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JURISPRUDENCE ON MARITIME CONVENTIONS - A CMI PROJECT TO WHICH YOUR ASSISTANCE IS REQUIRED

INTRODUCTION

In order to ensure uniformity by way of international legislation three subsequent steps are required:

a) Adoption of an international convention on a given subjectb) Appropriate implementation of the conventionc) Uniform interpretation of the convention

Information on the technique adopted by States parties to a convention for its implementation will help the Depositary of the convention, States parties, courts and lawyers to establish the extent to which legislative uniformity has been achieved.

Information from various countries on judgments in which a convention or its national enactment is considered, interpreted and applied will indicate whether its interpretation is uniform or not and may also contribute to increased uniformity in the future. Similarly, information on commentaries in text books, law journal articles and the like of a convention, its implementation and judgments issued in respect of a convention, may be of assistance to judges and lawyers.

Our project is to contribute to uniformity by collecting and publishing information about the implementation and interpretation of international maritime conventions on a national level.

In order to collect the necessary information from various jurisdictions, we will rely primarily on the assistance of judges, academics, civil servants, practising lawyers and interested persons generally.

You are therefore kindly invited to provide relevant information in English to Francesco Berlingieri at [email protected]

Associations, organizations and publishers are of course also invited to provide information.

Publication by us of any information supplied will normally be with attribution to our source as well as with customary reference to case, book, article etc.

MANNER OF CONTRIBUTION

In order to ensure consistency in the information specimens are provided. Click here for more information.

However, we emphasize that if for want of time or otherwise you are unable to submit information in the requested format, please supply the information in whatever form or language the circumstances permit. Some information is obviously better than no information and we will hopefully be able to supplement with information from other sources

A DATABASE of decisions by national Courts on the interpretation of maritime conventions has been established on the CMI website. Its purpose is to make available to judges, lawyers, academics and to the industry, as many judgments as possible from as many Courts situated in as many countries as possible, on the interpretation of maritime conventions, in the hope that that will contribute to their uniform interpretation.

The database is structured with reference to each convention and then for each convention with reference to individual subjects, listed in an alphabetical order, with the indication of the relevant article.

For each judgment there are indicated the country, the judicial authority, the date of the judgment, the names of the parties and the journal where the judgment has been published. There follows a summary of the facts and the head notes.

At present the database contains summaries of judgments that relate to the following Conventions:

mailto:[email protected]

•The Salvage Convention 1910 •The 1910 Collision Convention •The 1924 Bill of Lading Convention and its 1968 and 1979 Protocols (Hague-Visby Rules) •The 1926 Convention on Maritime Liens and Mortgages •The 1952 Arrest Convention •The CLC 1969-1992 •The Fund Convention 1971-1992 •The Limitation Convention (LLMC) 1976 •The 1976 Athens Convention on The Carriage of Passengers and their Luggage by Sea•The Hamburg Convention 1978 (Hamburg Rules) •United Nations Convention on the Law of the Sea, 1982 •SUA Convention 1988 •The Salvage Convention 1989

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THE SALVAGE CONVENTION 1910

•Right to reward•Salvage services rendered against the prohibition of the owner (Art. 3)

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Right to reward (Art. 2)

United States

United States of America et Al. v. Ex. USS “Cabot/Dedalo”, United States Court of Appeals for the Fifth Circuit 1 July 20002 (2002 AMC 1974)

In 1997 the m/v "Tours Future", when steaming down river along the Mississippi, allided with the former light aircraft carrier U.S.S. "Cabot", moored on the east bank of the Mississippi at the Press Street wharf in New Orleans. The "Cabot" after being decommissioned, had been sold to Spain and renamed Dedalo. In 1999 she had been purchased by the U.S.S. "Cabot" Dedalo Museum Foundation, Inc. and moved to New Orleans. After the allision the Coast Guard, that sometime before had ordered the Foundation to move the "Cabot" to a safer berth, issued another order under 33 U.S.C. Chapter 25, requesting the Foundation to hire a tug to stand by the "Cabot" and, within three days, to move her to a safe hurricane mooring site. Since the Foundation did not take any action, the Coast Guard notified the Foundation that it would do so in accordance with the relevant provisions of the Federal Water Pollution Control Act (FWPCA). The total cost involved was US$ 500,868.94. Later that year the "Cabot" was sold and moved to Port Isabel, Texas where wharfage and security services were provided to her by Marine Salvage & Services, Inc. and, when she began to list, that company acted to prevent her from capsizing at a cost of US$ 20,908.

The "Cabot" was arrested by various claimants and sold by the U.S. Marshal for US$ 185,000, about half of which was paid to her custodian.

Following a trial to determine the priority and amounts of the liens, the Southern District Court of Texas held that Marine Salvage had a valid salvage lien of US$ 20,908 with priority over a valid salvage lien of the U.S. Government which in turn was entitled to the balance of US$ 70,342.68. Marine Salvage appealed, contending first that the Coast Guard could not make a salvage claim for the actions it took under the authority of the FWPCA.

Held, by the Court of Appeals – Fifth Circuit, that:

[1] The Coast Guard cannot seek a salvage reward for actions taken pursuant to mandatory provisions of the Federal Water Pollution Control Act.

Salvage services rendered against the prohibition of the owner (Art. 3)

United States

International Aircraft Recovery L.L.C. v. The Unidentified, Wrecked and Abandoned Aircraft and United States of America (U.S. Court of Appeals-11th Cir. 17 July 2000, 2000 AMC 2345)

In 1990 a group searching for Spanish galleons off the Florida coast located the wreck of a Navy Devastator TBD Torpedo Bomber that has crashed off the Florida coast in 1943. The discoverers sold the plans location to Winword Aviation, a corporation controlled by Douglas Champlin who, after a previous attempt, filed an in rem action through International Aircraft Recovery seeking an injunction barring any interference with the plaintiff’s exclusive salvage rights. In its final order, the District Court granted IAR permission to proceed with salvage operations over the objection of the United States. The United States appealed arguing that it is the owner of the crashed TDB-1 and that as such, it can reject salvage efforts by third parties.

