Sea Venture newsletter Issue 11

Introduction....................................3

Realising India’s Maritime Potential ......................................4

Loss Prevention ............................4

California - On Off Enforcement of CARB Regulation ....................5

Profit Sharing Agreements in Long-Term Time Charters..............6

US Cruise Lines - Forum Selection Clauses ..........................7

Thailand - Developments in Maritime Law............................7

Cargo Hold Fatality ......................8

Time Charterers and Third Party Liabilities ....................9

Dogs that Didn’t Bark - The “Achilleas” ..........................9

US COGSA - What Constitutes a Package? ................................10

China - Delivery Without Bills of Lading ....................................11

UNCITRAL - International Carriage of Goods Wholly or Partly by Sea ..........................12

Named Ports, Safe Ports and Deadfreight..........................13

UK - Corporate Manslaughter ....14

US COGSA - Liability for Dangerous Goods ......................14

Sale of Goods - Jurisdiction Issues under EU Regulations ......15

Japan - New OPRC-HNSRegulations ................................16

US Ports - Conditions of Entry ......17

Australia - Tug Liability Under UK Standard Conditions for Towage ................................18

Collision - Damages for Loss of Fixture ................................19

Peril of Sea Defence - Alive and Well in United States Fifth Circuit ..........20

Oil Spills During Routine Bunkering Operations ................21

China - Recent Amendments to Civil Procedure Law ....................22

Recent Publications ....................23

Contents

2

Editorial TeamSue WatkinsNaomi Cohen Malcolm Shelmerdine

Sea Venture is available in electronic format. If you wouldlike to receive additional copies of this issue or futureissues in electronic format only please send your name andemail address to seaventure@simsl.com.

Feedback and suggestions for future topics should also besent to this address.

The immediate background to the 2008 renewal wasanother high claims year in 2007, following 2006 whichwas an historically high claims year for claims on theInternational Group Pool. Fortunately the Club’s Boardread the signs early, decided to increase premiums and seta 9% standard increase at the 2007 renewal. Thisenabled the Board to set a standard increase of 15% forthe 2008 renewal, lower than some of the otherInternational Group Clubs. Naturally Members never liketo see premium increases but there is a generalunderstanding that the current vibrant shipping marketand the attendant high level of claims inevitably requireshigher premiums. A premium increase of 13%, inclusiveof change of terms, was achieved on renewing business.The Board believes that this is an appropriate response tothe current circumstances.

Going forward it is difficult to predict anything other thana continuation of the current level of claims whilst theshipping markets remain strong, the fleet continues toexpand and the demand/supply equation for experienced,competent crew remains under stress. Premium rates willhave to reflect the level of claims. More than ever theonus is on the Club to ensure that Members are treatedfairly. Members are entitled to know exactly how theirpremium is calculated and how the costs of claims andreinsurances are allocated. Transparency allied to aconsidered approach to risk retention should ensure thatthe Club and the Members work together to achieve anacceptable and appropriate premium level for the fleet.

Over the 2007 year the Club’s owned entered tonnageincreased by 3.3 million GT, approximately 7.5%.Together with chartered tonnage, total entered tonnagewas approximately 72 million GT. Perhaps moreimportantly the Club returned to a pure underwritingsurplus for the financial year with free reserves increasingto US$185.8 million. Given the continued high level ofclaims the result confirms that the Club is pursuing theright course. Financial strength and stability will be theoverriding objectives of the Club.

Gary Rynsard

30th May 2008

Introduction

Sea Venture newsletter Issue 11 3

Sea Venture newsletter Issue 11

Realising India’s Maritime Potential

4

Steamship Mutual wishes to congratulateMr. S. Hajara, Chairman & ManagingDirector of Shipping Corporation of IndiaLtd, who received an Emeritus HonoraryMembership of The Institute of CharteredShipbrokers (ICS) at the inaugural RealisingIndia’s Maritime Potential seminar held inMumbai on 15 April 2008.

The event, considered a resounding successwith over 150 attendees, was designed toacknowledge the innovation taking placewithin India’s maritime industry and toconsider how to maintain healthy growthacross the sector in conjunction with ICSand Maritime London.

In addition to various presentations onrisk-management, port expansion andthe problems of organising ship financein the current global financial climate,Jonathan Andrews, Director and Head ofUnderwriting in the Eastern Syndicate,presented a paper on the InternationalGroup of P&I Clubs’ position in theIndian market.

India, of course, has a special andlongstanding position in the history ofSteamship Mutual, with Indian shipownersbeing amongst the first of the Club's non-UK based Members.

