WHAT IS NEW IN NEW YORK? Singapore March 27, 2006 William J. Honan Holland & Knight LLP.

WHAT IS NEW IN NEW YORK?WHAT IS NEW IN NEW YORK?

SingaporeSingapore

March 27, 2006March 27, 2006

William J. HonanWilliam J. Honan

Holland & Knight Holland & Knight LLPLLP

TRENDS IN NEW YORKTRENDS IN NEW YORK

1.1. A few years ago, there A few years ago, there were hardly any time charters were hardly any time charters being done. Rates were low and being done. Rates were low and owners were disinclined to offer owners were disinclined to offer vessels for long terms at those vessels for long terms at those low rates.low rates.

2.2. The forms haven't The forms haven't changed very much. For example, changed very much. For example, ASBATANKVOY dates back to 1977 ASBATANKVOY dates back to 1977 and its predecessor Essovoy dates and its predecessor Essovoy dates back to 1969, the year I started back to 1969, the year I started practicing law. At some point, practicing law. At some point, disputed issues have to diminish.disputed issues have to diminish.

3.3. Traders and other Traders and other charterers have adopted special charterers have adopted special provisions which have been provisions which have been refined to reduce the risk of refined to reduce the risk of exposure and dispute. exposure and dispute.

4.4. Judges and arbitrators have Judges and arbitrators have shown a greater willingness to shown a greater willingness to exercise their discretion in an effort exercise their discretion in an effort to reach a just result.to reach a just result.

S.M.A. RULE 30S.M.A. RULE 30

““The Panel, in its award, The Panel, in its award, shall grant shall grant anyany remedy or remedy or relief which relief which itit deems just and deems just and equitable. . . .”equitable. . . .”

ARBITRATORS’ POWERARBITRATORS’ POWER

1. Arbitrators, in many 1. Arbitrators, in many ways, have more power than ways, have more power than courts of law.courts of law.

2. Arbitrators have the 2. Arbitrators have the power to fashion innovative power to fashion innovative remedies to resolve complex remedies to resolve complex problems.problems.

ARBITRATORS’ DISCRETION IS ARBITRATORS’ DISCRETION IS BROAD AND DEEPBROAD AND DEEP

1. Require Security for Claim.1. Require Security for Claim.2. Dismiss Claim That Lacks Merit.2. Dismiss Claim That Lacks Merit.3. Require Adequate Assurance.3. Require Adequate Assurance.4. Impose Conditions re Ongoing 4. Impose Conditions re Ongoing

Performance.Performance.5. Order Specific Performance.5. Order Specific Performance.6. Provide Injunctive Relief.6. Provide Injunctive Relief.7. Provide an Expedited Award.7. Provide an Expedited Award.8. Award Legal Fees and Costs.8. Award Legal Fees and Costs.

MARITIME CLAIM SECURITIZATIONMARITIME CLAIM SECURITIZATION

1. 1. ArbitratorsArbitrators

Arbitrators have the power to Arbitrators have the power to require the defendant to post require the defendant to post security in advance of the security in advance of the hearing(s) on the merits under hearing(s) on the merits under circumstances they, in their circumstances they, in their discretion, deem just. discretion, deem just.

PRACTICE TIPSPRACTICE TIPS

A claimant in arbitration is more likely to A claimant in arbitration is more likely to obtain an arbitration panel’s order requiring the obtain an arbitration panel’s order requiring the other side to post security if:other side to post security if:

1. The claim appears likely to succeed.1. The claim appears likely to succeed.2. The claim is for an improper deduction or 2. The claim is for an improper deduction or

withholding of funds due to the claimant.withholding of funds due to the claimant.3. The defendant is not doing business in the 3. The defendant is not doing business in the

U.S. and may be able to avoid paying an adverse U.S. and may be able to avoid paying an adverse award.award.

4. There are other circumstances that lead 4. There are other circumstances that lead the arbitrators to believe that the defendant may the arbitrators to believe that the defendant may not pay, e.g., a poor credit history or a pool of funds not pay, e.g., a poor credit history or a pool of funds which may be disbursed to the defendant.which may be disbursed to the defendant.

2. 2. U.S. Federal CourtsU.S. Federal Courts

Under the Supplemental Rules to Under the Supplemental Rules to the F.R.C.P., a federal court, at the the F.R.C.P., a federal court, at the request of a claimant, has the power, request of a claimant, has the power, without prior notice to the debtor, to without prior notice to the debtor, to cause a vessel, monies or other of the cause a vessel, monies or other of the debtor’s assets to be seized and held debtor’s assets to be seized and held pending a resolution of the underlying pending a resolution of the underlying disputes.disputes.

