IN THIS ISSUE
1. Tug’s H&M Insurer Must Reimburse P&I Club’s Defense Payment in Bridge Allission
2. Electronic Bills of Lading: A Step Forward or Two Steps Backward?
3. The TEU–A New Crypto Currency?
4. Eagle Ocean Marine Reports Progress
5. Running Away to Sea on Board Queen Mary 2
6. People and Places
FOB Network News
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1. Tug’s H&M Insurer Must Reimburse P&I Club’s Defense Payment in Bridge Allission
Jason P. Minkin, Jonathan A. Cipriani and Nicole M. Gallagher of BatesCarey LLP in Chicago write:-
When a tug boat leads a towing operation, the tug, through its “dominant mind,” is responsible for the safe navigation of the entire flotilla and “has the duty to exercise such reasonable care and skill as navigators would exercise under similar circumstances.” See Cont’l Ins. Co. v. L&L Marine Transp., Inc., Civ. No. 14-2967 (consolidated with Civ. No. 15-4423), 2017 WL 1405703, at *4 (E.D. La. Apr. 19, 2017).
In L&L Marine, the United States District Court for the Eastern District of Louisiana applied this concept in conjunction with the language of the lead tug owner’s hull and machinery policy (the “hull policy”), to find that the hull insurer was required to reimburse the tug owner’s protection and indemnity (“P&I”) insurer for the cost of defending an underlying lawsuit arising from the Sunshine Bridge allision in St. James Parish, Louisiana. The court’s decision has been appealed. We summarize the decision and the arguments on appeal below.
The Allision
On December 29, 2013, the M/V Angela Rae, a tug owned by L&L Marine Transportation, Inc. (“L&L”), was the lead tug in a four-vessel flotilla. The M/V Angela Rae and another tug, the M/V Freedom, were positioned behind a barge, the FSB-101. Another tug, the M/V Miss Dorothy, was positioned in front of the barge. When the flotilla approached the Sunshine Bridge in St. James Parish, Louisiana, the M/V Miss Dorothy allided with the bridge and sank.
The Coverage Dispute
The insurers of the M/V Miss Dorothy filed a lawsuit against L&L, as the owner of the M/V Angela Rae, alleging that L&L was responsible for the allision and the loss of the M/V Miss Dorothy. L&L sought coverage from its hull insurer, Atlantic Specialty, and its P&I insurer, P&I Underwriters. Atlantic Specialty denied coverage, while P&I Underwriters agreed to fund the defense. P&I Underwriters then sought reimbursement of the defense payment from Atlantic Specialty contending that the underlying lawsuit arose out of towage, in which case Atlantic Specialty, as the hull insurer, was obligated, but failed, to pay the defense costs.
P&I Underwriters contended that Atlantic Specialty was obligated to reimburse the defense costs P&I paid to L&L, pursuant to the hull policy’s “Collision and Tower’s Liability” provision:-
if the Vessel hereby insured shall come into collision with any other vessel, craft or structure, floating or otherwise (including her tow); or shall strand her tow or shall cause her tow to come into collision with any other vessel, craft or structure, floating or otherwise, or shall cause any other loss or damage to her tow or to the freight thereof or to the property on board, and the Assured, or the Surety, in consequence of the insured Vessel being at fault, shall become liable to pay and shall pay by way of damages to any other person or persons any sums, we, the Underwriters, will pay the Assured or the Surety, whichever shall have paid, such proportion of such sum or sums so paid as our subscriptions hereto bear the value of the Vessel hereby insured, provided always that our liability in respect of any one such casualty shall not exceed our proportionate part of the value of the Vessel hereby insured….
