1. Fraud and Bills of Lading
2. Hague Rules Time Bar Open to Doubt where there is a Deviation
3. Carrington Event – 1-2 September 1859
4. York Antwerp Rules 2016 – Potential for Further Changes
5. Unburied Stone
6. People and Places
FOB Network News
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1. Fraud and Bills of Lading
Our friends over at the Forwarderlaw zine have published a piece by John Habergham of Myton Law in Hull on the recent Court of Appeals decision in Sinocore International v RBRG Trading [2017] 1 Lloyd’s Rep. 375 in which the alleged fraudulent issuance of bills of lading to satisfy a letter of credit was a key issue in a $12 million dispute. The author comments that the decision is a reinforcement of the English law approach to the international arbitral process and should be be respected and supported.
http://forwarderlaw.com/2018/07/25/fraud/
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2. Hague Rules Time Bar Open to Doubt where there is a Deviation
Debra Munford has sent us this article from Hill Dickinson by authors Lewis Moore, Toby Miller, Chris Primikiris and
Beatrice Cameli on the decision in Dera Commercial Estate -v- Derya Inc (The “SUR”) [2018] EWHC 1673 (Comm)
In this case, the Commercial Court dealt with a section 68 challenge and appeals on four issues of law under section 69 of the Arbitration Act 1996 from an LMAA arbitration award which had dismissed the counterclaim for ‘inordinate and inexcusable delay’.
Factual background
The claim relates to the purchase by Dera Commercial Estate (Dera) of 18,000 metric tons of Indian maize shipped aboard the “SUR” (the vessel) in Diamond Harbour and Vizag completing on 27 July 2011. Bills of lading were issued incorporating the Hague Rules and providing for disputes to be settled under English law by arbitration in London.
The vessel then departed for Aqaba where the cargo was to be discharged. Following her arrival on 16 August 2011, the Jordanian customs authorities refused to allow the cargo to be discharged saying, in a letter dated 8 September 2011, that this was on account of alleged ‘broken percentage, foreign matters, impurities, damaged kernels… and apparent fungus’.
On 12 September 2011 Dera issued proceedings against Derya Inc (owners) in Jordan claiming US $8 million for cargo damage. Following this, on 16 September 2011 the American Club (the club) put up a US $9 million letter of undertaking (LOU) in connection with all disputes and differences arising under the bills of lading.
LMAA arbitrators were then appointed by the parties in October 2011 in relation to ‘all disputes’.
The impasse in Jordan continued until 8 November when the vessel departed from Aqaba without permission from either Dera or the Jordanian authorities, and sailed to Turkey. Following the issuance of proceedings in Turkey, the cargo was discharged from the vessel, subsequently sold and the sale proceeds paid to the owners. After this the vessel was scrapped.
The London arbitration remained dormant until 23 March 2015 when claim submissions were served by Hill Dickinson on instructions from the club exercising their subrogated rights. The claim was for, inter alia, a declaration of non-liability for the cargo claim and an order that the LOU be released. Dera responded on 1 June 2015 and served particulars of the cargo claim relying on the bills of lading and owners’ Hague Rules obligations. Reply submissions were served on 26 August 2015 by the owners and on 16 October 2015 by Dera.
A hearing then took place in March 2017 on preliminary issues and the tribunal determined that:
a. the cargo claim was not extinguished by virtue of the Turkish proceedings because Dera had not submitted to the jurisdiction of the Turkish court; but
b. the cargo claim was struck out for want of prosecution under section 41(3) Arbitration Act 1996
Dera then raised a section 68 challenge alleging serious irregularity on the part of the tribunal and sought permission to appeal under section 69 of the Arbitration Act 1996.
By order of Leggatt J dated 18 December 2017, Dera was given permission to pursue its section 68 challenge on one out of the four issues which it had put forward (the remaining three failing to survive owners’ challenge under order 8, rule 5 of the Commercial Court guide). Dera was also given permission to appeal on four out of five questions of law under section 69:
1. Whether a claim which is particularised within the six year limitation period applicable to contractual claims pursuant to s. 5 of the Limitation Act 1980 can nevertheless be struck out for ‘inordinate delay’ under s. 41(3) because the parties have contracted for a shorter limitation period (here one year under Article III rule 6)
2. Whether, in a contract evidenced by a bill of lading subject to the Hague Rules, a geographic deviation precludes a carrier from relying on the one year time bar created by Article III rule 6
3. Whether, where the one year time bar created by Article III rule 6 applies, the period between a) the time that the cause of action arises and b) the expiry of the contractual time limit is to be taken into account when assessing whether the delay is ‘inordinate’ for the purpose of s. 41(3)
4. The proper order, burden and/or standard of proof applicable to a tribunal’s assessment of whether a delay is ‘inexcusable’ for the purpose of s. 41(3)
The matter was heard by Carr J. who handed down a detailed judgment on 13 July 2018. The judge held that Dera’s section 68 challenge failed, but Dera succeeded with the second of the legal challenges.