Held, by United States Court of Appeals for the 11th Circuit, that:

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[1] The owner of a vessel in marine peril may decline the assistance of others so long as only the owner’s property interests are at stake.

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THE 1910 COLLISION CONVENTION

•Allocation of liability (art. 4) •Joint liability – Apportionment of fault (art. 4)•Legal presumptions of fault (art. 6) •Time for suit (art. 7) -------------------------------------------------------------------------------------------------------------

Allocation of liability (art. 4)

United States

Otal Investments Limited v. United Services Automobile Association, and Others M.V. “Clary” and Others and M.V. “Tricolor”, U.S. Court of Appeals-II Circ. 6 July 2007

Before dawn on December 14, 2002, three vessels, the M/V Kariba (the “Kariba”), the M/V Tricolor (the “Tricolor”) and the M/V Clary (the “Clary”) were navigating a Traffic Separation Scheme (“TSS”) in international waters north of Dunkerque, France (in the English Channel). At the relevant point of the TSS, two branches intersect at approximately right angles, one branch cutting roughly North-South, the other roughly East-West. On the night in question, the fog was thick and visibility was low. The Kariba was proceeding westward at about 16 knots. The Tricolor was also proceeding westward at 17.9 knots, one-half mile to the starboard aft of the Kariba, and in the process of gradually overtaking her. At the same time, the Clary was moving northward, along the intersecting branch of the TSS, at 13 knots, on a collision course with the Kariba.

Noticing that it was on a collision course, the Clary planned to turn starboard and steer astern of the Kariba. Before the Clary began to turn, however, the Kariba initiated its own evasive manoeuvre. The Kariba, seeking to avoid a collision with the Clary – and perhaps unaware of the proximity of the Tricolor – made an abrupt turn to starboard. The Kariba struck the port side of the Tricolor, rending the Tricolor’s hull below its bridge. The Tricolor along with its cargo then sank. There were no human casualties.

In the quarter-hour leading up to the collision, none of the vessels sounded its foghorn or communicated with any other vessel via radio.

In June 2003, Otal Investments, Ltd., the owner of the Kariba (hereinafter, Otal and the Kariba together the “Kariba”), filed a complaint in the Southern District of New York “seeking Exoneration from or Limitation of Liability.” In response to this complaint, numerous claimants filed claims against the Kariba, seeking damages for the loss of their cargo, which had sunk along with the Tricolor (hereinafter, the claimants will be called the “cargo owners”). Meanwhile, the Kariba impleaded the Clary and the Tricolor as third-party defendants.

The Kariba and the cargo owners settled their disputes before trial, and the Tricolor agreed to resolve its disputes against the Kariba in Belgium. For the district court, this left only the disputes between the Kariba and the cargo owners, on the one side, and the Clary and the Tricolor, on the other. After a bench trial, the court ruled in favor of the Clary and the Tricolor, finding the Kariba to have been the sole cause of the collision.

All parties agreed the substantive law governing this case derived from treaties ratified by the vessels’ flag states. Specifically, the navigational duties are contained in The International Regulations for Preventing Collisions at Sea (the “COLREGS”). In addition, the parties stipulated their claims should be adjudicated “in accordance with” the Brussels Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels, 1910 (the “1910 Collision Convention”).

The district court found the rule in The Pennsylvania did not apply in this case. Generally,” the court held, “United States courts will apply the 1910 Collision Convention when a collision occurs in international waters between vessels that fly flags of signatory states.” In re Otal Investments, Ltd., 2005 U.S. Dist. LEXIS 21580 at *6. Article 6 of that Convention states “[a]ll legal presumptions of fault in regard to liability for collision are abolished.” If the rule in The Pennsylvania is substantive, the court noted, Article 6 of the Convention would override it. Id. at *8.

Both the Kariba and the cargo owners appealed from this judgment, seeking a reversal of the district court’s determination that the Kariba was solely liable. The Clary and the Tricolor sought to preserve that decision.

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Appellants the Kariba and cargo owners argued that while substantive law was governed by the 1910 Collision Convention, procedural law was governed by the law of the forum and that, therefore, the Pennsylvania Rule applied, since it its nature was procedural.

After deciding that the Pennsylvania Rule is substantive, the Court of Appeals considered the allocation of liability under the 1910 Collision Convention.

Held, by the U.S. Court of Appeal-II Circ., that:

[1] Article 4 of the 1910 Collision Convention, which allocates liability “in proportion to the degree of the faults respectively committed,” requires consideration of both culpability and causative effect.

Joint liability – Apportionment of fault (art. 4)

France

Tribunal de Grande Instance of Sables d’Olonne 7 January 2011, At Racing LLP v. Armement Coopératif Artisanal Vendée, 2011 DMF 607

The sailing yacht “Black Sambucca”, that intended to participate to the regatta around the world with departure from Sables d’Olonne on 17 October 2008, arrived in the roads of Sables d’Olonne in the evening of 16 October and remained in the road heaving to in order to enter into the port the following morning. In the night, at about 03.40, the fishing vessel “Anthineas” ran into the yacht causing serious damage to her hull and breaking the mast. On 20 August 2009 the owners of the “Sambucca”, AT Racing LP, brought proceedings against the owners of the “Anthineas”, José Jouneau and Armement Cooperatif Artisanal Vandée, and their insurers claiming damages.

Held, by the Tribunal de Grande Instance of Sables d’Olonne, that:

[1] A collision of a fishing vessel with a sailing yacht that was heaving must be deemed to have been caused by the fault of both vessels when they both failed make signals to attract the attention of the other vessel and pursuant to art. 4 of the 1910 Collision Convention liability must be apportioned equally.