RULE C: ARRESTRULE C: ARREST

• • Need only a common law, Need only a common law, statutory or contractual statutory or contractual maritime lienmaritime lien

RULE B: ATTACHMENTRULE B: ATTACHMENT

Two RequirementsTwo Requirements

a) Plaintiff (i.e., the a) Plaintiff (i.e., the claimant) must have a maritime claimant) must have a maritime claim claim andand

b) Defendant (i.e., the b) Defendant (i.e., the “debtor”) must not be found “debtor”) must not be found within the district.within the district.

RULE B: FUNCTIONRULE B: FUNCTION

a) To secure the plaintiff’s a) To secure the plaintiff’s claim andclaim and

b) To obtain jurisdiction b) To obtain jurisdiction over the defendant.over the defendant.

PREREQUISITESPREREQUISITES

a) Is it a maritime claim?a) Is it a maritime claim?

b) Can the defendant be b) Can the defendant be found in the federal court found in the federal court district?district?

c) Is the asset owned by c) Is the asset owned by the debtor?the debtor?

RULE E: RULE E: POST-ATTACHMENT/ARREST HEARINGPOST-ATTACHMENT/ARREST HEARING

• • After the attachment or arrest, After the attachment or arrest, the defendant has the right to the defendant has the right to a “prompt hearing”a “prompt hearing”

• “• “[At the] prompt hearing the [At the] prompt hearing the plaintiff shall be required to plaintiff shall be required to show why the arrest or show why the arrest or attachment should not be attachment should not be vacated . . . .”vacated . . . .”

WINTER STORM SHIPPING LTD. V. TPI, WINTER STORM SHIPPING LTD. V. TPI, 301 F.3d 263 (2301 F.3d 263 (2ndnd Cir. 2002) Cir. 2002)

Electronic funds transfers, in Electronic funds transfers, in the hands of an intermediary the hands of an intermediary bank, are subject to bank, are subject to attachment.attachment.

SEAPLUS LINE CO. LTD. V. SEAPLUS LINE CO. LTD. V. BULKHANDLING HANDYMAX ASBULKHANDLING HANDYMAX AS, ,

2006 AMC 82 (S.D.N.Y. 2005)2006 AMC 82 (S.D.N.Y. 2005)

. . . Seaplus bears the burden of . . . Seaplus bears the burden of demonstrating, by a preponderance of demonstrating, by a preponderance of the evidence, that the attachment is the evidence, that the attachment is necessary to effectuate one of the two necessary to effectuate one of the two purposes of Supplemental Rule B:purposes of Supplemental Rule B:

1) Is it necessary to obtain 1) Is it necessary to obtain jurisdiction over Bulkhandling?jurisdiction over Bulkhandling?

2) Is it necessary to receive any 2) Is it necessary to receive any award Seaplus may obtain in the Hong award Seaplus may obtain in the Hong Kong arbitration?Kong arbitration?

PRACTICE TIPPRACTICE TIP

If you have a significant claim If you have a significant claim under a dollar denominated maritime under a dollar denominated maritime contract and you desire security, you contract and you desire security, you may wish to seek to attach assets may wish to seek to attach assets owed by the other party to the owed by the other party to the contract even though the contract in contract even though the contract in question provides for arbitration question provides for arbitration elsewhere.elsewhere.

SIX ASPECTS WORTH REMEMBERINGSIX ASPECTS WORTH REMEMBERING

a) You can commence a law a) You can commence a law suit in the U.S. to attach (or suit in the U.S. to attach (or arrest) the defendant’s assets arrest) the defendant’s assets without waiving your right to without waiving your right to arbitrate in accordance with the arbitrate in accordance with the charter party arbitration charter party arbitration provision.provision.

SIX ASPECTS WORTH REMEMBERINGSIX ASPECTS WORTH REMEMBERING (continued)(continued)

b) A foreign claimant can b) A foreign claimant can attach the property of a foreign attach the property of a foreign defendant even if there is no defendant even if there is no connection with the U.S. except connection with the U.S. except defendant’s asset(s) are located defendant’s asset(s) are located there.there.


c) The funds or other c) The funds or other assets that are attached need assets that are attached need not be related to the not be related to the transaction in which the breach transaction in which the breach occurred.occurred.


d) You can seize the other d) You can seize the other party’s assets without any party’s assets without any prior notice.prior notice.


e) The court, in dealing e) The court, in dealing with the attachment, almost with the attachment, almost never considers the merits of never considers the merits of the underlying claim.the underlying claim.


f) Usually, no bond is f) Usually, no bond is necessary to obtain the necessary to obtain the attachment.attachment.

