shipping law – The Institute of International Shipping & Trade Law (IISTL) Blog

Who is an “operator of a seagoing ship” for the purposes of the 1976 Limitation Convention?

In a recent blog post I commented on various gaps in the limitation regime and the Admiralty court has now given guidance as to how another gap may be plugged – namely whilst an “operator of a seagoing ship” is a “person entitled to limit liability” pursuant to article 1.2 of the 1976 Limitation Convention, what is meant by the term “operator”? That is a term that is not defined in the Convention nor in the travaux preparatoires to the Convention, Furthermore, the issue has not been considered in any prior case and there is no helpful commentary in any of the leading textbooks on the subject.

In the case of the “Stema Barge II”(2020) EWHC 1294 (Admlty) Teare J has engaged in a careful and cogent analysis of the issue. The judge notes firstly that article 2.1 refers to the “manager and operator of a seagoing ship” and comments that in many instances there is considerable overlap between “manager” and “operator” and that the terms may often be used interchangeably:

“I therefore consider that the ordinary meaning of “the operator of a ship” includes the “the manager of a ship”. Indeed, in many cases involving a conventional merchant ship there may be little scope for operator to have any wider meaning than that of manager”. (para 74)

However, he goes on to say that a person may be an “operator” even if that person does not engage in the more conventional management activities which would include manning, fuelling, technical and safety supervision, trading, deployment of the ship etc.

The “Stema Barge II” was an unmanned dumb barge which required unique handling as explained by the judge:.

“The present case does not involve a conventional merchant ship but a dumb barge, laden with cargo, which is towed from the loading port to the discharge location, left there by the tug and thereafter “attended” (to use a neutral word) by a company which places men on board with instructions to operate the machinery of the dumb barge. The question which arises in these circumstances is whether the ordinary meaning of “the operator of a ship” in article 1(2) can include those who physically operate the machinery of the ship and those who cause the machinery of the ship to be physically operated, or whether the ordinary meaning of “the operator of a ship” is limited to the manager of the ship.” (para 75)

The judge concludes that:

“I have therefore concluded that the ordinary meaning of “the operator of a ship” in article 1(2) of the 1976 Limitation Convention embraces not only the manager of the ship but also the entity which, with the permission of the owner, directs its employees to board the ship and operate her in the ordinary course of the ship’s business.”

Whilst the facts of the case may have been somewhat special the decision may have an impact on the wider issue of who is deemed to be an “operator” of an unmanned ship and whether an entity that operates the controls of an unmanned ship “in the ordinary course of the ship’s business” from shore can limit its liability. It is true that in the case of the “Stema Barge II” the entity that sought the right to limit had actually boarded the barge in order to be able to operate its machinery. However, it does not seem that the physical boarding of the vessel should necessarily be a restricting factor and there are indications that the judge was thinking in more general terms. For example, he makes the following more general observations:

“The question which arises in these circumstances is whether the ordinary meaning of “the operator of a ship” in article 1(2) can include those who physically operate the machinery of the ship and those who cause the machinery of the ship to be physically operated…” (para 75)

“Those who cause an unmanned ship to be physically operated…” (para 81)

It is true that the judge says at para 74 that:

“Indeed, in many cases involving a conventional merchant ship there may be little scope for operator to have any wider meaning than that of manager.”

However, it is equally true that an unmanned ship is not a “conventional merchant ship.”

When is the Fund not the Fund? Venezuela’s unsuccessful fishing expedition.

The 1971 IOPC Fund ceased to exist on 31 December 2014. The 1992 IOPC Fund, however, is still going strong. This fact was not lost on the Venezuelan fishermen’s union who lodged a claim in Venezuela in respect of damage sustained as a result of an oil spill in May 1997 from the tanker Plate Princess. In 2009 they obtained a judgment against the shipowner and also against ‘The International Fund for Compensation for Oil Pollution Damage’. In March 2015 Master Eastman made a Registration Order in respect of that judgment.

