IN THIS ISSUE
1. No Cover under Liner Negligence Clause Where Vessel’s Sinking Caused by Lack of “Due Diligence”
2. Student Maritime Art Contest
3. Tanker Oil Spills
4. SmartCon
5. Great Lakes Shutting Down for Winter Break
6. People and Places
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1. No Cover under Liner Negligence Clause Where Vessel’s Sinking Caused by Lack of “Due Diligence”
The latest case note received from Jason P. Minkin and Jonathan A. Cipriani of BatesCarey in Chicago concerns a Liner Negligence Clause which broadens the cover available under a marine insurance policy beyond the classic “perils” clause to losses caused by certain machinery or hull defects, or by the negligence of certain individuals.
This expansion in coverage is not, however, unlimited. This is demonstrated by Starnet Insurance Co. v. LA Marine Service LLC, No. 16-13511, 2017 WL 6604843 (E.D. La. Dec. 27, 2017), which found that no coverage was available under a time-hull insurance policy for a vessel that sank as a result of the policyholder’s lack of due diligence.
In Starnet, the insured vessel sank after water entered the engine room through the shafts, stuffing boxes, and packing gland assemblies. The relevant policy included a Liner Negligence Clause, which covered losses caused by specified machinery, including “breakage of shafts” and “any latent defect in the machinery or hull.” The policy also provided, however, that to come within the protection of the Liner Negligence Clause, the loss must not have resulted from a “want of due diligence by the Assured(s), the Owner(s) or Manager (s) of the Vessel, or any of them.”
The policyholder claimed coverage under the Liner Negligence Clause, arguing that the damage to the vessel resulted from a premature failure of the stuffing box. The insurer took the position that the Liner Negligence Clause did not cover the loss because it was caused by the lack of diligence of the vessel owner-specifically, a failure to properly maintain the vessel’s stuffing boxes. The insurer also claimed, as a separate coverage defense, that the insured violated the American Rule. As the Starnet court explained, the American Rule consists of two warranties that federal maritime law implies in every time hull insurance policy: an “absolute warranty of seaworthiness at the inception of the policy” and a “modified, negative warranty, under which the insured promises not to knowingly send a vessel in an unseaworthy condition.” The court also noted, however, that the text of a Liner Negligence Clause can waive or displace the implied warranties under the American Rule. Thus, the court focused its analysis on whether the insured had shown “due diligence” as required to obtain coverage under the liner Negligence Clause.
While recognizing that a Liner Negligence Clause does permit recovery for some losses that would not be available under traditional maritime insurance contracts, such as losses caused by the negligence of the vessel’s builder and construction supervisor, the court observed that the clause’s expansion of coverage is not unlimited, as was clear from the explicit terms of the policy. Reviewing the facts, the court found that the vessel sank because of a leak through the vessel’s stuffing boxes and that such leak was caused by overstuffing of packing material against the propulsion shafts, which wore down the shafts and led to a failure of the compression seal around the shafts.
As to whether the leak from the stuffing boxes resulted from want of due diligence by the policyholder, the court found that it was “essentially uncontested” that the policyholder failed to maintain the vessel’s stuffing boxes and propulsion shafts properly. “Due diligence,” the court explained, is judged under an objective standard, “rather than the vessel owner’s subjective beliefs regarding acceptable practices.” The insurer presented evidence from an expert witness who determined that the vessel’s shafts wore down through lack of maintenance, specifically a failure to remove old packing rings when new ones were installed in the packing chamber. The insured argued in contrast that the sinking was caused by a “sudden and unexpected failure of the stuffing boxes,” but the court concluded that there was no physical evidence in the record to support this theory. Based on the evidence submitted, the court found that the policyholder failed to exercise due diligence to maintain the vessel’s stuffing boxes and that the policyholder was aware of an excessive leak from the stuffing boxes and failed to take reasonable steps to ensure that the stuffing boxes were in seaworthy condition. Therefore, because the insurer was able to demonstrate that the loss of the vessel resulted from the want of due diligence of the policyholder, the vessel’s sinking was not covered under the Liner Negligence Clause.
Starnet underscores that coverage determinations are driven by the specific language of the relevant policy. In this case the Liner Negligence Clause can expand coverage beyond what a traditional time hull insurance policy would cover, but the coverage is contingent upon meeting certain additional requirements, such as the due diligence requirement enforced by the court here. In Starnet, the insured’s lack of due diligence precluded its ability to recover.
