The Maritime Advocate online–Issue 629


1. AAA Chairman Floats Claims Council Notion
2. Demurrage and Detention in Shipping
3. Compelling Arbitration under Equitable Estoppel
4. Cyber Security in the Tanker Industry
5. My Life, Standing on the Shore
6. People and Places

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1. AAA Chairman Floats Claims Council Notion

To the Savoy we went to attend a banquet hosted by the Association of Average Adjusters. At the preceding AGM Chairman Paul Rowland opined that the London marine insurance market might benefit from a Claims
Council to help resolve day-to-day dilemmas, suggests chairman of Association of Average Adjusters.

Mr. Rowland said that such a council could provide valuable guidance on the impact of court decisions and on the need to update or clarify insurance policy wordings. It could help prevent issues over interpretations of market practice escalating into costly and time-consuming disputes. London may lack the advantage of Scandinavian-based insurers who had recourse to a major commentary appended to their Nordic Marine Insurance Plan. The Nordic Plan is a set of standard policy conditions and is based on an agreement between the Nordic Association of Marine Insurers (Cefor) and the shipowners’ national associations of Denmark, Finland, Norway and Sweden.

He said: “I believe the [Nordic] commentary performs a crucial role in explaining how claims matters are dealt with on a day-to-day basis without the need for recourse to a ‘higher’ level.”

Producing a commentary relating to Institute Time Clauses, American Institute Hull Clauses and other policy conditions on which hull insurance is written in London would be far too extensive an undertaking, but “perhaps claims guidelines would be useful, or even some form of claims council.”

The committee comprising representatives of insurers, shipowners, adjusters and academics who kept the Nordic Plan under review “must be hugely valuable,” said Mr Rowland. Perhaps London could find a claims council of similar value. The body might include claims professionals from insurers, shipowners, brokers, average adjusters, lawyers and possibly P&I representatives.

“It could meet periodically to consider claims issues and the practical repercussions of legal decisions and whether policy terms require amending, new wordings produced or whether simply an issue was so obscure that it is unlikely to come up very often.

“It might also consider issues that have been spotted on the horizon. I am a bit of an idealist and therefore I do feel that any claims council or market forum which, if possible, moves beyond protecting the interests of any particular group could be of greatest value.”

Mr Rowland said that the Average Adjusters Association had, to some extent, played its part in terms of practical claims handling by introducing various Rules of Practice. “I believe this has helped considerably in reaching a market consensus in terms of the treatment of certain practical claims issues. However, perhaps more is now required.”

Mr Rowland, who is a director of Richards Hogg Lindley, said that much effort was rightly being made to attract younger people to professions engaged in marine claims handling and adjusting. Overall however, the numbers had fallen “and to some extent we may be living off the family silver” in terms of relying to a great degree on the older, experienced people. “This means that there is considerable pressure on younger professionals to study and acquire knowledge and expertise at a far faster rate than was required of some of us when we were their age,” said Mr Rowland.

As an example of the conundrums of conflicting views in apportioning correctly expenses of the parties following casualties, Mr Rowland cited the Association’s decision to extend one of its Rules of Practice to deal with payment for ship repair where the potential effect of the suggested “correct legal principles” appeared to conflict with claims practitioners’ understanding and treatment of such costs.

The amendment was introduced in response to a suggestion that once a policy expired, and repairs had not been done, the assured was entitled to claim only on an unrepaired damage basis. “For most experienced claims practitioners this suggestion was rather startling and, instinctively, I suspect that most practitioners would have felt that it was, at best, questionable.”

It could have led to the assured taking the vessel out of service prior to expiry of the policy specifically to effect damage repairs, as opposed to deferring repairs to the next routine drydocking and sharing certain common costs (and thereby significantly
increasing claim costs); or left an assured with an older vessel at the mercy of fluctuating market values. He had never heard of an insurer proposing that a ‘particular average’ case should be dealt with on that basis.

The “basic instincts” or “gut reactions” of practitioners were not infallible, but they were not some kind of primal sense. They were the outcome of hard-won commercial experience and what they believed to be the correct application of principles to claims.

“The Courts are, to some extent, at a disadvantage in this respect. An issue comes before them and they have to give effect to the wording of a commercial agreement one way or another based upon the evidence and argument – yes or no, right or wrong, black or white. They may not necessarily fully appreciate the impact of a decision on say, an obscure point under the ‘sue and labour’ clause, and how this may affect other aspects of claims under a hull policy. Nor do they get the opportunity to reach a decision that may be a murky grey, or what practitioners may call a compromise.”

