Issue 182


1. Agents warned on switching

ITIC (International Transport Intermediaries Club) has warned that ship agents face large claims for losses if they fail to follow simple rules when issuing ‘switch’ bills of lading.

It is not unusual for ship agents to be instructed by their principals to issue a second, or ‘switch’, set of bills of lading. Sometimes they will be instructed by a principal to do so without collecting the first set. This is a very dangerous practice. Although agents may be offered a letter of indemnity by their principal, or the party receiving the second set, this can often prove to be worthless.

“There has been a recent spate of very large claims against ship agents by banks, shippers and shipowners resulting from the issuance of a second set of bills of lading to trading companies or middlemen without cancellation of the first set, against letters of indemnity from those companies,” says Julia Mavropoulos, claims director at ITIC. “The trading companies in all cases have become bankrupt after negotiating both sets of bills of lading for cash. The fact that the agents may have acted in good faith pursuant to their principals’ instructions does not provide a defence to claims by third parties who have sustained losses.”

ITIC advises agents to only issue a second set of bills of lading once they have ensured that the first set has been surrendered for cancellation. But if the principal does instruct them to issue a second set without receiving the first set, they should seek written authority from their principal along with a letter of indemnity, countersigned by a bank if necessary. They are also advised to obtain written authority from any other party which might be adversely affected, for example the shipowner, shipper or bank.

Agents should also check that the second set of bills of lading does not contain any misrepresentations as to the discharge port, condition of the cargo or date of loading, for example, which can all too easily lead to claims from parties that have suffered losses as a result.

2. Warm welcome for SCMA

THE Singapore Chamber of Maritime Arbitration (SCMA) got a welcome boost at its launch earlier this month when six major companies from the local shipping community presented letters of pledge to use the SCMA’s facilities for dispute resolution and to include SCMA arbitration clauses in their maritime-related contracts where appropriate.

“This strong display of support, and the fact that distinguished maritime leaders are serving on its advisory committee and panel of arbitrators, shows that the SCMA has made a good start,” says Trudy Leung, general manager of the Singapore Maritime Foundation.

3. Upholding Himalaya

THE US Supreme Court has upheld the validity of a Himalaya clause in a dispute involving cargo damage sustained during inland transit.

In a case reported on the Holland & Knight website, an Australian manufacturer shipped cargo from Australia to Huntsville, Alabama, via Savannah, Georgia. The shipper contracted with a freight forwarder for the shipment and the bill of lading issued by the NVOCC included a Himalaya clause extending the COGSA liability limitations to downstream parties.

The freight forwarder contracted with a vessel operator for actual carriage of the cargo. The bill of lading issued by the vessel operator likewise included a Himalaya clause. The vessel operator contracted with a railroad company for carriage of the cargo from Savannah to Huntsville. Enroute, the train derailed and the cargo was damaged. The shipper brought suit against the railroad, among others. The railroad contended that its liability was limited under COGSA by means of the Himalaya clauses.

The trial court agreed with the railroad, but this ruling was overturned by the appeal court, which held that there was no privity of contract between the shipper and the railroad as required by state law. On review, the US Supreme Court ruled that the contract was maritime in nature and that the need for a uniform maritime approach was not affected by the fact that the damage was incurred during the inland part of the transit. The court held that the railroad was entitled to avail itself of the COGSA limits of liability by means of the two Himalaya clauses. (Norfolk Southern Railway Co v James N Kirby Pty Ltd)

4. Brazilian fines

SHIPOWNERS and operators trading with Brazil have been warned about excessive new fines for violations of sanitary laws levied by the country’s port health authority. Insurance manager Thomas Miller (Americas) and port correspondents both fear that the port health authority’s approach to breaches of the law may be driven more by economic than scientific principles.

Agents’ concern is heightened because, according to Brazilian law, they are jointly responsible for paying fines. TMA expects agents to seek cash advances or club guarantees before performing the necessary functions to enable ships to sail.