2. Student Maritime Art Contest
Carleen Lyden Walker writes:-
Students in grades K-12 are invited to participate in the annual calendar art contest sponsored by the North American Marine Environment Protection Association (NAMEPA), the United States Coast Guard (USCG), and the Inter-American Committee on Ports of the Organization of American States (CIP-OAS). The theme of this year’s contest aligns with that of IMO’s World Maritime Day, “Better Shipping for a Better Future.” Submissions will be accepted from youth across the Americas (North America, Central America, South America and the Caribbean).
Maritime shipping has existed for thousands of years- ever since the earliest humans took to the water to find food, building supplies, and adventure. Throughout its history, shipping has evolved into the most environmentally friendly and safest way to transport goods around the world. Today, the maritime shipping industry transports about 90% of the items people use every day like clothes, cars, furniture, toothbrushes, and computers. Students are asked to submit an original poster, by March 30, 2018, depicting creative ideas about how shipping makes the future better for people and the marine environment, or how shipping can be even more green.
Twelve entries (six from grades K-5 and six from grades 6-12) will be selected as finalists by May 15, 2018. Winners will be required to submit their original artwork upon being notified of their selection as finalists. The winning artwork will be featured on the NAMEPA, USCG, and CIP-OAS websites as well as on a printed bilingual (English & Spanish) calendar distributed throughout the Americas. Finalists will receive a certificate and a calendar with the artwork from all 12 winners. Two grand-prize winning artists (chosen from the finalists in each of the grade brackets) will be selected and will receive, in addition to the certificate and calendar, a $100 cash prize and a USCG prize package.
For complete “Better Shipping for a Better Future” art contest guidelines, submission instructions, prize details, and more information about the maritime shipping industry, visit:-
http://www.namepa.net/art-contest
If you have additional questions about the contest, please contact:-
Who: Students in grades K-12
What: Each entry must be a two-dimensional, original piece of artwork done on white poster board with dimensions of 24″ x 18″ or 32″ x 24″ (61 cm x 46 cm or 81 cm x 61 cm) in the landscape orientation. Any art medium may be used; however, computer graphics will not be accepted. Bright colors should be used because they are best for reprinting. Any artwork that includes copyrighted or trademarked product names will be disqualified. The student’s name or school should not appear on the front or back of the artwork.
When: All entries must be uploaded by March 30, 2018.
How: You must take a high-resolution (at least 3072 x 2304 pixels) digital photograph of your poster in order to submit your entry. You or your teacher/facilitator must then upload the digital photo of your poster along with your name, grade, school/after-school program name, school/after-school program address, and teacher/facilitator’s name, phone number, and e-mail address via the submission form at:-
http://www.maritimeartcontest.submittable.com/submit
3. Tanker Oil Spills
We read in the esteemed Tanker Operator the views of ITOPF which events have conspired to mistime. They say that tanker oil spill statistics for almost 50 years show a progressive downward trend. The average number of spills greater than, or equal to 7 tonnes in size has continuously reduced and, since 2010, averages around seven per year. When large spills of greater than 700 tonnes are looked at, the yearly average, which was around 25 in the 1970s has reduced dramatically to less than two since 2010.
It’s a safer industry all right. But there lies the wreck of the Sanchi in 115 metres, all hands dead, 136 000 tons of condensate, the slick the size of Paris and heading for coastal Japan like its 1968. Nearly half a career’s preoccupations await the claims handlers at the SKULD Club as they deal with the technical issues arising out of a large pollution incident near to well to do coastal jurisdictions as complicated by the Iran factor
4. SmartCon
Grant Hunter, BIMCO’s Head of Contracts & Clauses has sent in news of the launch of the organisation’s new contract drafting system. All these years on since the first wave of excitement during the internet bubble and you can still see how the maritime world struggles with all these basic things, not to mention eBLs and the new preoccupation with cyber security.
Hunter says:-
SmartCon is not just an editing tool, it includes a range of complimentary products giving users access to relevant explanatory notes, eLearning and direct messaging access to BIMCO’s Support and Advice service.
SmartCon’s forerunner, IDEA, currently has around 3000 companies using it.
The pricing structure of SmartCon has been simplified. There is little actual price difference between SmartCon and IDEA.
At launch, SmartCon contains the 35 most popular contracts, all ready to go. Further contracts will be added subject to customer demand.
In common with other charter party editor’s, it’s not possible to turn off “Track Changes” in SmartCon. This allows two parties to work on a contract as part of their regular work flow, but gives each of them the assurance that the other party can’t make any changes to the document, without both being able to see it.
