The Athens Convention: uniformity rules – and quite right

Athens Convention time-bars are not the most riveting topic, but can be important. P&I clubs have little compunction in pouncing on inexperienced personal injury solicitors who miss the two-year time-bar and assume their clients have what is otherwise the normal three years to sue. But what happens when the claimant has the benefit of something that would delay the starting of the clock, such as a later date of knowledge, incapacity or even fraudulent concealment? Subject always to the absolute three-year Athens longstop, can they take advantage of this? Upholding the Inner House, the Supreme Court in a brief decision has now said they can, thus setting to rest doubts stemming from Higham v Stena Sealink Ltd [1996] 1 WLR 110.

The issue turns on the wording of Art.16(2), under which periods of “interruption” or “suspension” of a time-bar are governed by the law of the forum. These terms are normally used in connection with Continental systems’ long-standing habit of switching limitation periods on and off after they have started, rather like a malfunctioning Belisha beacon, on account of all sorts of matters such as ongoing negotiations. We don’t do that, being happy on occasion to delay the starting of the clock, but insisting that once it has started it ticks on to the bitter end. Can “interruption” or “suspension” cover this situation, that is a limitation clock that never starts, as against one that starts and then temporarily stops? The answer is Yes; the only exception is s.33, allowing the limitation period to be disregarded entirely if just and equitable, which clearly neither interrupts nor suspends anything.. And rightly so: Athens needs uniform interpretation, and a reading that took account of Continental modifications of the limitation period but not UK ones would be not only nit-picking but highly non-uniform. It would represent a kind of UK exceptionalism we can well do without.

Warner v Scapa Flow Charters (Scotland) [2018] UKSC 52 was, as readers no doubt noticed as a result of the reference to the Inner House, technically a Scots decision turning on the Scots law of prescription. But it is plainly just as relevant to our own Limitation Act 1980. Happy reading.

Good Lorde! A new transnational torte?

News last Friday that under the 2011 Law for Prevention of Damage to State of Israel through Boycott an Israeli Court has awarded damages of $19,000 plus costs against two New Zealanders who posted a tweet urging the popular chanteuse, Lorde, to cancel her planned concerts in Israel (which she did). The Israeli law is of universal effect. However, the judgment will not be enforceable in New Zealand which does not have a reciprocal treaty with Israel for recognition and enforcement of judgments and where the common law principle applies that absent presence by the defendant in the foreign state giving the judgment or submission to its jurisdiction the local court will not grant recognition to the foreign judgment.

The same would apply were a similar judgment to be given against UK tweeters. Although the UK does have reciprocal arrangements with Israel for recognition and enforcement of judgments under The Reciprocal Enforcement of Foreign Judgments Order (Israel) Order 1971 SI 1971/1039, the common law rule on recognition is applied in article 4(1). Additionally, article 3(4)(d) precludes recognition of a judgment which would be contrary to public policy.

Another sensible OW Bunker decision

The US Ninth Circuit rightly confirms that the only person who can sue in rem for the price of bunkers supplied is the person who contracted with the operator of the vessel. It’s not enough that you physically pumped the bunkers aboard on the orders of another supplier who contracted to supply them to the ship and then agreed to buy them from you and pay you for them. Quite right too. Those who give credit to the uncreditworthy (in this case — you guessed — OW Bunkers) must be allowed to lose out: that’s business, sonny.

See Bunker Holdings v Yang Ming Liberia, No. 16-35539 (9th Cir., October 11, 2018). And thanks to the Maritime Advocate for the heads-up.

Who is an “operator” under OPA 1990? Dumb barges and dumb tug.

 

Who is an “operator” under OPA 1990? Dumb barges and dumb tug.

 

In January 2013, a tugboat owned by Nature’s Way was moving two oil-carrying barges owned by Third Coast Towing down the Mississippi River. The barges were “dumb” barges lacking the ability for self-propulsion or navigation. The barges collided with a bridge, resulting in one of the barges discharging over 7,000 gallons of oil into the Mississippi. Nature’s Way and its insurer, and Third Coast Towing and its insurer were all designated by the Coast Guard as “responsible parties” under the 1990 Oil Pollution Act (‘OPA’). Nature’s Way subsequently spent over $2.99 million on the clean-up, and various governmental entities spent over an additional $792,000. In May 2015, Nature’s Way submitted a claim to the National Pollution Funds Center (NPFC) seeking reimbursement of over $2.13 million on the grounds that its liability should be limited by the tonnage of the tugboat and not the tonnage of the barges and also claiming relief from any obligation to reimburse the government for the additional $792,000-plus. Those claims were denied by the NPFC based upon its determination that Nature’s Way was an “operator” of the oil-discharging barge at the time of the collision.