Loss PreventionThe current high levels of activity in theshipping market and the acknowledgedshortage of experienced officers andcrew have played a significant part in theclaims that Steamship Mutual and otherClubs have experienced in the last twoyears. With the growth in the industrythat is forecast for the next few years therisk of incidents caused by “humanerror” or crew claims seems unlikely todiminish. In view of this the significanceof loss prevention cannot be over-emphasised. One element is crewtraining. In this respect Steamship Mutualhas continued to work with VideotelMarine International in the production ofonboard training programmes. During2007 new programmes were completeddealing with:

• Engine Room Waste Management• Container Stowage and Securing• Ship Husbandry• Working with Tugs

In addition, twoprogrammes in thePersonal Safety series,Personal Safety: The

Shipboard of Management Role andPersonal Safety on Tankers, were updated.To re-emphasise the importance of crewtraining in loss prevention an updatedversion of Training Matters in DVD formatwas also published. In conjunction withVideotel, Steamship Mutual’s innovativemagazine Sea News was also published inDVD format. The objective of Sea News isto inform seafarers on matters of topicalinterest. We are pleased to report thatboth Sea News and Training Matters werethe recipients of media industry awards.

Further information about loss preventionmaterials can be found on the SteamshipMutual website at:

The Right Honourable Lord Mayor of the City ofLondon is greeted by the Chairman and ManagingDirector of Shipping Corporation of India, Mr S.Hajara.

www.simsl.com/loss-prevention-and-safety-training.html

Sea Venture newsletter Issue 11 5

The status of the Californian Ocean-Going VesselAuxiliary Diesel Engine Regulation has proved to be amoving target in recent months.

With effect from 1 January 2007 the regulationrequired all ocean going vessels calling at Californianports to use Marine Gas Oil (MGO) or Marine DieselOil (MDO) with 0.5% or lower sulphur content byvolume for powering diesel electric engines and dieselauxiliary engines. The regulation was, however,challenged on the basis that the Federal Clean Air Actpre-empts regulations adopted by individual states andthat prior consultation with and authorisation from theU.S. Environmental Protection Agency (EPA) wasrequired prior to implementation.

On 30 August 2007 an injunction was grantedpreventing CARB from enforcing the regulations.CARB appealed the decision and on 24 October 2007the Ninth Circuit Court ordered a hold on theinjunction, thereby allowing CARB to enforce theirregulations pending the appeal.

However, on 27 February 2008 the Ninth Circuitdecided the regulation was pre-empted by federal law.CARB suspended enforcement of the regulation whileconsidering the next step, but subsequently appealedand on 10 March, because the injunction had notbeen reinstated, issued a Notice announcing itsdecision to continue to enforce the regulation.

The appeal failed and the injunction was reinstated.Accordingly, on 7 May 2008 CARB issued a furtherNotice stating that enforcement would bediscontinued. The Notice can be found at:

CARB now plans to submit a request to EPA forauthority to enforce the existing regulation.

In the meantime, CARB encourages ship operators touse 0.5% sulphur MDO or MGO within 24 nauticalmiles of California to reduce the significant adversehealth impacts from human exposure to the airpollutants emitted by ocean-going vessels in Californiawaters.

Further details are available in an article by NaomiCohen (naomi.cohen@simsl.com) on the SteamshipMutual website at:

California –On OffEnforcementof CARBRegulation

www.arb.ca.gov/ports/marinevess/documents/Auxenforce050708.pdf

www.simsl.com/CARBReg0508.html

Sea Venture newsletter Issue 106

The case of Golden President ShippingCorp v Bocimar NV concerned an appealto the High Court by the owners of the“Channel Alliance” against an arbitrationaward in favour of charterers. The courthad to consider whether a profit sharingagreement within an NYPE charterapplied to the extended charter periodexercised at charterers’ option.

Bocimar NV, the charterers, had charteredthe vessel for 5 years on an NYPE formcharter with an option to extend for a 6th

and 7th year. The dispute arose in relationto Clause 98(6) which provided that “Forprofit sharing purposes, optional year(s),if declared to be considered on theirown”. Charterers contended that theeffect of this sub-paragraph was toexclude the optional years from the profitsharing agreement. Not surprisingly,owners argued to the contrary that theoptional years were to be included in theprofit sharing agreement. However, thearbitrators sided with charterers anddecided that the optional years could notbe considered for profit sharingpurposes.

On appeal, Mr Justice Cooke agreed withowners’ argument. He held that both on aproper construction of the clause and froma commercial perspective it was clear thatthe optional years, if exercised, were to beconsidered in the context of the profitsharing agreement and that owners weretherefore entitled to 50% of profits earnedfrom the 6th and 7th additional years.

This judgment is considered in detail inan article by Mahtab Khan(mahtab.khan@simsl.com) on theSteamship Mutual website at:

Profit Sharing Agreements in Long-Term Time Charters

Sea Venture newsletter Issue 116

www.simsl.com/GoldenPresident0508.html

Sea Venture newsletter Issue 11 7

It has long been common practice for cruise linesoperating out of the United States to include forumselection clauses in their passenger tickets dictatingthat any claims must be brought in a specified state.The provision might also specify a particular federaldistrict court as the exclusive venue for bringing suit.

