The Maritime Advocate online–Issue 635


1. Texas Prompt Pay Act–When does it Apply?
2. US Coast Guard Marine Casualty Reporting Guidance
3. Demurrage Claims
4. London International Shipping Week Debate on Maritime Welfare
5. E-Presentation of Bills of Lading and Bolero
6. People and Places

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1. Texas Prompt Pay Act–When does it Apply?

News reaches us of a decision in the bracing market climate
of Texas. Nejat A. Ahmend of the firm of Cozen O’Connor has sent us
an Alert:-

In a recent decision, the Fifth Circuit considered when
the 18 percent damages interest under the Texas Prompt Payment of Claims
Act (Prompt Pay Act) accrues and whether an insurer can waive a policy’s
one-year cost reporting requirement.

This coverage action arose out of pollution cleanup costs Cox Operating,
L.L.C. incurred in complying with federal statutes and regulations after
Hurricane Katrina damaged its facilities in Louisiana. Cox was insured
by St. Paul under primary commercial general liability and umbrella
excess liability policies. Cox notified St. Paul of the claim on October
17, 2005, but St. Paul did not request any invoices or other documents
until July 24, 2006. In response, Cox submitted invoices and statements
in excess of $15,000,000. Cox completed its cleanup work in September

Read the note in full here:-

2. US Coast Guard Marine Casualty Reporting Guidance

Jonathan K. Waldron, Jeanne M. Grasso and Stefanos N. Roulakis of
Balnk Rome have sent in this action item:-

The Coast Guard finalized its NVIC, published earlier this year in
draft form, which endeavors to provide a uniform policy interpretation
of when a casualty report is and is not required. Vessel owners, operators,
and crew managers should review the policy guidance to ensure that their
own reporting procedures are in line with Coast Guard interpretations.

On July 21, 2015, the U.S. Coast Guard released Navigation and Vessel
Inspection Circular 01-15 (“NVIC 01-15”), titled Marine Casualty
Reporting Procedures Guide with Associated Standard Interpretations.
The purpose of NVIC 01-15 is to clarify terminology and phrases within
the regulatory context, draw attention to helpful regulatory citations,
and provide concise policy interpretations to assist vessel owners/operators
with the casualty reporting process. NVIC 01-15 can be located here:-

Read the Blank Rome note in full here:-

3. Demurrage Claims

Demurrage specialist Phil Stalley has sent in a promotional flyer for
his new software app. Very succinct it is too:-

HubSE is delighted to invite you to participate in the latest way to
send and receive demurrage (and other) claims between you and your trading
partners with the built-in facility to negotiate online, add and share
documents keeping everything in one place. A complete audit trail tracks
every activity and claims are held for your statutory and accounting

Add your claim
Add your documents
Negotiate & Settle

No More:
Sending claims to the wrong email address
Overloading your inbox with large documents
Searching in your email or shared folders for the negotiation history

Documents and history in one place. Pick up your colleagues claims when
they are out of the office with confidence.

How do you use the Hub Exchange?

Choose from:
Simply log-in the the web page with your username and password
Use our interfaces to plug into your own demurrage system
Use HubSE’s Claims Management System (CMS)** and you are already
plugged in
*Free – yes the Hub Exchange is free until the end of 2015 so you
can really see the benefit to you at no cost. From 2016 a small transaction
fee will apply – still less than you’d pay a courier.

To register your interest simply reply to this message:-

4. London International Shipping Week Debate on Maritime Welfare

Maritime Welfare: The Big Debate
13.30 – 17.30, 8 September 2015
Drinks reception, 17.30 – 19.00

On board with seafarers’ welfare? Join industry and support service
specialists to debate contemporary issues
concerning seafarers’ rights.

Chaired by four leading maritime charities, this free event will take
the form of four separate 40 minute panel sessions. Panellists include:
Clay Maitland, International Registers & NAMEPA; Grahaeme Henderson,
Shell; Per Gullestrup, International Seafarers Welfare Assistance Network,and
many more!

Venue: The Willis Building, 51 Lime Street, London EC3M 7DQ

Book your free place at:-

[Registration closes at midday on 7 September]

5. E-Presentation of Bills of Lading and Bolero

Aline Bezerra writes:

The history of electronic alternatives to paper bills of lading goes
back 25 years or more. The preparedness to introduce eB/Ls has increased
in recent years as shippers and traders begin to appreciate the gains
they are able to make by adopting e-Presentation into their work flow.
It is possible now to compare the electronic alternative to the traditional
paper process in specific trades (for example the iron ore trade between
Australia and China) where the inherent difficulties of paper transactions
are more apparent. Moreover, the sandwiching of many documents which
travel with electronic bills of ladings removes many uncertainties.

