IN THIS ISSUE
1. Maritime Liens and Bunker Suppliers
2. Arbitration and Want of Prosecution
3. Rotterdam Rules and E Commerce
4. Gard Campaign on Cyber Security
5. Rights of Riparians
6. People and Places
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1. Maritime Liens and Bunker Suppliers
Randolph Donatelli and Martin West writing in the Lyons & Flood newsletter add a new instalment to what might be called the OW saga and examine who is entitled to a maritime lien in a typical shipping transaction:-
In a long-awaited decision, the U.S. Court of Appeals for the Second Circuit became the latest U.S. court to hold that a maritime lien for a bunker supply belongs to the bunker trader, not the physical supplier of the bunkers. A copy can be found in the link below.
This was another case featuring a supply by the O.W. Bunker group shortly before their collapse. The vessel’s charterer ordered the bunkers from O.W. Denmark, who subcontracted with O.W. USA, who subcontracted with the physical supplier, CEPSA. ING bank became the assignee of O.W. Denmark’s rights by way of a financing agreement.
The Second Circuit affirmed the lower court (the U.S. District Court for the Southern District of New York), agreeing with the U.S. Court of Appeals for the Eleventh Circuit that the physical supplier does not have the lien, essentially because the physical supplier did not deal with the charterer who ordered the bunkers. [L&F Note: the issue of who has the maritime lien – – the trader or physical supplier – – is now also before the U.S. Courts of Appeal for the Fifth and Ninth Circuits, and decisions from those courts ought to be issued in the next several months.]
In rejecting the physical supplier’s claim to a maritime lien, the Second Circuit court made clear that liens can be created only by law, not by contract. Therefore, the physical supplier’s argument that O.W.’s bunkering supply terms and conditions confer a lien on the physical supplier failed. The court also rejected, as unsupported in the record, the claim by the physical supplier that the O.W. entities acted as agents of the physical supplier.
Further, the Second Circuit court rejected the physical supplier’s argument that it had a maritime lien on equitable grounds, holding that a claim based on equity or unjust enrichment does not give rise to a maritime lien and can be asserted only in an in personam action, the case before the lower court being solely in rem [L&F Note: please recall from our newsletter of May 11, 2018 that the Eleventh Circuit court in the Martin Energy case found in favor of a physical supplier against a vessel owner in personam on a quantum meruit theory. Now that the clear trend of U.S. courts is to deny that physical suppliers have a maritime lien against vessels in rem, it will be interesting to see if physical suppliers will assert quantum meruit claims against vessel owners in personam, perhaps attempting Rule B attachments to establish jurisdiction. As noted in our May 11, 2018 newsletter, the Eleventh Circuit in Martin Energy did not expressly decide whether a quantum meruit claim can be the basis of a Rule B attachment.]
As for the assertion by ING (as assignee of O.W. Denmark) of a maritime lien, the lower court held that there was no lien because O.W. Denmark did not have a financial risk in the transaction. The Second Circuit reversed that holding, finding that the consideration of risk is irrelevant where it was clear that O.W. Denmark contracted with the charterer to supply bunkers to the vessel. The Second Circuit said that, in any event, there was evidence in the record that O.W. Denmark was exposed to risk.
Read the decision here:-
https://tinyurl.com/
2. Arbitration and Want of Prosecution
Henry Dunlop, writing from HFW’s Hong Kong office, has published a briefing on the decision in Grindrod Shipping Pte Ltd (t/a Island View Shipping) v. Hyundai Merchant Marine Co Ltd [2018] EWHC 1284 (Comm).
He describes the actual circumstances of the “K AMBER” decision as exceptional. At one level, six years after the dispute arose, the arbitrators concerned clearly considered the claim was stale, and the sub charterers IVS were responsible for the delay. Nevertheless serious prejudice in the more usual sense of deterioration of the evidence was not made out by Hyundai. As an exercise of discretion, the case is a salutary reminder that once six years have slipped by, a tribunal may take little persuasion that relevant prejudice has been suffered, and of the Court’s reluctance to second-guess that decision. IVS were provided the security they demanded from Hyundai; but when the arbitrators’ discretion came into play, in the application under section 41(3), their demand brought IVS more than they had bargained for.