In Sindicato Unico de Pescadores del Municipio Miranda del Estado Zulia v. IOPC [2015] EWHC 2476 (QB); [2016] 1 Lloyd’s Rep Plus 2, Picken J has set aside the Registration Order. The 1992 Fund was not involved in an incident which occurred at a time when Venezuela, although a signatory to the 1992 Protocol, had yet to ratify, accept, approve or accede to it. The Venezuelan judgment could not be regarded as applying to the 1971 Fund Convention as amended by the 1992 Protocol. Even if the judgment had been against the 1992 Fund, there was no relevant exception to the 1992 Fund’s immunity under art. 5(1) of the International Oil Pollution Compensation Fund 1992 (Immunities and Privileges) Order 1996. The only possible exception, in art. 5(1)(b) “in respect of actions brought against the 1992 Fund in accordance with the provisions of the [1992] Convention” would not apply.

NYPE 2015. New rights for owners against defaulting charterers.

On 15 October 2015 BIMCO released their 2015 revision to the NYPE form. It contains the following provisions which will improve owners’ position against defaulting charterers.

Clause 11 dealing with withdrawal has been amended as follows.

The grace period no longer refers to ‘oversight, negligence, errors or omissions on the part of the charterers or their bankers’ and now refers simply to a failure to make punctual payment of hire due.
Owners are now given a right to damages, if they withdraw the Vessel, for the loss of the remainder of the Charter Party. There are currently two conflicting first instance decisions as to whether owners can claim damages for the loss of the remainder of the charter following the exercise of their right to withdraw. In 2013 in The Astra [2013] EWHC 865 (Comm); [2013] 2 Lloyd’s Rep. 69, Flaux J held that there was such a right as the obligation to make punctual payment of hire was a condition, but in 2015 in Spar Shipping v Grand China Logistics v Spar Shipping [2015] EWHC 718 (Comm), [2015] 2 Lloyd’s Rep. 407 Popplewell J held that there was no such right, as hire was not a condition. The new clause makes it clear that owners do have such a right.
The right of owners to suspend performance of their obligations under the charter has been extended. This was first introduced in NYPE 1993 and was not a right which owners would otherwise have, as seen in The Agios Georgis [1976] 2 Lloyd’s Rep. 192. Under NYPE 1993 the right of suspension operated after the expiry of the grace period for as long as hire was outstanding. Hire would continue to run during this period and charterers were to indemnify owners for any consequences resulting from the owners’ suspension of performance, and to pay for any extra expenses resulting from the suspension. NYPE 2015 now provides that the owners’ right of suspension now exists ‘at any time while hire is outstanding’ and deletes the reference to the expiry of the grace period.

Clause 23 dealing with liens has been amended so as to create a lien on sub-hires and sub-freights due to any sub-charterers. This is in accordance with the interpretation of the effect of a lien on sub-freights in cases such as The Cebu [1983] 1 Lloyd’s Rep 302, QB, and The Western Moscow [2012] EWHC 1224 (Comm); [2012] 2 Lloyd’s Rep. The lien on sub-freights and or sub-hires is also extended to deadfreight and demurrage.

The 11th IISTL Annual Colloquium

International Trade and Carriage of Goods: Emerging Issues and Legal Problems in Contemporary Practice

It has been a decade since the Law School’s Institute of International Shipping and Trade Law (IISTL) launched its annual international colloquia with a view to providing a forum for discussing contemporary and controversial aspects of shipping, trade and commercial law.

From modest and experimental beginnings in 2005, since then these colloquia have grown exponentially and established themselves as a key event in the commercial maritime law calendar. Today they attract not only the best academics in the area from the UK, Europe and elsewhere, but also large numbers of leading lawyers, judges and executives from shipbroking, P & I, banking and other businesses.