Shippers who have taken the step of adopting e-Presentation of Bills
of Lading find that they are knitting in the many counterparties to
their trading transactions. These counterparties may issue no more than
a packing list, a customs declaration, a security statement, a warehouse
receipt or certificate of quality, but these documents are liable to
cause delay if they become separated from the bill of lading. Their
banks in managing letters of credit have become collaborators and promoters
of the electronic way as they too realise that the use of eB/Ls precludes
the need to use letters of indemnity and drives away transcription and
literal errors in the terms in use in the electronic document. Banks
have fewer causes to hold up documents for minor discrepancies.

The collapse in the use of letters of indemnity plugs one of the most
unsatisfactory work arounds in use by shippers today. Paper bills of
lading with discordant terms, error, mis-timings and misplacement have
throughout been papered over by shippers by offering a letter or indemnity
promising to indemnify parties in the event that they suffer loss or
damage of their goods. These letters of indemnity are dubious innovations
in the eyes of insurers and the law. The P&I Clubs stand bank and
warn their carriers that the letter of indemnity is not insured, that
they better use a specified wording (which is not insured) and pay close
attention to the solvency and good standing of the institution which
is issuing or guaranteeing the letter or indemnity.

To these procedural and security gains also come huge time gains. A
case study in the use of Bolero Bills of Lading in a major iron ore
trade found the time taken for end to end presentations between Australia
and China was a mere 2 days compared with the old traditional time of
three weeks using paper bills. The carrier friendly enlistment process
for shipping companies is a single day as the electronic platform in
use is accessed via a simple web browser.

All this translates into attractive financial terms. E-Presentation
results in a reduction of 7 days or more in the time to cash. The traditional
costs of the administration of the shipping process is normally estimated
at between 2 and 3 per cent of the transaction. The conservatism of
the international trade world has not over history been abated by the
sense of vulnerability which ordinary use of traditional bills of lading
often implies. There has always been a worry that other sets of paper
bills may be in transit through the banking system, that delays in presentation
are impossible to oversee in an environment like short sea shipping
of say oil cargoes, where goods are traded many times before reaching
their destination.

As the ease of use and sophistication of eB/Ls increases in modern
times and the financial attractions become more evident, shippers should
be making plans to follow the pathfinders using Bolero.

6. People and Places

The boards of the International Seafarers Welfare and Assistance Network
(ISWAN) and the Maritime Piracy Humanitarian Response Programme (MPHRP)
have announced they are moving the activities of the MPHRP into ISWAN.
A transfer agreement was signed by both parties on 3 August 2015. ISWAN
will now be responsible for all the activities of the MPHRP. The move
to ISWAN will enable the programme to develop under the auspices of
a well-established international seafarers’ welfare organisation that
is registered as a charity.

The programme will continue to support the seafarers and their families
who are affected by piracy. While piracy attacks off the coast of Somalia
have significantly decreased, attacks are on the increase in South East
Asia and continuing in the Gulf of Guinea. The MPHRP programme will
concentrate on these areas while still supporting seafarers who were
held for years in Somalia. The programme will seek to develop constructive
and positive relationships with existing and new industry partners.

ISWAN has already appointed a new programme manager, Mr Tom Holmer,
to lead the MPHRP in this new phase of its development. The programme
in South Asia will continue while an immediate priority will be to secure
funding to continue the programme in South East Asia and Eastern Europe.

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.

Looking for insurance cases featuring the word prompt, we ran across
this item in Issue 14 February 2001:-

Fraud not material to claim
IN a dispute recently before the Commercial Court in London (K/S Merc-Scandia
XXXX11 -v- Lloyd?s Underwriters & Ors (2000) Lloyd?s Rep 357), it
was held that, even though an assured had acted fraudulently, the fact
that the fraud was immaterial to the claim meant that its legal liability
insurance policy could not be avoided by insurers.

The assured, a shiprepairer in Trinidad, had cover against legal liability
in respect of negligence. A shipowner claimed against it for negligent
repair and consequential loss. Proceedings were started in the English
courts by the shipowner, and permission was obtained to serve the proceedings
out of the jurisdiction. The assured then provided the solicitors appointed
by insurers to defend the claim with a forged document which the assured
thought would help on the issue of the jurisdiction of the English courts.
The forgery was discovered before there was any hearing on the jurisdiction

The insurance policy provided that, ?In the event of any occurrence
which may result in a claim ? the assured shall give prompt written
notice ? and shall keep the underwriters fully advised.? When the assured?s
fraud was discovered, the insurers sought to avoid the policy for breach
of the duty of the utmost good faith and/or for breach of this provision.
The insurers claimed that there had been a post-contractual breach of
the duty of utmost good faith. The assured, meanwhile, argued that,
for the period after the contract of insurance had been concluded, the
operation and scope of the duty was limited to a duty not to make a
fraudulent claim and not to prosecute litigation based on such.

