IN THIS ISSUE
1. The Enterprise Act 2016 – a “Reasonable Time” to Pay – What does that Mean?
2. Largest Pollution Fine Ever Dished out to Princess Line
3. UK P&I Club Advises on the Safe Carriage of Calcium Hypochlorite
4. IMLA Biennial Conference in Dublin – Friday May 19th 2017
5. Thoughts on the Global Economy
6. People and Places
The Maritime Advocate–A Growing Concern
This publication, nicknamed “the Avo” passed a milestone last summer. It has passed the 20 000 subscriber mark, the highest total since its foundation in 2001. As a result of hand-ons and internal republications within firms, it is fair to assume a total readership of around 60 000 located in 120 countries. This gives the Avo a very wide footprint in the maritime world. If you have a message or product to promote or circulate, the Avo can promise to get the word out at affordable rates. Give us a try why don’t you.
1. The Enterprise Act 2016 – a “Reasonable Time” to Pay – What does that Mean?
Helen McCormick of CTRL Marine Solutions, the claims handlers writes:-
Introduction
The Enterprise Act 2016 comes into force on 4 May 2017, and will apply to every insurance policy placed or renewed on or after 4 May 2017 which is subject to the laws of England and Wales, Scotland, or Northern Ireland. The Act, which amends the Insurance Act 2015, gives insureds a right to claim damages if the insurer has breached their obligation to pay their claim within a reasonable time.
The Current Law
At the moment, insureds cannot recover damages from insurers if they have suffered additional losses due to a delays by the insurer in paying out under the policy.
Under the new Act, it will be an implied term of every contract of insurance that the insurer must pay any sums due within a reasonable time. If the insurer breaches this term, the insured could have a claim for damages if they have suffered a loss as a result of being kept out of funds. Interest on late payments can also be claimed in addition.
What does “reasonable time” mean?
This means a reasonable time to investigate and assess the claim depending on the relevant circumstances, which include
*The type of insurance
*The size and complexity of the claim
*Compliance with relevant statutory or regulatory rules or guidance
*Factors outside the insurer’s control.
The Act also provides a defence for insurers. If an insurer can show that there were reasonable grounds for disputing the claim (whether in relation to liability or quantum), the insurer will not be in breach of the implied term if they delay in paying the claim while the dispute is continuing.
Usual contractual principles will also still apply. In order to recover damages for failure to pay within a reasonable time, the insured will still need to show that they have suffered a loss which was caused by the insurer’s breach of the implied term. The loss cannot be too remote, and the insured will still have to take reasonable steps to mitigate their losses.
Contracting Out
The Act does allow parties to contract out of the implied term, provided that the insured is not a consumer and that the insurer meets the transparency requirements set out in the Insurance Act 2015.
However, contracting out will not protect an insurer if they have committed a deliberate or reckless breach of the implied term.
Time Limits
Claims against insurers for breach of the implied term must be brought within one year of the date on which the insurer has paid the claim. It is important for insureds to be aware that any claims for breach of the implied term brought after that date will be time barred.
Comments
The Act is certainly beneficial to insureds in that it introduces a new right to claim damages in circumstances where insurers have failed to pay claims within a reasonable time, and it might provide an incentive for insurers to process and pay claims promptly.
However, the impact of this Act should not be overestimated. It does not give insureds a right to recover all losses in all cases. The usual hurdles for proving recoverable damages for a breach of contract will still have to be met. Furthermore, the Act does not oblige insurers to admit or pay claims immediately. Insurers will continue to investigate claims, particularly large or complex ones, and will still be able to delay payments in case of a genuine dispute with their insured.
helen.mccormick@ctrlmarinesolutions.com
2. Largest Pollution Fine Ever Dished out to Princess Line
Word reaches us via a DOJ Press Statement on how Princess Cruise Lines Ltd. was sentenced to pay a $40 million penalty – the largest-ever for crimes involving deliberate vessel pollution – related to illegal dumping overboard of oil contaminated waste and falsification of official logs in order to conceal the discharges.
The story has everything we have come to expect in these matters– a whistleblower, a magic pipe, a rather low functionary fixed with responsibility and a rather cringe making story of long term malfeasance dating back to 2005 and involving many famous cruise ships in the fleet. Here is a link to the release issued by the feds in Florida:-
3. UK P&I Club Advises on the Safe Carriage of Calcium Hypochlorite
Helen Coton sent us this concise advice from the UK Club’s loss prevention team. Good and brief. Give that draftsmen a raise:-
Calcium hypochlorite is used as the active ingredient in a variety of water purification and bleaching agents and by nature is continually decomposing, making the substance unstable and dangerous when not handled correctly.