2. Demurrage and Detention in Shipping

The World Shipping Council has submitted a letter to FMC Chairman Cordero in response to comments made and questions raised regarding detention and demurrage practices. The WSC leads the field of the trade organisations in seeking patiently and cogently to explain container shipping and its needs and paradigms to the body politic.

3. Compelling Arbitration under Equitable Estoppel

The following case note appears in the current edition of Arbitration Watch which is forwarded to us courtesy of editor Albert Badia of AACNI:-

Motion to compel arbitration under the theory of equitable estoppel

Appellee, The Flintkote Company, a major supplier of asbestos-based products, had procured a number of insurance policies from London insurance firms, including Appellant Aviva PLC. Flintkote and several of the London insurers—but not Aviva—entered into a mass settlement known as the Wellington Agreement, which required that disputes over coverage be resolved through mediation and arbitration. Invoking the Wellington Agreement, Flintkote initiated large-scale coverage-related mediation with some of those insurers, which Aviva joined, although not contractually obligated to participate. Ultimately, when Aviva sought a declaratory judgment action against Flintkote to determine the scope of coverage, Flintkote moved in the District of Delaware to compel arbitration. In a September 30, 2013 Order, the Delaware District Court granted Flintkote’s motion, concluding that Aviva was equitably estopped from avoiding arbitration by virtue of Aviva’s participation in the earlier mediation. Applying Delaware law, the Third Circuit reversed, concluding that Aviva was not equitably bound to arbitrate based on the facts. The Third Circuit first addressed the district court’s so-called “knowing exploitation” theory of equitable estoppel, in which a non-signatory is equitably precluded from embracing a contract, and then turning its back on the portion of the contract, such as an arbitration clause, that it finds disadvantageous. The Third Circuit found that Flintkote failed to adduce clear and convincing evidence that Aviva “embraced” the Wellington Agreement when it opted to participate in mediation alongside the other London insurers. The Third Circuit also addressed the district court’s second theory that Aviva’s participation in mediation caused Flintkote to change its position to its detriment. The Third Circuit found that Flintkote could not have reasonably relied on Aviva’s participation in the mediation as a basis to believe binding arbitration would occur with Aviva if the mediation failed. Flintkote Co. v. Aviva PLC, No. 13-4055 (3d Cir. Oct. 9, 2014)

4. Cyber Security in the Tanker Industry

We are indebted to our good friends at the US based Maritime Executive publication for an article with a reasonable amount of skin and bones on the issue of cyber security. The article says:-

IT company Panda Security has released Operation Oil Tanker: The Phantom Menace, a report that details a malicious and largely unknown targeted attack on oil tankers.

First discovered by Panda Security in January 2014, the ongoing attack on oil cargos began in August 2013 and is designed to steal information and credentials for defrauding oil brokers.

Despite having been compromised by this cyber-attack, which Panda has dubbed “The Phantom Menace”, none of the dozens of affected companies have been willing to report the invasion and risk global attention for vulnerabilities in their IT security networks.

[This is how it goes. I have concerns about IT security, you are a cyber attack waiting to happen and he couldn’t be more exposed if he tried, which he does not. Readers in this business who are possibly losing sleep ought to give our good sponsors Messrs Bolero International a ring, it is far too hard to game their system and precautions–ed]

Read the report here. It really is not half bad, as these things go:-

5. My Life, Standing on the Shore

Courtesy of the Browser we ran across this well written piece by Warren Ellis, comparing the life of the freelance author with life at the water’s edge. Spot on.

6. People and Places

We are sorry to report that grain trading guru and arbitrator Anthony Scott died peacefully at home on Tuesday 5th May 2015.

Hamburg’s shipping and sailing community came together at the city’s yacht harbour earlier this month, as DNV GL and Hamburgischer Verein Seefahrt (HVS) christened the offshore racing yacht “Broader View Hamburg”. The classification society has taken up the sponsorship of the Andrews 56 vessel to support and encourage more young people to develop their interest in ocean sailing and maritime topics in general.

The “Broader View Hamburg” is used for training purposes and takes part in races worldwide. Built by Alan Andrews in 1999, its light frame allows the vessel to sail at speeds of up to 24 knots. “The new name ‘Broader View’ represents our aim to recognise the conjunctions between technology, environment and society and include this into our work. HVS shares our commitment to promoting the highest safety standards and we are very pleased to support them in their efforts in training and racing with young sailors,” said Tor Svensen, CEO DNV GL – Maritime, during the christening ceremony at the Hamburg Yacht Harbour.

