English law

Thursday, November 3, 2022

11:09 AM
 
Based on principles of common law / civil law
Case law
 
If no agreement – gap filling

common law

tort law, matter of dispute – no contract in place

rights and remedies

English contract law

- legally binding
- contract needs legal aspect to it (non-applicable to social arrangements)
 Consideration
 Burden of proof
 Invitation for offer
 Form

end of contract:
performance / expiration / termination / frustration / force majeure / vitiating factors

terminate for cause of convenience

Damages – compensation for breach of contact
Reasons: Breach / Anticipatory Breach / Termination for breach

Tort
Tort – claim based not on a contract
Intentional tort / strict liability tort / negligent tort

Force Majeure:

- event that seriously impacts the parties ability to perform the obligations of the contract
- natural disasters, war, pandamics

Damages:
- compensation for parties losses due to breach of contract
- fault needs to be proven -> causal link or damage is foreseeable
- unliquidated: precise loss / liquidated: fixed by parties in contract / fair comensation for services
already provided
Remedies:
- can be requested if compensation of damage is insufficient
- can be specific performance / ending a contract / return of property

Privity of Contract:
- cannot impose obligations on thrid parties who are not part of the contract
- third parties can have rights under contract

Battle of Forms:
- ref to standard terms of a contract
- agree as per last shot principle

Signatures:
- siganture of right person important
- only legal + binding if signed by right person
- director or other authorised person

Capacity:
- legal capacity = signed by right person / otherwise not legal or valid

 
 
 
English Tort Law
Sunday, December 4, 2022
4:36 PM
 
Intentional tort = substantial knowledge that action would result into harm

Strict liability tort = focus on physical aspect of wrongful act and focus on liability caused due to their
action not on whether or not it is their fault

Negligent tort = wrongdoer failed to act on required duty of care

Key Elements

- negligent party owed a duty of care to the victim

- breach of duty of care
- causation (negligent behaviour caused the injury / loss)
- damage or injury occurred

Duty of care
- harm = reasonably foreseeable
- proximity
- fair, just and reasonable to impose liability

Breach of Duty of Care

- would a reasonable person have acted that way

Causation
- would have the damage/loss occurred without the tortfeasor

Harm or Injury
- personal injury / financial loss
- sentimental value not represented

Remedies
- Damages – financial compensation
- Injunctions – tortfeasor prohibited from certain action / required to take certain action

 
 
 
Cargo Claims + Bill of Lading
Wednesday, November 2, 2022
11:45 AM
 
Cargo Claims
2 party contract

A – Shipper
B – Carrier

A reselling to C

Only parties in the contract are entitled to sue

- Regulations in order to give power to party C

6 Steps to Cargo Claim

1. Has claimant title to sue?

2. choice of law + applicable rules
3. is carrier liable?
4. Carriers defences (exemptions)
5. Bar to carriers exemptions
6. Limit of liability

Title to Sue

Privity of contract = only parties to contract can sue / be sued

COGSA – certain parties can optain rights

Target for lawsit

- Chrt should sue person he charterered from
- Non-Chrt should sue person signing BL

Choice of Law

Cogsa / Hague Visby Rules can be applicable

- dependant on if BL issued in HVR state / goods shipped from HVR state
- certain exeptions apply

 
 
 
Proving claimants loss

- Claimant must prove loss

- BL central document
- Difference btw clean BL and qualified BL

Carriers breach

- claimant must prove carriers breach

- HVR Article III 1 – HVR Aricle III 2
- Stated withing relevant time period
- Notice from claimant must be provided in due time – HVR Article III 6

Carriers defences

- Time Bar – HVR Article III 6

- Defences = only applicable in respect of the carriers dutly in relation to cargo
- Carrier has burden of proof

= Carrier barred from using HVR Article IV in case of:

- Unseaworthiness
- Unjustified deviation
- Cargo on deck

Limitation of Liability of Carrier

- Value of goods has the be defined

- HVR Article IV 5 = 666.67 units or 2 units per kg of weight
- Unit of Account = SDR

- Exclusion of limitation of liabilty = HVR IV 5e / HVR III 8

Bills of Lading
 
 Receipt
showing number of pkgs / mt / kg etc
 
 Document of Title
negotiable and may be endorsed + must be presented to take delivery of cargo
 
 Evidence of Contract
Contractual terms on reverse side of BL + conclusive evidence of goods shipped

3 main functions
 Receipt / evidence of contract / document of title
 To order – needs to endorse
Consignees name must be stated in the BL / or endorsed to her
 Barer: who ever receives them

Haque Visby Rules

- title to sue
only parties on the contract can sue – COGSA applies

- choice of law and applicable rules

Hague Visby Rules
BL is issued in HVR state
Carriage from HVR state
BL is governed by HVR

Exceptions applicable to HVR:

- live animals
- Carriage on deck – if agreed prior

- liable
- defences
- any bars to the carriers exemption
- limit his liability

Proofing claimants loss:

- Bill of lading is central document
- Conclusive proof

- Is it the carriers fault

 - Due diligence has to be executed
- Duty to care for the cargo / safe storage
- Notice needs to be provided immediately

Carriers defences
- Time bar – 1 year (loss for the claimant)
- Carrier has burden of proof

Bars to the carriers defences

- unseaworthiness, unjustified deviation, cargo on deck

Carrier can limit his liability

- special drawing rights
- SDR fluctuates
- if value of goods is not states in the BL
- limited to 666.67

 
 
 
Charter Parties
Wednesday, November 2, 2022
3:12 PM
 
Introduction of Charterparties

- Bareboat CP / Time CP / Voyage CP

 
Charter parties are often being combined

Ownership
- Registered owner
- Disponent owner

- Sale – lease back

Seaworthiness
- condition / manning / fit to carry cargo / owner must provide vsl in fit condition
- sources defining seaworthiness: shelltime / barecon / hague visby rules art 3 / case law
- If vsl not seaworthy: claim damages / cancel the charter party / terminate the charter party