In giving his judgment, Mr Justice Aikens reviewed the case law since
the Litsion Pride decision, in which the assured did not inform insurers
that the insured vessel had entered a war zone, thereby increasing the
risk to the vessel. In that case it was found that the assured had a
continuing duty to disclose all material facts to insurers, and that
failure to do so entitled insurers to avoid the claim and/or the policy.
Particular attention was paid to the decision of the Court of Appeal
in Manifest Shipping Co. Ltd v Uni-Polaris Insurance Co. Ltd and La
Reunion Europeene: “The Star Sea” [1997] 1 Lloyd’s Rep 36,
an appeal from which has just been heard by the House of Lords. Reference
was also made to the decision of Mr Justice Rix in Royal Boskalis Westminster
NV v Mountain [1997] LRLR 523. On the basis of these authorities, Mr
Justice Aikens concluded that there was no English authority which supported
the contention that the duty of good faith operated in this case. The
notion of a broadly construed post-contractual duty was also rejected.
Such a duty would only arise where insurers had been given information
for the purpose of taking on a new or increased risk under an existing
policy or where the assured was making a claim under the policy. In
either case, the remedy for the breach of duty was avoidance of the
policy as a whole.

The court decided that, for the fraud to be material, it had to relate
either to an increase in the risk or to the presentation or pursuance
of the claim. Here the fraud related to the ancillary matter of jurisdiction,
with the result that there was either no duty at all or there was a
duty which had not been breached.

The judge concluded that the policy could not be avoided on the grounds
of immaterial fraud because to do so would elevate such immaterial fraud
to the status of a material fact. Insurers also had to show that the
fraud had induced them to take a particular course of action in relation
to their handling of the claim. No such evidence was available as the
fraud was immaterial to the claim.

As regards the notice/claims provision, it was found that a breach
of this clause had occurred, because insurers had been supplied with
a forged document, and the assured had failed to keep insurers fully
advised. However, Mr Justice Aikens concluded that the clause was not
a true condition precedent, and that insurers would in fact have been
in the same position with or without the production of the forged document.
The breach had not seriously prejudiced insurers? position, and they
could not treat the claim as having been repudiated by the assured.
(Lawrence Graham Insurance & Reinsurance Division)

Puns for Educated Minds

How does Moses make his tea? Hebrews it.
Venison for dinner again? Oh deer!
A cartoonist was found dead in his home. Details are sketchy.
I used to be a banker, but then I lost interest.
Haunted French pancakes give me the crepes.
England has no kidney bank, but it does have a Liverpool .
I tried to catch some fog, but I mist.
They told me I had type-A blood, but it was a Type-O.
I changed my iPod’s name to Titanic. It’s syncing now.
Jokes about German sausages are the wurst.
I know a guy who’s addicted to brake fluid, but he says he can stop
any time.
I stayed up all night to see where the sun went, and then it dawned
on me.
This girl said she recognized me from the vegetarian club, but I’d never
met herbivore.
When chemists die, apparently they barium.
I’m reading a book about anti-gravity. I just can’t put it down.
I did a theatrical performance about puns. It was a play on words.
I didn’t like my beard at first. Then it grew on me.
Did you hear about the cross-eyed teacher who lost her job because she
couldn’t control her pupils?
When you get a bladder infection you know urine trouble.
Broken pencils are pretty much pointless.
What do you call a dinosaur with an extensive vocabulary? A thesaurus.
I dropped out of the Communism class because of lousy Marx.
All the toilets in New York’s police stations have been stolen. As of
now,it appears the police have nothing to go on.
I got a job at a bakery because I kneaded dough.
Velcro – what a rip off !

[Source: Hilde Krause in Long Beach]

The Changing Face of School

THIRTY YEARS AGO: Miss Lichtig receives an apple from an anonymous
student and shows it to her fellow teachers.
TODAY: Ms. Lichtig receives a package from an anonymous student and
shows it to the bomb squad.

THIRTY YEARS AGO: Ed Navis, the class clown, is caught reading Playboy.

TODAY: Mrs. McMahon, the art teacher, is caught posing for Playboy.

THIRTY YEARS AGO: Nurse Dweezel treats the fifth grade’s first case
of whooping cough.
TODAY: Nurse Dweezel treats the fifth grade’s first case of morning

THIRTY YEARS AGO: students find mercury, lead and cobalt on the periodic
TODAY: students find mercury, lead and cobalt in the drinking water.

THIRTY YEARS AGO: each class begins with “Show and Tell.”

TODAY: each class begins with “Search and Frisk.”

THIRTY YEARS AGO: ninth grader Clyde Kelly is caught cheating on a pop
TODAY: ninth grader Scott Kelly is caught cheating on his common-law

[Source: Paul Dixon]

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.