TIME BAR CLAUSESTIME BAR CLAUSES

§6 OF COGSA, §6 OF COGSA, 46 U.S.C. §130346 U.S.C. §1303

In any event the carrier and In any event the carrier and the ship shall be discharged from the ship shall be discharged from all liability in respect of loss or all liability in respect of loss or damage unless suit is brought damage unless suit is brought within one year after delivery of within one year after delivery of the goods or the date when the the goods or the date when the goods should have been goods should have been delivered . . . .delivered . . . .

SCANPORTS 1990SCANPORTS 1990

20. Demurrage Claims. Charterer shall be 20. Demurrage Claims. Charterer shall be discharged and released from all liability in respect of any discharged and released from all liability in respect of any claim for demurrage owner may have under this charter claim for demurrage owner may have under this charter party unless a written invoice for the claimed demurrage party unless a written invoice for the claimed demurrage and copies of ETA notices sent in compliance with voyage and copies of ETA notices sent in compliance with voyage orders, notices of readiness at each port, pumping logs, and orders, notices of readiness at each port, pumping logs, and port logs/statements of fact for each port as well as all port logs/statements of fact for each port as well as all other supporting documents have been received by other supporting documents have been received by charterer within ninety (90) days after completion of charterer within ninety (90) days after completion of discharge of the cargo covered buy this charter party or discharge of the cargo covered buy this charter party or after other termination of the voyage, whichever first after other termination of the voyage, whichever first occurs. . . . occurs. . . .

BPVOY 4BPVOY 4

20.220.2 Any other claim against charterers for any Any other claim against charterers for any and all other amounts which are alleged to be for and all other amounts which are alleged to be for charterers' account under this charter shall be charterers' account under this charter shall be extinguished, and charterers shall be discharged from all extinguished, and charterers shall be discharged from all liability whatsoever in respect thereof, unless such claim is liability whatsoever in respect thereof, unless such claim is presented to charterers, together with full supporting presented to charterers, together with full supporting documentation substantiating each and every constituent documentation substantiating each and every constituent part of the claim, within one hundred and eighty (180) days part of the claim, within one hundred and eighty (180) days of the completion of discharge of the cargo carried of the completion of discharge of the cargo carried hereunder. hereunder.


1.1. If the Owner:If the Owner:

a) seek to eliminate altogethera) seek to eliminate altogetherb) make the clauses mutually applicableb) make the clauses mutually applicablec) provide as long a period as possiblec) provide as long a period as possibled) provide training to the persons handling claimsd) provide training to the persons handling claims

2.2. If the Charter:If the Charter:

a) include all claims not just demurrage and detentiona) include all claims not just demurrage and detentionb) draft the clause so as to avoid obvious loopholesb) draft the clause so as to avoid obvious loopholes

BACK-LOADING CLAUSESBACK-LOADING CLAUSES

EXXON MOBILVOY 2000EXXON MOBILVOY 2000

19. BACK LOADING. Charterer shall have the 19. BACK LOADING. Charterer shall have the option of loading Vessel with a part cargo at any option of loading Vessel with a part cargo at any discharging port or place to which Vessel may have been discharging port or place to which Vessel may have been ordered,. . . . Owner shall discharge such part cargo at any ordered,. . . . Owner shall discharge such part cargo at any other discharging port(s) or place(s) previously nominated, other discharging port(s) or place(s) previously nominated, provided such port(s) or place(s) lie within the rotation of provided such port(s) or place(s) lie within the rotation of the discharging ports or places previously nominated. If the discharging ports or places previously nominated. If this option is exercised, additional time consumed awaiting this option is exercised, additional time consumed awaiting berth and/or cargo and/or tank preparation and/or loading berth and/or cargo and/or tank preparation and/or loading and discharging such part cargo shall count as laytime or, and discharging such part cargo shall count as laytime or, if Vessel is on demurrage, as time on demurrage. . . . if Vessel is on demurrage, as time on demurrage. . . .

SHELLVOY 5SHELLVOY 5

Back LoadingBack Loading38.38. Charterers may order the vessel to load a Charterers may order the vessel to load a

part cargo at any nominated discharging port, and to part cargo at any nominated discharging port, and to discharge such part cargo at a port(s) to be nominated by discharge such part cargo at a port(s) to be nominated by Charterers within the range specified in Part I(E) and Charterers within the range specified in Part I(E) and within the rotation of the discharging ports previously within the rotation of the discharging ports previously nominated, provided that such part cargo is of the nominated, provided that such part cargo is of the description specified in Part I(F) and that the master in his description specified in Part I(F) and that the master in his absolute discretion determines that this cargo can be absolute discretion determines that this cargo can be loaded, segregated and discharged without risk of loaded, segregated and discharged without risk of contamination by, or of, any other cargo remaining on contamination by, or of, any other cargo remaining on board.board.