At normally encountered temperatures calcium hypochlorite decomposes very slowly, releasing heat as it does so. However, at higher temperatures the rate of decomposition increases and if the heat is not able to escape from within the material then its temperature increases.
The packaging and quantity of the substance can have an impact on self-accelerating its decomposition. A self-accelerating reaction can occur and result in serious fires and explosions. When involved in a fire, the heat and oxygen released by the decomposing calcium hypochlorite will intensify the fire.
Decomposition can also be accelerated by contamination with organic materials (such as oil), inorganic materials (such as metals) or moisture. If calcium hypochlorite is mixed with organic materials it can result in a fire without the need for an external ignition source.
The temperature at which the self-accelerating reaction occurs depends on the type, size and shape of the packaging. The temperature required will be higher for a small package compared to a larger package of the same material. This is because the smaller package will be able to lose heat to the surroundings much more readily than a larger package. The selection of type, size and shape of packaging to promote heat dissipation is therefore important.
Dry or reefer containers may be used provided that a proper risk assessment is undertaken. The risk assessment should include all aspects of through transport including, but not limited to, routing, climatic temperature and journey duration.
The reefer container control temperature should be 10 °C. In the event of a mechanical failure or of an interruption of the power supply, the insulation in a reefer will initially protect the calcium hypochlorite from external heating.
However, if there is an extended interruption to cooling, heat produced by calcium hypochlorite decomposition may accumulate faster in a reefer than in a dry container. The longer the interruption, the greater the risk that calcium hypochlorite will heat up faster in a reefer container. Prompt steps need to be taken to restore the power or fix a mechanical failure or cool/ventilate the cargo.
In practice, calcium hypochlorite tends to be shipped on a full container load basis. It is not recommended that such payloads be consolidated with other cargo because this could detrimentally affect the stability of the calcium hypochlorite due to changes in the overall thermal properties of the container contents.
Plastic drums are to be used as the packaging for calcium hypochlorite, as adequate air circulation around the containment is required in order to prevent any heat build-up. Drums offer the best solution as they provide the largest surface area to be exposed to the surrounding air.
Packaging materials must be clean, free from contaminants, and in good condition. The drums should be properly secured on pallets and within the container. Any securing method, such as shrink-wrapping, should not restrict air flow around the drums to reduce retained heat within the cargo.
Calcium hypochlorite or calcium hypochlorite mixtures shall be transported in compliance with stowage requirements which state that during the course of transport, these substances shall be shaded from direct sunlight and all sources of heat and be placed in adequately ventilated areas. It is also recommended to stow containers of calcium hypochlorite where they are accessible.
4. IMLA Biennial Conference in Dublin – Friday May 19th 2017
Barrister Edmund Sweetman writes:-
The Irish Maritime Law Association is delighted to bring together high profile National and International speakers to address the Market on current challenges in the Maritime Industry for Lawyers, Shipowners, Port Operators, Insurers and those involved in the wider Maritime Transport logistics chain. Post Brexit Europe, increased Political volatility and the constant focus on the cost of Dispute Resolution are today a backdrop to some of these challenges. Join us in a fascinating programme.
Download details here:-
https://www.sugarsync.com/pf/D8797650_07984342_0794903
5. Thoughts on the Global Economy
Andrew Craig Bennett surveys the international trade and shipping scene and hints he may not be a true believer in Brexit. See his recent column in Splash 24/7, a model of its kind:-
http://splash247.com/not-economy-stupid/
6. People and Places
The Port of Long Beach, USA, has appointed Mario Cordero as the port’s executive director. Cordero, a former member of the Harbor Commissioners was appointed to the Federal Maritime Commission by President Barack Obama in 2011 and became chairman in 2013. While no longer the chairman, he is expected to serve on the maritime board until June 2019. Cordero will succeed Duane Kenagy, who has been interim executive director since late 2016.
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Inchcape Shipping Services (ISS), the world’s leading maritime and logistics service provider, has announced the appointment of Jasem Zaiton as Commercial Manager, Cruise Solutions.
In his previous role Jasem led the cruise sector at dnata, a member of the Emirates Group, where he spearheaded a dedicated cruise department delivering high quality shore excursions and ground handling services to over one million cruise passengers in the region.
With over ten years’ cruise-orientated experience in destination management services Jasem has focused on cruise tourism, contributing to Dubai becoming a Cruise HUB of the Cruise Arabia region and developing premier cruise passenger handling in the UAE, Qatar, Bahrain, Oman and India.
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BMT Ship & Coastal Dynamics, has announced a new contract with the UK’s Marine Accident Investigation Branch, in respect of ship electronic evidence gathering, including VDR data recovery and interpretation. BMT has installed its marine navigation and manoeuvring simulator, REMBRANDT and will provide ongoing specialised training, to allow MAIB personnel to understand the simulator’s attributes.