Hire / Off Hire

- hire must be paid (weekends = weekday before)
- deductions: must be permitted in CP

Off Hire:
- defined in CP
- applies regardless of owners involvement / fault
- liquidated damages but not breach of CP
- calc depending on CP

Voyage Charter Parties

Bareboat Charter – only ship being provided (crew / stores / bunkers by chrts)
Time charter – ship incl crew + equip being disposed to charterer for period of time

Voyage charter – pays for use of ship for one or more voyage

Owners main obligations under voy charters:

- carrying voyage + maintenance + insurance + crew wages + bunkers
Charterers main obligations:
- freight for carriage of goods

Freight
- charterers obliged to pay for freight (lumpsum / pmt pcbm)
- due of delivery of cargo / depening on CP
- no right of deduction
- Deadfreight: compensation for freight that would have been earned if full cargo would have been
loaded

Laytime / Demurrage
- Laytime: starts when vsl has arrived at load port + NOR tendered (in accordance with CP) + vsl is ready
to load
- demurrage: damages for delay which shall be paid for owners without proof of loss
- to be calculated per day or pro rata
- demurrage must be presented within short period otherwise can be time barred

Despatch
- applicable if less laytime is being used – chrts entitled to compensation
- 50 % of demurrage
- no righ under common law – only if stated in CP

 
 
 
Contracts / Letters of Credit / Financing
Sunday, December 4, 2022
4:17 PM
 
Contracts in international documentary sale

- Sales Contract (governed by Incoterms)

- Payment contracts (letter of credit)
- Contracts of carriage
- dispute resolution contract

Letter of Credit vs. CAD ( Cash against documents)

- Obligations: seller must deliver goods and documents in accordance with the contract
- Obligations: buyer must accept goods & pay price
Always: In accordance with the terms of the contract of sale (incoterms)

Letter of Credit:
- law to be chose for LC = setting out all terms and obligations of LC
- All documents which must be tendered by seller must be listed in LC
- Credit must be conform with sales contract
- Buyers and sellers bank correspond within the jurisdiction
- LC must be accepted – once accepted it is the only available method of payment for this transaction
- Buyer must strictly comply with instructions otherwise the documents will not be handed out = no
goods
--> Strict compliance: all documents must STRICTLY comply with the requirements
--> Strict compliance means: seller: absolute assurance of payment if it delivers conforming documents –
for buyer: absolute assurance that the documents comply with the sales contract

Bank:
- can decide within 5 banking days to pay or not to pay
- cannot extend period
-bank must follow verbatim the procedure reg notices / rejecting of documents etc
- if bank does not reject the docs = it has to pay

Fraud:
- there must be clear evidence of fraud
- clear notice of evidence of fraud
- bank awareness of fraud must be timely

Benefits of LC:
- security for both parties
- seller has greater assurance of payment
- seller protected against litigation abroad
- LC provide liquidity to buyer
- Bank is secured through BL

 
 
 
 
S&P of Ships & Newbuilds
Sunday, December 4, 2022
4:17 PM
 
Newbuilding:
 
 
Selected standard forms:
o SAJ form: shipbuilders association of Japan form
o AWES: association of european shipbuilders and shiprepairs form
o Norwegian form: norwegian standard form of shipbuilding contract
o NEWBUILCON: BIMCO standard newbuilding contract
 
 
Heavily amended standard form:
 Internal conflicts
 Inconsistency
 Interpretation issues
 
 
Main aspects of the newbuilding:
 Predelivery: inspection
o The buyer has the right to have its representative on board the ship during sea trials.
The buyer may choose whether to accept or reject the newbuilding
 Delivery of vessel:
 o Important for the buyers arrangement such as:
 Chartering commitments
 Registration
 Insurance
 Financing
o Right place:
 Sellers place
 Most often at the shipyard
 Breach of contract:
o Warranties under the contract
 Express warranties
 Implied warranties
o Regulates whether defects of the ship may be the builders fault.
 
Breach of the contract:
 Breach of a term gives the innocent part different remedies.
 Important to distinguish the terms of the contract between
o Conditions
o Warranty
o Intermediate term
 
Secondhand vessels:
 
Newbuilding vs. Second-hand vessel:
 
Newbuilding:
 Operating costs are often lower than for older vessels
 Ensuring agreed performance of contract is of very high importance
 Typically more expensive than second-hand vessels
 Requires substantial efforts with regard to securing financing
 
Secondhand-vessels:
 Operating costs increase with age
 Quicker to acquire
 Often cheaper than newbuildings
 Higher maintenance costs
 
Contract negotiation and closing:
 

 
The parties and the vessel (NSF 2012, clause 7):
 
 Offer and acceptance
 Buyer's objective
o Vessel in good condition
 Sellers objective:
o Receive timely payment of highest purchase price
 
Entire agreement clause:
 
 Clause 18:
 

 
Deposit and purchase price (clause 1,2,3):
 
 Failure to pay gives right to cancel and claim compensation of losses and expenses.
 Joint escrow account:
o Nominated: law firm or brokers
o Escrow agreement
 
Inspection (clause 4,6,11):
 
 Before or after signing
 Divers inspection/drydocking
o Free of class conditions
 
Delivery and notice of readiness:
 
 Time and place for delivery
 Sellers shall provide NOR:
o Ship is at place of delivery
o Ship is physically ready
 Tender of NOR triggers payment obligations
 
Title and encumbranes (clause 9):
 
 Buyer wants clean title
 Seller wants clean break I.e. no liability after delivery
 Bill of sale transfers title
 
Breach of contract:
 
 Buyers default:
o Sellers keep deposit
o Sellers can claim damages
 Sellers default:
o Buyers can cancel agreement
o Buyers can claim damages
 
Documentation and closing:
 
 Documentation is provided in clause 8 or in an addendum
 Sellers documentation is the most burdensome
 Buyers documentation ensure validity of contract and party.
 
