hill dickinson marine, trade and energy newsletter spring 2014

Marine, trade and energy spring 2014

Mike Mallin: in conversation

Page 6

Destination: Asia

Page 3

hilldickinson.com/marine

marine, trade and energy

spring 2014

Hill Dickinson has augmented its successful Asian practice with the opening of a new office in Hong Kong to work in partnership with its well-established Singapore team.

Hill Dickinson expands in Asia

The firm’s second international base to open in 2013, following the successful launch of the yacht team’s Monaco office, will operate in association with Laracy & Co, led by experienced litigator and arbitrator, Damien Laracy, and will see Master Mariner and long-standing partner, Mike Mallin - from the London City office - leading the new venture.

Mike, who was named in TradeWinds list of the ‘World’s Top 5 Lawyers’ for marine emergencies in 2012 and also recently in Lloyd’s ‘Top 100 most influential people in the shipping industry’, has dealt with many major and high profile casualties including

“COSTA CONCORDIA” on behalf of her owners and insurers. Mike’s arrival in Hong Kong now means we offer three mariner partners working in Asia.

Hill Dickinson is recognised as one of the major international firms in the Asian marine, trade and energy market, and the new office represents a cornerstone in building the firm’s long-term strategy in the region.

Mike Mallin welcomes his involvement spearheading the move into Hong Kong: ‘Marrying Hong Kong with Singapore creates the ideal pan-Asia base for us to provide a unique service

to our clients. It’s where we’ve long known we wanted to be, where we’ve needed to be, and now we’re here.’

With so much focus turning to Asia in recent years, the Hill Dickinson Singapore/Hong Kong axis consolidates the firm’s lead position as a major international player and offers significant benefits for an expanding client base both in Asia and Europe.

Read interviews with Mike Mallin and Tony Goldsmith on the significance of the new Hong Kong office on pages six and seven of this newsletter.

Safe havens: what constitutes an unsafe port in a storm?

4

Laura Dobbs The marine personal injury team in our London office welcomes solicitor, Laura Dobbs. Laura acts for a variety of UK port operators, cruise and ferry operators and their insurers, covering both marine-related and general EL/PL personal injury claims.

Claire Morgan The Singapore office is delighted to see the return of Claire Morgan to Hill Dickinson. Having previously been a member of the marine personal injury team in London and having spent the last two years with a boutique shipping firm in Sydney, Claire handles both 'wet' and 'dry' shipping disputes, acting for ship owners, charterers, salvors, P&I clubs and oil majors.

Inspired by senior partner, David Wareing, who turns 60 this year, ‘60 at 60’ will see the firm promote health and wellbeing across the business whilst helping community based charitable projects to raise funds and spread the healthy living message far and wide. Throughout the campaign David and teams from across Hill Dickinson will be raising money for The Prince’s Trust and a variety of other local organisations, based in the locations in which the firm operates, supporting community based healthy living projects with a particular emphasis on young people.

The ambitious initiative includes employees from all offices across five countries, with each team taking part in a locally based half-marathon and with David participating in all eight races as follows:

Commenting on 60 at 60, David said: ‘The 60 at 60 challenge is a first of its kind for Hill Dickinson as this is more than just a fundraising initiative supporting charitable projects. We are encouraging the whole firm to actively participate in order to improve health and wellbeing on an individual and collective level. If you would like to support our 60 at 60 challenge, we would appreciate any donations and involvement in fundraising opportunities which will help to provide moral support and take us closer to raising £60,000.’

If you are interested in getting involved, would like to make a donation, or to find out further information, please visit: 60at60challenge.com. Your support for the project throughout the year will be very much appreciated.

2

Hill Dickinson expands in Asia

New starters ‘Sixty at Sixty’

Destination Asia

Hong Kong office launch

Hill Dickinson Singapore spearheads new SEADOCC arbitration model


Tony Goldsmith: in conversation

Superyachts in Asia – five tax regimes and what they mean for owners

What’s in a name? The importance of an ampersand

Lucky 13: memories of Singapore

Safe havens – what constitutes an unsafe port in a storm?

Which carrier carries the can? - CMR jurisdiction options clarified by Court of Appeal

Deep Sea and Foreign Going - review

To repudiate or not to repudiate: the rest is silence

“ATHENA” on appeal

Stop press updates

1

2 3

4

5

6

7

8

10

12

14

15

16 18

19

19/20

New starters

Hill Dickinson launches marathon campaign across five countries

International Law firm Hill Dickinson has launched an ambitious health and wellbeing initiative across its eight offices in an effort to raise £60,000 for charity.

Schedule of half marathons

Monaco 16 March 2014

Liverpool 23 March 2014

Sheffield 6 April 2014

Athens 4 May 2014

Singapore 1 September 2014

Manchester (Macclesfield) 21 September 2014

London 12 October 2014

Hong Kong Date TBC

Contents

3

Over 300,000 commuters made their way into the City of London this morning. Like many millions before them, they endure the stress and expense of the journey because it is in the City that careers are made. That is particularly so for those who work in the maritime sector, given London’s historic position as the world’s leading maritime centre.

Times, however, are changing. Increasing numbers of shipping professionals - surveyors, underwriters, lawyers, brokers and many others besides - are now heading for Heathrow and the opportunities that a career in the booming cities of Asia can provide. Singapore and Hong Kong are undoubtedly the most popular destinations.

Whilst the pages of the business papers have spent the past decade focussed on the rise of China and India, the ‘Asian Tiger’ economies of Singapore and Hong Kong have turned themselves into economic powerhouses. Now widely regarded as the world’s third and fourth largest centres of global finance behind London and New York, and world-leading centres of international commerce,

both have achieved success in spite of comparatively modest populations, lack of natural resources and scarcity of land (Singapore for example is only slightly larger than the Isle of Man).

Singapore and Hong Kong have built on their long and proud histories as maritime hubs, as busy ports and centres of the entrepôt trade. Some 120,000 vessels call at the Port of Singapore every year, equivalent to one every three to four minutes. Half of the world’s crude oil is transhipped through Singapore’s terminals and a fifth of the world’s ship repairs are conducted in its busy yards. It is this hive of activity that has turned Singapore into one of the world’s leading international maritime centres and, as it has done for centuries, in return it handsomely rewards those who call it home. As a recent survey found, Singapore is now home to the world’s largest proportion of wealthy expatriates, with over half of expatriates surveyed saying they earned more than US$200,000 (£132,000) per year.

Companies in the maritime services sector recognise the importance of being located close to their clients. There are over 5000

such businesses based in Singapore, employing over 170,000 specialised personnel. If an Asian client is not based in Singapore, the chances are they are no more than a short flight or one or two time zones away. Increasingly, the boom in Hong Kong and Singapore has led these businesses to look to Europe in search of suitable candidates. Matt Cornelius, a consultant in the Asia team of shipping specialists Spinnaker Consulting, sees this first hand: ‘We’re seeing an increase in demand for maritime professionals in Asia, with Singapore now arguably on par with London as a maritime cluster.’

It’s not hard to see why increasing numbers are moving to Singapore and Hong Kong to satisfy this demand. On offer is often a well-paid job, low personal taxes, great career prospects and a high standard of living. Where ‘a stint in the East’ was once considered a step to further one’s prospects in London, Singapore and Hong Kong are now seen as places in which to settle and to build a long-term career.

Margaret Pinder [email protected]

Destination AsiaWhy increasing numbers in the maritime sector are heading east.


4

Hong Kong office launchHill Dickinson and Laracy & Co proudly opened our joint office in Hong Kong at a cocktail party last November. Held at the Hong Kong Maritime Museum, the event was a big success with guests getting to know one another in a relaxed atmosphere. Here, we take a look at a selection of photographs from the evening.


5


Hill Dickinson Singaporespearheads new SEADOCCarbitration modelThe firm’s Singapore office, working in conjunction with the Singapore Chamber of Maritime Arbitration, has recently launched a new SCMA-backed service to provide an expedited arbitration procedure for determining the apportionment of liability and/or assessment of claims arising out of collisions for which other means of dispute resolution may not be appropriate. The aim of this new initiative, as Andrew Gray explains, is to provide a fair, timely and cost effective collision dispute resolution service.

The new scheme, known as the SCMA Expedited Arbitral Determination of Collision Claims (SEADOCC), was unveiled last year at a launch in Singapore’s Capital Tower.