There are practical differences between the state andfederal courts which a cruise line operator should bearin mind when considering the benefits of using such aclause. These include: the judicial appointment system,procedural differences, speed, costs and the right to ajury trial.

In an article written for the Steamship Mutual website,Paul Brewer (paul.brewer@simsl.com) considers therelative merits of the two systems:

US CruiseLines - ForumSelectionClauses

In the past five years Thailand has enacted three newmaritime laws. These laws are the General Average inMaritime Adventure Act, B.E. 2547 (2004), CivilLiability and Damages Arising from Collision of VesselsAct, B.E. 2548 (2005) and the Marine Salvage Act,B.E. 2550 (2007).

Each of these three laws can be considered the fruit ofdevelopment in the maritime law system of Thailand,which aims to harmonise Thai national laws withuniversal maritime practices and principles, as setdown by international conventions and rules which are accepted worldwide. Some of these laws alsoincorporate additional criteria to suit the socio-economic conditions of Thailand. The IntellectualProperty and International Court in Bangkok isdesignated as a specialised court for handling ofdisputes relating to maritime laws, including theaforesaid three new laws. Special attention should bepaid to the time limits laid down for claims under eachnew law. In addition, the Thai government has a policyto ratify CLC 1992 in the near future.

Pramual Chancheewa of Pramuanchai Law Office hasprepared an article for the Steamship Mutual websitein which these recent developments are discussed inmore detail:

Thailand -Developmentsin MaritimeLaw

www.simsl.com/CruiseForum0508.html

www.simsl.com/ThaiDevelopments0508.html

Sea Venture newsletter Issue 118

During a ballast voyage from Tuticorin,India, to Dampier, Australia, the crew wereengaged in hold cleaning in preparationfor loading a cargo of salt. The first stageof the process involved spraying the holdsurfaces with a 31% hydrochloric acid inwater solution to help remove rust. Thissolution is left for a period of time prior tobeing washed off using sea water.

Two crew members had been engaged inspraying no. 3 hold with the hydrochloricacid solution. The two men proceeded todepart the hold, one using the forwardaccess ladder and the other the aft accessladder. Both ladders were of the“Australian” type with intermediateplatforms between the tank top and thedeck, although the aft ladder had aninclined staircase at its mid section makingit easier to climb. As the seaman on theaft ladder reached the top he heard a loudthump and turned to see his colleaguelying on the tank top near the base of theforward access ladder.

As is often the case, the death of anexperienced able seaman on board this

geared handy sized bulk carrier was theresult of a number of contributory factors;the possible impact of fatigue, tropicalheat, personal protective equipment, non-adherence to Safety Management Systemprocedures and lack of awareness ofMaterial Safety Data Sheets. The relevanceand interplay of these factors arediscussed in an article by Captain SimonRapley (simon.rapley@simsl.com) of theClub’s Loss Prevention Department on theSteamship Mutual website at:

Cargo Hold Fatality

www.simsl.com/HoldClean0408.html

9Sea Venture newsletter Issue 11

www.simsl.com/AchilleasAppeal0907.html

In issue 9 of Sea Venture Rajeev Philip(rajeev.philip@simsl.com) discussed the Court ofAppeal decision in The “Achilleas” and its implications:

More recently, in an article published in the February2008 edition of Lloyd’s Maritime and Commercial LawQuarterly ("LMCLQ") John Weale, Vice President ofFednav Limited, Montreal, explored the commercialaspects of the decision and the manner in which thecase was pleaded. We are grateful both to John Wealeand LMCLQ for allowing us to publish the article in fullon the Steamship Mutual website at:

The appeal to the House of Lords was heard in mid-May2008. A further Sea Venture article will address thedecision when handed down by the House of Lords.

Dogs thatDidn’t Bark - The “Achilleas”

The recent decision in the US Court of Appeals for theFifth Circuit concerning the case of Norwegian BulkTransport v International Marine Terminals demonstratesthe difficulties a charterer can face when pursuingrecourse actions against third parties for losses it hasincurred under a charterparty.

In the leading case of Robins Dry Dock, as well as inNorwegian Bulk Transport, the court ruled that, in theabsence of a contract, claims for economic damages arenot recoverable in maritime law by a charterer with noownership interest in the vessel and where the thirdparty being sued was not involved in the contract out ofwhich the economic damages arose.