Registration of ship and mortgage:
 
 Vessel (and any mortgage) is deleted from sellers registration
 Vessel (and any mortgage) is registered in buyers name
 
Closing procedure:
 

 
 
 
 
 
 
Litigation / Mediation / Arbitration
Sunday, December 4, 2022
4:17 PM
 
Governing Law / Jurisdiction
- can change entire case
 
- Where to dispute can have effect

Liability in tort
- civil liability based on wrongdoing of one party
- negligence vs intentional act

Contractual liability
- contract not fulfilled

Settlement
- commercial relationship
- negotiations without prejudice
- based on strength of evidence / enforcement of judgements / cost and timespan

Mediation
- decision cannot be imposed
- focus on finding soloution
- easier to maintain good relationship
- mediators correspondence with parties is not regulated

- easy / cheap / leading to solution

- non binding / potential loss of time / revealing too much info

Litigation

 
 
 

 
 
Jurisdiction
- courts respect parties choice of jurisdiction
- Forum-non-conveniens: acknowledgement that another forum / court is more applicable = change of
court
- If no agreement for law: brussels convention will decide
- General rule: defendants should be sue at their domicile
- Exceptions: place of performance / place of harmful event / consumer rules / real estate
- Lis pendens – if claim is submitted to one court it cannot be change to other court
- Res judicata – same matter cannot be brought to trial twice

Choice of Law:
- if no law has been agreed Rome I or Rome II regulation will apply (in most EU countries)
- Law Applicable to Contractual Obligations and Non Contractual Obligations (UK)
- Rome I applies to contractual claims and Rome II applies to non contractual claims

Rome I / Rome II principles.

- law of contract applies
- law of place in which events of tort took place
- flag state of vsl

Enforecement
- judgement typically bilateral treaty or multilateral international convention between enforcing state
and judgement state
- within EU = brussels I regulation (art 39) allows enforcement of judgements
 
 
 
Enforcement / Mortgages / Maritime Lien
Sunday, December 4, 2022
4:17 PM
 
Mortgages
Rights in personam
- rights against specific persons – claim for payment

Rights in rem
- Rights relating to a thing / property

Mortgages
- registered security against an asset
- security for repayment
- assets of considerable value
- in bankruptcy – mortgagees are secured
- financing bank has 1st priority
- its registered in the flag states registry

Maritime Lien
- security interest over an asset to secure payment of a claim
- rights against the ship itself

- it takes priorities over other liens and mortgages

- not require any agreement between shipowner and creditor
- also without registration valid
- attached to vsl when sold
- expire after one year

- cannot protect against it

- do not exceed after forced sale of vsl

Ranking
1 claims secured by maritime liens
2 claims secured by registered mortgage
3 unsecured claims, including maritime claims not secured by liens

Enforcement of maritime claims

Claim: argument that person is seeking type of reimbursement / payment / or compensation under
contract or because of injury or somebodys negligence

Maritime Claim:
- all claims in relation to which a ship may be arrested
- defined in arrest convention

- Special regime covering enforcement against ships – ship is being perceived as a legal person

- ship arrest and maritime liens are both parts of this regime

Arrest:
- detention of vessel to secure a maritime claim / forced sale of ship
- interim measure and MUST be followed by court proceedings

Freezing Injunctions
- aimed at securing funds for satisfaction of a legal right
- in order to prevent a defendant from taking actions
- burden of proof on applicant
 
 
Legal Compliance / Risk MGMT
Sunday, December 4, 2022
4:17 PM
 
Why is trade compliance important for shipping companies?
 
 
Ship recycling:
 

 
Ship recycling transactions:
 
 Ship recycling and scrapping is an integral part of the shipping insutry and usually conentrated in
developing stages.
 Vessels are typically sold to a "cash buyer" who contracts directly with recycling yard and
handles documentation.
 Contract terms vary, but often standard contracts are used as Norwegian Salesform 1993 with
amendments and BIMCO standard contract Recyclecon
 
Legal framework:
 
 
Ship recycling regulation – focus on movement of waste:
 
 Basel convention:
o 184 parties, incl. The main shipbreaking nations in south asia, excl. USA
o Prohibits transboundary movement of hazardous waste to or from non-parties to the
convention and non OECD-states.
o Restrictions on the transboundary movement of waste to/from/through party states
o Obligations to notify the state of export and the state of import of transboundary
movement of all wastes between parties to the convention
 Ships are not specific category of waste, which means that the general
categories and rules apply.
 
 EU waste regulation:
o Implements the Basel convention within the EU
o Prohibits transboundary movement of hazardous waste from EU countries to non-OECD
countries and lays down for controlling waste shipment borders.
 
Ship recycling regulation – focus on flag state and recycling operations:
 
 EU regulation on ship recycling:
o Applies to vessels of no less than 500 gross tonnage operating between diff. States
o Flying the flag of an EU member state (overall recycling requirement) and
o For ships flying the flag of a third country at EU ports (must keep an IHM)
 
 Notification requirement to the member state 14 days prior to recycling of the ship
 Most Hong Kong convention rules on ship recycling are adopted
 Ship recycling facilities must be authorised by the european commision to recycle ships
o Currently only nine facilities outside EU has been approved by the european commission
and added to the european list (8 in turkey, 1 in USA).
o Also a requirement that vessel specific ship recycling plan is produced.
 
Ship recycling regulation:
 
 Hong Kong convention:
 o Will apply to vessels larger than 500 GT entitled to fly the flag of contracting states
o Vessels must be recycled at an authorised ship recycling facility only.
 The authorised ship recycling facilities must comply with certain standards for
environmentally sound ship recycling and must produce a vessel-specific ship
recycling plan
o The convention is not yet in force
o IHM is being adopted in industry
o BIMCO's recyclecon incorporates many of the requirements of the convention
 
 IMO guidelines
o Recommended best practice for recycling – but only recommendations, not enforceable.
 