 

The District Court held that Nature’s Way was an “operator” and its decision has been upheld by the Court of Appeals for the Fifth Circuit in US v Nature’s Way 21 Sept 2018. Case: 17-60698. OPA does not define the term “operator” but the Supreme Court in United States v. Bestfoods, 524 U.S. 51, 66 (1998) analysed the definition of the term in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), as follows:

In a mechanical sense, to “operate” ordinarily means “[t]o control the functioning of; run: operate a sewing machine.” American Heritage Dictionary 1268 (3d ed. 1992); see also Webster’s New International Dictionary 1707 (2d ed. 1958) (“to work; as, to operate a machine”). And in the organizational sense more obviously intended by CERCLA, the word ordinarily means “[t]o conduct the affairs of; manage: operate a business.”

 

Applying that analysis, the ordinary and natural meaning of an “operator” of a vessel under the OPA would include someone who directs, manages, or conducts the affairs of the vessel, and would thereby include the act of piloting or moving the vessel. Nature’s Way undisputedly had exclusive navigational control over the barge at the time of the collision, and, as such, it was a party whose direction (or lack thereof) caused the barge to collide with the bridge. It was, therefore, “operating” the barge at the time of the collision based on the ordinary and natural meaning of the term.

 

The Fifth Circuit rejected Nature’s Way’s argument that its conduct in moving the barge was more akin to the “mere mechanical activation of pumps,” and it could not be deemed to have been “operating” the barge because it was merely moving the barge as per Third Coast’s directions, and it did not exercise control over its environmental affairs or inspections.

Nature’s Way directed precisely the activity that caused the pollution—it literally was the party that crashed the barge into the bridge. It was clearly “operating” the barge at the time of the collision and therefore constituted a “responsible party” under OPA.

 

Court of Appeal decision on crossing rule and causative potency in collision.

In Evergreen Marine (UK) Ltd v Nautical Challenge Ltd [2018] EWCA Civ 2173, we have the first Court of Appeal decision on collision liability since Bow Spring v Manzanillo II [2004] EWCA Civ 1007; [2005] 1 WLR 144, in 2004.

On the 11th February, 2015 the  “Alexandra I” and the “Ever Smart” collided just outside the dredged channel by which vessels enter and exit the port of Jebel Ali…” At first instance Teare J held that the crossing rules did not apply, so that when ‘Alexandra 1’ the inbound vessel approached the dredged channel (“the narrow channel”), she was not under a duty to keep out of the way of ‘Ever Smart’, the outbound vessel.  Instead, the navigation of the two vessels was governed by the narrow channel rule, rule 9 of the Collision Regulations, in the case of ‘Ever Smart’ and rule 2 of the Collision Regulations, the ordinary practice of seamen (i.e., the requirement of good seamanship), in the case of ‘Alexandra 1’ .   Furthermore, the crossing rule was inapplicable because ‘Alexandra 1’ was not on a sufficiently constant direction or heading to be on a course; she was waiting to embark a pilot rather than herself being on a course at the relevant time.

Teare J found both vessels to have been at fault and in apportioning liability had regard to the relative culpability and causative potency of each vessel’s faults.  Those of ‘Ever Smart’ were very serious in terms of culpability. ‘Alexandra 1’ ’s fault was culpable to a substantial degree.  In terms of relative culpability, the faults of ‘Ever Smart’ were much more culpable than those of ‘Alexandra 1’. The ‘Ever Smart’,  due to her unsafe speed, contributed far more to the damage resulting from the collision than the very much lower (and safe) speed of ‘Alexandra 1’ , and its. It followed that the causative potency as greater than that of ‘Alexandra 1’. Teare J held that ‘Ever Smart’ should bear 80% of the liability for the collision and ‘Alexandra 1’ 20%.

The Court of Appeal has now upheld the decision of Teare J. For the crossing rules to apply both vessels, the give-way vessel included, must be on sufficiently defined courses for the crossing rules to apply.  Had the crossing rules otherwise have applied it was argued that they were to be disapplied because ‘Alexandra 1’ ’ was “a vessel restricted in her ability to manoeuvre” within rule 18 (a)(ii) of the Collision Regulations.  the definition contained in rule 3(g)(iii),  provides as follows:

“ The term ‘vessel restricted in her ability to manoeuvre’ means a vessel which from the nature of her work is restricted in her ability to manoeuvre as required by these Rules and is therefore unable to keep out of the way of another vessel.  The term ‘vessels restricted in their ability to manoeuvre’ shall include but not be limited to:

(iii) a vessel engaged in …..transferring persons…while underway;”

For the ‘Alexandra 1’  it was argued that she came within the definition as she was waiting in the pilot boarding area for the pilot to board with minimum steerage way. The Court of Appeal rejected this and upheld Teare J’s conclusion that:

“….had the crossing rule applied and ‘Alexandra 1’ ’ been obliged to keep out of the way of ‘Ever Smart’ she could have done so, for example at C-6, by putting her engines astern and so permitting ‘Ever Smart’ to cross ahead in safety or by turning to starboard.  She was not restricted in her ability to take such action by reason of embarking the pilot because that work had not commenced (and never did commence)….”

