liability – New Trends
Frank Stevens

Chapter 18
Am I My Brother’s Keeper? Liability in Tort for the Acts of Third Parties
Simon Baughen

Chapter 19
Third Party Loss in Carriage of Goods by Sea
Melis Özdel

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. 

The Institute of International Shipping and Trade Law is organizing a one-and-a-half-day in-person workshop on the important and topical theme of ‘The Protection of Vulnerable People at Sea’ (17-18 May, Swansea University).

Confirmed panellists are:

The full programme of the workshop can be found here.

The workshop is open to all and there is no fee to attend. Participation can be registered via the following link: https://www.eventbrite.co.uk/e/the-protection-of-vulnerable-people-at-sea-tickets-558622122807.

Draft agreement under the United Nations Convention on the Law of the Sea on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction

The text of the Agreement, which takes the form of a new Implementing Agreement under the United Nations Convention on the Law of the Sea (UNCLOS) to protect and sustainably use the resources of these areas, was agreed on 4 March 2023. The Agreement establishes marine protected areas in the high seas which will help achieve the global goal of protecting 30% of the world’s oceans – set out in the UN’s Global Biodiversity Framework agreed in December 2022 in Montreal at the Convention on Biological Diversity  when countries pledged to protect 30% of ocean, land and coastal areas by 2030. These areas will put limits on how much fishing can take place, the routes of shipping lanes and exploration activities like deep sea mining – when minerals are taken from a sea bed 200m or more below the surface. the treaty will also require assessing the impact of economic activities on high seas biodiversity. Developing countries will be supported in their participationin and implementation of the new treaty by a strong capacity-building and marine technology transfer component, funded from a variety of public and private sources and by an equitable mechanism for sharing the potential benefits of marine genetic resources.

State parties are to apply the Agreement’s new environmental safeguards to activities “within their jurisdiction or control” and will need to ensure that high seas activities falling within their jurisdiction or control comply with the new requirements of (inter alia) environmental impact assessments, area-based management tools and marine protected areas under the Agreement. The Agreement does not define the concept of jurisdiction or control.

The Agreement will enter into force once 60 States have ratified. 

In The Achilleas, [2008] UKHL 48, the House of Lords set out a bespoke rule as to what damages could be recovered by a shipowner in respect of the time charterer’s breach in redelivering the vessel late – market value at the time of breach less time charter hire rate for the period from when the vessel should have been redelivered, up to the time of actual redelivery. However, clauses may be inserted in time charters to allow for recovery of additional damages in the event of such a breach. London Arbitration 1/23 involves just such a clause.

The case involved a head time charter and a sub time charter on similar terms with redelivery to be on or before 1 July 2021 in both cases.  Charterers were to give various etas as to the vessel’s redelivery date and port, and clause 119 provided that if an order for a voyage ending after the maximum period were given the owner should have the option

“(i) to refuse the order and require a substitute order allowing timely redelivery of the vessel,ꞏ or

(ii) to perform the order without prejudice to their right to claim damages, including consequential damages, for breach of charter in case of late redelivery of the vessel.

In any event, for the number of days by which the maximum period stipulated in this charter party is exceeded, the Charterers shall pay the prevailing market rate if this is higher than the hire rate agreed in this charter party.”

At the time of fixing the time charterers were aware of the importance of the redelivery date to the owners who were planning to drydock the vessel shortly afterwards as the vessel as due for her special class survey on 6 July, although the parties would also have known that there was some flexibility on dates because the owners would have been able to obtain a short extension of the validity of the class certificates.. Owners intended to obtain a short fixture to get the vessel near to the drydocking port to come into effect after the end of the two time charters on 1 July 2021.