The international legal regimes:
 

 
Status 2020; Flag and waste management rules:
 

 
 
Responsible parties:
 
  Exporter/importer typically the owner of the vessel at time of transfer. Disposer is the facility
 "generator means any person whose activity produces hazardous wastes or other wastes or, if
that person is not the person who is in possesion and/or control of those wastes (BC Art 2 (18))
 Risk that a seller of a vessel is deemed to be "waste generator" (when vessel is to be recycled)
 
Practical problem relating to waste shipment rules:
 
 Difficult to determine when owners are found to have "intention" to recycle
 
 Very cumbersonne, costly and time-consuming procedure
o Requirement to provide bank guarantee (for cost of recovery operations) and filling out
detailed forms.
o Process (consent from export, transit and import states) does often take severak
months.
o Movements of the vessel are, in principle, restricted to the jurisdiction during the
process.
o Owners have economic interest in avoiding – as they often do – the application of the
rules.
 
Competition law compliance:
 
 How does competition benefit society?
o Customer are offered the best products and services at the lowest prices
o Resources are allocated to the companies that perform best
 

European Competition Regulation

 The rules
o The Treaty for the Functioning of the EU; EU Regulations; Commission Guidelines

The authorities

-The European Court of Justice decides on EU law disputes, including competition law

-The European Commission, Directorate-General for Competition (DG COMP)

-Proposes legislation on competition (TFEU Art. 103)

-Administers the competition legislation by considering exemption applications, and by making

investigations (“dawn raids”)

-Enforce legislation by bringing competition cases against companies in breach of regulation

Collusive behaviourand agreements:

TFEU Article 101:

1.Agreements between undertakings, decisions by associations of undertakings and concerted

practices

2.Which may affect trade between EU Member States

3.The object or effect of which is to prevent, restrict and/or distort competition in EU

 

Types of collusive behavoiur:

 

- Types of collusive behaviour:

•Vertical

•Horizontal

•Horizontal agreements are often more likely to affect trade than vertical agreements

TFEU Article 101(3):

1.Contribution to improving the production or distribution of goods or promoting technicalor

economic progress,
2.while allowing consumers a fair share of the resulting benefit, but

3.restrictions imposed must be indispensableto attain the objectives

4.it must not be possibleto eliminate competition for a substantial part of the productsin
question

De minimis-exemption: Market share < 10% (horizontal agreements), or < 15% (vertical
agreements) –unlessprice fixing, output limitation, forms of customer and market sharing

Block exemption for liner shipping consortia (Regulation 906/2009) àmarket share < 30%

 
Abuse of dominant position
 TFEU Article 102 :

1.Any abuse by one or more undertakings

2.Of a dominant position within the internal market or in a substantial part of it

3.That may affect trade between Member States

•Is prohibited and void to the extent that it affects trade

 

The relevant geographical market

•The abuse of dominant position needs to be identified in relation to a particular market

•Abuse may be relevant in relation to ports, where (near-) monopolies can easily arise

•Under one market definition, a port could be dominant in a substantial part of the common
market and therefore subject to Article 102, but the same port might not be in a dominant
position under a different geographical market definition.

A product market covers such products and services, which are regarded as substitutable by the
consumers due to the products characteristic’s, their prices and their intended use

•Example: United Brands v. Commission of the European Communities àFruit market or

banana market?

•“The banana has certain characteristics, appearance, taste, softness, seedlessness, easy
handling, a constant level of production which enables it to satisfy the constant needs of an
important section of the population, consisting of the very young, the old, and the sick”

 
EU merger regulation – stopping market dominance:
 
 

EU Regulation 139/2004
Prohibits concentrations of businesses with a community dimension, which impedes effective
competition by creating a dominant position

Concentrations with a community dimension must be notified to the EU Commission

“Concentration”

Includes lasting and autonomous joint ventures, mergers, acquisitions.

“Community dimension”

The concentration must have a certain minimum turnover (worldwide and EU)

So what was P3? -A “Network Vessel Sharing Agreement “:

“The purpose of this Agreement is to authorize the parties to share vessels with one another in
the Trade (as hereinafter defined) and to authorize the parties to enter into cooperative working
arrangements in connection therewith.”

-Agreement on size, number and operational characteristics of vessels to be operated under P3

-The parties contribute vessel capacity, incl. e.g. deployment of newbuildings and e.g.
withdrawal

-Ports, rotation, speed and schedule are agreed. Repositioning costs shared pro rata

-Network centre (NC) manages vessels and schedule and can blank sailings or propose extra
loader. NC monitors bunker performance and settles slot transactions

-Slot capacity allocation for each party on each service and trade lane. Slots may be traded
between parties anonymously with NC as “broker” –and if not possible, to third parties

-No transfer of sensitive information between the parties. They may agree on preferred bunker
ports
 

Was the P3 network in compliance with competition laws?

 
•The p3 network was approved by the US authorities on 24 March 2014

•In June 2014, the European Commission informed the parties that it has decided not to open
an investigation into the P3 network

•However, on 17 June 2014, the Chinese authorities (MOFCOM) blockedthe P3 network

•The P3 network was abandoned by Maersk, CMA CGM and MSC.

MOFCOM (P3 perceived as a merger case)

•Reduces competition on the liner shipping routes between Europe and Asia

•Three largest companies on the route – market share of 47%

•Increases control in market and raise barriers to entry

•Less bargain power for cargo owners and ports

 Power to squeeze rivals

 State aid

State aid is prohibitedif it distorts competition, art. 107. The form of aid is irrelevantas long as a
company is affordedan advantage that distorts competition

Exemptions

Some types of aid may be acceptable, including where the purpose is to

•promote economic development in some regions and in areas of serious underemployment;

•promote an important project of common European interest;

•facilitate the development of certain economic activities or of certain economic areas

Port cases: When determining if public service contracts involve state aid, proportionality and
cost effectiveness of the public service is key

 
Anti-cirruption compliance:

 The cost of corruption can be divided into four main categories: political, economic,
social and environmental
 Transparency International Corruptions Perceptions Index 2018
 
 

Foreign corrupt practice (FCPA):

UK bribery act (UKBA):

 
 

Bribery vs. Facilitation payments:

•When is an act considered a bribe?