This year’s event, the eleventh in the series, was held on 10-11 September at Swansea and was devoted to international sale contracts and related issues such as carriage issues, documentary credits and cargo insurance. It was fully embraced by the international shipping and trade community, attracting 72 delegates from 11 jurisdictions. In addition to academics, lawyers, arbitrators and P & I interests were represented; from the commercial judiciary we were delighted to welcome the Hon. Mr Justice Males (Presiding Judge of the North Eastern Circuit), who enthusiastically participated in the debates and chaired one of the sessions. Apart from academics from the IISTL, namely Professors Baughen, Soyer, Tettenborn and Williams and Associate Professor Theodora Nikaki, the following academics and practitioners presented papers at the event:

Professor Olivier Cachard (University of Lorraine, France); Professor Jason Chuah (Head of Department, The City Law School, City University London); Sara Cockerill QC (Essex Court Chambers);Dr Miriam Goldby (Centre for Commercial Law Studies, Queen Mary, University of London); Damian Honey (Partner, Holman Fenwick Willan LLP); Ruth Hosking (Quadrant Chambers); Peter MacDonald-Eggers QC (7 King’s Bench Walk and IISTL); Simon Rainey QC (Quadrant Chambers and IISTL); Stuart Shepherd (Partner, Ince & Co LLP); Professor Michael Sturley (University of Texas, Austin); and Dr Frank Stevens (Roosendaal Kezer Advocaten, Antwerp).

From left to right: Professor James Hu (Shanghai Maritime University), Professor Richard Williams (IISTL) and Professor Olivier Cachard (University of Lorraine, France)

The Colloquium dinner, most generously sponsored by leading commercial law publisher Informa Law and entertainingly hosted by Head of College Professor Elwen Evans QC, was held at Sketty Hall. Informa (to whom, as ever, the IISTL remains enormously grateful) has also agreed to publish the papers presented at the Colloquium in book format in 2016, thus continuing another excellent traditional.

Talking after the event, Professor Soyer, Director of the IISTL, commented:

“The fact that this year’s Colloquium attracted record numbers of delegates from all around the world, including the US and China, is a clear sign that this event has been taken to heart by the shipping and trade community and is a permanent fixture. I would like to thank all those who helped: delegates, speakers and chairpersons, and also my colleagues at the IISTL who provided their unstinting support. I am leading a talented group of individuals here at the IISTL, who have enormous respect for each other and the sector that we aim to serve. They exemplify everything that is good about diversity and co-operation, and this becomes ever more obvious during events like this!

A number of events are planned for 2016, and the IISTL will continue to work towards achieving one of its key missions: namely bridging the gap between academia and practice.”

Professor Baris Soyer (Director, IISTL) presenting his paper

Temporal scope of Hague Rules

Volcafe v CSAV [2015] EWHC 516 (Comm); [2015] 1 Lloyd’s Rep 639.

Loading of a cargo of coffee inland by the carrier into its containers has been held to fall within the temporal scope of the Hague Rules. This may seem somewhat surprising in the light of Article 1 (e) of the Rules which provides: “(e) “Carriage of goods” covers the period from the time when the goods are loaded on to the time they are discharged from the ship.” However, David Donaldson QC in the London Mercantile Court has held that the initial loading into the carrier’s containers and the subsequent loading of the container onto the vessel were to be regarded as part of a single loading process. Even if this were not the case, the parties had exercised their freedom to agree what constituted loading under art 1. (e) which they had done by providing that the carrier would stuff the cargo into its own containers.

Simon Baughen

Free in/ Free out clauses and cargo claims

SDTM-CI v Continental Lines N.V. [2015] EWHC 1747 (Comm)

Cargo claims were brought against the shipowner under two bills of lading incorporating the terms of a charterparty which contained a clause providing “Cargo shall be loaded, spout trimmed and/or stowed at the expenses and risk of Shippers/Charterers … Cargo shall be discharged at the expenses and risk of Receivers/Charterers at the average rate of 1,500 metric tons per weather working day ……Stowage shall be under Master’s direction and responsibility…” Flaux J has held that the incorporated provision has the effect of transferring responsibility for loading and discharging away from the shipowner. To the extent that it was established that the cargo was damaged by bad loading and/or discharge, as opposed to bad stowage, the cargo interests could not recover such damages from the shipowner.

Simon Baughen

Arrest of Ships

An interesting decision of the Federal Court of Australia in The Sam Hawk [2015] FCA 1005. For the purpose of determining if a claimant has a maritime lien for a contractual claim (here the supply of bunkers), the law of the contract under which the bunkers were supplied controls. The court refused to follow the Privy Council in The Halcyon Isle [1981] AC 221 .