P&I Underwriters argued, and the court agreed, that under Louisiana law, the law governing the interpretation of the marine insurance contracts at issue, the question of whether coverage exists under the hull policy was based solely on the allegations in the underlying property damage complaint against L&L, and not whether the M/V Angela Rae actually caused the damage to M/V Miss Dorothy. The issue was whether the M/V Miss Dorothy was being towed or whether it was leading the tow along with the M/V Angela Rae. The relevant allegations in that complaint, the court noted, were directed toward the M/V Angela Rae as the lead tug responsible for coordination of the tow. The complaint alleged that L&L was responsible for the loss of the M/V Miss Dorothy, that the M/V Angela Rae was responsible for the coordination of the tow, that it failed to discharge that duty, and that it caused the M/V Miss Dorothy to allide with the Sunshine Bridge and sink.
Neither party, according to the court, disputed whether the allegations in the complaint controlled which policy would be implicated for defense payments and coverage. Atlantic Specialty, however, pointed to other allegations in that complaint to suggest that the M/V Miss Dorothy was assisting the M/V Angela Rae with her towage of the barge, instead of being towed by the M/V Angela Rae. The Collision and Tower’s Liability clause in the hull policy provided coverage in the following circumstances, none of which, according to Atlantic Specialty, were at issue here: (1) the insured vessel collides with another vessel, craft, structure, or her tow; (2) the insured vessel strands her tow; (3) the insured vessel causes her tow to collide with another vessel, craft, or structure; or (4) the insured vessel causes any other loss or damage to her tow, or to the freight thereof. According to Atlantic Specialty, because the M/V Angela Rae did not collide with the M/V Miss Dorothy or the Sunshine Bridge, and because the M/V Miss Dorothy was not “in the tow” of the M/V Angela Rae, none of the four coverage areas were implicated.
The court rejected Atlantic Specialty’s arguments. While Atlantic Specialty was correct that the property damage complaint against L&L alleged that the M/V Miss Dorothy was assisting the M/V Angela Rae and the M/V Freedom in towing the FSB-101, the M/V Angela Rae was also alleged to be the “lead tug and was responsible for coordination of the tow.” The court noted that this particular allegation was agreed to by the parties.
The court then applied the “dominant mind” doctrine, which provides that, where damages arise from a casualty involving a tow or an entire flotilla, only the vessel controlling the operation is liable. The court found that the M/V Angela Rae, as the lead tug, owed a responsibility to the entire flotilla – which included a duty to the M/V Miss Dorothy. Based on this duty, the court determined it was the insurance policy covering the M/V Angela Rae for damage caused during her tow that was liable to the damaged vessel. Contrary to Atlantic Specialty, the court found that the hull policy’s coverage – where the “‘insured vessel causes her tow to collide with another vessel, craft, or structure[,]'” – was implicated by the allision. There was no dispute that the M/V Miss Dorothy allided with the Sunshine Bridge while part of the flotilla. As the lead tug, the M/V Angela Rae was, according to the court, liable for causing her tow (i.e., the M/V Miss Dorothy) to allide with a structure (i.e., the Sunshine Bridge). The court stated: “[g]iving the policy terms [their] textual meaning, the Miss Dorothy’s allision with the Sunshine Bridge comports with a specific coverage term of Atlantic’s hull policy as well as this Circuit’s concept of the dominant mind.”
Finally, the court also agreed with P&I Underwriters that, while the P&I policy is “technically broader” than the hull policy, it was only intended to effect coverage in this particular situation after the hull policy limits were expended, pursuant to an endorsement to the P&I policy. Because the hull policy limits were not expended, the P&I policy was not implicated.
Conclusion
The court in L&L Marine examined the role of the lead tug in determining which vessel’s coverage is implicated where multiple vessels are involved. The court found that the lead tug owed a duty to the entire flotilla, even though other tugs may have assisted with the tow. The hull policy was implicated based on its language providing coverage where the “insured vessel causes her tow to collide with another vessel, craft, or structure.” For these reasons, Atlantic Specialty, as the hull insurer, was liable to reimburse the defense payments made by P&I Underwriters.
Atlantic Specialty has since appealed the L&L Marine decision. On appeal, Atlantic Specialty argues that (1) the M/V Miss Dorothy was not being towed by the M/V Angela Rae, and thus, a predicate to coverage under the Atlantic Specialty policy is not met; and (2) the “dominant mind” doctrine is a presumption of fault used in tort, and should not have been applied to the interpretation of the insurance contract. According to Atlantic Specialty, the lower court erred by looking beyond the plain and ambiguous terms of the hull policy. As briefing on the appeal has not yet concluded, it will likely be at least several months before a decision is rendered.