Legal presumptions of fault (art. 6)

United States

Otal Investments Limited v. United Services Automobile Association, and Others M.V. “Clary” and Others and M.V. “Tricolor”, U.S. Court of Appeals-II Circ. 6 July 2007

(The summary of facts may be found in the section “Allocation of liability”)

Held, by the U.S. Court of Appeal-II Circ., that:

[1] The rule in The Pennsylvania is not a mere procedural rule; it is, instead, substantive. The question of whether a rule is procedural or substantive depends on its effect at trial. Under the rule in The Pennsylvania, a vessel that violates a navigational rule not only must show that her fault did not cause the collision, but also must persuade the court that her own explanation of the collision is correct. This is an imposing burden. It does not serve simply to determine who moves forward with the evidence, or to narrowly regulate the conduct at trial. To the contrary, the rule in The Pennsylvania is so significant as to substantially “affect the decision of the issue” of liability in a collision. Moreover, the purpose of the rule in The Pennsylvania extends beyond regulating evidentiary burdens at trial. As its author, Justice Strong, proclaimed, the rule “is necessary to enforce obedience to the mandate of the statute” (The Pennsylvania, 86 U.S. at 136), an aim that exceeds mere evidentiary concerns.

Time for suit (art. 7)

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France

Cour de Cassation 7 April 2011, Mr. P. v. Mr. L. (2011 DMF 707)

On 11 July 2006 a collision occurred between the yacht Le Georgina II, at anchor and the fishing vessel Le Jean Ricciardi. The yacht was damaged and Mr. P. who was on board, fell into the water and was rescued by a sailor of Le Jean Ricciardi. On 15 July 2009 Mr. P. brought an action against Mr. L., the owner of Le Jean Ricciardi in the Tribunal de Grande Instance of Montpellier. The defendant rejected the claim holding that it was time barred pursuant to article 7 of law no. 67-545 of 7 July 1967, the action having been brought over two years of the occurrence. By judgment of 10 May 2010 the Tribunal de Grande Instance rejected the exception and held the defendant fully liable for the accident. Mr. L. appealed and having Mr. P. objected that the two year prescription period was in conflict with the rights and liberties warranted by the Constitution, and specifically with article 16 of the “Déclaration des droits de l’homme et du citoyen” of 26 August 1789, asking that the issue be submitted to the Cour de Cassation. By judgment of 19 January 2011 the Cour d’Appel of Montpellier transmitted the issue to the Cour de Cassation.

Held, by the Cour de Cassation, that:

[1] The rule of article 7 of law no. 67-545 of 7 July 1967 on “événements de mer” that has become article L.5131-6 of the code des transports providing a two years prescription period in respect of claims arising out of a collision does not entail an unjustified distinction such as to deprive a person of the warranties of the law and there is no basis for the submission of the issue to the Conseil Constitutionnel.*

*This decision of the French Cour de Cassation, albeit considering a domestic law, has an international interest for the two years prescription (time bar) period is based on article 7 of the Collision Convention of 1910, still in force in many maritime States and the same prescription period may be found in many subsequent maritime conventions, such as the 1989 Salvage Convention (article 23) and the 1974 Athens Convention on Carriage of Passengers by Sea (article 16).

Hong Kong Special Administration Region

Chan Kwai Ha v. Wong Chick Bun, Court of Appeal 1 February 2008

In August 1999 Ms. Chan’s barge (the Tow) sank while being towed by Mr. Wong’s vessel (the Tug). In April 2005 Ms. Chan issued a writ against Mr. Wong claiming damages for the loss of the Tow. The writ alleged breach of contract on the part of Mr. Wong and/or negligent navigation and/or management of the Tug.

In his Defence, Mr. Wong contended that Ms. Chan’s claim was time-barred by reason of Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (Cap.508) section 7(1).

The High Court of Admiralty heard the time-bar question as a preliminary issue. It held that there was no good reason for extending the limitation of two years imposed by the Ordinance and that Ms. Chan was thus out of time in bringing her action. Ms. Chan appealed against this determination on the ground that, on its true construction, section 7(1) only applied to tortious claims and that the claim for breach of contract (arising from alleged negligence in navigation of the Tug) should therefore be allowed to proceed on the basis that the appropriate limitation period was 6 years (under the Limitation Ordinance (Cap. 347)).

Held, by the Court of Appeal, that

[1] There is nothing in Article 7 of the Collision Convention, 1910 to suggest that the “actions for the recovery of damages” mentioned in the Article are confined to tortious actions. On the contrary, the words are general. They indicate that all actions for recovery of damages in collision cases are barred after the lapse of two years from a casualty.

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THE 1924 BILLS OF LADING CONVENTION AND ITS 1968 AND 1979 PROTOCOLS (HAGUE-VISBY RULES)

•Action for indemnity (Art. 3(6 bis)) •Amount recoverable (Art. 4. 5(b)) •Bills of lading (Art. 1 (b)) •Burden of proof (Art. 3.(1)-(2); Art.4.(1)-(2)) •Cargoworthiness (Art. 3. 1(c)) •Dangerous goods (Art. 4. 6) •Deck cargo (Art. 1(c))•Delay (Art. 3.2)•Due diligence (Art. 3.1) •Duty to load and discharge the cargo (Art. 3 (2)) •Entry into force of the 1968 and 1979 Protocols (Art. 13 of the 1968 Protocol and Art. VIII of the 1979