The Court of Appeal also upheld Teare J’s decision on causative potency. The Judge was not precluded, when apportioning liability, from considering the relative impact of each vessel’s faults on the severity of the collision and no double-counting had been involved. Causative potency has two aspects; the first relates to the extent to which the fault contributed to the fact of the collision occurring; the second, to the extent to which the fault contributed to the damage or loss resulting from the collision. Excessive speed is a prime example of a fault likely to contribute to the extent and severity of the damage or loss suffered. A Judge may take into account the propensity of excessive speed to increase the damage suffered when undertaking the exercise of apportionment – and thus to have regard in broad terms to the magnitude of the damage sustained.  The excessive speed of the ‘Ever Smart’ bore on both the fact of the collision and its severity, amounting to the separate counting of two different (and cumulative) aspects of the same fault.

Brexit update (4). A “third way” for the UK parliament?

 

As we all know, the UK government gave notice of withdrawal from the EU under article 50 on 29 March 2017. Article 50(3) provides “The Treaties shall cease to apply to the State…from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification…”. The European Union Withdrawal Act 2018 provides that parliament will vote on any agreement between the UK government and the EU Council (if there be any such agreement). If parliament votes against the agreement and no alternative is proferred the UK leaves the EU at 11pm on 29 March 2019, the so-called ‘Brexit forte et dure’.

However, there may be a third option open to members of parliament wishing to take back control – to vote to revoke the notification under article 50 and to stay in the EU – at least for now. The UK government and the Commission take the view that a notice of withdrawal, as is the case with a similar notice under a time charter, once given cannot be revoked. But are they right? In Andy Wightman MSP v Secretary of State for exiting the European Union[2018] CSIH 62 the First Division, Inner House, Court  of Session has referred this question or a preliminary ruling under Article 267 of the Treaty on the Functioning of the EU to the Court of Justice of the EU under the expedited procedure. The question framed is:

“Where, in accordance with Article 50 of the TEU, a Member State has notified the European Council of its intention to withdraw from the European Union, does EU law permit that notice to be revoked unilaterally by the notifying Member State; and, if so, subject to what conditions and with what effect relative to the Member State remaining within the EU”.

If the CJEU rules that unilateral revocation is possible, then we are in for interesting times in 2019.

 

Brexit Update (3). Maritime organisations.

 

‘Exit day’ will see changes in two maritime organisations of which the UK is currently a member.

  1. The International Maritime Organisation (‘IMO’).

The IMO is a UN body of which most countries, and all EU member states, are members. The EU is not a member but the Commission has observer status. However, the Commission ensures that Member States follow a pre determined EU line in meetings of the IMO as outlined in this extract from the European Parliament’s 2016 briefing

“To ensure that the EU speaks with one voice in IMO meetings, it applies an informal process for coordinating the positions of the EU Member States, Norway and Iceland.For most IMO meetings, the European Commission prepares a coordination paper, suggesting the positions for the Member States to follow. Moreover, several weeks before key IMO sessions, a coordination meeting is held in Brussels for Member States’ representatives to agree on joint positions. In practice though, while during IMO meetings the EU Council presidency advances the coordinated position, individual EU Member States can take the floor and express their own position, sometimes departing slightly from the joint one.”

The key  word in the last sentence is ‘slightly’.  EU Member States have to toe the line in IMO meetings both in how they vote and what they say.

Not any more, for the UK, after ‘Exit Day’.

  1. The European Maritime Safety Agency (EMSA)

The European Commission proposed to set up a European Maritime Safety Agency (EMSA) in the aftermath of the “Erika” accident. EMSA was established by Regulation 1406/2002 ,  on 27 June 2002 and entered into force in August of the same year. EMSA provides technical and scientific assistance to the European Commission in the fields of maritime safety, maritime security, prevention of pollution and response to pollution caused by ships. The UK will cease to be member of EMSA as of ‘exit day’. However, article 17 of Regulation 1406/2002 ,  provides for participation of non-EU countries  “which have entered into agreements with the European Community, whereby they have adopted and are applying Community law in the field of maritime safety and prevention of pollution by ships.”

