Issue 761

September 25th, 2020

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Editor: Sandra Speares | Email: contactus@themaritimeadvocate.com

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IN THIS ISSUE
1. World Maritime Day
2. Duck boat tragedy or seafarer’s manslaughter?
3. Avoiding contractual disputes following Covid-19. Jonathan Lux comments.
4. New innovation programme
5. IUMI major claims database
6. Suspension of HK tax treaty
7. OCIMF overhaul concentrates on high risk
8. US Courts: borrowed servant rule
9. Low sulphur transition – a Gard view
10. KR cyber security notation
11. DNV GL forecast to 2050
12. Van Ameyde launch one brand and network

Notices & Miscellany

Readers’ responses to our articles are very welcome and, where suitable, will be reproduced:
Write to: contactus@themaritimeadvocate.com

1.World Maritime Day

As the industry celebrates World Maritime Day, Captain Rajesh Unni, chief executive of   Synergy Group gives his take on the current position for seafarers.
 
“On World Maritime Day, with hundreds of thousands of seafarers still stranded at sea, I think now is the time to address shipping’s inability to consistently shape and direct policies that impact our ability to conduct business safely and efficiently.
 
“When we called on governments to help our seafarers and classify them as key workers, our pleadings largely fell on deaf ears.
“We might be the engine of global trade, but even as a humanitarian crisis has unfolded at sea our voice has not been heard.

“The IMO has devoted this year’s World Maritime Day to sustainability but, again, we have been failing to speak to power beyond the maritime echo chamber.
 
“If shipping wants a say on its future, and support from lawmakers when it requires their help, it needs to be more transparent and progressive in meeting environmental obligations.
 
“We need to show the world beyond shipping that we accept change is coming and decarbonised supply chains are inevitable.
 
“With less than 3,650 days remaining until the 2030 emissions targets, today is a reminder that shipping must step-up and turn commitment into action if it wants to avoid the imposition of policies which might harm our industry.
 
“Even more urgently, with further lockdowns coming into force around the world, the crew change crisis could soon become even more acute.
 
“At Synergy Group, we are doing our utmost to relieve seafarers, but the restrictions hampering crew travel are in constant flux. I strongly urge the IMO and others to double down efforts in the fight for seafarer rights before the plight of our crews deteriorates further.
 
“For shipping, as we face these critical challenges of decarbonisation and crew changes on World Maritime Day in the midst of this ghastly pandemic, it is quite clear that the status quo is simply unsustainable.
 
“It is also clear that addressing the status quo means we must find a political voice that travels beyond the ports and the high seas –   one that reaches the decision makers who are currently determining our collective fates.”
 
 

2.Duckboat tragedy or seafarer manslaughter?

On Friday September 4, 2020, Chief Magistrate Judge David Rush of the Western District of Missouri issued a report and recommendation that all federal charges against the master of the duck boat that sank on Table Rock Lake Missouri in 2018 be dropped for lack of admiralty jurisdiction.   The duck boat tragedy on July 19, 2018 resulted in the deaths of 17 people who were onboard the Stretch Duck 7 when it sank during a storm.   Kenneth McKee was the master of the vessel during the incident and was charged in a 47-count Second Superseding Indictment alleging violations of the Seaman’s Manslaughter statute   and the gross negligent operation of a vessel.  In addition, Charles Baltzell (the operations supervisor and manager) and Curtis Lanham (the general manager of Ride the Ducks Branson) were charged with the same conduct on an aiding and abetting theory of liability.

In the case, the defendants moved to dismiss the indictment on numerous grounds, including lack of admiralty jurisdiction, as the alleged crimes occurred on Table Rock Lake which is not “navigable” as a matter of law under binding Eighth Circuit precedent, and therefore the federal court lacked subject matter jurisdiction.  Magistrate Judge Rush issued a 21 page report and recommendation which carefully analysed the Court’s exercise of subject matter jurisdiction in the case and concluded that the charges against the defendants should be dismissed.  In a two-part analysis, the Court found that there was general criminal subject matter jurisdiction over the charges because they are offenses against the laws of the United States.  However, that is not the end of the inquiry and in order to proceed with the case to a jury, the prescriptive reach of the statute (and by extension the Court’s jurisdiction to hear the case) is defined by whether the Court has admiralty jurisdiction.
 