Protocol) •Evidentiary value of the bill of lading (Art. 3. 4) •Excepted perils – Act of public enemies (Art. 4. 2(f)) •Excepted perils – Actual fault or privity (Art. 4. 2(q)) •Excepted perils - Arrest or restraint of princes (Art. 4.2(g)) •Excepted perils – Burden of proof (Art. 4.2) •Excepted perils – Fault in navigation or management of the ship (art. 4.2 (a)) •Excepted perils – Fire (Art. 4.2 (b)) •Excepted perils – Inherent vice (Art. 4. 2(m)) •Excepted perils – Insufficiency of packing (art. 4(2)(n)•Excepted perils - Latent defects (Art. 4.2(p)) •Excepted perils – Perils of the Sea (Art. 4. 2(c)) •Excepted perils – Seaworthiness as an “overriding obligation” (Art. 4. 2) •Excepted perils – When may be invoked (art.4(2)) •Freedom of contract (art. 7) •Identity of the carrier (Art.1(a)) •Jurisdiction Clause (Art. 3. 8) • Limitation of liability (Art. 4.5) •Loss of right to limit liability (Art. 4 5(e)) •Management of the ship and management of the cargo (Art. 4. 2(a) •Multimodal transport•Negligent stowage (Art. 3.2) •Notice of loss or damage (Art. 3.6) •Obligation to make the ship seaworthy (Art. 3. 1) •Obligation to properly care for the goods (Art. 3.2) •Paramount clause •Period of application (Art. 1(e)) •Qualifying clauses (Art. 3. 3) •Right of suit •Scope of application (Art. 1 (b) and (e)) •Scope of application (arts. 2 and 4)) •Scope of application - Claim by a third party (Art. 3(6 bis)) •Scope of application (Art. 10) •Scope of application - Claims against the shipper •Scope of application - Claim of a shipper against another shipper •Servants or agents (Art. 4 bis. (2)(a) and 4 bis (2) and (4). •Stowage on deck •Time bar (Art. 3.6) •Time for suit (Art. 3. 6) •Tort claims (Art. 4 bis . (1))

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Action for indemnity (Art. 3(6 bis))

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France

Cour de Cassation (Ch. Com) 15 March 2005, M.me Maurel v. M. Tessah, Panalpina France Transports Internationaux and Delmas (2005 DMF 536)

M. Tessah purchased from Mrs. Maurel a press for delivery at Douala. Mrs. Maurel requested Panalpina France Transports Internationaux to perform the carriage for delivery of the press at destination by 14 January 1998 and Panalpina sub-contracted the carriage to Delmas. Since the press never arrived at destination the buyer brought an action against the seller for the avoidance of the contract. The seller on 22 November 1999 brought an action for indemnity against Panalpina and Delmas.

The Tribunal de Commerce in which the action was brought and then the Cour d'Appel of Toulouse with judgment of 13 June 2003 declared the contract discharged but rejected the actions against Delmas on the ground that it had been brought after the lapse of the one year time limit.Mrs. Maurel and Panalpina appealed to the Cour de Cassation stating that their actions had been brought within the three months additional period set out in article 32(2) of law 18 June 1966, corresponding to article 3(6 bis) of the Hague-Visby Rules.

Held, by the Corte di Cassazione, that:

[1] The action for indemnity reference to which is made in article 32(2) of law 18 June 1966 (corresponding to article 3(6 bis) of the Hague-Visby Rules) relates to the situation where the main action is based on a contract and therefore, an action brought against the carrier by the seller who is sued by the buyer because the goods sold never arrived at destination is the main action reference to which is made in article 31(1) (corresponding to article 3, paragraph 6, sub-paragraph 4 of the Hague-Visby Rules).

Amount recoverable (Art. 4. 5(b))

England

Mediterranean Shipping Company S.A. v Trafigura Beheer BV (C.A.) [2007] EWCA Civ 794 Case No. 2007 0997 A3

This is a case in which cargo-owners have sued shipowners for conversion and breach of contract in relation to a consignment of copper stowed in 18 containers shipped at Durban for delivery in Shanghai. Fraudsters arranged to create and present a false bill of lading against which the shipowners gave a delivery order entitling the fraudsters to delivery from the Hudong Container Terminal warehouse, in which the goods had been stored after arrival. Customs at Shanghai will not permit cargo to be taken out of the container terminal in the port without payment of customs duty and VAT and production of a delivery order stating that payment has been so made. The fraudsters have paid the customs duty and their delivery order has been endorsed by Customs to that effect. Only a day later the cargo-owners presented their (genuine) bill of lading and the shipowners were able to ensure that delivery to the fraudster did not take place. Although the shipowners gave another delivery order to the cargo-owners, that delivery order has not been stamped with any record of duty having been paid and the cargo-owners cannot therefore obtain delivery from the warehouse. This impasse has continued and still existed at the time of the judgment. In these circumstances the cargo-owners sued the shipowners and obtained an order from Aikens J ordering the shipowner to deliver the cargo or pay the full value of the cargo. From that order the shipowners appealed contending that their liability is only a limited one. This depended on whether the shipowners’ liability was governed by the Hague Rules or the Hague-Visby Rules or the terms contained in the bill of lading.

“(a) For all trades, except for goods shipped to and from the United States of America, this B/L shall be subject to the 1924 Hague Rules with the express exclusion of Article IX, or, if compulsorily applicable, subject to the 1968 Protocol (Hague -Visby) or any compulsory legislation based on the Hague Rules and/or the said Protocols. Where Hague-Visby or similar legislation is compulsorily applicable, the Hague-Visby 1979 Protocol (“SDR” Protocol) shall also apply whether or not mandatory.”

The shipowners submitted that the 1924 Rules applied after discharge so that they were entitled to limit the claim to £100 per package or unit. The cargo-owners submitted that the Hague Rules (in whichever version), if one looked at the Rules themselves, only applied for the period between loading

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and discharge. The period after discharge was therefore governed by the terms of the bill of lading. Although the parties could agree that the Rules applied to any part of the shipowners’ obligation that occurred before loading and after discharge, they had not so agreed in this case. The judge accepted the cargo-owners’ submissions. Clauses 4(ii) and (iii) provided:

“(ii) The responsibility of the Carrier is limited to that part of the Carriage from and during loading onto the vessel up to and including discharge from the vessel and the Carrier shall not be liable for loss of or damage to the goods during the period before loading onto and the period after discharging from the vessel, howsoever such loss or damage may arise. Loading and discharge take place when the goods pass the vessel’s rail or ramp.