Delays occurred at the discharge port and the follow on fixture owners negotiated on 25 June 2021 was cancelled on 6 July.  Discharge eventually completed on 14 July 2021 and the vessel then sailed to the drydocking shipyard arriving there on 22 July 2021. The owners claimed that the charterers were in breach of charter on the following grounds:

(a) the vessel was redelivered late;

(b) the charterers failed to comply with their undertakings in clause 119;

(c) the charterers breached an implied term that any notices of expected redelivery (i) would be given honestly and in good faith, and (ii) would be based on objectively reasonable grounds following proper inquiries made by the charterers.

Time admitted a breach in redelivering late, that their last orders were illegitimate, and their estimates in the voyage orders had not been reasonable estimates. The charterers admitted that the owners were entitled to damages for late redelivery calculated on the basis of the difference between the market and the charter rate of hire for the 12.508 day overrun period between when the vessel should have been delivered (midnight on 1 July) and when she was actually delivered (12.12 GMT on 14 July).

Owners, however, also claimed hire and bunkers that would have been earned under the cancelled repositioning fixture, for the period for the actual ballast voyage from the time charter discharge port to a place 10 hours from the drydock, being a mid-point between the two redelivery ports under the repositioning fixture.

The tribunal accepted owners’ additional claim. The clause was not limited to breach by way of illegitimate last orders but covered all three breaches claimed by owners. The additional claim fell within the term ‘consequential damages’ in cl.119 which was not limited to damages within the second limb of Hadley v Baxendale (1854) 9 Exch 341 and would include losses on a follow-on fixture. However, this’ construction would not allow recovery of actual losses in excess of market rates. The standard approach to damages for breach of charter applied.

If this construction of cl. 119 were wrong, and ‘consequential losses’ was, as charterers argued, limited to the second limb of Hadley v Baxendale, owners’ claim would still be recoverable on that basis.  

Owners’ alternative claim based on the alleged breach of the obligation to give redelivery notices, which had to be given in good faith and also to be reasonable, was rejected as the tribunal accepted that even if the charterers had given accurate notices the vessel would not have been redelivered earlier.

As we approach the end of another very productive year for the Institute of International Shipping & Trade Law and its members, we would like to wish a happy new year for all friends, colleagues, followers and students!

Let’s hope 2023 brings you health, success and happiness!

MUR Shipping BV v RTI Ltd [2022] EWHC 467 (Comm) raised the question of whether the effect of financial sanctions obliges a contractual party to accept payment in a currency other than that specified in the contract, which has now come before the Court of Appeal [2022] EWCA Civ 1406.

Mur Shipping BV (“the Owners” or “MUR”) concluded a Contract of Affreightment (“COA”) with RTI Ltd (“the Charterers” or “RTI”) in June 2016. Under the COA, the Charterers contracted to ship, and the Owners contracted to carry, approximately 280,000 metric tons per month of bauxite, in consignments of 30,000 – 40,000 metric tons, from Conakry in Guinea to Dneprobugsky in Ukraine. On 6 April 2018, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) applied sanctions (“the sanctions”) to RTI’s parent company, adding them to the Specially Designated Nationals and Blocked Persons List. This led to the Owners invoking a force majeure clause in the COA by sending a force majeure notice (“FM Notice”) on 10 April 2018 in which the Owners said that it would be a breach of sanctions for the Owners to continue with the performance of the COA and noted that the “sanctions will prevent dollar payments, which are required under the COA”. Charterers offered to make the payment in euros and to bear the cost of converting those euros into dollars which the tribunal described as a “completely realistic alternative” to the payment obligation in the COA, which was to pay in US dollars.

The force majeure clause provided for the suspension of the obligation of each party to perform the Charter Party while such Force Majeure Event is in operation.  The clause provided that

“36.3. A Force Majeure Event is an event or state of affairs which meets all of the following criteria:

a) It is outside the immediate control of the Party giving the Force Majeure Notice;

b) It prevents or delays the loading of the cargo at the loading port and/or the discharge of the cargo at the discharging port;

c) It is caused by one or more of acts of God, extreme weather conditions, war, lockout, strikes or other labour disturbances, explosions, fire, invasion, insurrection, blockade, embargo, riot, flood, earthquake, including all accidents to piers, shiploaders, and/or mills, factories, barges, or machinery, railway and canal stoppage by ice or frost, any rules or regulations of governments or any interference or acts or directions of governments, the restraint of princes, restrictions on monetary transfers and exchanges;

d) It cannot be overcome by reasonable endeavors from the Party affected.”