SEADOCC is primarily aimed at determining the apportionment of liability between two or more ships involved in a collision - but, by extension, is also designed to deal with inter-ship claims, leading to the publication of a final award on liability and quantum if the parties so require.

Examples of where a SEADOCC arbitration might be applicable are when two parties dispute liability for a collision: and have been in protracted negotiations, but are unable to reach agreement on the apportionment of liability. If both parties are prepared to accept a binding determination of liability by a recognised expert in the field, this would save the cost of lengthy litigation. Another scenario might be where the quantum involved is relatively low and the cost of litigation would obviously be disproportionate to the amounts at stake, but the parties need to determine liability and, if possible, resolve the inter-ship claims.

The SEADOCC arbitration process, which has a simple and straightforward procedure for dispute resolution, lends itself to a constructive and consensual approach between the parties to a

dispute on collision liability. At the outset of the arbitration process the parties appoint an arbitrator jointly. It is likely that this would be someone with legal or practical experience in dealing with claims arising from collisions at sea, drawn from the maritime community in Singapore. The SEADOCC arbitration leads to the publication of a binding award. This has, the force of an arbitration award under the International Arbitration Act (Cap 143A) in Singapore, which is the juridical seat of any arbitration under this scheme. Once the arbitrator issues an award under the SEADOCC procedures, his or her name will be placed on a list of arbitrators maintained by the SCMA which in turn will form the panel of SEADOCC experts.

Working with the SCMA, Hill Dickinson drafted and finalised SEADOCC terms and conditions, which included consultation within the maritime and legal community in Singapore. These terms will be binding on all the parties to the arbitration process, subject to any agreed amendments. These terms are succinctly expressed for clarity, efficiency and flexibility and allow the parties to achieve some level of cost certainty as well as the scope of the documentation to be submitted early in the process. The arbitration process is also streamlined to ensure claims are handled efficiently within sensible

time-frames for the expedited resolution of the kind of claims SEADOCC is designed to handle.

While arbitration under SEADOCC is certainly not intended to replace conventional means of dispute resolution and will not be appropriate for all collisions, particularly those where the questions of liability are complex and/or the quantum is significant, or where there are multiple interested parties, it offers a relatively straightforward and cost effective process designed to complement and enhance the existing maritime legal services available to the shipping community in Singapore and possibly beyond.

The new arbitration initiative has been welcomed by the wider maritime community as a valuable addition to the current dispute resolution procedures available in the region.

Further information on SEADOCC and copies of the SEADOCC terms and conditions can be obtained from Andrew Gray, a shipping partner in Hill Dickinson’s Singapore office.

Andrew Gray [email protected]

6

With Hill Dickinson’s Hong Kong office up and running to meet the challenges of 2014, partner Mike Mallin talks about the genesis of the new venture and where he sees the firm positioning its future strategy in the Asian market.‘The Hong Kong office has definitely hit the ground running. We’ve already got a number of cases in the door and there’s been a lot of positive feedback both locally in Hong Kong and from the wider region to our opening here. The clubs in particular have been telling us that they see a gap in the market. After all, there are very few other firms of our calibre in Hong Kong doing this kind of work, and we field a comprehensive casualty team with qualified mariners (of which I am one) on hand to manage those ‘wet’ cases, and at a

more competitive price. We’ve been asked "why Hong Kong, when you have such a successful Singapore office?"

The answer is simple: we’re four hours closer to China and the Asia-Pacific rim. Tony Goldsmith (head of our Singapore office) and I worked together as a team in the London office for 15 years and it’s great to be working so closely with him again. By running the two offices as a closely coordinated unit we can provide better cover for the whole region. Hong Kong doesn’t replace Singapore; it enhances it and vice versa.

The China market is bound to bump from time to time – it’s the nature of the business – but the growth which we have seen in recent years is set to continue. The commercial world is moving east. So if you want to be a serious player in marine work globally, this is where you need to be.

We’re very pleased to have formed this association with Laracy & Co. The regulations here are such that you have to enter into that kind of formal association with a local firm to be able to open in Hong Kong. We’ve worked with Damien and his team on a number of occasions in the past. He's a first class lawyer and Laracy & Co is a top quality firm. We already had a lot of respect for him and what he has achieved here so there was a clear synergy between us. We had been approached by other smaller firms when we were first floating this as a project, but we already had this positive relationship and Laracy’s profile absolutely matched what we were looking for. It works both ways: we have joined a going concern with some real energy behind it, and in turn we bring a developed casualty practice to complement what Damien already offers in the maritime, corporate and asset finance fields.

Hill Dickinson in Hong Kong brings more choice of quality legal advice to the market and, because of the way we structure ourselves and our lean approach to our business model, we are extremely competitive in terms of value. Together with the resources in our Singapore office we offer an experienced team of qualified mariners, which means we can offer a much enhanced resource to our pan-Asian clients.

My experience as a Master Mariner, my long service with the firm, and my experience in Asia are what made me the partner best placed to open the office here and see it find its feet. We wanted an experienced casualty specialist, but also one who understood the Hill Dickinson culture which we believe is

unique to the firm. It’s been a challenge and that challenge is still there albeit now the focus is on growing the business once it is established, but I’m enjoying every minute of it.

As for the future, I have to say that the obvious direction at some point down the line is to embed ourselves further into China, which may mean opening another office in the region. But that’s a strategy consideration rather than a definite project right now. What we are focussing on now is building our team here in Hong Kong, especially the dry work and there may be an announcement on that in the very near future. We already have an experienced qualified PRC lawyer – Lynn Chen – on board and a further Asian specialist, Tang Chong Jun, will be joining us from Singapore very soon.

Our aim is definitely one of expansion and I am confident that, before 2014 is out, Hill Dickinson will be established as a major presence here in Hong Kong and the wider Asian market.’

Mike Mallin was in conversation with Margaret Pinder.


STOP PRESSHill Dickinson’s Mike Mallin named in Lloyd’s Top ‘100’ most influential in the shipping industry

Congratulations to Mike Mallin, head of Hill Dickinson’s Hong Kong office, who has been named in Lloyd’s List’s ‘top 100 most influential people in the shipping industry.

As a Master Mariner with 12 years’ seagoing experience, Mike deals in all aspects of maritime law - with particular specialism in problems arising out of maritime casualties.

Mike, who last year was named by Tradewinds as one of the world’s top five lawyers for marine emergencies, is the only Hong Kong-based lawyer in the list.


7

Tony Goldsmith, head of the Singapore office, gives his view on what Hill Dickinson in Hong Kong means for his practice and for the firm in Asia as a whole.‘First of all, I have to say what great cooperation we have between the two offices. It doesn’t surprise me, but it’s still a good feeling to see our plans come to fruition and work so well from the start. And it’s all helped by the relationship we have built up with Laracy & Co over the years which has now been formalised in this arrangement. Damien and his team are proving invaluable in supporting us in the day to day work, especially on the dry side as we develop our resources in that area.

Laracy & Co really is a first rate firm – we’ve always found them to be responsive and hardworking - and we couldn’t wish for a better professional association in Hong Kong. It’s allowed us to hit the ground as a significant presence from the outset, not just with our own team of wet work specialists led by Mike Mallin, but with the backing of more, specialist bodies on the ground offering all the areas clients expect from a top international maritime firm.

Hong Kong/Singapore is a natural axis. It’s not more of the same, except perhaps in the provision of expertise; the markets differ, particularly in the wet work. The reason for that is part geographic: there are fewer day to day incidents off Hong Kong compared with Singapore – that’s simply to do with the nature of the waters in close proximity to these two great shipping locations, and how this affects the traffic each experiences. Nevertheless, it’s gratifying to see the work coming in to our new office. We’ve already had a couple of casualties and the response from our insurer clients locally has been very positive.

The cross-fertilisation between the offices is one of the main advantages we are realising from having Hong Kong. It is great to have Mike back in the same time-zone as me. We worked closely together in the London office for many years and are firm friends. It is good to know he is a phone call away without a time zone difference to contend with. Practically speaking being in the same time zone allows much closer coordination and cross-fertilisation of ideas. Now we have Mike, Damien and their team to bounce thoughts off as and when we want to. And that works both ways.

Between the two operations we can now cover every aspect of our shipping work. For example, we have ship sale and purchase expertise we can offer Hong Kong and, now we have our team there, some matters we in Singapore would otherwise have sent out to third parties, can now be handled by Hill Dickinson across the board. This can only be good for us and for our clients. In fact, one of our big U.S clients is moving into Hong Kong – they’re a major ship-owning/operating and transport multinational – so there’s one mutual benefit right there. It’s all very positive.