5. Liens and mortgages in Spain

THE Geneva Convention on Maritime Liens and Mortgages entered into force in Spain on September 5. Recourse to the Spanish domestic regime with regard to this matter will now be limited to residual cases. The convention has reduced the number of maritime liens that take priority over registered mortgages and charges.

For a full explanation, by Uria & Menendez, go to the International Law Office website at:

6. Size matters

GLOBAL fuel testing company Lintec Testing Services says all shipowners and testing services should follow the lead on minimum bunker sample size requirements set by the Maritime and Port Authority (MPA) of Singapore in the recent revision to its bunkering code. Lintec believes a minimum fuel sample size of 750ml is essential, to ensure that shipowners and charterers get adequate levels of protection.

The revised Singapore bunkering code says, “The minimum quantity of the identical samples shall not be less than 600ml per container. For bunker samples to have repeated tests, a minimum quantity of 750ml is required.”

Douglas Raitt, Lintec regional manager for Asia, says, “Fuel testing companies are offering peace of mind and protection. They must work on the assumption that some parameters will need to be tested more than once from the same sample. If a result is off-spec, or close to the margin, then the parameter should be rechecked.”

Lintec believes a minimum fuel sample of 750ml will cover most eventualities, and that it should become global practice.

7. People & Places

MARITIME lawyer Helen Noble has joined Dublin law firm Mason Hayes & Curran from Watson Farley and Williams in London. Helen started her career as a barrister before qualifying as a solicitor. Managing partner Declan Moylan says the appointment reflects the government decision to develop Ireland as an international centre for shipping finance and to attract the international shipping sector.

HEALY & Baillie will be celebrating the tenth anniversary of its Hong Kong office at a party at the China Club on November 18. Hosted by resident partner Nigel Binnersley and the firm’s associate lawyers, the event will commemorate Healy & Baillie’s commitment to servicing its clients in Hong Kong, mainland China, Asia and Oceania.

The firm’s Hong Kong office recently expanded with the transfer of US legal attorney Grace Hou from New York. Grace is from Shanghai and was educated there before obtaining a law degree in the US.

JEFF Morgan, former ship finance partner at Stephenson Harwood, joined Winter Scott, London, on November 1, as partner in charge of ship finance and transaction.

Travelling hopefully

ROSIE Hawkes, who pops in from time to time to help your editor with his arithmetic, sent the following email last week to staff at the maritime advocate online: “I won’t be in again until the end of the month as I’m off to Ghana, with my school”.

Rosie broke the news as though she were popping out to the corner shop for a quarter of loose tea and a packet of fig newtons. But how, in the space of just a few years, did we get to Ghana from potholing in Derbyshire, which is where your editor went on his one and only school trip? Ghana didn’t exist at the time your editor was at school. Neither did air travel, although an early version of Africa was doing the rounds.

In your editor’s day, there were two classes of travel – first class, and with children. That is not to say your editor is against travel for the young. It is a good thing. In Rosie’s case, it may not be necessary, but it is still a good thing. But what about those who are left behind to do their long division? Your editor is sure Ghana is a perfectly nice place, but not for a whole fortnight, surely?

Smart work

A TEAM from US law firm Healy & Baillie has been crowned “Smartest Shipping Persons in the World” following the inaugural annual Connecticut Maritime Association Quiz Night. Healy & Baillie’s team swept aside stiff competition to win the prestigious Brad Berman Cup. Its victory apparently owed nothing to the fact that Brad Berman – who these days is president of the Liberian International Ship & Corporate Registry, and who was once a partner at Healy & Baillie – was a member of the winning team. The questions were compiled by Brad Berman (no relation).

Team captain and CMA president Peter Drakos said, “We had wet, dry, flag and legal covered. We employed knowledge, experience, strategy and red wine to achieve this win.”