(iii) When the goods are in the custody of the Carrier and/or his subcontractors before loading and after discharge, whether being forwarded to or from the vessel or whether awaiting shipment landed or stored, or put into hulk or craft belonging to the Carrier, or pending transhipment, they are in such custody for the risk and account of the Merchant without any liability of the Carrier.”Clause 7 provided, inter alia:

“The vessel may commence discharging immediately on arrival without notice to the consignee or any other party .... on to quay or into shed, warehouse, depot.....vehicle, vessel or craft as the Carrier or his agents may determine. Such discharge shall constitute due delivery of the goods under this Bill of Lading....Whether the vessel’s tackles or shore cranes or other means be employed in the course of delivery onto Quay or otherwise, any loss of, of damage to the goods . . . shall, after the end of the Hague Rules period, be at the sole risk of the consignee in every respect whatsoever....”

Held, by the Court of Appeal, that:

[1] If the carrier fails to deliver the goods against production of the bill of lading once the sea carriage is over the damages suffered by the holder of the bill of lading must be assessed on the basis of the value of the goods at the date of the judgment.

Italy

Corte di Cassazione 27 October 1998, n. 10692, Adriatic Shipping Company S.r.l. v. Continentale Italiana S.p.A.–The “Mirna” (2000 Dir. Mar. 505)

A shipment of cereals in bulk was carried from Port Sudan to Venice on board the m/v Mirna. Upon its discharge in Venice it was found that foreign materials were mixed with cereals and that a shortage had occurred. The consignees, Cerealmangimi S.p.A., sued the agents of the carrier before the Tribunal of Venice claiming damages and stating inter alia that they had to replace a part of the cargo by purchasing other goods of the same quality. The claim was rejected in part by the Tribunal of Venice and its judgment was affirmed by the Court of Appeal of Venice. Cerealmangimi then appealed to the Supreme Court.


[1] The liability of the carrier is not excluded by the lack of proof by the consignee that he has replaced the goods lost or damaged with other goods or that he has incurred an expense for such purpose. The invoice price of the goods can be presumed to correspond to their market price.

Bills of lading (Art. 1 (b))

England

J. C. MacWilliams Co. Inc. v. Mediterranean Shipping Company S.A. – The “Rafaela S.” (C.A.) [2003] EWCA Civ. 556; [2003] 2 Lloyd's Rep. 113; 2003 A.M.C. 2035

Four containers with printing machinery were carried from Durban to Felixstowe on the m/v Rosemary and then from Felixstowe to Boston, their final destination, on the m/v Rafaela S. Both vessels were owned by or demise chartered to Mediterranean Shipping Co. S.A. (MSC) of Geneva. A straight bill of lading was issued by MSC at Durban. On the way to Boston the machinery was badly damaged. One of the issues decided by the arbitrators to which the dispute was submitted was whether the straight bill of

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lading was a bill of lading or a similar document of title within the English Carriage of Goods by Sea Act 1971 which gives to the Hague-Visby Rules the force of law.

If the Hague-Visby Rules did not apply, the US Cogsa limit of liability of US$ 500 per package would have applied. The arbitrators decided that this was not the case and their decision was upheld by the Commercial Court.

Permission was given to the claimants to take a second appeal to the Court of Appeal.


[1] A straight bill of lading, the production of which is required on delivery, is a bill of lading or similar document of title to which the Hague-Visby Rules apply

Germany

The MV "New York Express", Oberlandesgericht Hamburg (Court of Appeal) 2 November 2000, (Transportrecht 2001, p. 87)*

Two containers with machinery were carried from Bremerhaven to Newark/New Jersey on the MV New York Express. The carrier issued an express cargo bill. The express cargo bill provided for the application of German law. After discharging had been completed at Newark and in the course of the handling of the cargo on the terminal, the terminal operator being the carrier's subcontractor, part of the cargo was damaged. The consignee claimed damages from the carrier under the contract of carriage. The issue to be decided by the Court was whether the express cargo bill constituted a bill of lading.

Held, by Hambug Oberlandesgericht (Court of Appeal), that:

[1] An express cargo bill is not a bill of lading or similar document of title within the meaning of Art. 1(b) of the Hague-Visby Rules or para. 662 German Commercial Code.

* By the courtesy of Dr. Cristoph Horbach, Lebuhn & Puchta Rechtsanwälte,Vorsetzen 35, D-20459 Hamburg - [email protected]


Carewins Development (China) Limited v. Bright Fortune Shipping Limited and Carewins Development (China) Limited v. Hecny Shipping Limited, High Court of the Hong Kong Special Administrative Region, 27 July 2006 (http://legalref.judiciary.gov.hk/lrs/common/ju/judgment.jsp - Case no. HCCL 29/2004)

In March 2003 Carewins Development (China) Limited of Hong Kong gave instructions to Bright Fortune Shipping Limited and to Hecny Shipping Limited for the carriage from Hong Kong to Los Angeles of 45 containers of footwear products. All bills of lading were issued by Bright Fortune on its form but some were signed by Bright Fortune "as agents only" and on the reverse side the clause headed "Definitions" so provided, inter alia: The term "Carrier" means Hecny Shipping Ltd.All such bills of lading named the buyer of the goods, Artist Fashion, Inc. of Los Angeles as consignee.

Out of the 45 containers 23 were delivered to the warehouse of Artist Fashion, without production of the relevant bills of lading and were subsequently seized by another company , Burberry Limited, who alleged that Artist Fashion had infringed trade marks owned by Burberry.

Carewins, who had net received payment of the goods loaded in the 23 containers, brought proceedings in the High Court of Hong Kong Special Administration against Bright Fortune and Hecny claiming damages for the delivery of the containers without production of the bills of lading.

Hecny denied that it had entered into any contract of carriage with Carewins, since the bills of lading had been issued on a Bright Fortune form and had been signed by Bright Fortune

Held, by the High Court of the Hong Kong Special Administrative Region, that:

[1] A straight bill of lading must be surrendered to the carrier in order obtain delivery of the goods.

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Carewins Development (China) Limited v. Bright Fortune Shipping Limited and Carewins Development (China) Limited v. Hecny Shipping Limited, Court of Final Appeal of the Hong Kong Special Administrative Region, 12 May 2009

The Court of Appeal agreed with the High Court that delivery without production of the straight bill of lading was a breach of the contract of carriage and allowed the appeal holding that the exclusion clause of the bill of lading did not exempt the carriers from liability. The carriers appealed to the Court of Final Appeal.