The vessel has been financed with the help of sponsorships for more than 15 years. DNV GL is taking over from the German investment company Norddeutsche Vermögen.

Inchcape Shipping Services (ISS) has opened a new office in Anchorage, Alaska.

The new office will give ISS a physical presence in this strategically important area of Alaska, with the team focusing on offshore logistics in support of the regional oil and gas industry.

Jessica Davis has been appointed as Port Manager for the Anchorage office. With 12 years’ experience in the shipping industry, Jessica previously worked in Dutch Harbor, Alaska.

on 20th May in Malmö, Sweden, the Korean Shipowners’ Association (KSA) made a donation of US$50,000 to the World Maritime University. The donation was handed over by KSA chairman, Mr Youn-jae Lee, at a ceremony attended by Ms Cleopatra Doumibia-Henry (president designate of WMU) and Mr Neil Bellefontaine (current president). Both expressed their gratitude as well as their desire to maintain strong relations with KSA.

WMU moved into Malmö city earlier this month and KSA’s donation will be used to furbish the university’s cafeteria which has now been named “KSA Hall”

KSA maintains strong relationships with WMU as more than 80 Korean shipping professionals have graduated from the university. The alumni includes Mr Ki-tack Lim, president of the Busan Port Authority and a current candidate for the role of IMO secretary general, as well as Young-moo Kim who is the current secretary general of the Federation of Korean Maritime Industries.

V.Group, the maritime services company, has announced the appointment of Sheila Armstrong as Head of Communications. Based in the company’s V.Ships office in Glasgow, Sheila will report directly to Executive Director, Bob Bishop. Previously Head of Communications at Inchcape Shipping Services, Sheila brings to the role a wealth of communications experience primarily gained in the maritime services sector.

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 did some searching against the word fraud this week, only to find this piece catching the eye. It appears in Issue 455 of October 1st, 2010

Detecting Liars

Chris Hewer has passed word of this research. “In my day,” he says “we could tell if they were lying just by checking to see if their pants were on fire”. How very true.

Insurance cheats running out of time

Insurance cheats stand a greater chance of being identified and truth-tellers vindicated as a result of new research into detecting lies.

Dr Sharon Leal, a research fellow at the University of Portsmouth, is an expert in detecting deception. She has recently embarked on a 112,000 study sample, funded by a leading insurance fraud investigation firm, to establish ‘ground truth’ about how liars behave when making claims.

Her research and experiments will come to an end in 2012 and are expected to give insurance fraud investigators the first evidence-based techniques for spotting liars to replace the gadgets and gut instincts they have traditionally relied upon.

An investigation into a claim can be triggered for a range of reasons, including a large claim on a new policy, or the investigator having a gut feeling that something doesn’t add up. A common trigger for an investigation is when the claimant cannot recall specific details surrounding the incident, such as what the other person was wearing or how many people were in the vicinity at the time.

Dr Leal said: ‘Insurance fraud has been on the rise since the recession began and insurance companies are very keen to find a way of beating those who cheat.

‘There is a saying, “needs must when the devil rides”, which basically means when times are tough, people are more likely to break the rules. That is certainly true in the case of insurance fraud.

‘People think if they are telling the truth it will shine out, but it doesn’t. Insurance investigators waste time and money when they chase innocent people. Under these circumstances some innocent people withdraw their insurance claim because they can’t cope with the stress of being investigated.’

Insurance fraud investigators have always relied upon a range of tools and instinct to identify liars, including recording telephone conversations and then running them through a voice stress analysis machine to decide if the person is telling the truth. They have also looked for signs such as nervous fidgeting, not looking at the questioner directly, and blinking a lot.

But the gadgets and interviewers’ instincts are wholly unreliable, according to Dr Leal.

She said: ‘Contrary to popular belief, motivated liars do not fidget, avert their gaze or blink nervously. They are usually calm and have planned their lies down to the last detail. Also, many people do not see anything wrong with making a false claim and if they don’t feel nervous or guilty, it follows that the techniques that rely on these factors will ultimately fail.

‘Even the majority of experts overestimate their ability to spot a lie. They might as well toss a coin in the air – their record of finding the cheats would be the same at about 50:50.’