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 good look for references to Calcium Hypochlorite and found this solid case note in Issue 337 of March 11th, 2008
COGSA liability and hazardous cargo
THE US Court of Appeals for the Second Circuit has issued an important decision in the DG Harmony case which clarifies the standard used to determine the liability of shippers and carriers transporting hazardous cargo under the Carriage of Goods by Sea Act (COGSA).
Thomas Belknap Jr, of Blank Rome in New York, writes in the firm’s latest Maritime Developments Advisory, “One consequence of the decision is that shippers will not be held strictly liable for damage caused by hazardous goods if both the shipper and the carrier had pre-shipment knowledge of the dangerous nature of the cargo, even if the carrier lacked information about the precise characteristics of the cargo and its hazards.
“Instead, in such a case, the shipper’s liability will be determined on negligence principles. In particular, where the carrier alleges that the shipper failed adequately to warn the carrier about the characteristics of the particular shipment, the carrier must show: (1) that the shipper had a duty to warn because the cargo presented dangers of which the carrier could not reasonably have been expected to be aware, (2) that the shipper failed to provide the adequate warning, and (3) that this failure caused the damage complained of.
“On November 9, 2007, the DG Harmony caught fire off the coast of Brazil as a result of an explosion in its third hold. The fire burned for three weeks, rendering the vessel and its cargo a constructive total loss. On board the vessel were ten containers, each packed with 16,000 kilograms of hydrated calcium hypochlorite (calyhpo) which was manufactured and shipped by PPG Industries Inc.
“Calhypo is an industrial bactericide which is likely to combust when it reaches its critical ambient temperature (CAT), a figure which is dependent on the manner in which the calhypo is stored and which is inversely proportional to the quantum of calhypo in a given sample. Calhypo is listed in the International Maritime Dangerous Goods Code (IMDG), which recommends that calhypo not be exposed to a heat source in excess of 55 degrees C for longer than a 24-hour period.
“PPG provided the carrier with documentation identifying the cargo by its IMDG code, declaring that the containers had been packed in accordance with the requirements of the IMDG Code, and cautioning that the containers should be stored in a cool, dry, well-ventilated place, away from sources of radiant heat. PPG also warned the carrier that the cargo would become unstable above a certain temperature, but it omitted specific information about what effect the packaging of the containers might have on the calhypo’s CAT. PPG’s containers were stowed in the vessel’s third hold. Three of the containers were placed adjacent to the heated port-side bunker tank, with two of these containers also sitting directly atop the bunker tank.
“The fire on board the DG Harmony was caused when PPG’s calhypo exploded. Litigation ensued in the US District Court for the Southern District of New York. All claims were resolved except the claims of the shipowning and cargo interests against PPG. The shipowning and cargo interests alleged that PPG was liable for the constructive total loss of the vessel based upon theories of general negligence, negligent failure to warn, and strict liability. After a bench trial, the district court found PPG solely liable based upon the theories of strict liability and negligent failure to warn. PPG appealed to the Second Circuit.
“The Second Circuit reversed the judgment of the district court that PPG was strictly liable pursuant to COGSA Section 4(6), which provides that the shipper of flammable, explosive, or dangerous cargo ‘shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment’.
“The Second Circuit held that a shipper cannot be held strictly liable for damage caused during the shipment of hazardous cargo in circumstances where the carrier was generally aware that the cargo’s dangerous nature requires careful handling or stowage, as the carrier was in this case, and it nevertheless exposes the cargo to conditions which could trigger a known danger, as the carrier did in this case. In such a case, liability must be determined under negligence principles and not strict liability principles.
“The Second Circuit then turned to the district court’s holding that PPG was liable because it failed to adequately warn of the dangers posed in shipping the calhypo. The court affirmed the district court’s finding that PPG had a duty to warn and that PPG breached this duty by failing to adequately warn the carrier of the potential dangers posed by the specific manner in which PPG had packed the containers containing the calhypo, and it further affirmed the finding that the calhypo caused the explosion resulting in the constructive total loss of the vessel.
“The court nevertheless vacated the district court’s judgment based upon its failure to address whether the carrier would have stowed the cargo differently if PPG had provided an adequate warning, and remanded the case to the district court with instructions to make findings on the issue of whether an adequate warning would have affected how the carrier stowed the calhypo.
“Where the carrier is generally aware of the hazardous nature of cargo, even if it is not aware of the precise nature of the risk, and the carrier nevertheless exposes it to potentially dangerous conditions, it will not be able to rely on the strict liability provisions of COGSA but will be required to show that the shipper acted negligently with respect to the cargo and/or its obligation to warn the carrier of the specific nature of the cargo’s risks.”
www.BlankRome.com
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