Held by the Court of Final Appeal, that:

[1] Straight bills of lading share all the characteristics of order bills save only that after transfer by the shipper to the named consignee, straight bills are not “negotiable” in that they are not further transferable by endorsement and delivery so as to constitute third persons holders of the bill. Straight bills therefore function as the carrier’s receipt for the goods shipped; as a memorandum of the terms of the contract of carriage; and as a document of title to the goods, enabling the consignee to take delivery at their destination against production of the bill.[2] The words of a clause in the bill of lading providing that the carriers shall be under no liability for loss or misdelivery of or damage to goods however caused whether or not through the negligence of the carrier its servants or agents or subcontractors are not precise enough to exempt the carrier from liability when, with eyes open, it delivers 23 containers without production of the bill of lading.

Burden of proof (Art. 3.(1)-(2); Art.4.(1)-(2))

United States

Steel Coils, Inc. v. M/v "Lake Marion", in rem; Lake Marion, Inc. and Bay Ocean Management, Inc., in personam - v. Western Bulk Carriers K/S Oslo - v. Itochu International, Inc. United States Court of Appeals for the Fifth Circuit, May 13, 2003 (2003 AMC 1408)

Steel Coils, Inc., an importer of steel products with its principal office in Deerfield, Illinois, ordered flat-rolled steel from a steel mill in Russia. Itochu International, Inc., which then owned ninety per cent of the stock of Steel Coils, purchased the steel and entered into a voyage charter with Western Bulk Carriers K/S Oslo for the m/v Lake Marion to import the steel to the United States. Western Bulk had time chartered the vessel from Lake Marion. Inc. As Lake Marion, Inc.'s manager, Bay Ocean Management, Inc. employed the master and crew of the vessel.

The Lake Marion took on the steel coils at the Latvian port of Riga and discharged them at New Orleans and Houston. Steel Coils alleged that the coils were damaged by salt water and filed suit under COGSA against the m/v Lake Marion in rem and against Lake Marion, Inc., Bay Ocean Management and Western Bulk in personam, requesting US$ 550,000 in damages, with a separate claim of negligence against Bay Ocean.

After a bench trial, the U.S. District Court for the Eastern District of Louisiana held the defendants jointly and severally liable to Steel Coils for US$ 262,000 and Bay Ocean liable for an additional US$ 243,358.94.

From this judgment the vessel interests appealed and Steel Coils and Western Bulk cross-appealed.

Held, by the U.S. Court of Appeals for the Fifth Circuit, that:

[1] COGSA provides a complex burden-shifting procedure. Initially, the plaintiff must establish a prima facie case by demonstrating that the cargo was loaded in an undamaged condition and discharged in a damaged condition and for the purpose of determining the condition of the goods at the time of receipt by the carrier, the bill of lading serves as prima facie evidence that the goods were loaded in the condition therein described. If the plaintiff presents a prima facie case, the burden shifts to the defendants to prove that they exercised due diligence to prevent the damage or that the damage was caused by one of the exceptions set forth in section 1304(2) of COGSA, including "[p]erils, dangers, and accidents of the sea or other navigable waters" and "[l]atent defects not discoverable by due diligence." If the defendants show that the loss was caused by one of these exceptions, the burden returns to the shipper to establish that the

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defendants' negligence contributed to the damage. Finally, if the shipper is able to establish that the [defendants'] negligence was a contributory cause of the damage, the burden switches back to the [defendants] to segregate the portion of the damage due to the excepted cause from that portion resulting from the carrier's own negligence.

Cargoworthiness (Art. 3. 1(c))

Italy

Court of Appeal of Venice 1 March 1999, Plaumann & Co. GmbH v. Adriatica di Navigazione - The “Egizia” (2001 Dir. Mar. 1450)

Plaumann and Co. GmbH of Hamburg purchased 480 tons onions which were loaded in Alexandria, Egypt on the m/v Egizia of Adriatica di Navigazione S.p.A. and carried from Alexandria to Trieste. A clause was inserted in the bills of lading to the effect that the consignment consisted of perishable goods and that the vessel was not responsible for damages. At discharge the goods were found to be seriously damaged and their sale for human consumption was denied. Plaumann and Co. commenced proceedings before the Tribunal of Venice against Adriatica di Navigazione claiming damages. The claim was rejected by the Tribunal of Venice and Plaumann and Co. appealed to the Court of Appeal of Venice.

Held, by the Court of Appeal of Venice, that:

[1] The bill of lading clause which exonerates the carrier from liability in respect of damage to perishable goods stowed in the holds is null since it is in conflict with Art. 3 r. 1(c) of the Hague-Visby Rules which expressly provides that the carrier has the duty to make the holds fit and safe for the reception, carriage and preservation of the goods, as well as with Art. 3 r. 8 which provides that any clause relieving the carrier from liability is null and void.

Dangerous goods (Art. 4. 6)

England

Compania Sudamericana de Vapores S.A. v. Sinochem Tianjin Import and Export Corp. – The “Aconcagua”, Queen’s Bench Division (Commercial Court) 24 January 2009 [2009] EWHC 1880 (Comm.)

At about 0230 local time on 30th December 1998 an explosion took place in the No 3 hold of the m.v. “Aconcagua” when she was on passage off the coast of Ecuador. The fire which resulted was so great that the crew had to abandon ship. Widespread damage was caused to the vessel and her cargo. The cause of the explosion was the self ignition of 334 kegs of calcium hypochlorite stowed in a container. The container had been loaded at Busan, South Korea and was stowed in No.3 hold. The vessel was on time charter to Compania Sud Americana de Vapores S.A (“CSAV”), a Chilean company. The owners of the vessel – MS ER Hamburg Schiffahrtsgesellschaft Mbh & Co – commenced an arbitration under the charterparty against CSAV. They held it responsible for the explosion and their consequent loss, claiming damages or an indemnity. The arbitration proceeded to an interim award in which the arbitrators decided certain issues, after which CSAV reached a settlement with the Owners pursuant to which they paid them US $ 27,750,000. CSAV brought proceedings in Queen’s Bench Division (Commercial Court) against the shippers of the calcium hypochlorite, Sinochem Tianjin Import and Export Corp (“Sinochem”), a Chinese State-owned trading house, for breach of the contract contained in or evidenced by the bill of lading in respect of the container.