Read the briefing here:-
https://tinyurl.com/delay-
3. Rotterdam Rules and E Commerce
Stuart Hethrington and Professor Tomotaka Fujita of the Comité Maritime International (CMI) have sent us this essay dealing with the evolution of shipping via blocktrains and paperless reforms:-
In the last several years, we have been hearing about the revolutionary change that autonomous ships will bring to international shipping. More recently, it is the technological developments in electronic commerce, such as “Blockchain”; that it is said will revolutionize shipping.
A recent article by Kyunghee Park published by Bloomberg, dated 19 April 2018, opens with the following paragraph:
“Globalisation has brought the most advanced trading networks the world has seen, with the biggest, fastest vessels, robot-operated ports and vast computer databases tracking cargoes. But it all still relies on millions and millions of paper documents.”
The article goes on to show how that is changing, and describes the revolution taking place “on a scale not seen since the move to standard containers”.
British futurist, Kate Adamson, has referred to “this digital industrial revolution … opening the gates to massive gains in productivity and efficiency”. (Readers may be familiar with her book “Shipping and the 800-lb Gorilla”).
It is difficult to see how all this change can take place when the cargo liability regime that still prevails in international carriage documentation was agreed in 1924 (based on the Harter Act of the United States of 1893 and the Visby Protocol of 1968 not making any changes that would assist E Commerce). The only realistic answer is that States will need to ratify the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2008 (the Rotterdam Rules) expeditiously.
What has been forgotten in the lethargy of States (except the four who have ratified them) and carriers since the Rotterdam Rules were adopted in 2008 is that they, unlike any of their predecessor regimes (Hague, Hague Visby, and Hamburg), actually deal with electronic commerce.
An article in the Economist (April 25, 2018) entitled “Thinking outside the box: Global logistics” explains the significance of the problem:
“Removing administrative blockages and outdated practices would, by some accounts, do more to boost international trade than eliminating tariffs. The UN reckons that putting all the Asia-Pacific regions trade-related paperwork online could slash the time it takes to export goods by up to 44%, cut the cost of doing so by up to 31% and boost exports by as much as $257 billion a year”.
The article identified an institutional obstacle to reform as the failure to ratify the Rotterdam Rules which would “put electronic documents in international shipping on a firm legal footing”.
When the CMI drafted its Instrument on Transport Law, which was provided to UNCITRAL in 2001 as the basis for the negotiations that ultimately produced the Rotterdam Rules, it declared that “there should be a clear statement in a preamble or in the Instrument that one of the intentions of the Instrument is to remove paper based obstacles to electronic transactions by adopting the relevant principles of the UNCITRAL Model Law on Electronic Commerce, 1996”.
The CMI Yearbook 2001, in its introduction to what was the final version of the “Outline Instrument” made the following far sighted comments:-
“Electronic commerce
The Instrument should apply to all contracts of carriage, including those concluded electronically. To reach this goal, the Instrument must be medium neutral as well as technology neutral. This means that it must be adapted to all types of systems, not only those based on a registry such as Bolero. It must be suited to systems operating in a closed environment (such as an intranet), as well as those operating in an open environment (such as the internet). One must also be careful not to be limited by what is currently in use, keeping in mind that technology evolves rapidly and that what appears impossible today is probably already on the current agenda of software developers.”
The preamble to the Rotterdam Rules Convention, after referring to the Hague, Hague Visby and Hamburg Rules, noted that the Convention had been drafted: –
“Mindful of the technological and commercial developments that have taken place since the adoption of those Conventions and of the need to consolidate and modernise them.”
The definitions section in the Rotterdam Rules gives a clue to the transformative nature of the Rotterdam Rules compared with its predecessors. There are definitions of the following words “”electronic communication”; “electronic transport record”; “negotiable electronic transport record”; “non-negotiable electronic transport record”; “the “issuance” of a negotiable electronic transport record; and “the “transfer” of a negotiable electronic transport record.