Legal issues
Dealing first with the section 68 challenge, Dera had to show a serious irregularity under section 68(2) of the Act by alleging bias. The question the court had to consider was, therefore, ‘whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the Tribunal was biased’ (Porter -v- Magill [2002] 2 AC 357).
The judge made a detailed analysis of Dera’s complaints, and found that there was no real possibility that a fair-minded and informed observer would conclude that the tribunal was biased.
As regards the questions of law the judgement on issue two is, by far, the most important. Here the judge held that she was bound by the decision in Hain Steamship Company Ltd -v- Tate & Lyle Ltd [1936] 41 Com Cas, 350. Therefore, where there is a geographical deviation, the other party to the contract is entitled, upon discovering the deviation, to retrospectively declare itself as ‘no longer bound by any of the contract terms’. If it does so, it is not bound by ‘the promise to pay the agreed freight any more than by his other promises’. However, the innocent party could also elect to treat the contract as subsisting and, if it did so with knowledge of its rights, it would be bound by all of its terms.
It is clear that the judge came to this decision reluctantly because she considered she was bound by Hain Steamship. As a result, owners were given permission to appeal to the Court of Appeal on this point. Accordingly, until the issue is taken further, this first instance decision reignites the controversy over where there is a deviation owners may lose the benefit of the 12 month time bar. This is so even though the doctrine of fundamental breach no longer exists, and the Court of Appeal has indicated in two cases (The Antares [1987] 1 Lloyds Rep 424 and The Kapitan Petko Voivoda [2003] 2 Lloyds Rep 1) that where there is a non-geographical ‘deviation’ the Hague Rules remain applicable, for which there is significant support from the leading textbooks (Cf. Cooke et al, Voyage Charters (4th ed.) (2014) (at [85.175])).
In relation to the other issues, the court decided:
” where the parties have stipulated for a short limitation period, the proceedings can be struck out for inordinate delay where that, shorter, limitation period has been exceeded (Cf. The Finnrose [1994] 1 Lloyd’s Rep 559)
” all time can be taken into account when assessing whether there has been inordinate delay and, in the instant case, it was not necessary to assess individual periods of delay separately and distinctly, in order to arrive at a cumulative picture of overall delay
” the burden is on the party seeking to strike-out for inordinate and inexcusable delay (Shtun -v- Zalejska [1996] 1 WLR 1270) to prove its case and not on the party against whom the application is made to justify the delay
Comment
The decision is a disappointing one for owners and clubs, although in order to rely on a deviation cargo interests (and charterers under the clause paramount) will have to elect as to whether it will be bound by the bill of lading contract and this should be done within a reasonable time of their learning of any deviation. However, until the matter goes further, there is an added layer of complexity to time bar issues.The case also shows the benefit of a challenge to a section 68 application on paper in order to filter out unmeritorious challenges.
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3. Carrington Event – 1-2 September 1859
We spotted this interesting piece in Dennis Bryant’s Maritime Newsletter which might be seen as a prognostication of a really big and upcoming mess:-
The Carrington Event was a massive solar storm that occurred on 1-2 September 1859. The largest geomagnetic storm on record was the result of a solar coronal mass ejection colliding with the Earth’s magnetosphere. The associated white light flare on the surface of the sun was observed and recorded by the English astronomer Richard Carrington. A similar event occurring today would have major repercussions, disrupting satellite communication systems and satellite-based positioning, navigation, and timing systems such as GPS. Solar coronal mass ejections are not rare. This one, though, was particularly strong and just happened to cross the orbit of the Earth exactly when and where the Earth was passing. Bloody bad timing.
http://www.leif.org/research/1859%20Storm%20-%20Extreme%20Space%20Weather.pdf
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4. York Antwerp Rules 2016 – Potential for Further Changes
The latest article to be posted on the website of Singapore correspondent M. Jagannath contains his thoughts on reform to this venerable maritime infrastructure We used to say that the easiest way to bring a room to hush was to ask whether anyone had considered the general average implications of whatever was under discussion.
http://nau.com.sg/york-antwerp-rules-2016-potential-for-further-changes/
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5. Unburied Stone
Courtesy of the Browser we ran across this essay which was one of a series of stories about the 2011 Japan tsunami made possible by a grant from the Pulitzer Center for Crisis Reporting. It is by Matthew Komatsu and appears in the latest Paris Review:-
When a Japanese town is wiped out by a tidal wave, a tsunami stone is placed on the beach or cliff nearby so that future generations can be warned of the danger long after it fades from living memory. After a tidal wave washed away the northern coastal village of Yoshihama in 1933, the villagers relocated to higher ground, left a stone — and their successors were spared the catastrophe of 2011. “The stone was a grim symbol of what would happen should the community return to lower lands. It became simply an erratic object, carven with the story of a forgotten danger”
https://www.theparisreview.org/blog/2018/08/30/the-unburied-stone/
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6. People and Place
Gareth Williams has joined Campbell Johnston Clark (CJC) as a director of its Singapore office. Williams, who is a specialist in dry work, joins CJC from HFW Singapore.