It sought to recover the amount which it paid the Owners in settlement and the costs of defending the Owners’ claim in addition to the amounts that it had counterclaimed in the arbitration.

Held, by the Queen’s Bench Division (Commercial Court), that:

[1] The normal characteristics of calcium hypochlorite of which a prudent carrier should have had knowledge were that the material was safe for carriage in The Salvage Convention 1989 South Africa containers on or under deck; but that it had a tendency to decompose if the

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temperature was as low as 60ºC, in which case it might explode; and that it should be kept away from sources of heat. The cause of the explosions that had taken place with UN 1748 material up to 1973 was probably rogue Japanese material of abnormally low thermal stability. CSAV did not know, nor should it have known, that UN 1748 could explode at CATs of 40ºC or below.[2] The effect of the heating which was applied to the tank on the ambient temperature in No 3 hold was likely to have produced temperatures in the upper parts of Hold No 3 (level 6 and above) in the high 30s. Normal UN 1748 should not have exploded if subjected to such temperatures. That, itself, implies that the material actually shipped was rogue material i.e. had characteristics which were markedly different from those of CH correctly described as UN 1748.[3] It is well established that a carrier is not entitled to an indemnity under Article IV, Rule 6 of the Hague-Visby Rules if its loss results from two causes (a) the shipment of dangerous goods not knowingly consented to; and (b) the carrier’s overriding obligation of seaworthiness under Article III, Rule 1 It is not necessary to determine whether the carrier’s breach was the dominant or merely an effective cause. It is sufficient that it was a cause.[4] If the shipper of dangerous goods seeks to avoid a liability to which, unless bad stowage was a cause, it would be subject, it is for the shipper to establish the causative effect of that stowage. [5] In a situation where the vessel might have been potentially in danger if the tank in the vicinity of which dangerous cargo has been stowed if the fuel loaded in that tank had been used, such use not being strictly required during the voyage, the heating of such dangerous cargo would have been the effect of an “act, neglect or default in the … management of the ship” and, therefore, the risk of loss arising therefrom would have been an excepted peril and the carrier would have been under no liability in respect of it.

Bunge S.A. v. ADM do Brasil Ltda and Others, High Court of Justice, Queen's Bench Division, Commercial Court [2009] EWHC 845 (Comm.) *

This is an appeal against eight arbitration awards issued by maritime arbitrators in relation to a dispute concerning the shipment of allegedly dangerous cargo. The cargo in question was 44,337.515 tonnes of Brazilian soya bean meal pellets, “SBMP”, loaded on board the Darya Radhe at Paranagua by nine shippers between 20 and 27 January 2004. The arbitrators found that there had been introduced with this cargo during loading less than 20 and probably no more than 14 live rats. Discovery of the rats during loading was said by Bunge SA, (“Bunge”), who were the time charterers of the vessel, to have been responsible for their incurring extraordinary expenditure and delay in dealing with the matter in an appropriate way.

Their loss was put at in excess of US$2 million. Bunge say that SBMP loaded with accompanying rats is a dangerous cargo. Bunge accordingly brought claims for damages against the nine shippers to each of which it had issued at least one bill of lading.

Held, by the Queen's Bench Division, Commercial Court, that:

[1] It is most unlikely that the word “dangerous” can be intended when used in Article IV Rule 6 of the Hague Rules to bear a meaning going beyond physical danger. The owner has the right under the Rule at any time before discharge and without incurring a liability to pay compensation to land “dangerous” cargo at any place or to destroy it or to render it innocuous. Quite apart from the obvious pointer given by the expression “render it innocuous” it would be very surprising if the owner had the right without incurring any liability whatsoever either to land at a non-contractual destination or even to destroy cargo which posed no physical threat to either ship or other cargo carried. The arbitrators made no error of law but on the contrary came to the correct conclusion that Bunge could not establish a breach of contract, or liability under the Hague Rules, even assuming that it could show that one or more of the shippers was responsible for the introduction of one or more rats.

* By the courtesy of Adv. Filippo Lorenzon, Lecturer in Law and Member of the Institute of Maritime Law, University of Southampton ([email protected])

Effort Shipping Co. Ltd. v. Linden Management S.A. and Another–The “Giannis NK” House of Lords 22 January 1998 ([1999] 1 Lloyd’s Rep. 337).

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In November 1990 a cargo of ground-nut extraction mill pellets was loaded into hold 4 of the m/v Giannis NK. Cargoes of bulk wheat pellets had been loaded into other holds at previous loading ports. The ground-nut pellets were fumigated after loading and an SGS certificate was issued. The vessel then crossed the Atlantic, discharged at St. Juan in Puerto Rico part of the grain pellets and then proceeded to Rio Haina in the Dominican Republic to discharge the balance of the cargo. Upon arrival it was inspected by the Agricultural Authorities and live insects and shed skins were found in the cargo and the vessel was quarantined. After fumigation live insects were still found in the vessel holds and the vessel was ordered to leave the port with both the ground-nut cargo and the wheat cargo still on board. Then the vessel sailed back to St. Juan and after examination of the cargo by the State Department of Agriculture a notice was served on the owners requiring them either to return the cargo to its country of origin or to dump it at sea. The vessel then proceeded out to sea and dumped both the ground-nuts and the balance of the wheat still on board.

The owners claimed against the charterers and the shippers stating the ground-nuts cargo was a dangerous cargo by reason of the fact that it contained khapra beatle and claimed that they could recover from the shippers pursuant to art. IV, r. 6 of the Hague Rules which were incorporated into the contract of carriage evidenced by the bill of lading. Judgment in favour of the claimant was issued by the Commercial Court ([1994] 2 Lloyd’s Rep. 171) and the decision of the Commercial Court was affirmed by the Court of Appeal ([1996] 1 Lloyd’s Rep. 577). Leave to appeal to the House of Lords was granted.