There are no plans to expand beyond Hong Kong at the moment, but, looking at the way Asia is growing, it seems inevitable. Our priority now is building our team and we are actively recruiting – so long as we can find the right calibre of person and the right fit for our business profile and culture.

You mentioned that there have been a few articles in the UK press about the growth of the super-yacht market in Asia recently. It’s definitely a noticeable trend and will only keep expanding given the growing number of high net-worth individuals especially in China. Hong Kong is an important insurance hub for the Asian yachting market, supporting the growing number of yachts making their home in Asia*. But, in respect of superyachts, most still seem to go to the traditional places where you find super-yachts, Monaco being one of the most important. So, yes, with our London yachts office and the new Monaco team going from strength to strength, that’s another Hill Dickinson-Asia axis where we can offer specialist expertise to our clients in this part of the world.

We are the legal advisers to APSA - the Asia-Pacific Superyacht Association - so the connection is already there. And that’s another example of how the Hong Kong office will improve our client support: only the other day, my colleague, Paul Barfield, who is currently working with Mike in Hong Kong, was able to attend and represent us at the APSA committee meeting. That’s the kind of indirect non-fee earning service the firm has always prided itself on offering to clients.

Shipping is a very personal world and Hill Dickinson has always been a very personal firm, even now, as such a significant international player, that’s our starting point. Clients come to us because they know us and trust us. I’ve already had clients coming to me because of that personal connection even though the work is Hong Kong work, because they know I can now pass them to our team there and they’ll get the same personal treatment and the same consistent level of Hill Dickinson expertise. It’s what it’s all about at the end of the day: gaining quality clients, winning their confidence and respect, and maintaining that relationship through the service we offer.’

Tony Goldsmith, who heads Hill Dickinson’s Singapore office, was in conversation with Margaret Pinder.

Tony Goldsmith: in conversation

*See ‘Superyachts in Asia – five tax regimes and what they mean for owners’ by yacht team expert Alex Teji on pages eight and nine of this edition.

8

Superyachts in Asia –five tax regimesand what they meanfor ownersWith the expansion of Hill Dickinson’s specialist yacht team into Monaco and their wider marine practice augmenting its Asian presence with the opening of the new Hong Kong office, this is an opportune time to look at the issues facing the growing number of superyacht owners either based in South East Asia or looking to cruise in South East Asian waters. Hill Dickinson superyacht lawyer Alex Teji, who is familiar with the need for clarity on the rules and potential tax liabilities in these regions, examines the key tax regimes as they apply to the import of yachts either for sale or private recreational use.


9

SingaporeGenerally speaking, GST (VAT) of 7% is levied on the importation of goods into Singapore and which the importer is liable to pay. However, an exemption applies to the import of a private or recreational vessel where it is used for solely private pleasure purposes, enters Singaporean waters under its own engine or sail, and there is an intention to leave Singaporean waters in due course. There are no formalities for triggering this exemption, which is not dissimilar to ‘Temporary Admission’ within the EU, save that there is no apparent time limit specified for the vessel’s stay in Singapore.

Where sale of a vessel takes place in Singaporean waters, GST at the standard rate applies. Further exemptions from paying GST do exist, but usually involve the sellers registering locally for GST purposes. The simplest and most cost-effective way of mitigating tax liabilities on the sale and purchase of a yacht in this region therefore would be to conduct the transaction in international waters.

Generally, there are no customs duties payable on vessels entering Singapore, but owners should be mindful of tobacco and alcohol on board, which are subject to strict regulation.

ThailandLike Singapore, Thailand offers pleasure yachts relief from taxes and customs duties for the purposes of private cruising in Thai waters. Unlike Singapore, however, this relief is for a strict period of six months and there are a number of bureaucratic formalities that must be adhered to (including a declaration of all fittings, accessories, passengers and luggage to the customs office at the port of entry). Customs officers may also request a cash deposit or bank guarantee covering the full amount of tax and duties that would ordinarily apply as security during a vessel’s stay.

The sale of a non-Thai owned and flagged yacht in Thailand is subject to Thai income tax, comprising: (i) 20% corporate income tax on net profits on the sale; and (ii) 10% profit tax on the net profits remitted abroad. This is in

addition to VAT levied at a rate of 7%. Again, these taxes can be mitigated by completing a sale in international waters.

JapanThe situation in Japan, however, is more complex and not always clear. There are no import or sales taxes payable in relation to foreign flagged vessels cruising in Japan although the advice of Nigel Beatty of Super Yachts Logistics LLC is that there is a relatively large amount of paperwork to comply with as the vessel moves around Japan. In addition, if the vessel is over 100 tons, it must have P&I cover for oil pollution and wreck removal. Confusion surrounds how long a foreign flagged vessel can remain in Japanese waters, but Super Yachts Logistics LLC recommends that vessels do not stay for more than a year.

Yacht chartering is not a concept recognised by Japanese law and therefore there is no tax payable. However, any vessel chartered in Japan does require cabotage permission, but in the absence of definitive legal rules setting out the position with regard to yacht chartering, it is likely that any such application would be met with a number of difficulties.

For Japanese flagged vessels there is an import tax of 5%. In addition to the import tax there is also import duty of 2.5%, although this is waived if the vessel is from certain emerging economies (e.g. China and Taiwan).

IndonesiaImportation of a yacht into Indonesia remains prohibitively expensive from a taxation perspective with import duty levied at 5% of the vessel’s value in addition to VAT chargeable at 10% and a luxury tax of 30%.

However, cruising in Indonesia has recently become much easier and cheaper since the introduction of a new temporary importation scheme under which no sales, import or luxury taxes are payable on vessels used solely for private cruising and which are in receipt of the relevant import declaration at the port of entry (PIB) and which also hold an Indonesian cruising permit (CAIT). The relevant certificates will be issued for fixed periods of 90 days but this

can be extended up to a maximum of 3 years before any import tax becomes payable. A written guarantee (jaminan tertulis) is required and our advice is to arrange this through a local agent. Again, the scheme is very similar to that of ‘Temporary Importation’ within the EU.

China/Hong KongOther notable jurisdictions include China and Hong Kong. Importing a yacht into China is expensive, attracting an import duty of between 8% and 10.5% in addition to VAT at 17% and a luxury/consumption tax of 10% for boats over 30 feet. There have also been indications that yachts may be subject to an even higher tax burden going forward. By contrast, as the Hong Kong Special Administrative Region operates as a free port, yachts may be imported into Hong Kong without attracting any customs duties. Nevertheless, if the vessel is to remain longer than six months, a Hong Kong ‘Pleasure Vessel Operator’ license must be applied for within that time.

ConclusionAs is to be expected, the tax situation in South East Asia differs from country to country and we do not foresee there will be any homogeneity/reciprocal agreements across borders any time soon. Whilst a number of the newly industrialised countries are starting to recognise the benefits of operating a VAT and duty free temporary importation scheme for pleasure yachts, others are yet to distinguish between pleasure yachts and commercial vessels. Our advice to yacht owners, as with anywhere in the world, is: do your homework and be pragmatic before cruising and/or importing any vessel.

This article appears with the kind permission of The Superyacht Report where it first appeared in issue number 148, pages 106-117, as part of a Global Tax Report

Alex Teji [email protected]

Hill Dickinson has successfully represented Shinhan Bank of Korea in a recent action brought by a Bulgarian claimant under a letter of credit issued in its favour. In this case, the English High Court considered a number of interesting and subtle issues as to what may constitute a material documentary discrepancy and a compliant notice of rejection under UCP 600.

This judgment is of significant importance, as (amongst other reasons) it represents the first decision of the English court where it was recognised that, where an ‘&’ was present in the name of the beneficiary in either the commercial invoice or the letter of credit itself, but not in both of them, the absence of ‘&’ in one of them may constitute a material documentary discrepancy for the purpose of Article 16(a) of UCP 600 entitling the issuing bank to reject the documents presented by the beneficiary to obtain payment under the letter of credit.

The claimant was a Bulgarian company. It presented itself as a trader of grains and feed materials with 30 years of business experience. A Korean importer, Heungsung Feed Company, ordered 3000 metric tonnes of wheat bran pallets from the claimant under a sale contract worth US$824,395. Shinhan Bank issued a letter of credit for USD825,000 in favour of the claimant at the request of Heungsung, which incorporated the provisions of UCP 600 by reference. The letter of credit identified the beneficiary as ‘Bulgrains Co Ltd’ and contained a detailed description of the goods.