2. Electronic Bills of Lading: A Step Forward or Two Steps Backward?
Gerald Yee and Natasha Rai writing in Clyde & Cos Marine News survey the paperless scene and ask when it is really going to happen in the lush conservative valley of shipping:-
Following the recent judgment in MSC Mediterranean Shipping Company SA v Glencore International AG [2017] EWCA Civ 365, cargo should be released only in accordance with the contract evidenced by the bill of lading, even where an electronic release system is being used. In this case, cargo was released on the presentation of a PIN code, despite there being no provision for this in the bill of lading. Two of the released cargo consignments were released to unauthorised persons.
The case is a reminder that the cargo is delivered on the presentation of one original bill of lading to the Master of the vessel and on the terms set out in the bill of lading. When using an electronic bill of lading, contracting parties must consider carefully the effect of electronic systems and negotiate terms accordingly, to avoid disputes arising from uncertainty.
The bill of lading seeks to replicate the contractual matrix between parties to a trade. Not all jurisdictions recognise electronic contracts, let alone electronic bills of lading. Potential issues may arise where a court or tribunal in Indonesia, for example, is faced with the question of whether an electronic bill of lading evidences a binding contract.
In Singapore, the Electronic Transaction Act excludes from its scope documents such as a bill of lading, warehouse receipt, dock warrant or negotiable instruments. Therefore, the Act does not currently enable the use of electronic equivalents of such transferable documents or instruments.
Despite the speed at which technology is advancing, paper bills are proving resilient to change. There is apprehension about whether electronic bills of lading are able to comprehensively mirror paper bills, which have been fundamental to international trade. It remains to be seen if, and when, the shipping industry and national laws will truly and bravely embrace a paperless world.
Read the article in full here:-
3. The TEU–A New Crypto Currency?
Read all about the attempt by 300cubits and co-founder Johnson Leung to float a new crypto currency not unlike bitcoin to fill the gaps between shipping present and shipping future, also known as the trust deficit. The piece appears in Splash 24/7:-
http://splash247.com/300cubits-container-crypto-currency/
4. Eagle Ocean Marine Reports Progress
Growing market share and continuing profitability augur well for the future.
Joe Hughes has sent us news of Eagle Ocean Marine (EOM), the American Club’s fixed-premium P & I and FD & D facility, which reports steady growth and continuing profitability. It has, he says, renewed its reinsurance program for a further twelve months from July 1 on favorable terms with the solid support of its coventurers at Lloyd’s.
EOM offers Protection and Indemnity and Freight, Demurrage and Defense insurance to the operators of smaller vessels, typically those in local and regional trades, who prefer a fixed premium approach to their P & I needs. It provides the benefits of American Club primary cover and service capabilities, co-venturing the first layer of insurance protection with underwriters at Lloyd’s on a quota-share basis. Lloyd’s syndicates also participate in the facility’s excess reinsurance arrangements for limits up to $500 million per risk.
EOM insures ships from all over the world except the United States. It enjoys a strong presence in Asia, approximately 48% of its business currently being derived from Southeast Asia and 32% from Greater China. However, its share of the market in Europe, the Middle East and Africa has also grown over the past year and now accounts for about 15% of its total portfolio.
EOM’s revenue has similarly increased over recent years. The recently concluded insurance year featured a topline increase in revenue of approximately 16% over the previous twelve months. Total income exceeded $8 million for the first time. It is expected that steady revenue growth will be maintained over the year ahead.