•The act of giving or receiving something of value in exchange for some kind of influence or
action in return, that you were otherwise not entitled to

•Example: Paying a government official to include you in a public tender offer that you were not
qualified to be included in

•When is an act considered a facilitation payment?

•The act of giving or receiving something of value in order to expedite an action (“a routine
governmental action”), that you were entitled to

•Example: Paying a government official to process your visa faster than the normal procedure
prescribes

 
Sanctions compliance:
 

Sanctions

Foreign policy instruments imposed with the aim of changing behaviour of the target by non-
military means, i.e. trade embargo

Most common restrictions

Export/import bans and bans on provision of specific services, asset freezes, prohibitions on
payments, investments and capital movements, arms embargoes, travel/visa bans
Penalties for breach of sanctions

•In the U.S.: massive fines and potentially prison sentence

•In the EU: fines, but not as massive as in the U.S., and potentially prison sentence

•Each member state sets out the penalty for breach in national law

•In Denmark breach of sanctions are penalized pursuant to the Danish Criminal Code section
110

Who imposes sanctions:

 
 
 

 
 

EU has implemented restrictive measures against the below countries (per 25 May 2022)

 
Who must observe the US sanctions and comply with the sanctions?

How can US sanctions be divided?:

(i)Country based sanctions;

(ii)List based sanctions;

(iii)Sector specific sanctions; and

(iv)Secondary sanctions.

What is important to know?

U.S. sanctions may apply for trade in goods and technology, which contain U.S. components, or
when a transaction is carried out in U.S. dollars.

Companies owned (50% or more) by a sanctioned company or a sanctioned individual is

considered sanctioned. U.S. persons are prohibited from trading with such companies.

OFAC:
 

Iran and syria sanctions program:

1. Primary sanctions - "US persons"

2. Secoundary sanctions – certain "significant transactions".

EU companies risk for violating US sanctions is high

OFAC has as annexes to the Advisory inserted:

(i)A Non-Exhaustive List of Vessels that Delivered Oil to Syria in 2016-2018; and

(ii)A Non-Exhaustive List of Vessels which have Engaged in STS Transfers of Petroleum Destined
for Syria in 2016-2019.

•Vessels that have been designated as blocked property pursuant to U.S. sanctions regulations
are identified on the SDN-list.

•Even though not listed on a sanctions list, it may still have extensive consequences for
shipownersthat their vessel is named on the list.

 
EU blocking statute:
 
 
 
Consequences of breach:
 

How to deal with sanctions

Sanctions checklist

1.What acts are prohibited?

−Reflected in the relevant legislation

2.What countries or persons are targeted?

−Reflected on the sanctions lists maintained by the UN, EU and US (i.e. SDN-List)

3.Is there a risk that our operation is covered by the prohibited acts and/or is connected to the
countries/persons targeted?

 
 

 
 
Marine Insurance
Sunday, December 4, 2022
4:17 PM
 
Marine insurance types:
 
 Protection and indemnity (P&I):
o Covers the vessels liabilities towards third parties. Covers limited areas IWL cover.
 Hull and machinery
o Covers damage to the vessel and its machinery.
 Cargo insurance
o Taken out by sellers/buyers of goods to cover the amoubt not covered by the ships P&I
(limited pursuant to the Hague visby rules)
 Anchillary cover
o Kidnap and ransom, war risk, loss of hire etc.
 
Insurance providers:
 
 Protection and indemnity:
o Mutual Insurance clubs or fixed facility (commercial) insurers.
o Hull and machineary
o Cargo insurance
 
Marine Insurance Act 1906:
 
 "A contract whereby the underwriter undertakes to indemnify the assured in a manner and to
the extent thereby agreed, against marine losses -> meaning the losses incident to marine
adventure" (MIA section 1).
 Subject to contract -> parties may agree otherwise
 Policy wording will always be the starting point for analysing an insurance claim.
 
Insurance Act 2015:
 
The insurance Act 2015 was enacted in order to replace the Marine Insurance Act 1906 which was
favouring the insurer to the detriment of the insured. It distinguishes between "consumer" and "non-
consumer" insurance contracts.
 
 Deals with (virtually) any kind of insurance (only in part with consumer insurance contracts).
  Introduces certain new concepts and requirements mainly on the part of the insurer (not simply
codification of case law).
 Repealed in part the MIA
 Subject to contract is also "disadvantageous terms"; which is terms putting the insured in a
worse position than under IA, (most be drawn to insureds attention in order to be in valid).
 
General principles of marine insurance:
 
 Insurable interest:
o The assured must have an "insurable interest"
 If not the contract is void and will be treated like it never existed (MIA section
4).
o How and who?
 Ownership
 Owner
o Possession together with right of enjoyment
 Time, voyage or BB charter.
o Duties/obligations in respect of the subject matter
 Technical manager
 Commercial manager
o Various security interests
 Bank with a mortgage upon the vessel
 
 
 The duties of fair presentation (IA) and utmost good faith (MIA):

 
 The duty of fair presentation (IA) - what is "fair presentation" :
o IA section 3 (1): "Before a contract of insurance is entered into, the insured must make
to the insurer a fair presentation of the risk"
o IA section 3 (3): "A fair presentation of the risk is one..."
 B: which makes that disclosure in a manner which would be reasonably clear
and accessible to a prudent insurer, and
 C: in which every material representation as to a matter of fact is substantially
correct, and every material representation as to a matter of expectation or belief
is made in good faith.
 