The claimant subsequently submitted certain documents (including the commercial invoice) to Shinhan Bank

through a nominated bank in Bulgaria requesting payment under the letter of credit. However, Shinhan Bank notified the nominated bank by SWIFT messages that it was rejecting the documents on the grounds a) that the name of the purported beneficiary in the commercial invoice was ‘Bulgrains & Co Ltd’, a name different (due to the presence of ‘&’) from the name of the beneficiary stated in the letter of credit itself; and b) that the description of the goods in the commercial invoice did not correspond to that of the goods set out in the letter of credit itself.

Shinhan Bank raised a defence based on the documentary discrepancy and (relying on discoveries made during the proceedings) also argued (by way of further and alternative defences) that there was evidence that the claimant had lost title to sue by selling its rights under the letter of credit to the nominated bank, and that some of the documents submitted by the claimant for payment under the letter of credit had been forged.

It was common ground between the parties that, if Shinhan Bank was correct in its submissions on the documentary discrepancy issue, that would suffice to dispose of the claim in its favour.

In order to determine the documentary discrepancy defence, the judge (His Honour Justice Gore QC) considered the following questions: (i) did the presence of ‘&’ between ‘Bulgrains’ and ‘Co’ in the commercial invoice make the submitted L/C documents discrepant from the relevant requirements of the original letter of credit? (ii) did Shinhan Bank comply with Articles 14(b) and 16(c) of UCP 600 in giving a valid notice of refusal within the specified timeframe?

As to the first issue, the claimant alleged that there was no material discrepancy

in respect of the name of the beneficiary because (i) the ‘&’ had only been omitted from the name of the beneficiary in the letter of credit itself due to the fact that (as admitted by Shinhan Bank) ampersands cannot be transmitted by SWIFT (the system which was used by Shinhan Bank to issue and send the letter of credit) and (ii) the correct address of the company and the director’s name in the commercial invoice had ensured that there could be no doubt as to the entity identified in the commercial invoice. Shinhan Bank submitted in response that, had the name of the beneficiary been stated in the letter of credit as (for example) ‘Bulgrains and Co Ltd’ (rather than ‘Bulgrains Co Ltd’), it would have accepted the name ‘Bulgrains & Co Ltd’ in the commercial invoice as compliant with the terms of the letter of credit.

In determining this issue, the judge held (following previous authorities) that the correct approach was that an error that was unmistakably typographical was not a material discrepancy, but anything that might not obviously be an inadvertent misspelling was. The bank did not have to assume the risk and responsibility of determining whether the discrepancy was material. The judge applied the reasoning of Tin J in United Bank Limited -v- Banque National de Paris [1992] 2 SLR 64 and held that ‘there was a discrepancy as to name that was not clearly and demonstrably simply a typographical error and was material, and it, together with the discrepancy as to description in the invoice, gave the defendant the right to reject the documents.’ The judge further commented (although, in our view, not as the fundamental basis of his finding referred to above) that, even if there was no facility to insert an ampersand in the SWIFT system, the word ‘and’ could have been used, and, in his judgment, should

10

What’s in a name? The importance of an ampersandBulgrains & Co Limited -v- Shinhan Bank [2013] EWHC 2498 (QB)


11

have been used in the letter of credit because the name of the claimant in the Cyrillic alphabet included the single letter which meant ‘and’ in English and the word therefore was properly part of the claimant’s name.

In relation to the second issue as to whether Shinhan Bank notified the nominated bank of its rejection of the letter of credit documents in time and in conformity with Articles 14(b) and 16(c) of UCP600, Shinhan Bank relied on two SWIFT notices, which the judge considered had all been served in time: namely, an MT999 SWIFT message (a free format SWIFT message) dated 6 May 2013, and an MT734 SWIFT message (a message in the format prescribed by the SWIFT system to serve as an Advice of Refusal) dated 7 May 2013.

The claimant made various allegations about these messages, including: (i) that the first notice of refusal in free format message MT999 was defective as (amongst other reasons) it did not comply with Article 16(c)(i) and Article 16(c)(iii) of UCP 600 in the sense that it neither expressly stated that Shinhan Bank was refusing to honour the letter of credit nor explained what Shinhan Bank was proposing to do with the supporting documents pursuant to Article 16(c)(iii), although it contained the words ‘Pls regard this msg as MT 734’ and ‘Notify, as per UCP 600 article 16(c)(iii)’; and (ii) the defendant was not entitled to rely on the second notice of refusal (i.e. the MT734 format notice).

However, the judge rejected these arguments recognising that MT734 is an accepted industry term denoting a notice of refusal, the meaning of which is clear to banks, and that even an implicit refusal might suffice for the purpose of Article 16(c)(i) of UCP 600. He went further and accepted that, as the relevant notices had been exchanged between banks in the present proceedings, there was no meaningful difference between an MT734 message and a free format MT999 message containing the words ‘Pls regard this msg as MT745’.

As to the issue relating to Article 16(c)(iii), the judge recognised that the word ‘Notify’ was also an industry term of art adopted by banks to avoid the need to repeat verbatim the wording of Article 16(c)(iii)(b) of UCP 600. Applying the reasoning in Fortis Bank SA/NV & Stemcor UK Limited -v- Indian Overseas Bank [2011] EWCA Civ 58, the judge held that

the word ‘notify’ relating to the disposal of documents in the first and second notices of refusal was sufficient to indicate to the nominated bank that Shinhan Bank was holding the documents pursuant to Article 16(c)(iii)(b).

The judge also opined that, where a bank has served a notice of refusal to honour a particular letter of credit, if that notice is defective for the purpose of Article 16(c) of UCP 600, the bank would not be prevented from serving another notice of refusal in order to rectify the errors in the first notice, provided the second notice stated the same substantive reasons for refusal as the first notice of refusal. The judge therefore held that Shinhan Bank was also entitled to rely on the second notice of refusal (i.e. the MT734 notice).

There was a further issue as to whether the second notice of refusal had actually been received by the nominated bank in Bulgaria. The judge found it was probable that the second notice had actually been received but, in any event, he accepted Shinhan Bank’s submission that it could rely on that notice even if it had not actually been received by the nominated bank. The judge held that Shinhan Bank was supported by Article 35 of UCP 600, which provides that, for the purposes of the UCP, a bank assumes no liability or responsibility for loss in transit of messages or errors in their transmission.

The judge also had to consider (amongst other issues): (i) whether the notices of refusal served by Shinhan Bank contained sufficient particulars of the alleged documentary discrepancies; and (ii) whether there was fraud on the part of the claimant (as opposed to the underlying shipper) at the time of submitting the letter of credit documents for payment under the letter of credit and, if so, could Shinhan Bank avoid liability on the basis of such fraud.

The judge praised the ‘intellect and industry’ of the Hill Dickinson team at the trial, however, he was reluctant to find in the bank’s favour on that issue in the absence of opportunity to hear oral evidence from the primary witness of the claimant.

The decision in this case provides useful (and in some respects, new) guidance to those who deal with letters of credit governed by English law, particularly in respect of the construction and application of Article 16 of UCP 600.


The effect of section 69 of the Enterprise and Regulatory Reform Act 2013 on employersSection 69 of the new Enterprise and Regulatory Reform Act 2013 (ERRA 2013) came into force on 1 October 2013, significantly amending section 47(2) of the Health and Safety at Work etc Act 1974 (HSWA 1974) to provide that civil liability will only apply where specifically provided for in health and safety legislation/regulations, effectively reversing the law prior to that date. Section 69 does not have retrospective effect; any breaches occurring prior to 1 October 2013 will not be afforded the benefit of its provisions.

Prior to this, a breach of statutory duty under health and safety legislation meant a claimant could rely on a civil right of action unless this was specifically excluded in the relevant legislation. Employers were therefore at risk of being found liable for breaches of statutory duty in circumstances where they had taken all reasonable steps to avoid an accident from occurring.

However, it is likely that claimants will still rely on a breach of statutory duty to support allegations of negligence and it is envisaged that the judiciary will be influenced by any such breaches when determining whether an employer has been negligent.

It is therefore essential that employers continue to operate a diligent health and safety system. Employers should also note that a breach of the regulations will still be a criminal offence under section 33(1)(c) of the HWSA 1974 and that the amendments only relate to statutory duties relating to health and safety at work. Breaches of statutory duty will still be directly pleaded in other contexts, most notably in respect of accidents involving customers.