At the operating level, the last several years have enjoyed consistently good results. The incidence and severity of claims have remained at moderate levels. Since it commenced operations in 2011, EOM has generated an aggregate profit margin in excess of 30%.
http://www.eagleoceanmarine.com/
5. Running Away to Sea on Board Queen Mary 2
Sea Prof Robert Gordon Has sent in his what I did on my holiday essay, the latest instalment of his blog. Anyone else who cares to do the same during these dog days of Summer we would probably be delighted to run, especially if it is as well written as Gordon’s:-
A former seafarer’s vision of a ‘busman’s holiday’ has got to be a 9-day cruise from Southampton to Norway’s fjords on board Cunard’s newly refurbished ‘Queen Mary 2’. My wife, otherwise secretly known as ‘she who must be obeyed’, thought it would be a splendid idea. Having spent 22 years at sea, inclusive of much bouncing around in North Sea gales, I did not share the same rosy view. However, after 34 years of married life, I have accepted that overt resistance to ‘she’ is futile. My holiday report is therefore as follows.
Read the blog post in full here:-
http://seaprof.com/2017/08/03/running-away-to-sea-on-board-queen-mary-2/
6. People and Places
Jeffrey Blum writes:-
London evening classes for shipping professionals:-
Maritime Education & Training Ltd (METL) is open for enrolment for the new academic year 2017-2018 in preparation for the Institute of Chartered Shipbrokers examinations in May 2018. Evening classes are held at our venue at King’s College, Guy’s Campus, behind London Bridge station from 11th September 2017 until 29th March 2018. Details are available on our website:-
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Andrew Webster has sent in details of the upcoming three day Port Feasibility & Valuation Course in Hong Kong. The course is being organised by Port Finance International (PFI), in partnership with MTBS as its key knowledge partner.
The program is aimed at increasing knowledge in the field of port financial modelling, project & PPP feasibility, equity valuation and bankability assessment.
Date: 12-14 September 2017, Hong Kong
Location: The Excelsior, 281 Gloucester Rd, Causeway Bay, Hong Kong
The course is aimed at port, investment and infrastructure professionals from public and private sector, as well as academics.
To find out more go to:-
http://www.portfinanceinternational.com/pfihongkong2017
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David Marsden of the Hong Kong Trade Development Council’s London office has sent us word of their ” Think Asia, Think Hong Kong” Business Conference in London. This will be held on Thursday, 21st September at the Queen Elizabeth II Conference Centre, SW1P 3EE.
The Conference will comprise a main symposium, a networking lunch, and concurrent thematic sessions on subjects including Belt and Road opportunities, Chinese outbound investment, Start-ups, FinTech, Hong Kong as a creative and innovation hub, and digital marketing. There will be opportunities to learn practical tips through free onsite consultation and to meet potential business as well as joint-investment partners e.g. Hong Kong business delegates and service providers.
To secure complimentary tickets for this event, please register here:-
http://www.thinkasiathinkhk.com/2017/en/
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Andrew Tettenborn of Swansea University has asked us to mention the Swansea Colloquium 2017 which is taking place on 4-5 September and devoted to many liability matters:-.
https://www.linkedin.com/pulse/13th-annual-iistl-colloquium-maritime-liabilities-4-5-kurtz-shefford
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HFW’s Asia Pacific shipping operation in Singapore is being expanded with the arrival from London of partners Toby Stephens and John Forrester.
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Hill Dickinson has appointed Tom Burdass to its shipping practice as Legal Director..
He joins the firm’s Broadgate Tower, London office from Campbell Johnston Clark (CJC) where he spent more than six years acting for clients in dry shipping litigation matters with a particular focus on P&I and FD&D disputes where he has significant experience. Tom has also acted in a variety of wet shipping matters.
He advises on all aspects of disputes arising from charterparties, bills of lading, pool agreements, MOAs and other commercial shipping contracts. He also has experience advising on towage, general average, salvage and marine insurance issues.
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.
Searching for items on bitcoins and such, we found this item which appeared in Issue 563 of April 12th, 2013. The link still works
Bitcoin–Shippng Currency of the Future?
Courtesy of the Browser we read this reposting of an article in the Economist seeking to explain this decentralised digital currency behind which stands no central bank.or monetary authority. It is set up so that the total amount in circulation can only ever reach 21 million bitcoins.