The Court also rejected the government’s argument that the Commerce Clause of the Constitution could in some way impart jurisdiction over the crimes, ruling that the clause relates to the regulatory powers of Congress, not the subject matter jurisdiction of the Court.  Magistrate Judge Rush lamented the tragic death of the 17 men, women, and children on Table Rock Lake, but ruled that there was no direct application of federal law to this case given the lack of admiralty jurisdiction.  As such, the Court ruled that the right to prosecute defendants for the tragedy is reserved for the State of Missouri’s general police powers and recommended dismissal of all charges.     Assuming the government makes objections, the District Court must consider de novo any objection to the recommendation and may “accept, reject, or modify the recommendation, receive further evidence, or resubmit the matter to the magistrate judge with instructions.”
 
Given the complex statutory and jurisdictional issues pending in this matter and the fact that the government pursued 47 counts in this case, it is anticipated the United States will file objections to the District Judge.
 
A copy of the Report and Recommendation can be found here.

For any questions about the decision or to learn more about the criminalization of admiralty matters in the United States, please contact info@chaloslaw.com.

3. Avoiding contractual disputes following Covid-19   –   Jonathan Lux comments

For businesses that have been negatively impacted by the pandemic, the focus must now be on rebuilding and regaining lost ground as trade and services resume. However, because of the widespread effect of lockdowns in many countries, resumption of activities is likely to be affected by numerous problems.

Some businesses, including the shipping, shipbuilding and international trade sectors, are already used to the contractual difficulties that arise where multiple organisations rely on supply chains between each other. When one fails, it can impact the whole project. Managers in these areas are used to dealing with legal problems, but pushing ahead with litigation in the current climate without first looking for alternative ways of solving problems risks spreading difficulties even more widely.
In the current post-Covid-19 climate a pragmatic approach will offer the best road to recovery for the economy as a whole. Turning to litigation will have very few benefits, if any, in an environment where contracts simply cannot be fulfilled in accordance with their original terms.

Businesses which are flexible and who look for innovative solutions will be best placed for survival and will help the other businesses on whom they rely. Looking at the bigger picture, by finding novel solutions and agreeing on new terms, businesses will be able to press ahead with regaining their commercial viability instead of having to focus on litigation.

Where organisations are unable to come to an agreement with each other, mediation is the key to moving forward. A skilled mediator will be able to help the parties understand each other’s point of view and will work with them to find the best possible solution for all involved.

A further benefit of avoiding litigation is the preservation of valuable business relationships. If disputing parties end up in court, they are almost certain never to do business together again. This can be damaging, particularly if they are in a niche area where there are few alternatives.
Mediation can improve the situation to such an extent that future business is possible between the parties. The process allows a deeper understanding of the difficulties another organisation might be facing and takes a realistic look at possible solutions.

Unlike litigation, an unwanted result is not imposed on the parties. Rather, it is an agreement reached between them and which they both find acceptable. Whilst compromise is inevitable, looking at the bigger picture, once the difficulties have been resolved, businesses may realise that it is in their best interests to resume a relationship, albeit on new terms.

 In May 2020, the government published guidance on responsible contractual behaviour in the light of Covid-19. The document asks organisations to act responsibly and fairly in the national interest when performing and enforcing contracts in order to protect jobs and the economy. In particular, it is noted that a plethora of disputes can be destructive to business and markets, saying ‘… the Government would strongly encourage parties to seek to resolve any emerging contractual issues responsibly – through negotiation, mediation or other alternative or fast-track dispute resolution – before these escalate into formal intractable disputes.’ While the document is not legally binding, there is a possibility that courts will look unfavourably on those who do not act within the spirit of the guidance.