Dr Leal hopes that by studying liars in laboratory conditions she will be able to identify the real cues that give liars away when making false insurance claims. She is spending her first year studying what investigators do and how often their methods are successful and her second year trialling new methods and testing the results.

She is an expert in detecting deception and her research has shown that, for example, that liars have had to make extensive plans before they lie, but that truth-tellers don’t plan their ‘story’.

Because liars need to think about their plan when being questioned, this puts a large load on their brain which in turn affects their behaviour. It is these changes which are most likely to form the basis of new investigative methods designed to spot the cheats.

Dr Leal said: ‘There is a real need to use evidence-based methods that are scientifically proven to work to stop wasting insurance companies’ time and money and to stop innocent people being treated as suspects while the guilty get away.’

List of Manly Things

20 things that make you feel ‘like a man!’

1.OPENING JARS – nnng, she’s struggling. You take it from her hands, open it effortlessly and pretend she loosened it for you. She didn’t. Jars are men’s work.

2. CALLING SOMEONE ‘SON’ – Especially policeman but even saying it to kids makes you the man.

3.TAKING A NEWSPAPER INTO THE LOO – a visual code for the unmentionable.

4. SHARPENING A PENCIL WITH A STANLEY KNIFE – Blunt, is it? Hand it here love. No, I don’t need a sharpener, you think I can’t whittle.

5. GOING TO THE DUMP – A manly act which combines driving, lifting and – as you thrillingly drop your rubbish into another huge pile of other rubbish – noisy destruction.

6. KNOWING WHICH SCREWDRIVER IS WHICH – “a Phillips? For that? Are you mad ?

7. HAVING A THIN BIT OF WOOD – in the shed, solely to stir paint with.

8. HAVING A SCAR – Ideally it’ll be a facial wound, but even an iron burn on the wrist is good. “Ooh, did it hurt”. “Nope”.

9. HAVING SOMETHING PROPERLY WRONG WITH YOU – especially if you didn’t make a fuss. “Why was I off, nothing much, just a brain haemorrhage”.

10. NODDING AT COPPERS – A moments eye contact is all it takes for you to share the unspoken bond. “We’ve not always seen eye to eye in the past”, it says, “but someone’s got to keep the little devils in line”.

11. USING POWER TOOLS – slightly more powerful than you need or can safely handle. One Handed with a pencil on the ear? high style points..

12. KICKING A FOOTBALL AGAINST A GARAGE DOOR – Clang-g-g-g-g-g-! Stitch that becks, I kick so hard I set off car alarms.

13. ARRIVING IN A PUB LATE… and everyone cheers you. It doesn’t mean you’re popular, it just means your buddies are inebriated. However, the rest of the pub doesn’t know that.

14. NOT WATCHING YOUR WEIGHT – fat is a feminist issue, apparently. Pass the pork scratchings.

15. CARVING THE ROAST – and saying “are you a leg or breast man” to the blokes and “do you want stuffing” to the women. Congratulations, you are now your dad.

16. WINKING – turns women to putty. Doesn’t it?

17. TEST SWINGING HAMMERS – ideally, B&Q would have little changing rooms with mirrors so you could see how rugged you look with any DIY item. Until then, we’ll make do with the aisles.

18. TAKING OUT £500 FROM A CASHPOINT – okay, so its for paying the plumber but with that much cash you feel like a mafia don. The only thing better is peeling notes off the roll later.

19. PHONE CALLS THAT LAST LESS THAN A MINUTE – unlike the other half of the human race, we get straight to the point. “alright? Yep. Drink? Red lion? George, it is then. Seven. See ya.”

20. PARALLEL PARKING – bosh, straight in. first time.

[As suggested by Paul Dixon]

Redneck Vacation

Billy Bob and Luther were talking one afternoon when Billy Bob tells Luther, “Ya know, I reckon I’m ’bout ready for a vacation. Only this year I’m gonna do it a little different. The last few years, I took your advice about where to go.”

“Well, what are you going to do, then?” Luther asks.

“Three years ago you said to go to Hawaii. I went to Hawaii and Earlene got pregnant.”

“Yeah,” Luther agrees.

“Then two years ago, you told me to go to the Bahamas,and Earlene got pregnant again.”

“I remember,” Luther says.

“Last year you suggested Tahiti and darned if Earlene didn’t get pregnant again.”

“Yep,” Luther says. “So, what you gonna do this year that’s different?”

“Well,” Billy Bob says, “this year I’m taking Earlene with me.”


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 15 500 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 45 000 Readers in over 120 countries.