It will be interesting to see whether this reduction of risk imposed on employers will be reflected by a corresponding reduction in insurance premiums.

Lucy Schofield [email protected]

STOP PRESS

12

Partner Paul Barfield considers the history of the island state that has been his home for the last 13 years.When I first flew in to Singapore, it was June 1966 and this new island city-state, which is separated from the Malaysian peninsular by the Strait of Johor, had been independent of Malaysia for less than a year. I was a brand new second lieutenant in the Brigade of Gurkhas. We arrived in a British Eagle Airways Bristol Britannia 175 turbo-prop which had stopped at Bahrain and Colombo on the 26 hour journey to Paya Lebar airport - then Singapore International Airport. I was taken to the transit camp at Nee Soon and flew on to Kuching, Sarawak the next day to spend my only two weeks on active service in and around the jungles of the central mountain range of Borneo. When I returned to Singapore, it was on a troopship and from there we travelled by road convoy up the Malaysian peninsular to Terendak camp above Malacca. However, we spent our weekends in Singapore, which in those days was still a military island dominated by British forces bases.

Back then, Singapore was full of shop houses, street vendors, kampongs, rickshaws, wonderful smells of food, vegetation and clove cigarettes. The humidity and heat were oppressive;

the tropical downpours heavy, short and dramatic; the people industrious, multi-racial and ambitious.

At the time I was not aware that Singapore had a long history predating the arrival of Sir Thomas Stamford Raffles, who landed here from Penang as a representative of the East India Company in January 1819. In the late seventh century, the city of Palembang, in southern Sumatra, rose to be the capital of the Buddhist Kingdom of Srivijayan, which became the main political and commercial power of South East Asia - although the Chinese considered Srivijayan to be a double kingdom with a second capital in Kedah, northern Malaya. For 300 years Pelambang absorbed international shipping passing between the Indian sub-continent and the Chinese empire, and grew wealthy on this seaborne equivalent of the Silk Road.

The power of Srivijayan was partly owed to the orang laut or (sea people), who came from the drowned lands of western Indonesia where they had adapted to a nomadic seaborne life. The orang laut would compel ships to call at Srivijayan ports to pay dues, whilst they in turn delivered tribute in the form of sea goods which they had caught for which they received ‘tokens of esteem’ from the Srivijayan ruler. The ability of a ruler to obtain such items from ships calling at his ports gave him prestige among his people and attracted to him

the able and useful manpower which was in scarce supply in South East Asia. Until the late nineteenth century, the major resource over which ambitious rulers in South East Asia contended for control was not land but people.

In 1068 King Rajendra I of the Chola Dynasty of southern India captured the Srivijayan Malay capital of Kedah. This brought about the collapse of the Srivijayan civilisation leaving no major political power with control in the region but eventually, from the few remaining Malay nobles, the last Srivijayan prince, Parameswara, emerged to try to restore the dynasty. He broke with Majapahit overlordship and was forced to flee to Temasek, as Singapore was then known to the Chinese who valued it as a port where they could exchange their goods for merchandise from the Indian sub-continent. Parameswara killed the governor of the Thai nationals, who were then occupying the island, but a punitive raid five years afterwards by the Thai Army forced him to retreat north where he established the Kingdom of Malacca.

The Javanese, also seeking to find and kill Parameswara, sacked the town in the late 14th century, but Temasek was not abandoned. It remained the fief of the leader of Malacca’s naval forces (in part due to the presence of the orang laut) and was frequently called upon to fight sea battles to defend Malacca. Parameswara later converted to Islam,

Lucky 13: personal reflections on Singapore


13

probably to increase trade from the Muslim and Javanese traders of the area, and by the 15th century, as the control of shipping in the eponymous straits transferred to Malacca, it prospered at the expense of Singapore.

When Raffles arrived in Singapore in 1819, Malacca had been conquered by the Portuguese (1511), followed by the Dutch East India Company (1641) and was to be ceded to the British in 1824 five years later. At that time Malacca was still the centre of the East/West trade, enhanced by the nutmegs, cloves and mace coming from the spice islands of the Indonesian Moluccas. Raffles had persuaded his employers in Calcutta that their island of Penang, at the top of the Malacca Straits, was not in a geographical position either to compete with Malacca nor to protect British shipping entering and leaving the South China Sea, but that Singapore was.

Raffles found a population that had declined to about 500, comprising a small Malay community governed by the Temenggong, 150 orang laut and a group of Chinese farmers, but the settlement was about to see a renaissance through a huge expanse in immigration. By 1824, Singapore had welcomed 10,000 immigrants and by 1830, 17,000, of which 40% were ethnic Chinese, and annual emigration from China was set to increase. In around 1840 it stood at approximately two thousand; by 1895

the figure was closer to two hundred thousand. Political upheavals in China, but principally poverty alone, made the prospering Chinese community in Singapore hard to resist.

The enduring legacy of Sir Stamford Raffles was twofold: first, he insisted Singapore was to be a free port which enhanced its commercial position; secondly, he laid out a town plan, which remains to this day along the Singapore River. Although Singapore came under the authority of Raffles, who was the Governor of Bencoolen, the man himself spent less than two years in total in Singapore, preferring his estate in the Minangkabau Highlands of Western Sumatra, and much credit must be given to Colonel Farquhar of the Madras Engineers, who was the first resident serving for three and a half years.

Just as the early history of modern Singapore revolves around the name of Raffles, so the present city-state of Singapore is the creation of Lee Kuan Yew. It was his drive, vision and iron will which welded together a unique collection of talented people and led his island people to develop an Asian tiger economy. Using to his advantage the control exercised by his dominant Peoples Action Party, he planned for and implemented housing for all, schools and universities, roads, utilities, defence forces, personal savings, financial institutions and jobs. The population responded to this

dynamic leader and his non-corrupt government, almost unique in Asia. He taxed his people but he used their money wisely. He used the carrot and the stick, which his generation appreciated and he moved them from the devastation of the post-war years to the uplands of the last four decades. They trusted him because he kept his word and they respected him for his achievements, which were also theirs.

Now, when I fly from Singapore, I do so from Changi International Airport, with its three terminals, in a Singapore Airline Airbus 380 on a direct flight to London, which takes just over 12 hours. I leave behind my island home, which has increased in land area by one fifth since 1819, with a developed financial centre, the fifth busiest port in the world, the third largest refining port, several major shipbuilding and repair yards, industrial and manufacturing zones, and an affluent people. They now number 5.3 million in total, of which 1.7 million are not Singaporeans but who provide an enormous boost to the capacity of the island to compete. In 2012 the Chinese population was 74.2%, the Malays 13.2% and the Indians 9.2%. The father of the nation, Lee Kuan Yew, can be proud of his achievement - Raffles would salute him.

Paul Barfield [email protected]

14

Hill Dickinson has found itself giving advice on a number of unsafe port claims, some of which can be traced back to the boom in commodities which saw vessels being sent to new ports, often in difficult or remote locations. Singapore office partner, Andrew Lee, therefore welcomes a recent ruling in the High Court by Mr Justice Teare which has gone some way both to clarify the law regarding the definition of what constitutes an unsafe port, as well as highlighting the increasingly complex issues surrounding the ever more available argument that the vessel or crew were at fault.

The vessel, “OCEAN VICTORY”, a Capesize bulk carrier, was demise-chartered by her registered owner, Ocean Victory Maritime Inc (OVM), to Ocean Line Holdings Ltd (OLH) for a period of 10 years on an amended Barecon 89 form. Additional clause 29 provided that the vessel was to be employed ‘only between good and safe ports’. OLH time-chartered the vessel to the defendant (Sinochart) for ‘minimum 5 month maximum 7 months via safe anchorage(s), safe berth(s), safe port(s)’ on an amended NYPE form, who in turn sub-chartered the vessel to the third party (Daiichi) for a ‘time charter trip via safe port(s) safe anchorages(s) South Africa’ also on an amended NYPE form.

Daiichi subsequently instructed the vessel to load a cargo of iron ore at Saldanha Bay, South Africa, and discharge at Kashima, Japan. On 19 October 2006 the vessel arrived off Kashima, and on 20 October 2006 she berthed at the Raw Materials Quay (the ‘Quay’) in the Central Fairway and discharge of the cargo commenced that afternoon. However the weather began to deteriorate and the Quay became affected by ‘long waves’ causing the vessel to range alongside its berth.