 The duty of fair presentation (IA) - when to disclose?:
o Obligation to disclose exists up until conclusion of the contract (pre-contractual)
o However, no duty to disclose in certain situations:
  IA section 3 (5): "in the absense of enquiry, subsection (4) does not require the
insured to disclose a circumstance if";
 (A): it diminishes the risk
 (B): the insurer knows it
 (C): the insurer ought to know it
 (D): the insurer is presumed to know it, or
 (E): it is something as to which the insurer waives information
 
 The duty of fair presentation (IA): - what to disclose? ('deemed full disclosure')
 
o IA section 3 (4):
 "The disclosure required is as follows
 (a) disclosure of every material circumstances which the insured knows or ought
to know
 (b): failing that, disclosure which gives the insurer sufficient information to put a
prudent insurer (a theoretical insurer who needs to know all the material facts before
entering into a contract of insurance) on notice that it needs to make further
enquiries for the purpose of revealing those material circumstances"
 
 Material circumstances:
 Physical hazards (the risk)
 Moral hazards (the insured person/company).
 
 The duty of fair presentation (IA) - test of materiality:
o Would the fact be of interest to a prudent insurer writing risks in the market and would
it ultimately have caused a prudent insurer to decline the risk or increase premium (test
of materiality?)
o Objective test (I.e. whether an insurer in general would consider it material).
 
 The duty of fair presentation (IA) - test of inducement:
o The insurers must prove that they were indured/convinced to enter into the contract by
the manner in which the risk was presented by the assured (misrepresentation of
facts)/or by the non-disclosure of material circumstances (test of inducement)
o Subjective test (must be shown that the insurer was in fact induced)
 
 The duty of fair representation / Remedy for breach:
o Remedies for failure to fairly represent the risks are avaliable to the insurer if (I) the
non-disclosure was material and (ii) the insurer was induced by that non-disclosure.
o Schedule 1 to IA ("Insurers' remedies for qualifying breaches")
 Section 2 "Reckless or deliberate breaches -> insurer may avoid contract and
keep premiums
 Section 3: Other breaches -> "proportionate remedies"
 Where the insurer would have declined the risk altogehther, the policy
can be avoided, with a return of premium
 Where the insurer would have accepted the risk but included a
contractual term, the contract should be treated as if it included that
term
  Where the insurer would charge a greater premium the claim should be
scaled down proporionately.
 
Coverage – incl losses (1 / 2):
 
o MIA section 55 -> defines incl. And excl. Losses
 1: Subject to the provisions of this actm and unless the policy otherwise provides, the
insurer is liable for any loss proximately caused by a peril insured against.
o Any loss: that is both partial and total loss
o Total loss: defined negatively in MIA section 56 as "any loss other than a total loss, as herinafter
defined, is a partial loss". Total loss can be defined either as:
 1: "actual total loss" (ALT) -> where the ship/cargo is destroyed that it can no longer be
said to be a ship/cargo).
 2: "constructive total loss" (CTL) -> the insured informs the insurer that it wants to
abandon the subject matter – the purpose is salvage
 
o MIA section 55 defines incl. And excl. Losses:
 1: subject to the provisions of this act and unless the policy otherwise provides, the
insurer is liable for any loss proximately casued by a peril insured against.
o "Perils": risks and dangers (I.e. that it must be covered by an actual insurance made)
o "Proximate cause" is the primary cause of a injury -> "proximately = primarily"
 The primiary reason/the efficient cause for the loss must be a peril covered by the
insurance
 
Hull and machinery:
 
Loss of or damage to the ship (+ collision liability)
 
 Primarily a property damage insurance
 Covers (institute/international hull clauses)
o Losses in case the vessel suffers damage (cover for repair costs)
o Losses in case the vessel becomes a total loss
o Loss of or damage to the vessel caused by any governmental authority acting to prevent
or mitigate a pollution hazard
o 75% collission liability
o Losses from marine perils whether or not assured has exercised due diligence
o Losses from marine perils where the assured has acted with due diligence
 
Institute/international hull clauses:
 
o Institute hull clauses 1983 and 1995
o International hull clauses 2033
 Losses from marine perils whether or not assured has exercised due diligence:
 Perils of the sea, rivers, lakes
 Fire, explosion, violent theft, piracy, contact with land installations, earthquake,
contact with aircraft.
 
o Losses from marine perils where the assured has acted with due dilligence (insured burden of
proof).
 Bursting of boilers or breakage of shafts (not repair costs)
 Latent defects in the machineary or hull
 Negigence of master, officers, crew or pilots
 Negligence of repairers or chrts.
 Barratry of master, officers or crew
 
Perils of the sea:
 
o Rule 7 in MIA 1906 schedule on construction
 "Perils of the sea refers only to fortuitous accident or caualties of the sea. It does not
include the ordinary action of the winds and waves".
o The cendor Mopu
 There can be loss by perils of the seas even if such sea condition where ordinary and
foreseeable and/or expected.
 Loss covered if threre is a fortuitous unexpected accident or casualty as an extraordinary
result of the wind and waves.
 
P&I clubs:
 
o Agreement to share own and other members risks by premium/calls.
o P&I are non profit making associations financed by its members.

Third party liability insurance:

 
o Covers loss and damage caused by the operation of the vessel
o Provided by mutual insurance clubs
o Losses are distributed evenly among members
o Diff. Premium calls for the members (loss record)
o Indemnity insurance as opposed to liability insurance
 
 Covers inter alia:
o Cargo claims
o Personal injuiry
o Collision claims (25%)
o Pollution claims
o Wreck removals.
 
Condition:
o Maintenance of clss
o Compliance with statuory obligations:
 SOLAS
 ISM
 STCW
 ISPS
 "pay to be paid" rule:
 Assured first held liable
 And have paid the claim
 Direct action of injuired party against insurer generally not possible
 Can be waived by the club
 
Letter of undertaking:
o LOU:
 the club provides security for the payment of a particular claim
o Purpose:
 ensure that the vessel is not arrested or that it is released from arrest
o Conditions:
 Claim is covered by the insurance
 Premiums (calls) are paid up to date
o Construction of a LOU
 Contract between insurers and injured party
 Very fact sensitive matter
 Intyerpreted literally (expection for obvious mistakes).
 