The government says that the behaviour of businesses at this time should be considered as part of the national response to the emergency. They believe that in the long term, responsible and fair behaviour will protect businesses, supply chains and opportunities in the economy. There are organisations out there which offer mediation, early resolution and other alternatives to litigation. For example, at Lux Mediation, we offer a range of different dispute resolution services, designed to deal with all types and stages of disputes. We are experienced in and understand the subtleties of online mediation. Our mediators have extensive credentials and experience in areas including maritime, international, EU and general commercial and civil law.
 
The London Shipping Law Centre recently staged an online debate ably chaired by retired Commercial Court Judge Sir Bernard Eder, entitled: “The Good Faith Debate: English law and the International Tide.” The fact is that English law (the law most often chosen by international business people to govern their contracts) broadly holds that it is for parties to draw up their contracts and for the courts to enforce the bargain made by the parties. Thus, there is no overriding concept of good faith such as to prevent a party from terminating or exercising a contractual option which may be ruinous for his counterparty. Applying the law with full rigour may lead to increasing insolvencies and shrinking markets at precisely the time when our workforce and economies are facing their biggest threats. In this situation it is not just common sense but a matter of necessity to engage in good-faith negotiation and mediation: jaw jaw and not war war.

Jonathan Lux mediation@lux-mediation.com

4. New innovation programme

The UK Hydrographic Office has launched its new ADMIRALTY Marine Innovation Programme, the organisation has announced. Spearheaded by the UKHO’s Research, Design and Innovation team,  it will give innovators and start-ups a chance to develop new solutions that solve some of the world’s most pressing challenges when it comes to our oceans.

The launch of this programme follows extensive research commissioned by the UK Hydrographic Office into the Blue Economy, which is estimated to be worth £3.2 trillion by the year 2030. Marine geospatial data will play an essential role in supporting this growth by enabling the identification of new areas for tidal and wind energy generation, supporting safe navigation for larger autonomous ships, playing a vital role in mitigating the effects of climate change and more.

Successful innovation programme participants will develop their own solutions for these areas, using ADMIRALTY data sets that range from seabed composition samples and bathymetric profiles of the seafloor, to tidal and navigational information. Entrants to some challenges will also work alongside leading experts in research, design and development at the UKHO, with winners receiving an opportunity to launch their products into some of the world’s fastest growing marine sectors.
 
From today, the UKHO are looking for applicants for its first innovation challenge:

Unlocking Autonomous Navigation – identify, trial and prove how navigational data can be used to support the safe navigation of Marine Autonomous Surface Ships. Each selected participant will have access to ADMIRALTY data and expertise, with winners receiving prizes worth £175,000 and an opportunity to launch their product in a sector estimated to be worth £111bn by 2030.
 
Find out more here: https://www.admiralty.co.uk/innovation-programme/autonomous-navigation-challenge

Applications for this challenge will close on 7th October 2020.

5. IUMI major claims database

During this year’s annual International Union of Marine Insurance (IUMI) conference, initial findings from IUMI’s major claims database were made available for the first time.
Following three years of development, the database is now sufficiently reliable for IUMI to publish a set of global cargo claims data.

Dave Matcham, Chief Executive, International Underwriting Association; and project leader and secretary to IUMI’s Facts & Figures Committee explains: “We began this initiative by establishing and proving the concept three years ago. Since then we have recruited 22 national insurance associations who are all IUMI members and together we have made a significant investment in gathering reliable and consistent data on both hull and cargo losses. This year – our third year of development – we have received 6,800 records of major (greater than US$250,000) losses totalling US$10.2 billion. Because cargo underwriting tends to be more evenly spread geographically than hull, we have more robust data for that insurance line and we are now ready to make public our initial major cargo claims conclusions.”

Sufficient information dating back to 2013 has now been collected on a range of metrics and from this, five specific data fields have been identified where the data is reliable enough to be published.   
Working in close partnership with IUMI professional partner, the Boston Consulting Group, IUMI has been able to undertake and publish some early analysis of this information. Examples include a year-on-year comparison of numbers of major cargo claims versus their average value; number of losses categorised by value range; value of different types of claims; and claim numbers and values attributed to various transport modes. 

“This is a unique database that is beginning to give a meaningful global insight into major cargo claims. Information of this breadth cannot be found elsewhere and it will allow underwriters to benchmark their own activity against global performance to better inform future decisions”, said Matcham.