At about 14.00 a pilot boarded with the intention of unberthing the vessel and informed the master that the vessel had to leave the port for safety reasons. This gave the master cause to believe (mistakenly) that the port authorities required his vessel to leave and that he had no option but to comply. His own preference was to stay. He therefore took the vessel out from its berth at about 14.30 with some undischarged cargo still on-board. As she proceeded along the Kashima Fairway she was confronted by gale force winds and heavy seas. When north-west of the seaward end of the South Breakwater, without steerage way and with her port side exposed to the gale, she was set down onto the end of the breakwater from where she was then driven southwards, went aground and was abandoned by her crew who were airlifted ashore. She subsequently broke apart.

The claimant (Gard), was the vessel’s hull insurer, and sued as assignee of the claims of OVM and OLH. Gard alleged that Sinochart was in breach of its safe port warranty under the head time charter. Sinochart in turn brought third-party proceedings against Daiichi.

Both Sinochart and Daiichi denied that the port of Kashima was unsafe, arguing that the port authority was only required to take reasonable precautions to ensure reasonable safety rather than to mitigate every conceivable hazard. As no vessel had ever before been trapped by a combination of wind and swell at the berth and adverse conditions in the fairway, this constituted a minimal or (non)-risk and the port could not be found to be unsafe by virtue of failing to put in place a system to address this. They also made the alternative argument that, even if the port were unsafe, the cause of the casualty was primarily the negligent navigation of the master when leaving the port.

In exploring the current law, the court held that the casualty was caused by the unsafety of the port in breach of the safe port warranty, finding that a port would not be safe if a vessel would be exposed to a danger which could not otherwise be avoided by good navigation and seamanship.

In relation to this latter point the court found that, although the port authority had a system for advising vessels to leave port before the onset of a typhoon, it had no system for ensuring that Capesize vessels, if they had to leave the berth on account of long waves, only left in weather conditions with which they could cope. The storm which affected Kashima port at the time of the casualty was not an abnormal occurrence i.e. one which was unconnected to the characteristics of the port at the time, but one that created a danger to the “OCEAN VICTORY” by virtue of the vulnerability of the Raw Materials Quay to long swell coupled with the vulnerability of the Kashima Fairway to northerly gales caused by a local depression. The plaintiff (Gard) was not required to identify a system which, had it been in place, would have enabled the master in possession of ordinary skills of seamanship and navigation to avoid the danger of leaving the port at a time when it was unsafe to do so. Instead, if it were established that a port was prospectively unsafe by reason of the circumstance that the chartered vessel might have to leave her berth in the port on account of long waves or bad weather at a time when the weather conditions were such that it was unsafe for that vessel to leave, then a breach of the safe port warranty had been established.

This is a clear and welcome exposition of the law on unsafe ports, but what was of further interest in this case was the level of scrutiny to which the conduct of the master was put by the defendants’ expert witnesses and counsel. With vessels now carrying voyage data recorders which record everything from course and speed to actual conversations on the bridge

Safe havens – what constitutes an unsafe port in a storm?Gard Marine & Energy Ltd -v- China National Chartering Co Ltd (“OCEAN VICTORY”)[2013] EWHC 2199 (Comm)


15

and the additional availability of AIS data, there is now often far more evidence that can be used to find out exactly what happened when there is an incident, evidence that means that it is almost invariably possible to raise some issue with the navigation of the vessel. This, taken together with the fact that vessels now have safety management systems which impose numerous (and often onerous) documentary requirements, it is easy to see why unsafe port claims are often so contentious; there is almost invariably some argument to be made that the vessel or the crew were at fault.

In fact, in this case there was some criticism of the master’s handling of the vessel in terms of position fixing and monitoring, but in nearly all other respects his actions were held to be reasonable under the prevailing circumstances of the conditions. However, the judge was quite clear in his finding that, even if he had found the master’s conduct to have been negligent, nevertheless he would have concluded ‘that the unsafety of the port remained the real and effective cause of the casualty.’

This case is noteworthy, not only in terms of Teare J,’s lucid exposition of the law surrounding this issue, but also in that it provides a timely reminder to those parties defending an unsafe port claim that establishing that the crew were at fault in the handling of the vessel or that there was some issue with the vessel itself will not suffice if it can be established that the port in question would not be safe if such a vessel would be exposed to any (and not merely any ‘reasonable’) danger which could not otherwise be avoided by good navigation and seamanship.

Andrew Lee [email protected]

British American Tobacco Switzerland SA and others -v- Exel Europe Ltd and others [2013] EWCA Civ 1319The recent Court of Appeal decision in the case of British American Tobacco Switzerland SA and others -v- Exel Europe Ltd and others [2013] EWCA Civ 1319 has provided some clarity on the choice of jurisdiction in respect of a claim against successive carriers under Article 31.1 of the CMR Convention.

The substantive proceedings arose following the loss of two consignments of tobacco, owned by British American Tobacco (BAT), during carriage by road from Switzerland to Holland and Hungary to Denmark respectively. BAT had contracted with Exel (an English company) pursuant to an agreement that incorporated an English law and exclusive English jurisdiction clause. The actual carriage of the subject consignments had been sub-contracted by Exel to two different (non-English) carriers, namely H Essers and Kazemier. BAT brought proceedings against both Exel and the two carriers before the commercial court in London.

The two sub-contracted carriers challenged the jurisdiction of the English court relying on Art 31.1 of CMR which provides: ’In legal proceedings arising out of carriage under this convention, the plaintiff may bring an action in any court or tribunal of a contracting country designated by agreement between the parties and, in addition, in the courts or tribunals of a country within whose territory:

(a) the defendant is ordinarily resident, or has his principal place of business, or the branch or agency through which the contract of carriage was made, or

(b) the place where the goods were taken over by the carrier or the place designated for delivery is situated.’

The two sub-contracted carriers argued that, on a literal interpretation of Art 31.1, the English court could not find jurisdiction for the claim against them, as they did not have their principal place of business in England, they were not a party to the agreement between BAT and Exel, and England was neither the place where the goods were taken over nor the place designated for delivery. The High Court agreed with this position.

BAT appealed the decision on the basis that Art 36 of CMR, whereby a claimant can only bring proceedings against the first, last or actual carrier at the time of the loss, had the effect of extending the jurisdiction provisions of Art 31.1. As such, if BAT were able to find jurisdiction over the first carrier in England, in this instance Exel (pursuant to the jurisdiction provision in the Agreement between BAT and Exel or by reference to Exel’s domicile in England), then Art 31.1 should be read so as to enable BAT to find jurisdiction against all successive carriers that fall within Art 36. The Court of Appeal agreed with BAT’s position and overturned the first instance judgment.

Although not absolute in its decision, the court also found support for its interpretation of Art 31.1 in the Brussels Regulations, and in particular, Art 6.1. Although the court followed the long established principle that Art 31 of CMR is paramount, it found that Art 31 must be interpreted so as to be consistent with the fundamental principles established by the Brussels Regulations and, further, that its own interpretation of Art 31.1 in this instance was entirely consistent with Art 6.1 of the Regulations.

In light of this judgment, where English jurisdiction can be found against the principal carrier under Art 31.1, cargo interests can now also establish jurisdiction in England over successive carriers. It is important to note that the principal carrier must be a party to those proceedings in order successfully to seize jurisdiction against the successive carriers.

The Court of Appeal refused permission to appeal to the Supreme Court and it remains to be seen whether the carriers will now seek permission to appeal directly from the Supreme Court.

Richard Allingham [email protected]

Adrian Marsh [email protected]

Which carrier carries the can?- CMR jurisdiction optionsclarified by Court of Appeal

Book review

16

One of the more interesting, if abstruse publications of 2008 was The Big Necessity: The Unmentionable World of Human Waste and Why it Matters (Metropolitan Books, 2008), in which the intrepid Ms George explored the history and current state of sanitation and its impact on the health of populations worldwide. In 2013 the author turned her attention to the importance of shipping in the modern world, specifically the role of containerisation in international trade. Readers of this newsletter will be well aware of the issues on which she touches, but what makes this book interesting is the way in which the author recognises the near invisibility for most people of an area that has such an impact on their everyday lives.