Charterers shall pay a lump sum freight in respect Charterers shall pay a lump sum freight in respect of such part cargo calculated at the demurrage rate of such part cargo calculated at the demurrage rate specified in Part I(J) on any additional time used by the specified in Part I(J) on any additional time used by the vessel as a result of loading, carrying or discharging such vessel as a result of loading, carrying or discharging such part cargo.part cargo.

27.27. KOCH DISCHARGE/RELOADKOCH DISCHARGE/RELOAD

27.127.1 Charterer has the option to Charterer has the option to discharge all or part cargo at one safe discharge all or part cargo at one safe port or lighterage location and reload port or lighterage location and reload same or different cargo in same or same or different cargo in same or different port or place for final different port or place for final discharge on the same voyage within discharge on the same voyage within agreed ranges as specified in Part I of agreed ranges as specified in Part I of this Charter Party.this Charter Party.


• • If OwnerIf Owner• • Exclude if possibleExclude if possible• • Make sure the new discharge port is in the Make sure the new discharge port is in the

same rotationsame rotation• • Make sure WS is the applicable freightMake sure WS is the applicable freight• • Insert deadline for exercise of charterer’s right Insert deadline for exercise of charterer’s right

to reloadto reload

• • If ChartererIf Charterer• • Include if possibleInclude if possible• • Draft as widely as possible (see Koch clause)Draft as widely as possible (see Koch clause)• • Use demurrage rate as the measure of Use demurrage rate as the measure of

compensationcompensation

ARREST OFF-HIRE CLAUSEARREST OFF-HIRE CLAUSE

RIDER CLAUSE 94RIDER CLAUSE 94

““SCM Mexico” S.M.A. 3885 (2005)SCM Mexico” S.M.A. 3885 (2005) Should the vessel be delayed, detained or Should the vessel be delayed, detained or

arrested during the currency of this charter arrested during the currency of this charter at the suit of any party having or purporting at the suit of any party having or purporting to have a claim against or any interest in to have a claim against or any interest in the vessel, Master, crew or owners, hire the vessel, Master, crew or owners, hire under this charter party shall not be under this charter party shall not be payable in respect of any period during payable in respect of any period during which the vessel is not at charterer’s full which the vessel is not at charterer’s full disposal and the consequential time and disposal and the consequential time and expenses resulting from same which the expenses resulting from same which the charterers incur are to be for owners charterers incur are to be for owners account.account.

CAPTURE, SEIZURE, ARREST CLAUSECAPTURE, SEIZURE, ARREST CLAUSE

The Doric Pride [2006] All ER(D) 173The Doric Pride [2006] All ER(D) 173

Should the vessel be captured or seized or detained or Should the vessel be captured or seized or detained or arrested by any authority or by any legal process . . . the arrested by any authority or by any legal process . . . the payment of hire shall be suspended until the time of her payment of hire shall be suspended until the time of her release, . . . , unless such capture or seizure or detention or release, . . . , unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or arrest is occasioned by any personal act or omission or default of the charterers or their agents or by reason of default of the charterers or their agents or by reason of cargo carried or calling port of trading under this charter.cargo carried or calling port of trading under this charter.

DEADFREIGHT OFFSETSDEADFREIGHT OFFSETS

(2006) LLOYD’S MARITIME (2006) LLOYD’S MARITIME

NEWS LETTER 685 (Feb. 23, 2006NEWS LETTER 685 (Feb. 23, 2006))Arbitrators’ ChecklistArbitrators’ Checklist

1. Charterer is to pay full dead freight.1. Charterer is to pay full dead freight.

2. Laytime is calculated on bill of lading cargo.2. Laytime is calculated on bill of lading cargo.

3. A separate laytime calculation is performed for bill 3. A separate laytime calculation is performed for bill of lading cargo plus deadfreight.of lading cargo plus deadfreight.

4. Owner is to concede any benefits.4. Owner is to concede any benefits.

5. Charterer is to concede any benefits.5. Charterer is to concede any benefits.

6. A deadfreight balance is produced and incorporated 6. A deadfreight balance is produced and incorporated into the final freight account.into the final freight account.

OWNER’S BENEFITSOWNER’S BENEFITS

1. Savings in Time1. Savings in Time

- demurrage rate- demurrage rate

- market rate- market rate

2. Bunkers2. Bunkers

- bunkers in port- bunkers in port

3. Port Charges3. Port Charges

WHAT IS NEW IN NEW YORK?WHAT IS NEW IN NEW YORK?

SingaporeSingapore

March 27, 2006March 27, 2006

William J. HonanWilliam J. Honan

Holland & Knight LLPHolland & Knight LLP

WHAT IS NEW IN NEW YORK? Singapore March 27, 2006 William J. Honan Holland & Knight LLP.

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