In an article by Aneeka Jayawardena(aneeka.jayawardena@simsl.com) the limitedinstances when a charterer may recover economic lossfrom third parties, under both US and UK law, and thepre-emptive steps charterers can take to protect theirposition are discussed:

TimeCharterersand Third PartyLiabilities

www.simsl.com/AchilleasWeale0508.html

www.simsl.com/NBT0508.html

On 28 January 2008 the Fourth CircuitCourt of Appeal handed down its decisionin the case of Maersk Line Ltd v UnitedStates of America. The judgmentconcerned the application of the USCOGSA per package limit of $500 to aHalvorsen aircraft loader (K-loader)transported by Maersk from the US toOman on a flat rack container.

The Military Surface Deployment andDistribution Command (SDDC), acting onbehalf of the United States, claimed thatthe K-Loader was not a package withinthe meaning of US COGSA and thattherefore a higher per ton adjustment ofdamage should instead apply.

The Court of Appeal upheld the summarydecision of the District Court. It was heldfirstly that the K-Loader did fall within thebroad definition of a package set down bythe Second Circuit in Aluminios Pozuelo

Ltd v S.S. Navigator and re-affirmed inCatepillar Overseas SA v Marine TransportInc. as “a class of cargo…to which somepackaging preparation for transportationhas been made which facilitateshandling…”. In this instance the K-Loaderhad to be loaded onto a flatrack to enableit to be loaded onto the vessel. Secondly, itwas held that examination of the contractsthemselves revealed that the parties hadintended each K-Loader to constitute apackage.

This decision is discussed in more detail inan article by Sue Watkins(sue.watkins@simsl.com) on theSteamship Mutual website at:

US COGSA - What Constitutes a Package?

www.simsl.com/MaerskPackage0508.html

Sea Venture newsletter Issue 1110

Sea Venture newsletter Issue 10 11Sea Venture newsletter Issue 11 11

The Shanghai Maritime Court (PRC) recently found inZhongcheng Ningbo Import and Export v ShanghaiAsia Pacific International Containership Warehousingand Transport Co. Ltd that a claim for delivery withoutbills of lading was defective where claimant holders ofa negotiable bill of lading were only able to produceone original bill in support of their claim.

The plaintiff, the seller and the shipper under the billof lading, delivered the goods to the defendant atShanghai for carriage to Australia. The defendantpurported to be a forwarder appointed by and actingas agent of the carrier. The defendant issued a bill oflading “as agent of the carrier”.

The court held that whilst the lawful holder of anegotiable bill of lading may be capable of takingdelivery of cargo against one bill at the discharge port,where a holder sought to assert his title under the billof lading outside the port of discharge he wasrequired to produce all three originals in support of hisclaims. In the instant case the claimant was unable todo so. It was noted that where a negotiable bill oflading was concerned there was a possibility ofcompeting title claims.

The court was also asked to consider when, inaccordance with legal principles of agency, a partypurporting to act as a forwarder in fact, by theirconduct, assumed the role of non-vessel owningcarrier. In the instant case the decisive factors wereheld to be (1) that defendants were unable to produceevidence to show that the party named as carrier hadauthorised its issue, and (2) that the defendants, infact, exercised a degree of control over the cargo inexcess of that which would normally be expected inthe case of an issuing agent.

This decision is discussed in detail in an articleprepared by Greg Yang and Mei Tong of Chinese lawfirm Hai Tong & Partners for the Steamship Mutualwebsite at:

China -DeliveryWithout Billsof Lading

www.simsl.com/Ningbo0508.html

“...where a holder sought

to assert his title under

the bill of lading outside

the port of discharge he

was required to produce

all three originals”

Sea Venture newsletter Issue 1112

The United Nations Commission onInternational Trade Law (UNCITRAL) hasbeen developing a convention onContracts for the International Carriage ofGoods Wholly or Partly by Sea, based ontext originally drafted by the ComitéMaritime Internationale. Representativebodies of the transport industry as awhole, including ICS, Bimco, WorldShipping Counsel (WCS), NIT League,FIATA, IUMI and the International Groupof P&I Clubs have been encouraged toattend the UNCITRAL Working Groupsessions, together with governmentdelegations, in order to put forward their views.

The UNCITRAL Working Group has nowfinalised a text for a draft conventionwhich will be considered by the UNCITRALCommission in June 2008. It seemsunlikely that the June session will result inchanges of substance to the Convention,although drafting changes may be madeto improve clarity. If approved by theCommission, the Convention will bepassed to the UN Assembly for adoptionin November 2008. The United States hasparticipated very actively in the draftingprocess and it appears that a significantbody of United States shippers andcarriers support the latest draft. TheConvention will enter into force 12months after 20 states have ratified it. Ifthe United States and other key tradingnations ratify early, then a significantnumber of other states may follow.

The UNCITRAL work has taken placeagainst a background of initiatives by the

European Union and the USA to developtheir own regional liability regimes, andproposes a Convention which aims to bemore broadly international in scope.