‘The First Sea Lord … says we suffer from “sea blindness” now. We travel by cheap flights, not liners. The sea is a distance to be flown over, a downward backdrop between take off and landing,

a blue expanse that soothes on the moving flight map as the plane jerks over it. It is for leisure and beaches and fish and chips, not for use or work. Perhaps we believe that everything travels by air, or that it does so magically and instantaneously like information … not by hefty ships that travel more slowly than pensioners drive.’

In order to research her topic, Ms George persuaded Maersk line to give her passage on one of their container vessels - the “KENDAL” – from Felixstowe to Singapore. In fact she was the last outsider to be allowed on Maersk’s ships through the Gulf of Aden.

The book is a study in interesting, relevant, and often surprising facts: nearly 90 percent of everything we consume in the first world is transported via ship. At time of writing there were 20 million containers and one hundred thousand ships at sea. The economics are such that shipping makes it less

‘People on land think of the sea as a void, an emptiness haunted by mythological hazards. The sea marks the end of things. It is where life stops and the unknown begins.’Johnathan Raban, Coasting

Inside shipping, the invisible industry that brings you 90% of everything

Deep Sea

and Forei

gn Going:

Inside S

hipping, the I

nvisib

le

Industry t

hat Brin

gs You 90% of

Everyt

hing, by R

ose G

eorg

e, is

published

by Porto

bello B

ooks


17

expensive to ship Scottish cod 10,000 miles away to China to be filleted and then sent back to Scotland than it is to pay Scottish filleters to do the job. This is a massively important industry, with huge implications for so many aspects of life we take for granted today.

But this is no ordinary travelogue. The voyage itself is without incident, dull even. The website ‘gcaptain’ criticised the book in its own review on this very count: ‘… it appears George may have set herself up for failure. Had she chosen a more interesting ship (perhaps a heavy-lift with enormous cargo) or even an interesting route … she might have found a compelling story but Rose chose to ride aboard a container ship, a job even the crew call “boring, opaque, blank. Stuff carrying stuff”.’ However, this is to miss the point. What George does it to take her trip aboard the “KENDAL” and use it to extrapolate a whole web of ideas and issues that surround the shipping industry both currently and historically.

The first inkling of this should come with her often philosophical musings on shipping and the sea. In chapter seven ‘No Man’s Land - Veiled faces in the Water’, the second of her sections on piracy (which coincide with the vessel’s passage through the Gulf of Aden), she takes issue with Michel Foucault’s definition of a ‘heterotopia’ i.e. a displacement habitat, a place that exists between places, the best of which is the ship, ‘a floating piece of space that exists by itself, closed in on itself and at the same time is given over to the infinity of the sea.’ But she does so to bring the subject back to earth (or sea) arguing that a better heterotopia is ‘a ship lying at anchor off Somalia, crippled and crewed by crippled people, visible, but untouchable’.

She is thorough and trenchant in her analysis of the situation surrounding piracy in Somalia, criticising those who may represent pirates as radicals who subverted the values of Atlantic capitalism, singling out for especial contempt Harvard Business School which, in 2010, selected Somali piracy as its business model. For her, with her many cases studies, the general is almost always to be understood through the personal.

The chapter headings identify the stages in the voyage she takes as her (figurative) jumping off points:

1. Embarkation 2. Aboard 3. Harbour 4. Open Sea 5. Sea and Suez 6. High Risk Area 7. No Man’s Land 8. Sanctuary 9. Animals Beneath 10. Rescue 11. Disembark

But it is the sub-headings that hold the meat of the topic she wishes to explore e.g. in chapter one, ‘Formalisation and Filipinos’, she examines the conditions in which seafarers work and the problems that affect them living in their own apparently regulated ‘heterotopia’, but yet vulnerable to all manner of abuse. She quotes a 17th-century clergyman who described seamen as neither living nor dead, but ‘a third sort of persons’, and from this she jumps off into an exploration of the world of shipping companies themselves: ‘… family companies who maintain a level of privacy that makes a Swiss banker seem verbose … Even shipping people admit that their industry is clubby, insular and difficult.’

In chapter four: ‘Calves can swim’ she takes the sinking of the livestock carrier, the “DANNY FII” and examines, not only the conditions in which animals are transported at sea, but also the brutal realities of a sinking and the difficulties of relatives of lost seamen obtaining information from vessels that sail under registries ‘of convenience’ and from there to the difficulties of regulating such an international and, of its nature, transient industry.

In chapter eight: ‘The Merchant Navy Comforts Service’, she takes a surprising, if poignant, look at the role seamen’s missions play in supporting and helping crew often so far from home. She quotes the Latin prayer Qui nescit orare, discat navigare: ‘He who does not know how to pray, let him go to sea,’ and then an anonymous sailor on the chaplains and missions: ‘They can share my emptiness.’

Chapter nine: ‘So remorseless a havoc’ is an essay on the effects of shipping on whales – not always a popular topic for industry insiders - and the progress that is being made in limiting the negative impact. The IMO’s seasonal speed restrictions around whales are one such measure: a ship travelling at 17 knots has a 90% chance of killing a whale, but at 10 gives it a 50% survival rate.

And in chapter ten: ‘The Bride on the Boat’, she revisits the nightmare of shipwreck, but, once again, not satisfied to limit herself to this one topic, turns her critical gaze on the historically shabby treatment of merchant seamen during wartime when their contribution was often as valuable as that of their military counterparts. How many of us were aware that the pay of merchant seamen travelling with the Royal Navy in convoys was stopped as soon as a ship was sunk? Exposure in a lifeboat was ‘an unpaid excursion.’

This is a fascinating insight from a non-industry author, an outside peering into a world that might otherwise remain hidden to the person in the street i.e. not on deck, at sea. Samuel Johnson famously described being in a ship as ‘being in a jail, with the chance of being drowned.’ And, while being a thoroughly researched exercise, this book remains a deeply personal account of the author’s experience of what, for its crew, is a typical, not to say boring trip. But for her it remains exotic and strange. She suffers troubled dreams: ‘It is rare that I wake up without having dreamt a murder. The crew nod with recognition when I tell them this. The noise gets in your head and shakes thoughts asunder.’

Deep Sea and Foreign Going is a collection of those thoughts, if not murderous, then shaken asunder and gathered into a curious exploration of an industry that affects so many and yet remains a mystery to all but a relative few.


18

The owners chartered the vessel “FORTUNE PLUM” to the charterers on an amended NYPE form and delivered the vessel on 23 July 2010. Hire then came to be paid persistently late by the charterers and, following various assurances that were not met, the owners concluded that the charterers did not intend to make any more payments and decided to end the charterparty. They consequently advised the Master (but not the charterers) of their decision which they did not immediately enforce by withdrawing the vessel, but allowed it to discharge its cargo. Only then did the owners inform the charterers that they had committed a ‘repudiatory/renunciatory’ breach of the charterparty which the owners looked to as terminating the charterparty. The charterers argued that the withdrawal was itself wrongful and a repudiatory breach of the charterparty.

The tribunal agreed with the charterers. It held that the owners had had a reasonable period of time in which to consider whether to accept the charterers’ repudiation, but instead they had continued to comply with the charterers’ orders until the cargo had been discharged. This continued compliance with the charterparty was a clear affirmation by the owners of the contract, and it followed that the owners’ eventual withdrawal of the vessel after completion of discharge was itself a repudiatory breach.

The owners appealed to the High Court pursuant to section 69 of the Arbitration Act 1996. They submitted that the tribunal erred in law inter alia in that it wrongly considered that the owners were unable to terminate the charterparty in circumstances where the charterers continued to evince an intention not to perform the charterparty (the continued renunciation point).

The court held that the tribunal had erred in law on this point. The tribunal of fact should focus on whether there is continuing repudiation after the affirmation. It should carefully consider whether there were words or conduct after such affirmation which demonstrated that the renunciation of the contract was continuing, so that a later acceptance of the continuing renunciation would be a legitimate termination of the contract.

An affirmation is not irrevocable, but the affirming party may not be able to change its mind if, for example, the previous repudiation is spent so that it has no further legal significance. This would be the case where, after the affirmation, the repudiating party’s conduct suggested that it proposed to perform after all. Where the repudiating party persists in a refusal to perform, even after the affirmation, the innocent party may later treat the contract as being at an end, but the refusal to perform by words or conduct must be clear and unequivocal.