IUMI will publish the initial cargo analysis in its annual Stats Report later this year. Meantime, more information can be found from http://www.iumi.com
 

6. Suspension of Hong Kong/US tax treaty

On August 19, 2020, the US Department of State notified Hong Kong authorities of the suspension or termination of the shipping tax treaty between the US and Hong Kong, Watson, Farley & Willams writes. This step was mandated by Executive Order 13936, issued by President Trump on July 14, 2020, which ordered the State Department to send Hong Kong notice of intent to terminate the Shipping Tax Treaty. Termination of the Shipping Tax Treaty will affect Hong Kong and US taxpayers engaged in shipping.
 
FULL ARTICLE
 

7. OCIMF overhaul to identify high risk issues

The Oil Companies International Marine Forum (OCIMF),   has announced that it has overhauled its committee structure in order to focus its resources on identifying and mitigating issues of highest-risk to its members and to the marine industry as determined by its re-energised strategy.

 While its scope of operations and remit remains the same, OCIMF’s strategy places a renewed emphasis on the way it identifies, analyses and assesses the issues that have the biggest impact on the safety of lives, the natural environment and property. Using a risks and barriers (or bowtie) methodology, a newly established risk advisory function within the OCIMF Secretariat is now responsible for identifying those risks that are most likely to impact on the activities of OCIMF members.

Rob Drysdale, managing director of OCIMF, explains: “As a voluntary organisation, we depend upon the expertise and input of our member companies and partners in order to develop our best practice publications and inspection programmes, and to advocate these and global regulation successfully to the marine industry. We need to optimise this input by working in a more effective and efficient way by focusing our efforts on the issues OCIMF is best placed to address.

“By restructuring our committees to focus on fewer, but higher risk activities, and implementing new ways of working which will enable us to respond with greater agility in producing relevant best practice publications, programmes or advocacy, we believe OCIMF can deliver greater value for our members and the industry as a whole.”
 

8.  US Court – borrowed servant rule

Dennis Bryant has brought to our attention an unpublished decision in the US Courts. The US Court of Appeals for the Fifth Circuit ruled that the right to compensation or benefits under the Longshore and Harbor Workers’ Compensation Act (LHWCA) is the exclusive remedy to an employee who is injured by the negligence or wrong of any other person in the same employ and is applicable in borrowed servant situations.

Skipper v A&M Dockside Repair, No. 20-30278, (5th Cir., September 16, 2020) http://www.ca5.uscourts.gov/opinions/unpub/20/20-30278.0.pdf
 

9. Low sulphur transition – a Gard view

Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the transition to Very Low Sulphur Fuel Oil (VLSFO) would be smooth sailing. From Gard’s experience, the transition has been smoother than many predicted but not without challenges.

Read more

10. KR issues world’s first cyber security class notation to HHI

The Korean Register has presented Hyundai Heavy Industries (HHI) with the world’s first Cyber Security (CS Ready) class notation for a very large liquefied petroleum gas (LPG) carrier. The presentation took place at KR’s Headquarters in Busan on 18 September.
 
Hyundai LNG Shipping is the owner of the very large LPG carrier built by HHI which is scheduled for delivery later this month. KR granted the notation after completing successful document and field inspections, which included Kongsberg Maritime’s ship alarm and monitoring system (AMS) and Hyundai Global Service’s Integrated Smart Ship Solution (ISS).

This is the first time the KR cyber security notation has been awarded to a very large LPG carrier, the notation is issued to newbuilding ships that have successfully passed 49 inspection items in a total of 12 categories, including risk and asset management, cyber incident response and recovery.

HHI and Korea Shipbuilding & Offshore Engineering have built a cyber security network encompassing the main systems, conducting risk assessment and vulnerability diagnosis for cyber security threats and KR has carried out and completed cyber security inspections across the network. As part of the comprehensive technological testing, KR conducted its first MITRE ATT&CK based penetration test to verify the safety of the cyber security system. 
 