From a shipowners’ perspective, thecurrent text of the draft Convention willincrease considerably the liability ofcarriers. In particular, the navigationalfault defences have been removed andthe carrier is liable for unseaworthinessduring the whole of the carriage by sea,not just at the commencement of thevoyage. The draft Convention alsoestablishes a right of control by shippersover the goods, which includes aunilateral right to demand delivery at aplace other than that provided for in thetransport document.

A further controversial provision is theoption given to a shipper/consignee topursue a claim against the registeredowner of the vessel where the contracting carrier is not identified in thetransportation document, as well asagainst a maritime performing party –essentially a party for whose acts thecarrier is liable. The jurisdiction andarbitration provisions reflect those in theHamburg Rules.

A more detailed overview of the provisionsof the draft Convention prepared by theIG UNCITRAL Working Group can befound on the Steamship Mutual website:

UNCITRAL - International Carriageof Goods Wholly or Partly by Sea

www.simsl.com/IGUNCITRAL0508.html

Sea Venture newsletter Issue 11 13

Two decisions of the High Court covering safe portwarranties were discussed in Sea Venture issue 9. In both cases the charterers were held to havewarranted the safety of the load ports that had been named in the charterparties.

The decision in one of these cases, The “Archimidis”,was appealed to the Court of Appeal. There weretwo issues on appeal:

1. Whether the charterers were liable for dead freightwhen the vessel could not load a full cargobecause of draught restrictions. The arbitratorshad found “that the owners are in principleentitled to claim dead freight in respect of thedifference between the minimum contractualquantities …. and the quantity of cargo loaded………”. Surprisingly the High Court disagreed.Gloster J’s reasons were discussed in an article onthe Steamship Mutual website at:

2. Whether the charterers had warranted the safetyof the port.

In a unanimous decision the Court of Appeal held infavour of owners on both issues. The decision isdiscussed in an article by Malcolm Shelmerdine(malcolm.shelmerdine@simsl.com) and Sarah McGuire (sarah.maguire@simsl.com) onthe Steamship Mutual website at:

Named Ports,Safe Ports andDeadfreight

www.simsl.com/Archimidis0508.html

www.simsl.com/NamedSafePort0807.html

The new Corporate Manslaughter andCorporate Homicide Act 2007 introducesa new offence in the UK, enablingcompanies to be prosecuted where therehas been a failure in health and safetymanagement, resulting in death.

The Act has been brought in because ofthe perceived difficulty under the old lawof prosecuting companies who causedeaths. Currently, under the old law, acontrolling director must be found to havebeen responsible for the death in hiscapacity as the “will and mind” of thecompany. The result has been that onlysmaller companies with hands-on directorshave been convicted and there have onlybeen seven convictions to date.

An understanding of the new regime iscritical for companies, their directorsparticularly and also their public andemployer liability insurers who might beasked to provide legal expenses support inthe event of investigations or prosecutions.

The Act came into force on 6 April 2008.In an article written for the SteamshipMutual website Rachel Butlin of HolmanFenwick & Willan reviews the newlegislation and considers its implications:

UK - Corporate Manslaughter

www.simsl.com/CorpManslaughter0508.html

The United States Court of Appeals forthe Second Circuit recently issued animportant decision which clarifies thestandard used to determine the liabilityof shippers and carriers transportinghazardous cargo under US COGSA.

Following the ruling in In re M/V DGHarmony shippers will not be held strictlyliable for damage caused by hazardousgoods if both the shipper and the carrierhad pre-shipment knowledge of thedangerous nature of the cargo, even ifthe carrier lacked information about theprecise characteristics of the cargo andits hazards. Instead, in such a case theshipper’s liability will be determined onnegligence principles. In particular, wherethe carrier alleges that the shipper failedto warn the carrier adequately about thecharacteristics of the particular shipment,the carrier must show:

that the shipper had a duty to warnbecause the cargo presented dangers ofwhich the carrier could not reasonablyhave been expected to be aware, thatthe shipper failed to provide adequatewarning and that this failure caused therelevant damage

The background to this case and thedecision itself are reviewed in an articleby Thomas H. Belknap, Jr, LeRoy Lambertand Brian S. Tretter of Blank Rome on theSteamship Mutual website at:

US COGSA - Liability for Dangerous Goods

www.simsl.com/Harmony0308.html

Sea Venture newsletter Issue 1114

Sea Venture newsletter Issue 11 15

The case of Scottish and Newcastle InternationalLimited v Othon Ghalanos Limited considers thecircumstances in which the English Court hasjurisdiction to entertain an action in the case of thesale of goods. On the facts of this case, the issueturned on the interpretation and application of article5(1)(b) of the EU Regulation. Ordinarily, article 2(1) ofthe Regulation provides that persons domiciled in amember state must, irrespective of their nationality, besued in the courts of their home state. However, this isqualified by a special rule in article 5(1) of theRegulation, which provides that in matters relating toa contract, a party may be sued in the “place ofperformance of the obligation”, which includes theplace where, under the contract, the goods weredelivered or should have been delivered. Therefore, thequestion which arose in this context was whether,under the contract in question, the goods were orshould have been delivered in England. Thisnecessitated a consideration of established principlesof English commercial law as to what was thecontractually agreed place of delivery: this is notlimited to the terms of the contract, but includes thearrangements between the parties as to thetransportation and carriage of the goods. Siiri Duddington of Reed Smith reviews the case in anarticle written for the Steamship Mutual website at:

Sale of Goods -JurisdictionIssues under EURegulations

www.simsl.com/Scottish0508.html

Parties to the International Conventionon Oil Pollution Preparedness, Responseand Co-operation 1990 (OPRC) arerequired to establish measures fordealing with pollution incidents, eithernationally or in co-operation with othercountries. A protocol to extend theConvention to apply to pollutionincidents by hazardous and noxioussubstances (HNS) was adopted in 2000and entered into force in certaincountries, including the UK and Japan,on 14 June 2007 (OPRC-HNS).

Pursuant to the 2006 Japanese lawrelating to the Prevention of MarinePollution and Maritime Disaster, witheffect from 1 April 2008, tankers over150 gt carrying liquid HNS products,including kerosene, naphtha, jet oil, gasoil and noxious substances, when sailingin certain specified areas in Japan (TokyoBay, Ise Bay, Seto Inland Sea includingOsaka Bay) are required to have access to materials, equipment and expertsnecessary for the prevention/eliminationof HNS spills. The Maritime DisasterPrevention Center (MDPC) can providethese and, in reality, in order to complywith the requirement under this law it is necessary for owners to pre-contractwith MDPC.

The 2006 law is similar to that applying totankers carrying persistent oil when callingat Japanese ports. Owners must pre-contract with MDPC in order to haveaccess to the appropriate responseequipment etc. MDPC is in effect acting asa spill response organisation. The latestMDPC contract has been reviewed by theInternational Group. Unfortunately, it doesnot conform with the Group’s guidelinesfor OSRO contracts.

As a temporary measure, and to allowtime for discussions with MDPC, theInternational Group brokers havearranged additional insurance to cover the increased liability, details of which can be obtained from the Club Managers.

Article by Colin Williams(colin.williams@simsl.com)

Japan - New OPRC-HNS Regulations

Sea Venture newsletter Issue 1116

The Maritime Transportation Security Act of 2002imposes an obligation on the US Coast Guard toevaluate the effectiveness of anti-terrorism measures inforeign ports and provides for the imposition ofconditions of entry on vessels arriving in the UnitedStates from countries that do not maintain effectiveanti-terrorism measures.

Cuba is the most recent addition to a list of countriesdeemed by the Coast Guard not to be maintainingeffective anti-terrorism measures. The list also includesIran, Syria, Indonesia (with some ports excepted),Cameroon, Equatorial Guinea, Guinea-Bissau, Liberia, andMauritania. There are additional requirements for vesselscalling at US Ports that have visited listed countries.

Full details are given in US Coast Guard Port SecurityAdvisory (5-08) of 11 April 2008, the text of whichcan be found on the Steamship Mutual website at:

Advisories can be found on the USCG/DHS Homeportwebsite at:

Several additions/changes to this program have been made in recent months and, accordingly, the Homeport website should be monitored on a regular basis.

Article by Naomi Cohen (naomi.cohen@simsl.com)

US Ports -Conditions of Entry

http://homeport.uscg.mil/mycg/portal/ep/home.do.

www.simsl.com/USEntry0308.html.

Sea Venture newsletter Issue 11 17

In PNSL Berhad v Dalrymple MarineServices the Court of Appeal of theSupreme Court of Queensland analysedthe requirements for determiningwhether the towing period hadcommenced under the UK StandardConditions at the time of a collisionbetween a tug and a ship where the tugwas approaching to attend. A secondaryissue before the Court concernedwhether the limitation of the tugowners’liability under the UK StandardConditions is rendered void by reason ofcertain provisions of the Trade andPractices Act 1974 (Cth) (“TPA”).

The tug “Koumala” collided head-onwith the starboard side of the dry bulkcarrier “Pernas Arang” after suffering a steering failure when approximately150 metres from taking up positionalongside the ship. The impact caused a significant dent to the hull plating of the “Pernas Arang”.

Applying a “practical common sense”approach, and approving Brandon J’sanalysis of the UK Standard Conditions in“The Apollon”, the Court of Appeal ruledthat the trial judge was correct indetermining on the facts the “Koumala”

never reached “a point where she wouldhave been able to accept orders directly”.Therefore, “towing did not commence”and “the collision did not occur “whilsttowing” within the protection of the UKStandard Conditions.”