The court then explored if, in some circumstances, a continuing repudiation after affirmation could be inferred from silence which is normally equivocal. However, it was suggested that, where it is part of a course of consistent conduct, silence may not only speak, but may do so unequivocally i.e it might be ‘overlaid with all that had gone before,’ becoming in effect ‘a speaking silence’ and, ‘where silence speaks, the onus may be on the silent party in turn to speak to rectify the significance of that silence.’ Stocznia -v- Latvian Shipping Co [2002] EWCA Civ 889

In this case the tribunal had not made a finding that the charterers had continued to renounce the charterparty but, having found that there was an affirmation, had concluded that it followed that the owners’ withdrawal of the vessel after it had discharged the cargo was itself a repudiatory breach. In this the tribunal had erred in law in failing to identify a continuation of the circumstances giving rise to an anticipatory breach i.e. of future non-payment of hire, and it did not follow therefore that a termination following an affirmation in these circumstances was a repudiatory breach. The case was remitted to the tribunal.

Pushpa Pandya [email protected]

To repudiate or not to repudiate: the rest is silence White Rosebay Shipping SA -v- Hong Kong Chain Glory Shipping Ltd “THE FORTUNE PLUM” [2013] EWNC 1355 (Comm)


19

In our summer 2013 edition, we reported on the High Court decision in “ATHENA”, a decision that has now been overturned on appeal in a unanimous decision which declared it to be ‘both wrong and precluded by authority’. In reaching this finding the Court of Appeal restored the original tribunal’s decision and endorsed the arbitrators’ focus on the service immediately required of the vessel whilst she was drifting in international waters in determining that the vessel was off-hire.

In the High Court, Walker J. had allowed the owners’ appeal and held that the ordinary meaning of the phrase ‘time thereby lost’ in clause 15 of the NYPE form required there to be a net loss of time in the performance of the chartered service overall and that there must be a direct causal effect of the vessel not rendering the service then required. The judge used a variety of phrases to express the concept encompassed by clause 15: ‘net loss of the performance of the chartered service’, ‘a net loss of time in performing the charter service overall’ and ‘loss of time overall,’ but did not explain what he meant by these expressions.

In clarifying the position the Court of Appeal held that the off-hire clause is concerned with identifying an actual period of real time that is lost and not in identifying the length of time by which ‘the chartered service’ or what the judge at first instance sometimes called ‘the charter service overall’ can be said to have been delayed. Lord Justice Tomlinson, with whom the other two members of the Court

of Appeal agreed, said the key to a proper understanding of the off-hire clause is that it is triggered by a cause preventing the full working of the vessel which in turn envisages the ability of the vessel to do that which she is immediately required to do and not with ‘the chartered service’ as a whole or the entire maritime adventure or adventures which may be undertaken in the course of the chartered service.

Of Walker J’s decision the Court of Appeal said that i) the Judge’s view was unjustified by the wording of the clause, ii) inconsistent with the conventional approach to the clause, iii) inconsistent with the hallowed authority, and iv) would lead to the need for ‘the most intricate and speculative enquiries as to the course which the events would have taken if the full working of the vessel had not been prevented.’ Commercial contracts require certainty and such enquiries i) may not be conducted or finalised before the charterers come under obligations to pay their next monthly or semi-monthly instalment of hire from which they would ordinarily expect to deduct accrued off-hire; and ii) it could also lead to the outcome that a vessel might be off-hire under a head charterparty yet on hire under a sub-charterparty on terms materially identical save as to the period of the charter.

The Court of Appeal’s decision should be welcomed as it avoids intricate calculations of hire enabling the parties to know where they stand without having to wait on events subsequent to the period of inefficiency, a consideration of prime importance bearing in mind the remedies available to the owners in the event that payment of hire is not made punctually.

“ATHENA” on appeal: Minerva Navigation Inc -v- Oceana Shipping AG [2013] EWCA civ 1723

Hill Dickinson launches specialist brand and reputation protection teams.Brand strategy is big business that adds significant value to an organisation, driving understanding of value in a product or company and, perhaps most importantly, defining customer loyalty and the marketing power of that brand.

Hill Dickinson’s London-based brand protection team brings together leading legal advisers in the sector. Well known for providing brands with a strategic overview of their portfolio, the team identifies risk or opportunities that can be overlooked when using multiple firms.

The team covers all legal areas that will arise during the lifecycle of a brand including clearance, registration, exploitation, enforcement and prosecution.

Attacks on reputation are becoming more complex and more damaging with increasingly invasive reporting and the importance of social media.

Hill Dickinson’s reputation management team comprises expert advisers in defamation and privacy law who provide discreet, commercial and strategic advice.

The team offers a clear understanding of the print and broadcast media, and is equally experienced in protecting reputations online and in social media, managing crises in the short term and preventing damage to reputations in the longer term.

Quality of service, discretion and an understanding of each client’s business and goals are critical to the teams’ success, allowing the provision of a bespoke and comprehensive service to all clients.

Our legal advisors are available 24 hours a day, 7 days a week to provide legal and commercial advice no matter where clients are in the world.

For advice on brand protection, please contact: [email protected].

For advice on reputation protection, please contact: [email protected].

STOP PRESS

For further details please contact:

Maria PittordisHead of Marine, Trade and Energy+44 (0)20 7280 [email protected]

Editorial contacts:Nicholas Phillips+44 (0)20 7280 [email protected]

Rhys Clift+44 (0)20 7280 [email protected]

The information and any commentary contained in this newsletter are for general purposes only and do not constitute legal or any other type of professional advice. We do not accept and, to the extent permitted by law, exclude liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. Whilst every effort has been made when producing this newsletter, no liability is accepted for any error or omission. If you have a particular query or issue, we would strongly advise you to contact a member of the marine, trade and energy group, who will be happy to provide specific advice, rather than relying on the information or comments in this newsletter.

hilldickinson.com/marine

Letters to the editorsWe welcome any comments readers may have on the articles in this newsletter, or on any related topic, and would be happy to publish suitable commentary in a subsequent edition. Please contact the editors, whose details appear above.

London Piraeus Singapore Monaco Hong Kong Liverpool Manchester Sheffield

About Hill DickinsonThe Hill Dickinson Group offers a comprehensive range of legal services from offices in London, Piraeus, Singapore, Monaco, Hong Kong, Liverpool, Manchester, Sheffield. Collectively the firms have more than 1350 people including 175 partners.


STOP PRESS

JakartaSingapore-based Hill Dickinson partner, Andrew Lee, appeared at the recent IBC Offshore Marine conference at the Grand Hyatt, Jakarta, giving a one day pre-conference workshop covering offshore vessel chartering.

The workshop focussed on guidelines for chartering an offshore vessel in Asia,

with an emphasis on key regulations and risk mitigation strategies aimed at assessing, managing and reducing risk. Andrew offered a comprehensive look at the procedures involved, with advice on overcoming key commercial and regulatory risks in the Asian market, industry best practices and procedures for offshore vessel chartering, as well as negotiation in light of the key rights and liabilities of each party involved.

On 11 September 2013 the intrepid Jonathan Woods, Nick Grant, Jack Hatcher, Tom Turner, Sarah Barnes, Krestina Hayes, Richard Taylor and Alexander Bramwell stepped up to put their bodies on the line and take part in ‘The Big Row’, at Spitalfields Market, as part of a Hill Dickinson crew to raise money for the Chauncy Maples Malawi Trust.

The Chauncy Maples Malawi Trust is renovating Africa’s oldest ship into a mobile clinic on Lake Malawi. The M.V. “CHAUNCY MAPLES” will bring much-needed healthcare to remote villages where malaria, TB and HIV/AIDS are common. Improving people’s health enables them to farm, fish and live more productively.

There was an energetic atmosphere at the event - with a few famous faces, including Angela Rippon, to spur the teams on. Team Hill Dickinson rowed admirably, with some exceptional individual performances. The team came a noteworthy 17 out of 76 teams, beating some other names from the marine legal community.

The firm has raised in excess of £8000 and was proud to be part of the event and the worthy cause it raised money for.

‘The Big Row’

Hill Dickinson partner, Ian Maclean (third from the left) was hosted by Videotel when he joined fellow executive committee members from Intermanager at the London International Shipping Week gala dinner. Ian, a Master Mariner, is currently working with Tony Goldsmith out of the Singapore office and supporting fellow mariner Mike Mallin in the launch of Hill Dickinson’s new Hong Kong base.

hill dickinson marine, trade and energy newsletter spring 2014

Documents

new hong kong office

new office

singapore office

mike mallin

asian marine

marrying hong kong

marine personal injury

london city office