Bitcoins (or fractions of Bitcoins known as satoshis) can be bought and sold in return for traditional currency on several exchanges, and can also be directly transferred across the internet from one user to another using appropriate software. This makes Bitcoin a potentially attractive currency in which to settle international transactions, without messing around with bank charges or exchange rates. It has been in the news of late, not least because the currency is rather volatile at the moment.
http://www.economist.com/blogs/economist-explains/2013/04/economist-explains-how-does-bitcoin-work
Memorable Show Biz One Liners
“You have to stay in shape. My grandmother, she started walking 5 miles a day when she was 60. She’s 97 today and we don’t know where the hell she is.” — Ellen DeGeneres
“If you ever see me getting beaten by the police, put down the video camera and come help me.” — Bobcat Goldthwait
“I’ve been doing the Fonda workout: the Peter Fonda workout. That’s where I wake up, take a hit of acid, smoke a joint, and go to my sister’s house and ask her for money.” — Kevin Meaney
“My mom said she learned how to swim. Someone took her out in the lake and threw her off the boat. That’s how she learned how to swim. I said, ‘Mom, they weren’t trying to teach you how to swim.’ ” — Paula Poundstone
“In elementary school, in case of fire you have to line up quietly in a single file line from smallest to tallest. What is the logic? Do tall people burn slower?” — Warren Hutcherson
“I voted for the Democrats because I didn’t like the way the Republicans were running the country. Which is turning out to be like shooting yourself in the head to stop your headache.” — Jack Mayberry
“I have six locks on my door all in a row. When I go out, I lock every other one. I figure no matter how long somebody stands there picking the locks, they are always locking three.” — Elayne Boosler
“Ever wonder if illiterate people get the full effect of alphabet soup?” — John Mendoza
“Today I met with a subliminal advertising executive for just a second.” — Steven Wright
“A study in the Washington Post says that women have better verbal skills than men. I just want to say to the authors of that study: Duh.” — Conan O’Brien
“When I was a kid, I had two friends, and they were imaginary and they would only play with each other.” — Rita Rudner
“Did you ever walk in a room and forget why you walked in? I think that’s how dogs spend their lives.” — Sue Murphy
“My grandfather’s a little forgetful, but he likes to give me advice. One day, he took me aside and left me there.” — Ron Richards
“I worry that the person who thought up Muzak may be thinking up something else.” — Lily Tomlin
“Some women hold up dresses that are so ugly and they always say the same thing: ‘This looks much better on.’ On what? On fire?” — Rita Rudner
“I was raised by just my mom. See, my father died when I was eight years old. At least, that’s what he told us in the letter.” — Drew Carey
“Everything that used to be a sin is now a disease.” — Bill Maher
“You know how to tell if the teacher is hung over?? Movie Day.” — Jay Mohr
“Now they show you how detergents take out bloodstains, a pretty violent image there. I think if you’ve got a T-shirt with a bloodstain all over it, maybe laundry isn’t your biggest problem. Maybe you should get rid of the body before you do the wash.” — Jerry Seinfeld
“I ask people why they have deer heads on their walls. They always say because it’s such a beautiful animal. There you go. I think my mother is attractive, but I have photographs of her.” — -Ellen DeGeneres
“If God doesn’t destroy Hollywood Boulevard, he owes Sodom and Gomorrah an apology.” — Jay Leno
“Chihuahua. There’s a waste of dog food. Looks like a dog that is still far away.” — Billiam Coronell
“If your parents never had children, chances are you won’t either.” — Dick Cavett
“I have such poor vision I can date anybody.” — Garry Shandling
“I was a vegetarian until I started leaning towards sunlight.” — Rita Rudner
“I always wanted to be somebody, but I should have been more specific.” — Lily Tomlin
“I planted some bird seed. A bird came up. Now I don’t know what to feed it.” — Steven Wright
“I don’t kill flies but I like to mess with their minds. I hold them above globes. They freak out and yell, ‘Whoa, I’m way too high!’ ” — Bruce Baum