More details at http://www.hfw.com/Arrest-of-the-SAM-HAWK-October-2015

Andrew Tettenborn

IISTL Members at Prestigious International Events in 2014-15

Academic staff teaching at Swansea LLM degrees are at the forefront of scholarship in their particular areas of expertise, which they combine with skilled and innovative teaching.

They are also members of the Institute of International Shipping and Trade Law (IISTL), an internationally renowned research centre, which promotes research and teaching of the highest standard in the fields of international shipping and trade law.

The IISTL has a global reputation and its members are often invited to speak at international conferences to disseminate the results of their research. Like any other year, members of the Postgraduate Legal Studies Department with the commencement of the academic year of 2014-15 have travelled around the world delivering academic papers in prominent international events on shipping, transport and trade law.

On 17 September 2014, Dr Theodora Nikaki delivered a keynote address at the InterTran Research Project Closing Conference in Helsinki entitled “European Intermodal Sustainable Transport – Quo Vadis?”. The InterTran project is an interdisciplinary research project focusing on the expanding new, European transport policy from a legal and logistical point of view. It is a research project financed by the Finnish Academy and The Scandinavian Institute of Maritime Law jointly. Dr Nikaki’s paper, titled “The Future of Multimodal Transport: Is the Uniform Liability System the Way Forward?”, tested the feasibility of the uniform liability system as basis of a new multimodal regime. The paper also examined the difficulties in implementing a new multimodal transport regime arising out of the existing international transport conventions, a theme which also provoked a lively debate among the participants.

On 11 September, Professor Andrew Tettenborn addressed the Eighth European Colloquium on Maritime Law Research, hosted by the Rotterdam Institute for Shipping & Transport Law (RISTL). The European Maritime Colloquia are a series of biannual conferences organized by leading maritime law centers in Europe, in collaboration with the Scandinavian Institute of Maritime Law (University of Oslo, Norway). The Eighth Colloquium’s theme was “Common core, PECL and DCFR: Could they change shipping law?” and Professor Tettenborn delivered a paper on “”How far the imposition of a serious good faith obligation (an important part of both PECL and DCFR) might impact on the black-and-white world of shipping contracts.” His thought-provocative paper has sparked a debate over the concept of good faith in various jurisdictions and its impact on shipping law.

‌‌On 16 October, Professor Simon Baughen gave a paper at a conference at the University of Marmara on “Marine Pollution Liabilities in EU waters. New Developments” which considered the impact on oil rig operators of art. 38 of the 2013 Offshore Oil and Gas Operations Directive, art 38, extends the geographical limits of water pollution to the EEZ of Member States. The paper also considered the extent to which the CLC system of civil liability for oil pollution from ships has been undermined by civil claims attached to criminal proceedings arising out of the ‘Erika’ spill, in France, and the ‘Prestige’ spill, in Spain.

Most recently (7-8 November), Professor Bariş Soyer, the Director of the IISTL, attended the International Conference on “Hong Kong Maritime Law Forum” organised by the Hong Kong Centre for Maritime and Transportation Law (City University of Hong Kong) and delivered a paper discussing why the Athens Convention 2002 will be a good model for Asian countries to follow to regulate compensation claims for passengers carried by sea. Professor Soyer has written on this subject extensively and is currently working on a piece with Dr Leloudas, another IISTL member, evaluating how air law conventions can be utilised to fill the gaps that arise in the context of the Athens Convention.

On 8 November Professor Simon Baughen co-organised a conference at the University of Bristol on “Corporate Accountability and Access to remedies for Corporate Wrongs”, the third in a series of conferences organised by the University of Sheffield with an ESRC grant. The series will conclude in 2017 with a submission to the UN Human Rights Council based on findings from the conference series. Professor Baughen gave a paper “Life after Kiobel. The future for human rights litigations against MNCs in the US.” on the future of human rights litigation in the US District Courts under the Alien Tort Statute following the Supreme Court’s decision on the territorial reach of the statute in April 2013 in Kiobel.

Similarly, with the commencement of the new academic year, IISTL members spread around the world presenting academic papers in various international events addressing shipping, transport, trade and marine and environmental law.