———-
FONASBA and BIMCO are inviting London shipping professionals to a seminar on the recently released Agency
Appointment and General Agency Agreements. The event will introduce both documents, highlight and explain the main clauses and allow participants to discuss the benefits of using the new agreements
with members of the FONASBA/BIMCO drafting team. The seminar will be followed by a networking reception
WHEN:
The event starts at 18:30 on 20 September 2018
18:30-19:30 – seminar
19:30-20:30 – networking reception
WHERE:
The Conference Suite
The Baltic Exchange
St Mary Axe, London
WHO:
Panel:
John A. Foord, President FONASBA
Simone Carlini, FONASBA, Managing Director, Multi Marine Services srl
Donald Chard, BIMCO
email: admin@fonasba.com
Attendance is FREE but pre-registration is required
If you wish to attend, please register before Tuesday 18 September
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From the Avo Archive
The website of this newsletter contains all the editorial material since the inception of the Maritime Advocate as a print based quarterly in 1997 under the founding aegis of John Guy, Chris Hewer and Manfred Arnold. Readers can go to the site and search the database on the home page in its entirety. If you are looking for an old case, an old controversy or you would just like to see how many times you and your firm have featured in our annals feel free to access the archive. It is like this e-zine, free to Readers and we always appreciate the support of advertisers and sponsors.
On the hunt for references to solar flares we could find only levity and a want of seriousness in Issue 284 of December 19th, 2006
Junk bonds explained
THE textbook has it that junk bonds offer high rates of interest but with correspondingly higher risk attached to the capital. But Moore Stephens, in the latest alternative definition of accounting terms in its ‘Insured Interest’ newsletter, puts forward a more imaginative provenance. It says, “Junk bonds, like the Japanese candlestick chart, begin with the letter ”J’, which was the last letter to be added to the Latin alphabet and the only letter not to appear in the periodic table, even periodically. Bad luck.
“The Japanese candlestick chart was popular in the 1600s. It showed opening and closing times and whether or not the market had moved up or down or sideways. Junk bonds were popular in 1980, along with Spandau Ballet. This is also the year in which they became unpopular. After this they were referred to – if at all – as Petrus Ramus, which is German for ‘garlic’.
“As the Romance languages developed, so did new types of bonds. None was less popular than the junk bond, with its ‘J’ in place of the more normal ‘Y’. The classic example is ‘Hallelujah’, which is pronounced ‘Pumsnoh’.
“The first known reference to junk bonds comes in Othello, when Iago says, ‘Who steals my purse steals trash’. This at least makes more sense than the same character’s claim, ‘I am not what I am’.
“Perplex in the extreme, at regular intervals.”
www.moorestephens.co.uk
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Stardust and bulldust
AFTER 4.57 billion years drifting through space, a thousand grains of stardust are apparently ‘forcing’ scientists to rethink their theories on how the solar system was created. They needn’t bother on your editor’s behalf.
Stardust that dates from before the sun was born, and which was collected from the tail of a comet, is said to have the scientific world in a ‘ferment’. It doesn’t take very much. It may be Christmas, but this cockamamie story holds no water.
A scientist says, “The composition of minerals is all over the place, which tells us that the components that built this comet weren’t formed in one place.” You need to be a scientist to appreciate how clever this is.
Your editor knows a lot about comets. There are 878 of them. Of these, 184 are periodic, and so are the rest. They are sometimes called dirty snowballs, or icy mudballs, or melba thins, and are invisible except when they can be seen. By far the most famous comet is Halley’s Comet, but scientists say “SL9 was a big hit for a week in the summer of 1994”. So was ‘What’s Up?’ by D J Miko.
Bill Haley and the Comets were a big hit in 1955. Stardust was much earlier. Alvin Stardust was much later, although not late enough.
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Fat chance
THE latest hare-brained idea to encourage people to eat less is to label clothes made in larger sizes with an obesity helpline number. Your editor would not be one to suggest that this is a very silly idea. But he would be one of three.
Health warnings on clothing would be as effective as health warnings on cigarette packets. If a nice herringbone trouser or a bombazine jacket catches your eye in your local tailor, you buy it in a size that fits you, preferably with an elastic waist. At a pinch, you might look at the label for the washing instructions. You will not appreciate a fat helpline number.