The Court also upheld the trial judge’sfinding that as a contract to providetowage services was not a contract inrelation to the transportation of goodswithin the meaning of s 74(3) of the TPA,it was subject to a warranty implied intothe contract by s74 that the serviceswould be rendered with due care and skill.

It follows that ship owners ought to beaware that suppliers of towage servicesin Australia may seek to incorporateterms limiting their liability to the costs ofthe services provided as permitted unders68A of the TPA.

This decision is discussed in more detailin an article prepared by Gavin Vallely ofHolman Fenwick & Willan, Australia, forthe Steamship Mutual website at:

Australia - Tug Liability Under UKStandard Conditions for Towage

www.simsl.com/Koumala0508.html

Sea Venture newsletter Issue 1118

The recent decision of the Court of Appeal in The“Front Ace” touched on three distinct areas of law:

1. Causation in the context of the duty to mitigate,

2. Assessment of damages for loss of a fixture, and

3. The application of “loss of chance” principles.

The case concerned a seemingly innocuous collision asthe “Vicky 1” approached the VLCC “Front Ace” forlightering. Liability for the collision was admitted bythe owners of the “Vicky 1” and the matter wasreferred to the Admiralty Registrar for an assessmentof quantum. Although the cost of repairs onlyamounted to about US$80,000, the matter went to ahearing because, as a result of the collision, the “FrontAce” was unable to perform her next fixture toChevron. A substantial claim was thus put forward forloss of the fixture. Initially, those damages were put atUS$1.2 million but shortly before the trial they werere-assessed at about US$2.4 million.

In its decision, the Court of Appeal applied the test oncausation as laid down by Lord Wright in The“Oropesa” and re-affirmed the House of Lordsdecision in The “Argentino”, in which the right toclaim damages for loss of a fixture was approved. Theyalso rejected the Admiralty Registrar’s finding that“loss of chance” principles, as set out in “AlliedMaples”, ought to apply to the assessment ofhypothetical voyage earnings.

Darryl Kennard of Thomas Cooper reviews the case inan article written for the Steamship Mutual website at:

Collision -Damages forLoss of Fixture

http://www.simsl.com/FrontAce0508.html

Sea Venture newsletter Issue 11 19

The recent decision of the United StatesCourt of Appeals for the Fifth Circuit inCorus U.K. Ltd. v Waterman SteamshipCo. demonstrates that the peril of thesea defence is indeed alive, well andreadily available to a COGSA carrier; atleast, to a carrier who is free ofnegligence.

The claim was brought by the owner ofvarious steel products damaged aboardthe LASH vessel “Atlantic Forest” duringa voyage from Rotterdam to New Orleansin late November 2002. During thevoyage, the vessel encountered weatherconditions ranging from Force 9- 12 onthe Beaufort Scale for the better part ofthree days. The crux of the dispute waswhether the conditions the vesselencountered were sufficiently severe toconstitute a “peril of the sea” within themeaning of the COGSA defence codifiedat 46 U.S.C. § 1304(2)(c).

The court expanded upon the general rulethat for a storm to constitute a peril of thesea it must be “of an extraordinary natureor arising from irresistible force oroverwhelming power which could not beguarded against by the ordinary exertions

of human skill and prudence.” The courtheld that this required the carrier to show:

1. The severity of the storm was sufficientto constitute a peril of the sea,

2. A causal connection between thecargo loss and the peril of the sea, and

3. The carrier’s freedom from fault andthat the ship was not unseaworthy.

Among other reasons, the court upheldthe heavy weather defence because of theextent of physical damage to the ship. Inthe absence of this substantial damage tothe ship, the peril of the sea defencewould likely not have been sustained.

Also of importance to the decision was thecourt’s finding that the storm system whichcaused the damage was unforeseeable,both in terms of its intensity and its erraticand unpredictable course.

In an article written for the SteamshipMutual website Gary A. Hemphill ofPhelps Dunbar, New Orleans, discussesthe case in further detail:

Sea Venture newsletter Issue 1120

Peril of Sea Defence - Alive and Well in United States Fifth Circuit

www.simsl.com/Corus0508.html

A recent spate of spills during routine bunkeringoperations has resulted in a number of significantpollution claims, raising concerns as to the lack ofawareness during critical aspects of the operation andthe failure to follow defined operating procedures.

Analysis shows that whilst circumstances leading toeach incident were often different, common causativefactors included the failure to:

• Completely close valves to tanks on completion,

• Adhere to the stipulated maximum loading ratecontained in a vessel’s bunker plan and agreedprior to operations commencing,

• Adhere to recognised procedures for topping offtanks, and

• Monitor the progression of loading at adequateintervals.