Freight, demurrage & defence:
 
o Area wider (contractual/other disputes)
o Not only defending but also pursuing claims of members/assureds
 
It is not:
o P&I
o H&M
o Legal advice and support before dispute arise
o Cover for legal costs and expenses in legal disputes (arrest/attachement, arbitration, court
cases)
o It does not cover the underlying claim itself (fx for hire or freight) which is in dispute.
 
Legal costs and expenses:
 o Surveyors and forensic experts to prepare/defend a claim
o Lawyer/counsel fees
o Own legal costs for arbitration, court or mediation
 
FD&D – main area of cover/examples:
 
 Hire, freight, demurrage and re-delivery disputes
 Bunker contamination claims
 Disputes on the safety of ports or berth
 Delay claims
 Ship vetting disputes
 Disputes with agents, stevedors, port authorities etc.
 
 
Cargo insurance:
 
Issues:
 The institute cargo clauses
 Scope of policy
 Duration
 Exclusions
 Seaworthiness and cargo
 
Institute cargo clauses:
 
 ICC (A): all risks
 ICC (B): 9 named perils
o Fire or explosion, stranding, sinking, derailment of land conveyance, collision, discharge
of cargo at a port of distress, earthquake, general average sacrifice, jettison or washing
overboard, entry of sea water into vessel.
 ICC (C): 7 named perils
o Fire or explosion, stranding, grounding, sinking, deraiment of land conveyance, collision,
discharge of cargo at a port of distress, general average sacrifice, jettison.
 
Scope of policy:
 Cargo policies are voyage policies (not time policies)
o Alteration of port of departure will void the insurance
 If changed prior to ship sailing, the risk never attaches.
 If voyage change after ship has sailed: cover ceases from the moment the
change of voyage is manifested.
 Principle of innocent cargo
o Cargo owner may not be aware of (lack of) seaworthiness of the ship and may not even
know which particular ship the cargo will be transported on.
 
Duration:
 
 Warehouse to warehouse (ICC 1982 s. 8.1)
 Shelf to shelf (ICC 2009, s. 8.1).
 
Exclusion:
 Fx inherent vice: this refers to goods which damage themselves without any external source)
o Narrow concept
 Fx insufficient packing and stowage
 Burden of proof for exclusions is on the insurer.
 
Other insurance types:
 
 Kidnap and ransom insurance
 War risk insurance
 Mortgage interest insurance (MMI)
o Provides cover for the mortgagees (banks) loss in case the regular H&M insurance does
not provide cover in the event of damage to the vessel.
 Mortgage add. Perils (MAP)
o Provides cover for the mortgages (banks) loss in the event of marine pollution the costs
of which create a maritime lien that may have priority over the banks mortgage.
 
 
 
Towage / Salvation
Wednesday, September 21, 2022
1:07 PM
 
Intro

- Civil claims
- Public scrutiny
- Class investigations
- Criminal sanctions

Claimants against the owners

-> Class, cargo interest, authorities, insurance companies, media/public, crew, third parties,
other vessel interests
 

Which rules apply?

- Vessel type
- Event circumstances
- Type of incident
- Type of damage / losses
- Claim basis

Pollution – coastal state matter

Internal economy – not necessary of interest of the coast state
 
1. Collision

- 1910 convention
- fault base

Contributory Negligence – Both to Blame

- both parties reliable to a certain degree
- shared as per their fault percentage
- time bare of 3 years

Principles of Liability:
- one at fault, cover all loss

- several regulations – COLREG

- governing certain rules

Defences Available
- inevitable accident
- contributory negligence
- agony of the moment

 
2. Limitation of Liability
- LLMC 1996
- based on vessel size / GT
- Shipowners + salvors can limit their liability

- setting up a limitation fund

- claimants can seek cover from that

 
3. Salvage
- any act or activity
- assist a vessel – not applicable for off shore platform
- salvage of human life – no salvation award -> entitle fair share of salvage reward
- vessel in 'danger'
-> no clear definition of danger
- if no help was sufficient – no cure no pay -> no salvage award

Salvage agreement
- can be altered
- can be entered by the captain

Lloyd's open forum

- SCOPIC clause
- Special compensation P&I Clubs
- renumeration of some kind, even though no salvage happened
- only under article 13 in the salvage convention
 Exceptions – damage to environment- or - no vessel/ property / value saved
-> purpose to encourage people to assist

Maritime Lien
- security has to be satisfactory
 
4. General Average
- arrangement of sharing financial consequences
- loss shared by all parties involved
- York Antwerp Rules

- cargo jettison

Rules fulfilled
- extraordinary sacrifice
- intentional / reasonably
- unintentionally
- common safety of the voyage

The voyage must be save for General Average to apply

Calculation:
- Expenditures / Contributory value / split by parties involved
exemption as per charter party
 
5. Towage
- several acts considered to be towage
- also in connection with salvage
- contractual or non-contractual (towcon / towhire)
- towage – have a contract, renumeration on certain basis, not same priority as salvage
- salvage – more valuable, contractual basis, based on what actually saved, creates
maritime lien

- towage – cannot seek more renumeration

Absence of written contract

- obligations of care and skill

Contract – hirer + tug owner

- warrant of authority clause

UK Standard Towage Conditions (1986) - UKSTC – more tug friendly

Towcon/Towhire - Bimco – more balance
Towcon – lumpsum
Towhire – Daily rate

Knock for Knock – Regime

 - damage / loss parties shall share responsibility for the loss occurred
- bare own loss
- only agree to – need to be towcon/hire
- offshore
- difficult to enforce in certain jurisdictions – standard practice
 
6. Wreck Removal
- most cases pni + owner liable for removing the wreck
- pay to be paid – pni basis
- Nairobi convention
 
7. Marine Pollution
- Legal Framework – MARPOL
- SOLAS
- oil pollution damage
- limited to green fuels
- exemptions for tanker vsls
- registered owner is liable
- not liable if act of god / natural phenomenon / governmental errors
- owner takes out insurance
- liability is limited – SDR 89,77 million usd is max

Funds on international level – 1992 fund + 2003 fund

NHS convention

Strict liability – fault based liabilty

 
Marine pollution – strict liability
collision – fault based
 
 
Carriage of passengers
Thursday, November 3, 2022
10:26 AM
 
- Athens convention
- EU Package Travel Directive

1974 entered force

2002 protocol – amendments, replacement of faultbased liability

Shipping incident
collision, grounding, everything related to the vessel
- Strict liability vs Fault based liability

Non Shipping Incident

- Fault based liability
personal injury / death to passenger – collision
strict liability for 250.000 sdr
maximum for passenger 400.000 sdr

intent to damage – no limit to liability

few cases – as covered by insurance

Forum shopping – seeking largest compensation

EU package travel – more than 24hrs in order to be applicable

time bar of 2 years
 
 
 
Contracts / Pool Agreements / Cooperations Contracts
Sunday, December 4, 2022
4:18 PM
 
1. Ship Management:
 
 Management agreement: the ship manager provides services to the ship owners for a fee.
 