Being overweight doesn’t mean that you are not intelligent. As a philosopher once said, “Allow me to furnish the interior of my head as I please, and I shall put up with a hat like everybody else’s.”
In your editor’s day, we bought our grey flannel shirts at Henry Taylor the Outfitter, our underwear at British Home Stores, and our shoes at Bootsy, on a provident cheque. We wore our brothers’ and sisters’ cast-offs and, if we didn’t have a brother or sister, we were an only child.
It never did us any harm.
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Speculation
Skinny people irritate me! Especially when they say things like, “You know sometimes I just forget to eat.” Now I’ve forgotten my address, my mother’s maiden name, and my keys. But I’ve never forgotten to eat. You have to be a special kind of idiot to forget to eat!
A friend of mine confused her valium with her birth control pills. She had 14 kids, but she doesn’t really care.
They keep telling us to get in touch with our bodies. Mine isn’t all that communicative but I heard from it the other day after I said, “Body, how’d you like to go to the six o’clock class in vigorous toning?” Clear as a bell my body said, “listen witch… do it and die!”
The trouble with some women is that they get all excited about nothing (and then they marry him.)
I read this article that said the typical symptoms of stress are eating too much, smoking too much, impulse buying, and driving too fast. Are they kidding? That is my idea of a perfect day.
I know what Victoria’s Secret is. The secret is that nobody older than 30 can fit into their stuff.
“If men can run the world, why can’t they stop wearing neckties? How intelligent is it to start the day by tying a noose around your neck?”
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More Lady Thoughts
Growing old is mandatory; growing up is optional.
Insanity is my only means of relaxation.
Forget the health food. I need all the preservatives I can get.
Blessed are those who hunger and thirst, for they are sticking to their diets.
Life is an endless struggle full of frustrations and challenges, but eventually you find a hairstylist you like.
You’re getting old when you get the same sensation from a rocking chair that you once got from a roller coaster.
Perhaps you know why women over fifty don’t have babies; they would put them down somewhere and forget where they left them.
One of life’s mysteries is how a two pound box of candy can make you gain five pounds.
God put me on earth to accomplish a certain number of things. Right now I am so far behind, I will live forever.
It’s frustrating when you know all the answers, but nobody bothers to ask you the questions.
If you can remain calm, you just don’t have all the facts.
Stress reducer; Put a bag on your head. Mark it “closed for remodeling”. *Caution – leave air holes.
I finally got my head together, and my body fell apart.
There cannot be a crisis this week; my schedule is already full.
The real art of conversation is not only to say the right thing in the right place, but also to leave unsaid the wrong thing at the tempting moment.
Time may be a great healer, but it’s also a lousy beautician.
The best way to forget all your troubles is to wear tight shoes.
Brain cells come and brain cells go, but fat cells live forever.
The nice part of living in a small town is that when I don’t know what I’m doing, someone else does.
The older you get, the tougher it is to lose weight, because by then your body and your fat are really good friends.
Age doesn’t always bring wisdom. Sometimes age comes alone.
Life not only begins at forty, it begins to show.
Just when I was getting used to yesterday, along came today.
Sometimes I think I understand everything, then I regain consciousness.
If at first you don’t succeed, see if the loser gets anything.
You don’t stop laughing because you grow old; you grow old because you stop laughing.
I don’t mind the rat race, but I could do with a little more cheese.
I had to give up jogging for my health. My thighs kept rubbing together and setting my pantyhose on fire.
Amazing! You just hang something in your closet for a while and it shrinks two sizes.
It is bad to suppress laughter; it goes back down and spreads to your hips.
Age is important only if you’re cheese.
The only time a woman wishes she were a year older is when she is expecting a baby.
Freedom of the press means no-iron clothes.
Inside some of us is a thin person struggling to get out, but she can usually be sedated with a few pieces of chocolate cake.
Can it be a mistake that “STRESSED” is ” DESSERTS” spelled backwards?
Seen it all, done it all, can’t remember most of it.
Those who live by the sword get shot by those who don’t.
Honk if you love peace and quiet.
Despite the high cost of living, have you noticed how it remains so popular?
Nothing is foolproof to a sufficiently talented fool.
[Paul Dixon]
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A Walk Around The Docks With Lew Tassell
A glimpse of St Katherine’s Dock back in its late dereliction period in 1971 appears in a recent edition of the admirable blog on London called Spitalfields Life:-
http://spitalfieldslife.com/2018/08/23/a-walk-around-the-docks-with-lew-tassell/
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Thanks for Reading the Maritime Advocate online
Maritime Advocate Online is a weekly digest of news and views on the maritime industries, with particular reference to legal issues and dispute resolution. It is published to over 20 000 individual subscribers each week and republished within firms and organisations all over the maritime world. It is the largest publication of its kind. We estimate it goes to around 60 000 Readers in over 120 countries.
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