“I met a new girl at a barbecue, very pretty, a blond I think. I don’t know, her hair was on fire, and all she talked about was herself. You know these kind of girls: ‘I’m hot. I’m on fire. Me, me, me.’ You know. ‘Help me, put me out.’ Come on, could we talk about me just a little bit?” — Garry Shandling
“Where lipstick is concerned, the important thing is not color, but to accept God’s final word on where your lips end.” — Jerry Seinfeld
“I think that’s how Chicago got started. A bunch of people in New York said, ‘Gee, I’m enjoying the crime and the poverty, but it just isn’t cold enough. Let’s go west.” — Richard Jeni
“Why does Sea World have a seafood restaurant? I’m halfway through my fishburger and I realize, Oh my God….I could be eating a slow learner.” — Lynda Montgomery
Ah, yes, divorce, from the Latin word meaning to rip out a man’s genitals through his wallet. — Robin Williams
Just broke up with someone and the last thing she said to me was, “You’ll never find anyone like me again!” I’m thinking, “I should hope not! If I don’t want you, why would I want someone like you?” — Larry Miller
If you want to say it with flowers, a single rose says: “I’m cheap!” — Delta Burke
You can say any foolish thing to a dog, and the dog will give you this look that says, “My God, you’re right! I never would’ve thought of that!” — Dave Barry
According to a new survey, women say they feel more comfortable undressing in front of men than they do undressing in front of other women. They say that women are too judgmental, where, of course, men are just grateful. — Jay Leno
In the last couple of weeks I have seen the ads for the Wonder Bra. Is that really a problem in this country? Men not paying enough attention to women’s breasts? — Jay Leno
My mom said the only reason men are alive is for lawn care and vehicle maintenance. — Tim Allen
We have women in the military, but they don’t put us in the front lines. They don’t know if we can fight, if we can kill. I think we can. All the general has to do is walk over to the women and say, “You see the enemy over there? They say you look fat in those uniforms.” — Elayne Boosler
Always be nice to your children because they are the ones who will choose your rest home. — Phyllis Diller
When the sun comes up, I have morals again. — Elayne Boosler
The post office says they’re raising the price of stamps by one cent because they need to upgrade their equipment. Apparently, they’re going from semi-automatics to Uzis. — Conan O’Brien
Men look at women the way men look at cars. Everyone looks at Ferraris. Now and then we like a pickup truck, and we all buy station wagons. — Tim Allen
There’s very little advice in men’s magazines, because men don’t think there’s a lot they don’t know. Women do. Women want to learn. Men think, “I know what I’m doing, just show me somebody naked.” — Jerry Seinfield
Men are liars. We’ll lie about lying if we have to. I’m an algebra liar. I figure two good lies make a positive. — Tim Allen
AT&T is now offering a new service that allows you to pay your bills through your TV screen by using your remote control. So instead of saying, “The check’s in the mail,” people are going to say, “Hey, I wanted to pay, but I couldn’t find the remote.” — Jay Leno
You make the beds, you do the dishes, and six months later you have to start all over again. — Joan Rivers
A survey says that American workers work the first three hours every day just to pay their taxes. So that’s why we can’t get anything done in the morning: We’re government workers! — Jay Leno
Electricity can be dangerous. My nephew tried to stick a penny into a plug. Whoever said a penny doesn’t go far didn’t see him shoot across that floor. I told him he was grounded. — Tim Allen
Men do not like to admit to even momentary imperfection. My husband forgot the code to turn off the alarm. When the police came, he wouldn’t admit he’d forgotten the code…he turned himself in. — Rita Rudner
If you can’t beat them, arrange to have them beaten. — George Carlin
When I was in Boy Scouts, I slipped on the ice and hurt my ankle. A little old lady had to help me across the street. — Steven Wright
Instead of getting married again, I’m going to find a woman I don’t like and give her a house. — the late, great Lewis Grizzard
The problem with the designated driver program, it’s not a desirable job. But if you ever get sucked into doing it, have fun with it. At the end of the night, drop them off at the wrong house. — Jeff Foxworthy