A recent High Court decision provides an in-depth analysis of how, if at all, the prevention principle applies to shipbuilding contracts and the importance of good contract management to notify and seek extensions for events of delay. The dispute arose in the context of 11 arbitrations between a seller and a buyer concerning a series of 14 bulk carriers which were to be designed and constructed by the seller in China.
The fast spread of COVID-19 worldwide and the actions taken by regulatory bodies have created challenges for the shipping industry in particular given its international character. Much information is available, but it is fragmented. This article set outs several issues of importance and gives basic information to help parties handle the situation at hand in the best possible manner.
Since May 2019, six oil tankers have been attacked in the Strait of Hormuz. However, despite these attacks, vessels are still taking orders to sail through the strait, albeit with higher war risk insurance rates and, most likely, heightened crew concerns. At what point under UK law can owners refuse such voyage orders on the basis that the strait is contractually unsafe?
Project financing has historically been a popular investment scheme and source of capital in Norway for shipping projects. However, the Norwegian regulatory authorities recently published guidelines regarding the application of the alternative investment fund (AIF) regime to project finance entities. Issuers, advisers, arrangers and investors in shipping projects must be aware of the pitfalls of being captured by the wide definition of an 'AIF' and the steps that they can take in order to adapt to the regulations.
A recent High Court decision provided guidance on the rules of interpretation when construing guarantees that display characteristics of both on-demand and true guarantees. The case concerned a charterer guarantee, which was described as a parent company guarantee and had characteristics of both an on-demand guarantee and a true guarantee.
In the lead up to delivery under shipbuilding and offshore fabrication contracts where delivery is delayed, buyers may occasionally face claims that they have disrupted the contractor's progress in such a way that the contractor is entitled to an extension of the delivery date and/or damages for the additional costs incurred. A recent ruling from the Supreme Court involving land-based construction clarifies the requirements as to causation for such a claim to succeed.
The Supreme Court recently clarified that when determining whether a vessel is a constructive total loss under the Institute Time Clauses Hulls conditions, regard should be had to the costs incurred prior to the owner's notice of abandonment, but not to remuneration payable under a special compensation protection and indemnity clause. The decision is a landmark decision on marine insurance because of its financial and practical implications.
Parliament recently decided that Norway will ratify the Nairobi Wreck Removal Convention and that the convention will be given effect not only in Norway's exclusive economic zone, but also in its territorial waters. Parliament also adopted legislation to implement the convention into Norwegian law once ratified. The legislation will introduce a dual system where the national rules on wreck removal will continue to be in effect and the convention rules will be introduced as a parallel set of rules.
The High Court recently upheld two worldwide freezing orders in a multinational shipping fraud case were upheld, rejecting the defendant's allegations of breaches of full and frank disclosure. Among other things, the judgment is a useful confirmation and strengthening of the standing of intermediary charterers to sue for the full value of the hire in circumstances where the claimant's ultimate loss may be substantially lower.
Unmanned ships are on the horizon and the Norwegian maritime sector is uniquely positioned to take a leading role internationally in the development and commercialisation of this technology. Autonomous shipping may be Norway's maritime equivalent of Project Apollo, but is the legal framework keeping pace?
A recent High Court decision will provide comfort for vessel owners and serve as a reminder to charterers of the importance of documentary obligations within a bareboat charter. The court held that where a vessel is on bareboat charter, the obligation on charterers to keep the vessel with unexpired class certificates at all times is an absolute obligation and a condition of the contract.
The 2019 version of the Nordic Marine Insurance Plan 2013 recently entered into force. Among other things, the revisions introduce an arbitration clause as an option for insurances with Nordic claims leaders. Making arbitration the default position when there is a non-Nordic claims leader aims to align the plan with market practice. However, the change has also been brought about by the looming consequences of Brexit.
In charterparties where no expected time of arrival or readiness to load at the loading port is stated, the question will be whether an equivalent can be identified which can be used as the basis for an absolute obligation requiring the owners to proceed to the loading port by a particular time. The Court of Appeal recently held that the itinerary for an intermediate voyage was such an equivalent.
In a recent judgment in the Full City limitation fund proceedings, the Supreme Court clarified how a global limitation fund established pursuant to the Norwegian Maritime Code should be distributed. The court held that the interest component in the limitation fund should be distributed only on the claims for interest and not on the other claims filed in the fund because vessel owners' limitation of liability should remain the same regardless of whether a limitation fund is established.
A 2017 Commercial Court judgment clarifies the concept of barratry and confirms that there is no qualification to fire when seeking to rely on the fire defence under the Hague or Hague-Visby Rules (assuming that the vessel is seaworthy and that the fire was not caused by the actual fault or privity of the owner). It also confirms that, absent fire, an owner cannot escape liability for deliberate wrongful acts of the crew under the Hague or Hague-Visby Rules even if there is no actual fault or privity on its part.
The High Court recently considered the wording "exposure to sanctions" and ruled that the underwriters of a marine insurance policy could not rely on that wording to avoid a claim on the basis of a "risk of exposure" to the US-Iran sanctions. Rather, for underwriters to do so, there would need to be an actual prohibition on paying the claim in question. This latest judgment deals with a number of key points for drafting effective sanctions exclusion clauses in commercial maritime agreements.
A recent Court of Appeal decision concerned a claim by charterers against disponent owners in respect of contaminated fish oil in bulk carried on board a tanker. The owners accepted liability for the damaged cargo, but argued that they were entitled to limit their liability under Article IV(5) of the Hague Rules. However, the court confirmed that Article IV(5) does not apply to bulk and liquid cargoes; therefore, a carrier cannot limit liability for such cargoes under the Hague Rules.
In a recent case concerning the enumeration of units for the limitation of containerised cargo, the Court of Appeal was asked to determine whether the Hague-Visby Rules are compulsorily applicable if a bill of lading is not issued, what constitutes a 'unit' under the rules and what enumeration of cargo is required under Article IV.5(c) of the rules. The claim arose following damage to a cargo of frozen bluefin tuna packed into three refrigerated containers, which had occurred during carriage from Cartagena to Japan.
The Aconcagua Bay was voyage chartered for the carriage of cargo from the US Gulf. While the vessel was loading, a bridge and lock were damaged and the vessel could not leave the berth for 14 days. The owners claimed damages for detention from the charterers for the period of delay. The main issue was whether a warranty in a voyage charter that the berth is 'always accessible' means that the vessel can always enter and leave the berth.
In a landmark decision the Supreme Court has set aside a Court of Appeal decision which concluded that the Norwegian courts have jurisdiction under the Lugano Convention in a direct action concerning a ship collision in the Singapore Strait. The decision provides welcome clarification to liability insurers across Europe, as it sets out that the Lugano Convention is a self-contained and exclusive code governing matters relating to insurance.