The matter went to arbitration and the Tribunal in its award held that Mur could not rely on the force majeure clause because the offer of payment in euros meant that the ‘event or state of affairs’ could have been ‘overcome by reasonable endeavours from the Party affected’. The Tribunal found that RTI was therefore entitled to damages for MUR’s refusal to nominate vessels to load the relevant cargoes.

On an appeal under s69 of the Arbitration Act 1996 Jacobs J held that the Tribunal had erred in their finding that “reasonable endeavours” required the Owners to accept the Charterers’ proposal to make payment in a non-contractual currency. A party does not have to perform the contract otherwise than in accordance with the contract in order to avoid a force majeure event. He held that the contract required payment in US dollars and that “a party is not required, by the exercise of reasonable endeavours, to accept non-contractual performance in order to circumvent the effect of a force majeure or similar clause”, referencing the decision in Bulman v Fenwick & Co [1894] 1 QB 179. The case involved a voyage charter where the charterer could discharge the cargo of coal at one of certain named places on the Thames. The charterer nominated the Regents Canal which subsequently became subject to a strike. The charterer resisted a demurrage claim on the grounds of a strike exception. Owners claimed charterers should have ordered discharge at one of the other possible places on the Thames. It was held that the charterer was entitled to send the vessel to the Regent’s Canal, with no limitation express or implied on its choice of discharge place and that the delay fell within the strike exception clause.

The Court of Appeal has now, in a majority decision [2022] EWCA Civ 1406, reversed the decision at first instance. The Court of Appeal focussed on the word ‘overcome’ in cl 36.3.(d). Males LJ, giving the principal judgment of the majority, held that the real question was whether acceptance of RTI’s proposal to pay freight in euros and to bear the cost of converting those euros into dollars would overcome the state of affairs caused by the imposition of sanctions on Rusal. Could that state of affairs only be overcome if RTI found a way to make timely payments of freight in US dollars, in strict accordance with the terms of the contract? The answer was ‘no’.

Clause 36 should be applied in a common sense way which achieves the purpose underlying the parties’ obligations –that MUR should receive the right quantity of US dollars in its bank account at the right time. RTI were able and willing to pay in euros and to bear any additional costs or exchange rate losses in converting the euros to US dollars. Accepting their proposal would have achieved precisely the same result as performance of the contractual obligation to pay in US dollars. The word “overcome” did not necessarily mean that the contract must be performed in strict accordance with its terms, given that the arbitrators’ conclusion in their award that the force majeure could have been “overcome by reasonable endeavours from the Party affected” was a finding of fact, or at any rate of mixed fact and law, with which the court should not interfere. The cases of Bulman v Fenwick and the Vancouver Strikes case referred to by Jacobs J were not relevant as neither case involved a force majeure provision such as cl.36 (d).

Arnold LJ dissenting found that if the parties to the contract of affreightment intended clause 36.3(d) to extend to a requirement to accept non-contractual performance, clear express words were required and there were none. He gave the example of a contract of carriage requiring discharge at port A which was strike bound. Clause 36 would not require acceptance of an offer by the other party to divert to port B which would involve no detriment to the party invoking the clause because the goods were required at a place equidistant to the two ports. The party invoking the clause is entitled to insist on contractual performance by the other.

The decision is very much tied to the wording of the particular force majeure clause in question and to the fact that the offer to pay the dollar equivalent in euros would have involved no detriment to owners. In the absence of such a clause a party would still be entitled to insist on contractual performance, as in Bulman v Fenwick.