11.  DNV GL forecast to 2050

DNV GL has released the fourth edition of its Maritime Forecast to 2050 which aims to enhance the ability of shipping stakeholders, especially shipowners, to navigate the technological, regulatory and market uncertainties in the industry, and set shipping on a pathway to decarbonisation. It is based on a library of 30 scenarios which project future fleet composition, energy use, fuel mix, and CO2 emissions to 2050. Sixteen different fuel types and 10 fuel technology systems are modelled in the report.

“The grand challenge of our time is finding a pathway towards decarbonisation,” said Knut Ørbeck-Nilssen, chief executive of DNV GL – Maritime. “Reducing GHG emissions is rapidly becoming the defining decision-making factor for the future of the shipping industry. The pressure to act decisively is mounting. Perfect is the enemy of good, and so we mustn’t wait for an ideal solution to arrive and risk making no progress at all. Using a wide range of scenarios involving different fuel types and technologies, and varying degrees of regulatory pressure, our new report helps to map a way forward, offering shipowners clear insights on how to meet the challenges and opportunities ahead.”

The Maritime Forecast identifies the choice of fuel as the essential factor in decarbonizing shipping. The industry is at the beginning of a transition phase, with many potential options emerging alongside conventional fuels. This increasingly diverse fuel environment means that engine and fuel choice now represent potential risks that could lead to a stranded asset. Factoring in the impacts of availability, prices and policy, on different fuels, makes the choice even more complex.
To capture this complexity and help make this picture clearer the Maritime Forecast offers a wide range of scenarios, outlining the potential risks of a particular fuel choice. To make the ramifications concrete, alongside the pathways, the Maritime Forecast includes detailed analysis of a Panamax bulk carrier new building. By stress testing technology decisions under the various pathways and scenarios, the Forecast presents potential performance and the carbon robustness of the various design choices.

A surprising result from the model is the relative limited uptake of hydrogen as a ship fuel, as a result of both the estimated price of the fuel and the investment costs for the engine and fuel systems. Hydrogen, however, plays an integral role as a building block in the production of several carbon-neutral fuels such as e-ammonia, blue ammonia and e-methanol, all of which gain significant uptake under the decarbonization pathways. It may also find niche applications in some vessel types, such as ferries and cruise vessels, as well as in specific regions where investments have been made into local production and distribution.

The Maritime Forecast to 2050 is part of a suite of Energy Transition Outlook (ETO) reports produced by DNV GL. The ETO has designed, expanded and refined a model of the world’s energy system encompassing demand and supply of energy globally, and the use and exchange of energy between and within ten world regions.

You can download the full Maritime Forecast to 2050 here.
 

12.   Van Ameyde launch one brand and network

Van Ameyde’s four marine companies have integrated their activities in one network of marine surveyors, consultants and claims handlers. Operating as one brand, the network provides its services to all the parties in the marine industry from offices in all the major ports, from Scandinavia, the Baltic States and Russia, via the Benelux and the United Kingdom to South Africa and the entire APAC region.
To emphasize the network’s brand unity towards the global marine market, the companies have adopted Van Ameyde in their brand names. The joint mission is to secure the success stories of all the players in the marine industry. Independence, integrity, reliability and quality are the mutual core values that take centre stage in the brand’s services.

Van Ameyde Marine, Van Ameyde McAuslands, Van Ameyde Krogius and Van Ameyde Seasia recently launched their new website ameydemarine.com, corporate identity and their brand-new ‘Surveyor App’. This app enables clients all over the world to appoint the right expert for the right job.
 

Events and appointments

Jens Martin Jensen takes on CEO role at Athenian Holdings

Shipping industry name Jens Martin Jensen has taken up the post of chief executive at Kyriakou family-controlled tanker owner Athenian Holdings.

Peril at Sea and Salvage: A Guide for Masters, Sixth Edition
                       
Due for publication in mid-October, Peril at Sea and Salvage: A Guide for Masters is priced at £155 and is available to pre-order directly from Witherbys or your bookseller.

For further information please visit Witherbys.
 

Please notify the Editor of your appointments, promotions, new office openings and other important happenings: contactus@themaritimeadvocate.com

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