Professor Bariş Soyer, the Director of the IISTL, was invited to present a paper at the 8th International Conference of Maritime Law organised by the Piraeus Bar Association held at the Congress Hall of the Piraeus Port Authority (10-12 October 2013). This event was the latest in a prestigious series, first established 22 years ago, which provides a forum for maritime academics, practitioners, public officers and experts from all over the world to discuss timely issues of theoretical and practical interest. The theme of this year’s event, which was a fitting tribute to the late Emeritus Professor Anthony M. Antapassis (Athens University), to whom the conference was dedicated, was ‘Shipping in Periods of Distress. Professor Soyer’s paper, entitled ‘Early Redelivery of Chartered Vessels – Remedies Available for Shipowners’ was well received and prompted an interesting debate on the subject. The early redelivery of chartered vessels poses significant problems for shipowners. As Professor Soyer outlined, the current legal protection accorded to shipowners under English law is far from satisfactory. In his paper, Professor Soyer elaborated how shipowners could best protect themselves by incorporating contractual provisions into their agreements with charterers.

In May 2014, Professor Soyer was invited by the Italian School of Judiciary (Scuola Superiore Della Magistratura) to speak at their Conference held at Genova on international maritime law. This event, which was organised in collaboration with the Association of Bar of Genoa, attracted delegates from the Italian judiciary and legal practice. Professor Soyer in his paper evaluated the position of standard cargo insurance on offer in international insurance markets highlighting their limitations especially in the context of multimodal transport.

On 11-14 October Dr Richard Caddell participated at the Sixth Symposium on Polar Law, an annual event dedicated to the regulation of the Arctic and Antarctic regions and which has rapidly established itself as the leading scholarly forum for debating these issues. The Polar Regions – especially the Arctic – have rapidly become a core area of international focus, raising controversial questions over their future governance and the exploitation of marine resources. Dr Caddell presented a paper entitled “Regulating the Whale Wars: Freedom of Protest, Navigational Safety and the Law of the Sea in the Polar Regions” in which he examined the scope for environmental activism at sea and its conflict with other legitimate uses of ocean space. The paper was especially timely given the recent arrest of 30 Greenpeace activists for boarding the Prirazlomnaya oil platform in Russian Arctic waters, a situation that Dr Caddell examined alongside significant legal developments from a variety of other jurisdictions, which also provoked a lively debate among the participants.

Dr Caddell has also been invited to join an expert group reviewing the future protection of cetaceans (whales, dolphins and porpoises) under European Law, with a view towards reforming the current unsatisfactory and contentious legal position of these species. Moreover, in late October he presented a paper entitled “Wilderness Protection in Estonia” at a workshop of invited participants at the University of Tilburg, the Netherlands. Here Dr Caddell will present research that will form part of a chapter contribution to the first major book examining European wilderness law, edited by Professor Kees Bastmeijer, scheduled for publication by Cambridge University Press in 2014.

Dr. Leloudas was invited at the 5th Annual McGill Conference on International Aviation Liability & Insurance which was held at Montreal, Canada (25-26 October 2013). The Conference is one of the main international events in the field of carriage of passengers by air and attracts aviation legal professionals from all over the world. Dr. Leloudas was on the panel that discussed the erosion of the principle of exclusivity under the Warsaw and the Montreal Conventions, a principle which creates a constant stream of case law worldwide with often mixed results. Dr. Leloudas was one of the very few academics from outside McGill who was invited to speak at the Conference.

Furthermore, Dr George Leloudas was invited to present a paper to the LL.M (Air Law) students of the Institute of Air & Space Law of McGill University in Canada (24 October 2013). The paper was entitled “Multimodal Transport under the Montreal and the Warsaw Convention: a velvet revolution?” in which he examines the boundaries of application of the air law conventions in a multimodal context. This issue is in high academic and practical demand as result of conflicting case law developing in continental, English and US courts, with Dr. Leloudas providing his interpretation of the current judicial developments and his prediction as to where the future lies. The presentation gave the impetus for a heated discussion among the students, the academics of the Institute and the speaker on the (dis)uniformity of this area of law and the commercial reasons behind the latest judicial developments.