This is all very well. Anybody can answer questions about the collision regulations and demurrage, but we wonder how the Healy & Baillie team would have fared if asked something difficult. We would like to see Berman, for example, explain how you would dispose of (a) a papal bull or (b) your nephews; or Drakos having to come up with the French name of Brian the Snail in Le Manège Enchanté, or ‘Magic Roundabout’.

Perhaps some of the following might also tax the smartest shipping persons in the world:

1. How long did the Hundred Years War last? (Be exact).

2. Which country makes Panama hats?

3. From which animal do we get cat gut? (Pity).

4. In which month do Russians celebrate the October Revolution?

5. What is a camel’s hair brush made of?

6. The Canary Islands are named after which animal?

7. What was King George V1’s first name?

8. What colour is a purple finch?

9. Where do Chinese gooseberries come from?

10. What is the colour of the black box in a commercial aircraft?

When they can answer THESE questions, we will think about – I say THINK about – calling people ‘smart’. Come on Healy & Baillie, if you think you’re hard enough.

Frankly astonishing

SCIENTISTS are very excited about the recent discovery of the remains of a diminutive cousin of modern man, nicknamed the ‘Hobbit’, on a remote Polynesian island. ‘Homo Floresienses’ stood 3 feet 3 inches tall and had a brain a quarter the size of a modern man’s, or roughly the size of some marine insurance underwriter’s. He was last seen wearing a barathea blazer and cavalry twills.

The remains were discovered by an old palaeontologist who, at the time, was looking for an everton mint that had fallen through a hole in the lining of his parka. Thinking nothing of it, he called the police.

Experts say it is impossible to be sure such hobbits have died out. One expert said, “I don’t think the likelihood of finding a new species of human alive is any less than that of finding a new species of antelope, and that has happened.” (Ed: HAS it?)

Meanwhile, independent experts (who are different from other experts, being taller, more expensive and less biddable) say the fact that a human only three feet tall and with a brain the size of a cat’s lived less than 20,000 years ago is “frankly astonishing”.

Frankly, your editor is not at all astonished. He has known hundreds of people who were only three feet tall, and they had brains as big as teapots. What is frankly astonishing is the news that domestic cats kill 55 million birds a year. And that’s just in Orpington. This is probably 54.9 million more birds than have been killed by wind farms since the days when hobbits roamed the earth. Yet nobody is protesting in our streets about the growth in the cat population.

Lost cause

A BURGLAR was jailed recently after being caught relaxing in the bath of a London house he had broken into. But he was by no means the most inefficient burglar of the week. That honour goes to a thief who was apprehended by police leaving the scene of a crime in Maidenhead. The local newspaper reported, “A tussle ensued in which the burglar’s false leg came off, and they saw a tattoo saying ‘Keith’ on his hand.”

Speeding ticket

A POLICE officer stopped a blonde for speeding and asked her very nicely if he could see her licence. She replied, in a huff, “I wish you people would get your act together. Just yesterday you took away my licence, and then today you expect me to show it to you.”

Best Body-Part Headlines of the Week

Ellis heads for CII (Insurance Day)

JLT arm celebrates Dubai registration (Insurance Day)

Indiana’s head leaves (Lloyd’s List)

Unlucky Shamrock changes hands (Fairplay Daily News)

Kenya’s wildlife head suspended (BBC Online News)

Broking arm kept following merger (Post Magazine)

Quote of the Week

Suburbia is where the developer bulldozes out the trees, then names the streets after them. (Bill Vaughn)

Best Question-and-Answer Sessions of the Week

Q: What ‘V’ is a salad dressing made from oil, vinegar and herbs?

A: Venison

Q: In which sport can a team be asked to follow on?

A: Rallying

Q: Which five-letter word beginning with ‘C’ is a word meaning ‘vulgar’ and also a term for unrefined petroleum?

A: Course

Q: In the traditional ‘Hatches, Matches and Despatches’ column of a publication, which of the words refers to births?

A: Deaths

Q: Latvia, Lithuania and which other country are traditionally known as the Baltic States?

A: Hungary

(‘The Weakest Link’, BBC TV)