Bunkering is categorised as a critical operation underthe ISM Code. Whilst commercial schedules imposeimmense pressure on a vessel’s crew to stem bunkerswithin limited time periods, non compliance withbunkering procedures in a vessel’s Safety ManagementSystem could potentially result in substantial costs,penalties and even greater delay where spillage occursas a consequence.

Many bunker spills are small in quantity, though theresultant clean-up costs can be substantial. Shipownersare facing ever stricter regimes in liability compensationand the Bunker Convention 2001 enters into force on21 November 2008.

In an article produced for the Steamship Mutualwebsite at:

Paul Amos (paul.amos@simsl.com) looks at some ofthe common factors present in routine bunker spillsand highlights the importance of implementing aneffective oil transfer procedure whilst exercisingcontinued vigilance during operations.

Oil SpillsDuringRoutineBunkeringOperations

Sea Venture newsletter Issue 11 21

http://www.simsl.com/BunkerSpills0508.html

“...commercial schedules

impose immense pressure

on a vessel’s crew to stem

bunkers within limited

time periods”

Amendments to the Civil Procedure Lawof the People’s Republic of China (“CPL”)came into force on 1 April 2008. Theamendments focus on the enforcementof civil judgments and retrial procedure.

The limitation period for enforcement ofcivil judgments has been extended fromsix months to two years. In addition, thisperiod can now be “suspended” or“interrupted” if certain conditions aremet. The amended CPL also increases theoptions available for enforcement, whichformerly fell under the sole jurisdiction ofthe first instance court.

These amendments are designed to improvethe ease and efficiency of enforcement ofjudgments in the PRC. In addition, the newCPL provides the court with greater powersthrough increased fines, the power toattach assets without notice and othermeasures which may be taken againstjudgment debtors or defaulters.

The amendments to retrial proceduresare designed to fine tune and clarify thecurrent process by setting out clearly to

which court a party may apply for retrial,setting time limits for a court to considerand respond to an application, andsetting clear criteria for the acceptance orrejection of an application. In addition,the time limit for making an applicationfor retrial has been extended and noticemust now be given to the other party inorder to afford the opportunity forobjection to be raised.

It is hoped that the amendments willhelp in the development of a moreefficient legal system, although there areconcerns that the amendmentssimplifying the retrial procedure may leadto greater legal uncertainty as it becomeseasier to pursue this route. It remains tobe seen how the courts will interpret theamendments in practice.

An article by Zheng Yu of Rajah & Tannwritten for the Steamship Mutual websiteexplains these amendments in more detail:

China - Recent Amendments to Civil Procedure Law

Sea Venture newsletter Issue 1122

www.simsl.com/ChinaCPL0508.html

Sea Venture newsletter Issue 11 23

Website Articles

• Argentina - Farmers' Protests & Loading Delays -Who Bears the Costs?www.simsl.com/ArgentinaStrikes0408.html

• California - Hull Husbandry Reportswww.simsl.com/CaliforniaHullHusbandry0308.html

• POEA Revise Position on Nigeriawww.simsl.com/POEANigeria0208.html

• South Africa - We Will Tow You Awaywww.simsl.com/SAMSA0208.html

• Spain - Maritime Emergencies Evaluation Teamswww.simsl.com/SpainMEET0208.html

Circulars

• Bunkers Convention – “Blue Cards”

As highlighted in issue 10 of Sea Venture, theInternational Convention on Civil Liability for Bunker OilPollution 2001 (the “Bunkers Convention”) enters intoforce on 21 November 2008. Registered owners of anysea going vessel over 1000GT registered in a state party,or entering or leaving a port in the territory of a stateparty, will be required to maintain insurance whichmeets the requirements of the Convention and toobtain a certificate issued by a state party attesting thatsuch insurance is in force. The state-issued certificatemust be carried on board at all times. The regimefollows closely the well established liability andinsurance provisions which apply to oil tankers underthe Civil Liability Convention (CLC). Further details areavailable on the Steamship Mutual website at:

www.simsl.com/Bunkers1207.html

Club circular B.469 of April 2008 notified Members thatClubs in the International Group will issue the requiredBunkers Convention “Blue Cards” to enable signatorystates to issue certificates from August 2008. The Clubwill, therefore, issue these Blue Cards althoughconditions apply in relation to war risks. Furtherinformation is given in the circular which can be foundon the website at:

www.simsl.com/Circulars-Bermuda/B.469.pdf

RecentPublications

For further information please contact:

Steamship Insurance Management Services LimitedAquatical House,39 Bell Lane, London E1 7LU. Telephone: +44 (0)20 7247 5490 and +44 (0)20 7895 8490 Email: seaventure@simsl.com

Website: www.simsl.com