By way of the background he says:-
BIMCO is a membership organisation, which derives its revenue from member fees. BIMCO Informatique is a company, owned by BIMCO, which is dedicated to creating products relevant for the entire maritime industry and BIMCO members.
SmartCon is part of the BIMCO Informatique portfolio, along with, among others, Shipping KPI and BIMCO’s training and publishing activities.
SmartCon was developed together with Hosters.com, a Microsoft Gold Competency Managed Services Provider.
SmartCon is available to anyone. BIMCO members get a discount.
SmartCon is built on Microsoft’s Cloud technology, using Azure Active Directory, Azure Information Protection and Office Groups. Minimum requirements are Microsoft Windows 7 and Microsoft Word 2013.
SmartCon works on iOS and Android devices, that support the respective Microsoft Word App required.
[If your editor ruled the world, he would bolt something like this onto a great database of wordings and standard contracts, a kind of boilerplate wiki, and give the long suffering providers and users of such things something of long term value–ed]
5. Great Lakes Shutting Down for Winter Break
Our good friend Jonathan Spencer, the average adjuster based in New York, has sent in the link to this grand piece by Chicago-based Mitch Smith which appeared in the New York Times. Good writing, images and clips of film describe the northerness of the St Lawrence Seaway.
https://www.nytimes.com/2018/01/18/us/great-lakes-ships.html
6. People and Place
Lucy Clarke has been appointed as the Chief Executive of the Jardine Lloyd Thompson Group’s worldwide insurance broking activities, with the title Global CEO of JLT Specialty.
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Thomas Miller has announced the acquisition of international marine consultancy, Brookes Bell, for an undisclosed consideration.
[In the Inns and Taverns a figure of 4 million is mentioned. An interesting acquisition cleaving to a path opened by Charles Taylor Consulting some two decades ago. Up until now we have always thought of CTC as the industry experts on how businesses which live by the billed hour cohabit with those who live sans timesheets.–ed]
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Cynthia Hudson, founder and CEO of HudsonAnalytix, has been appointed to the Board of the American Caribbean Maritime Foundation, an organization which supports the endeavors of the Caribbean Maritime University in its goals to educate students for roles in the maritime trade.
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.
We had a little search around “BIMCO” and, in Issue Issue 130 of 4th November 2003, turned up this hardy perennial item:-
BIMCO has an idea
JUST the one? It has plenty, in fact, but the one it is currently promoting is a web-based feature that allows users to access and edit standard shipping documents online. Documents can also be saved online, so that subscribers to the service can work on them without access to their own computers. “Efficiency at last,” boasts BIMCO?s signature file. Readers can make up their own minds by signing up for a free three month trial.
Good Enough
A man realized he needed to purchase a hearing aid, but he felt unwilling to spend much money. “How much do they run?” he asked the clerk.
“That depends,” said the salesman. “They run from £2.00 to £2,000.”
“Let’s see the £2.00 model,” he said.
The clerk put the device around the man’s neck. “You just stick this button in your ear and run this little string down to your pocket,” he instructed.
“How does it work?” the customer asked.
“For £2.00 it doesn’t work,” the salesman replied. “But when people see it on you, they’ll talk louder!”
[Paul Dixon]
Alternative Defs
An urban myth has it that a well known American newspaper asked itsreaders to take any word from the dictionary, alter it by adding, subtracting, or changing of one letter, and supply a new definition. Here are some results:-
Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period.
Intaxication: Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.
Bozone (n.): The substance surrounding stupid people that stops bright ideas from penetrating.
Giraffiti: Vandalism spray-painted very, very high.
Sarchasm: The gulf between the author of sarcastic wit and the person who doesn’t get it.
Inoculatte: To take coffee intravenously when you are running late.
Hipatitis: Terminal coolness.
Osteopornosis: A degenerate disease. (This one got extra credit!)
Glibido: All talk and no action.
Dopeler Effect: The tendency of stupid ideas to seem smarter when they come at you rapidly
How To Survive 75 Hours Alone In The Ocean
Courtesy of the Browser we read this rather chilling piece by Alex Hutchinson which appears in the Outside zine:-
In February 2006 an experienced Navy diving instructor called Robert Hewitt was scuba diving off the coast of New Zealand’s North Island. A current pulled him offshore. He spent three days and nights in the water before he was spotted and rescued. How did he survive, when he should have died? It was mostly down to psychology. “In defiance of all the physiological models, Rob Hewitt survived for an astounding 75 hours alone in the cold water. If you find yourself out there, don’t give up”
https://www.outsideonline.com/2275116/how-survive-75-hours-alone-ocean