Chapter 3 of the Rotterdam Rules is entitled “Electronic transport records” and contains Articles 8 to 10 enabling the use of electronic transport records which are functional equivalents to transport documents such as bills of lading.
In addition Chapter 8 is headed “Transport documents and electronic transport documents” and comprises Articles 35 to 42 and Chapter 9 deals with “delivery of the goods” and comprises Articles 43 to 49 both of which include parallel provisions applicable to paper documents and their electronic equivalents; Chapter 10 “rights of the controlling party” (Articles 50 to 56) and Chapter 11 “Transfer of rights” (Articles 57 to 58) also address issues not covered by the previous regimes. All these provisions were carefully designed to be applicable to both paper and electronic records.
In addition to the use of electronic transport records the Rotterdam Rules create the possibility for using electronic communications to transfer the right of control.
It will be seen from this brief description of the contents of the Rotterdam Rules that they were drafted with electronic commerce in mind, unlike their predecessors.
Those involved in the transport chain, including carriers, port authorities, cargo interests, insurers and others involved in international trade should recognize the significance of the Rotterdam Rules in the context of electronic commerce, and they need to encourage their national governments to ratify the Convention as soon as possible.
Stuart Hetherington
President, Comité Maritime International
Professor Tomotaka Fujita
Chair of CMI Standing Committee on Carriage of Goods
4. Gard Campaign on Cyber Security
Randi Gaughan of the Gard P&I Club writes:-
Cyber security is high on the agenda for many of our Members and clients, and focus on this issue will only increase in the future. The human factor is important in cyber security management and there is still some work to be done in this respect – in other words, awareness, training and competence is in demand, and not least there is a need to demystify and make real the cyber security issues faced by the ship’s crew.
Gard’s aim is, together with our partner in this project, DNV GL, to create awareness and contribute to an increased competence on cyber security. We have produced a video and a supporting presentation identifying some of the risks, technical and operational issues, and steps the maritime industry can take to address them. These are listed below:-
Cyber security – introductory video (YouTube) (3 mins):-
https://www.youtube.com/watch?
Cyber security – full video (20 mins):-
Cyber security – full information package:-
http://www.gard.no/web/
5. Rights of Riparians
We were entertained by this essay by Chris Colin which appears in Outside which we learned about courtesy of the Browser.
If you go boating down America’s most scenic rivers you will find that many riversides are claimed as “private” by local residents. But the banks of navigable rivers are public up to the high watermark, and “navigable” includes navigable by tourists. Property deeds are irrelevant.
We have no doubt our Readers have seen some examples of this common misconception.
https://www.outsideonline.com/
6. People and Place
The Benelux law firm AKD has appointed Vivian van der Kuil a partner in its Transport & Energy team.
Vivian joined AKD in 2015. She is an international litigation specialist with wide experience as a lawyer of complex proceedings in the Dutch Civil and Criminal Court. She is also a former judge and public prosecutor. Before joining the legal profession, Vivian completed officer training at the Royal Dutch Institute for the Navy and subsequently worked as an officer in the Operations/Navigation Service with the Royal Dutch Navy.
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The LOC Group has appointed ex-Head of Engineering at BP, Ian Cummins as its new Energy Projects Development Director. Ian will focus on the oil and gas and renewables markets, and help to identify and develop new and innovative engineering opportunities to progress the business.
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Hill Dickinson has appointed finance and corporate partner Jasel Chauhan, senior associate Anthony Paizes and legal assistant Foteini Sfyndili to its Piraeus office.
Jasel joins from HFW where he headed the ship finance and corporate practice in Piraeus. Jasel will be appointed as Head of International Finance as the firm looks to build on its presence in this area, with particular focus on the EMEA region. Jasel has over 10 years’ experience of corporate and finance transactions in the marine sector and has been based in Greece since 2009. His practice covers a broad range of cross-border corporate projects, finance and commercial shipping transactions – acting for Greek and international ship owners, banks, private equity and financial institutions.
Anthony also joins from HFW and is qualified in South Africa, England & Wales, Greece and the Cayman Islands. Foteini adds further offshore experience from the Cayman Islands and over 12 years’ experience working with international and domestic law firms in Canada.