And that means accepting continuing role of CJEU, so not very likely.

 

Brexit Update (2)

 

In the absence of an agreement with the EU, Brexit will have an immediate impact on UK seafarers and on shipping services from the UK to ports within the EU.

  1. UK seafarers. The STCW requires crew members to have a Certificate of Competence which must be renewed every five years. The UK allows crew members who have trained outside the UK to work on a UK vessel if they have a certificate of equivalent competency issued by the Maritime and Coastguard Agency. Under EU law there are two procedures for recognising seafarers’ qualifications. Under EC Directive 2005/45/EC there is mutual recognition by EU Member States of certificates issued to seafarers by other Member States which must be accompanied by an endorsement by the recognising State. Certificates from non-EU countries may be endorsed under EC Directive 2008/106/EC. After exit day existing UK endorsed certificates would enable UK seafarers to work on vessels flagged with EU Member States but on expiry renewal would be under the procedure set up under Directive 2008/106. EU Member States would be required to write to the Commission if they wish to continue accepting new UK certificates of competence.
  2. Shipping services. Under Article 6 of EC Regulation 725/2004 requires shipping companies (including ferries carrying passengers and lorries) prior to entering an EU port to submit security information, such as: particulars of the ship; last 10 port facilities of call; crew and passenger list. Article 7 allows a Member State to exempt companies which operate scheduled services between ports in their territory and that of another Member State. After ‘Exit Day’ no exemptions will be available for vessels operating scheduled services from the UK.

Sea here? What’s with the Caspian?

 

On August 12 2018 the five Caspian states- Russia, Iran, Turkmenistan, Kazakhstan, Azerbaijan – signed the Convention on the Legal Status of the Caspian Sea. The surface of the Caspian is treated as a sea and the five states are granted jurisdiction over 15 nautical miles of water from their coasts and fishing rights over an additional ten miles. However, allocation of the seabed and its mineral deposits is left to the five countries to agree on a bilateral basis. Pipelines along the seabed may be constructed, with the approval of the countries whose seabed they cross, subject to environmental conditions. The Convention forbids deployment of military vessels by non-Caspian countries in the waters of the Caspian.

 

Force majeure and counterfactuals

A nice force majeure issue — and one of considerable importance — came up before Teare J yesterday in Classic Maritime v Limbungan [2018] EWHC 2389 (Comm), argued by IISTL stalwart Simon Rainey QC. Imagine you conclude a contract (in this case a CoA under which you have to provide a number of iron ore cargoes) which in the event you can’t and don’t perform, and never could have performed. An exemption clause in the contract says that if you could have performed it but a force majeure event X (inundations in Brazilian iron ore mines) then occurs that stops you performing it, you are not liable for breach. Event X occurs. Are you (a) in breach of contract, (b) on the hook for substantial damages?

On (a) the answer is Yes. You promised to perform, you haven’t performed, and because you never could have performed in any case you can’t shelter behind the exemption clause.

But what about (b)? There are two ways to look at this. One is to say: this is a simple case of unexcused non-performance, and hence you must be liable to the shipowner for his lost profits on the carriage, a figure amounting to many millions. The other point of view runs thus. If, counterfactually, you could have performed but for X, the shipowner would in the event have had no claim to performance because of the exemption clause. Hence hence it’s no skin off his nose that you didn’t perform, and damages are nominal only. Teare J plumped for the second: nominals only.

This view is highly plausible and for the moment clearly represents the law. It also dovetails quite nicely with the general rule in cases such as The Golden Victory [2007] UKHL 12, [2007] 2 A.C. 353 and Bunge v Nidera [2015] UKSC 43, [2015] 2 CLC 120, that in assessing damages we take into account later events that would have taken away the right to demand performance.

But this case, or the issue in it, may go further. There is a respectable argument, that certainly can’t be dismissed summarily, which suggests a different answer. In so far as the inability to rely on a force majeure clause is due to a party’s own default, which was the case in Classic Maritime, should it be open to that party to argue that if he had acted differently he would have been able to invoke that very same clause? Suppose a force majeure clause requires notice to be given within 7 days after the force majeure event; a party prevented by force majeure nevertheless fails to give notice for 10 days, and thus loses the protection of the clause. Is it really open to the party then to say that if he had given the proper contractual 7 days notice he would have been protected by the clause, the counterparty would have had no right to demand performance, and hence damages are nominal only? I’m doubtful. And I’m equally not sure that this scenario is that different from what happened in Classic Maritime.  It’s just a thought. Whether it’s a good one, only time will tell.