 Contracts are by the ship management companies themselves or (BIMCO Shipman 2009).
o SHIPMAN is a ship management agreement that include crew, technical and commercial
management as well as insurance arrangement in respect to the ship. (comes in two
parts).
 
 Ship managers are authority's who can bind ship owners to contracts. (meaning that the ship
manager enter into contracts on ship owners behalf)
 Agent:
o if a third party knows that the contract on behalf of the ship owners, then the contract is
valied.
o Owners are also bound if within actual/apparent authirity and third party intended to
enter into contract with owners.
o IMPORTANT: it's important to know if you act as an agent or behald of one.
 
 Managers obligations:
o Use best endeavours in carriying out obligations.
o Not act inconsistently with principals interest.
o Not do anything for his own purpose
 
 Owners obligations:
o Pay management fee to the manager
o Supplement manager in perf. Obligations.
o Techinal compliance if the agreement doesn't cover tech. Management.
  
 Managers liability:
o If manager fail his obligations -> manager is liable in contract and/or negligence to ship
owners/third party.
o BUT: liability to the ship owner is excluded if sole negligence or wilful default of
manager.
o Shipowner must indemnify manager against third party claims (costs, damages,
expenses) incurred by the manager in performance of the agreement.
o Manager use insurance to cover,.
 
 Termination:
o Termination requires that the defaulting party has not remedied their default within a
reasonable time after receiving a notice of default.
o Manger can terminate the agreement with immediate effect if payment for an agreed
amount has not been receievd within 10 days.
o Extraordinary termination: if sale of vessel/vessel becomes a total loss and in certain
other events.
 
 Crew mangement:
 
o The CREWMAN is basically the same as SHIPMAN 2009 –> the crewman is agency based (so you
employ people on behalf of, not as principals), made on the same time.
o CREWMAN A and CREWMAN B -> similar obligations as to SHIPMAN, but only covers crew
management.
o Either payed "cost plus fee" and "Lumpsum"
 
 
2. Commercial management and pool agreements:
 
 Cons:
o Shared pool earnings, security, less risk, the vessel "share" ups and downs. Fx if there is
a claim it doesn't just effect that one vessel, but are shared on all the vessels in the pool.
o Provide expertise and supportive actitivities etc -> should help reduce ballast leg, bulk
bying of goods, economies of scale etc.
o The owner gets "pool earnings" instead of TC hire
 
2 types of pool:
 
1. Time charter based pool (POOLCON A):
 
 Each owner enters into a pool agreement with the pool manager
 Each owner TC their vessel to the pool manager.
 Pool manager manages the pool vessel(s) commercially and the owner receive hire each month
and a distribution yearly.
o All contracts are entered into in the pool managers name (not as agent)
 
Pool manager:
 
 Takes care of everthing (marketing, instructions to master, accounting etc)
 Can enter into contracts not exceeding 6 months (normally) / or the equivalent number of
voyages if they are scheduled to be performed with 12 monts.
 Charter in add. Tonnage not exceeding 6 months.
 Sign accession agreements.
 
Pool committee:
 
 They will supervise and monitor the pool managers and protect the interest of the pool.
 Normally meet up every 1-2 year.
 Normally you have 1 vote pr. Vessel.
 Pool committee have autorhority to;
o approve new pool vessels from existing participants
o Enter into transportation contracts committing a pool vessel for more than 6 months
but less than 12 months (subject to owner)
o Charter in add. Tonnage for more than 6 months but less than 12.
 
Participants meeting (highest authority of the pool):
 
 Meets at least once a year
 Extraordinary meeting may be called by 25% of total pool vessels.
 They approve pool operations' annual accounts and appointment of auditors.
 Approve annual budget.
 Following can be approved by 2/3 (depending on number of pool owners participating in regards
to votes:
o Pool points and changes to pool points formula
o TCO for more than 12 months
 o TCI add. Tonnage for periods longer than 12 months
o Approve contracts outside normal course buisness
o Approval of use of participants or its subsidiaries/branches for concluding contracts re.
Provisions or sub-contracting of services.
o Contracts for bulk buying of services/supplies with annual value exceeding and agreed
amount
o Approve framework contracts for bunkers, agency, brokerage.
o Winding up of the pool
o Approve of the appointment of new pool managers,
 
 Following can be approved if unanimity of participants are present:
o Co operations or joint venture agreement
o New participants
 
 Following requires unanimity of all participants:
o Expulsion of participants
o Changes to the pool agreement (all participants + pool manager)
 
 Payment:

 
 Pool net revenue:
 

 
 Pool points:
o They are used for fx young vessels that doesn't burn that much fuel -> so that the
vessel/vessels that "perform" the best in the pool also gets most out of it.
 
2. Agency based pool (POOLCON B):
  Here it's the pool manager who employees the vessel, as if they were his own.
 Owner has to take care of the insurance
 
 
Joint venture:
 
 Fx if a commercial and financial company merge -> they can use eachothers expertise.
 
 Umbrella term for many diff. Setup
 Usually;
o 2 or more parties establish a jointly owned JV company.
o JV agreement governs the participants relationsship.