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Liberty Global Logistics (LGL) has announced today that Paul “Chip” Jaenichen, former U.S.Maritime Administrator, has joined the Company as its Executive Vice President – US Flag. In his new position, he will be responsible for the oversight of the day to day aspects of the Company’s business relating to U.S. flag, government relations, strategic business
initiatives and US cargo opportunities.
Chip received his B.S. in Ocean Engineering from the U.S. Naval Academy and his Masters’ degree in Engineering Management from Old Dominion University. Chip joins Liberty after a distinguished career in public service. His 30-year Navy career was spent in submarines and included command assignments as Captain of the USS Albany, a fast attack
submarine and Commodore of Submarine Squadron 11 in San Diego, California. He also served as Director of Submarine/Nuclear Power Distribution, overseeing 4,500 submarine and nuclear-trained surface warfare officers and aviators. His last posting for the Department of the Navy was as Deputy Chief of Legislative Affairsfrom 2010 to 2012.
Chip was appointed U.S. Maritime Administrator for the U.S. Department of Transportation in July 2014 by President Obama and served until January 2017. Hepreviously served as both Deputy and Acting Maritime Administrator from 2012 to 2014. After leaving public service, Chip worked as Chief Operating Officer of HMS Global Maritime prior to joining LGL.
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 tried tracking down early references to e-commerce. In Issue 18 of 20th August 2001 this item appears:-
Online judges
WE are indebted to UAE law firm Al Tamimi for news that judges in the Dubai courts have recently concluded an internet and IT training course. Topics covered included browsing the net, email, file sharing, and e-commerce.
One wonders whether judges in the UK courts – whose knowledge of technology is popularly perceived to have been arrested at the invention of the crystal set – are similarly boned up. We suspect they are more comfortable with the definition provided over a hundred years ago by Oliver Wendell Holmes Jr that, “Judges commonly are elderly men, and are more likely to hate at sight any analysis to which they are not accustomed, and which disturbs repose of mind, than to fall in love with novelties”.
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Consolations of Seniority
1. Your supply of brain cells is finally down to manageable size.
2. Your secrets are safe with your friends because they can’t remember them either.
3. Your joints are more accurate meteorologists than the met office.
4. People call at 9 PM and ask, “Did I wake you?”
5. People no longer view you as a hypochondriac.
6. There is nothing left to learn the hard way.
7. Things you buy now won’t wear out.
8. You can eat dinner at 4 P.M.
9. You can live without sex but not without glasses.
10. You enjoy hearing about other peoples operations.
11. You get into heated arguments about pension plans.
12. You have a party and the neighbors don’t even realize it.
13. You no longer think of speed limits as a challenge.
14. You quit trying to hold your stomach in, no matter who walks into the room.
15. You sing along with elevator music.
16. Your eyes won’t get much worse.
17. Your investment in health insurance is finally beginning to pay off.
18. You can’t remember who sent you this list.
._____________________________
Life Insurance
Peter walks into an insurance office and asks for a job.
“We don’t need anyone” they replied.
“You can’t afford not to hire me. I can sell anyone, anytime, anything!”
“Well we have two prospects that No One has been able to sell. If you can sell just one, you have a job.”
He was gone about two hours, and returned and handed them two checks, one for $25,000.00 and another for $50, 000.00.
“How in the world did you do that ?” they asked.
“I told you I’m the worlds best salesman, I can sell anyone, anywhere, anytime!”
“Did you get a urine sample?” they asked him.
“What’s that?” he asked.
“Well, if you sell a policy over $20,000.00 the company requires a urine sample. Take these two bottles and go back and get urine samples.”
Peter was gone about 6 hours and they were fixing to close when he walks in with two five gallon buckets, one in each hand. He sets the buckets down, and reaches in his shirt pocket and produces two bottles of urine, and sets them on the desk and says, “Here’s Mr. George’s and this one is Mr. Robert’s.”
“Thats good” they said, “but what’s in those two buckets?”
“Well, I passed by the Holiday Inn and they were having a teachers convention, so I stopped and sold them a group policy!”
[Source: Paul Dixon’s Joke of the Day Zine]
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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.