Held, by the House of Lords, that:

[1) The word “dangerous” in the expression “goods of … [a] dangerous nature” must be given a broad meaning. Goods may be dangerous if they are dangerous to other goods, even though they are not dangerous to the vessel itself. A groundnut cargo is of a dangerous nature if it is liable to give rise to the loss of the other cargo loaded on the same vessel by dumping at sea. The liability of the shipper under article 4(6) of the Hague Rules is strict irrespective of fault or neglect on his part.

United States

In Re M/V DG Harmony, United States Court of Appeals – Second Circuit, 3 March 2008*

The M/V DG Harmony, owned by Navigator Shipping Ltd. and chartered to several charterers, in her voyage from New York to South America in October 1998 loaded at Newport News, Virginia ten containers each of which contained approximately 16,000 kilograms of calcium hypochlorite (hydrated) (calhypo). The shipper of the container was PPG Industries Inc. When the vessel was off the northern coast of Brazil an explosion ripped through the third hold, where the calhypo was stowed, and all efforts of the crew to fight against the fire that developed after the explosion were of no avail. The fire resulted in a constructive total loss of the vessel. The owners of the vessel and of other cargo on board as well as of the insurers brought proceedings against PPG in the United States District Court for the Southern District of New York holding them strictly liable under § 4(6) of the Carriage of Goods. The order of the District Court finding PPG strictly liable was appealed by PPG.

Held, by the U.S. Court of Appeals-II Circuit, that:

[1] Shippers cannot be held strictly liable in respect of loss or damage caused by the dangerous nature of their cargo if the carrier was generally aware of such dangerous nature, even though he may not have been aware of its precise characteristics. In such circumstances, however, the shipper may be .liable on account of his negligent failure to warn the carrier about the dangers inherent in the cargo, provided the carrier demonstrates (a) that the shipper failed to warn him about dangers inherent in the cargo of which the stevedore and ship’s master could not reasonably have been expected to be aware; and (b) that an absent warning, if given, would have impacted stowage.

* By the courtesy of David Martin Clark (www.onlinedmc.co.uk)

Contship Containerlines, Ltd. v PPG Industries, Inc. - The "Contship France", United States Court of Appeals for the Second Circuit 21 March 2006 (not yet reported)

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PPG Industries, Inc. shipped 512 drums of Cal Hypo aboard the Contship France, operated by Contship Containerlines, Inc. which sailed from Charleston, South Carolina in late September 1997. Upon the ship's arrival in Tahiti, a fire broke out. The source of the fire was one batch of Cal Hypo, consisting of 80 drums each weighing 425 pounds. The particular type of Cal Hypo at issue, designated "UN 2880" by Department of Transportation regulations, is known to be flammable. When exposed to heat at or above its "critical temperature," Cal Hypo will generate heat from decomposition faster than the heat can dissipate, resulting in a "thermal runaway" that can ignite surrounding materials. The critical temperature of a given drum of Cal Hypo depends in part on the volume of the drum. Contship brought proceedings against PPG in the US District Court, Southern District of New York, claiming damages. Contship conceded awareness (based on published specifications) that Cal Hypo could ignite at temperatures over 55°C; and PPG conceded awareness that the cargo could ignite at lower temperatures. After a bench trial, the district court found that the proximate cause of the fire was Contship's failure to consider the impact of heat on the cargo when it stowed the cargo in a spot that sustained temperatures of at least 47°C. On appeal, Contship argued that the district court erred in dismissing its claims of strict liability and duty to warn.

Held, by the United States Court of Appeals for the Second Circuit, that:

[1] A carrier cannot invoke strict liability if it knows that a cargo poses a danger and requires gingerly handling or stowage, and nevertheless exposes the cargo to the general condition that triggers the known danger, regardless of whether the carrier is aware of the precise characteristics of the cargo.[2] The liability of the shipper of dangerous goods does not arise where, should warning have been given, that would not have prevented stowage of inflammable cargo near a source of heat.

American Home Assurance Co. v. M/v Tabuk et Al., United States District Court, Southern District of New York, November 5, 2001 (2002 AMC 184)

One container in which one hundred missiles, placed on pallets had been stowed, was loaded on the deck of the m/v Tabuk for carriage from Wilmington to Kuwait. In the course of the voyage the container was lost overboard during a storm. American Home Assurance Co. indemnified the shipper, Raytheon System Company and brought an action against the m/v Tabuk and the carrier, United Arab Shipping Company, claiming US$ 2,560,250.00 in damages, stating that the package limitation was not applicable because the stowage of the container on deck was an unreasonable deviation and in any event the deviation was per se unreasonable, the total number of containers on deck exceeded that contemplated in the stowage manual of the ship and the container was improperly secured.

Held, by the U.S. District Court, Southern District of New York, that:

[1] Loading on deck of hazardous material (missiles) does not constitute an unreasonable deviation

Deck cargo (Art. 1(c))

Belgium

Cour de Cassation 1 December 2000, The “Kintampo” (www.cass.be)

Two containers were carried on deck by the Kintampo without this having been mentioned in the bill of lading. The consignee claimed damages in respect of loss of or damage to the cargo. By judgment of 24 February 1997 the Cour d’Appel of Antwerp held that the failure by the carrier to declare in the bill of lading that the cargo had been loaded on deck prevented him to invoke the limit of liability. The carrier appealed to the Supreme Court.


[1] Article 91A paragraph I(c) of book II of the Code of Commerce, corresponding to article 1(c) of the Hague-Visby Rules whereby the provisions of the Convention are not applicable to goods which by the contract are stated as being carried on deck and are so carried requires such

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declaration only in order to protect the third party holder of the bill of lading and not in order to allow the carrier to benefit of the limit of liability. The decision that the carrier who carries goods on deck without so stating in the bill of lading cannot benefit of the limitation of liability is not in conflict with article 91 of book II of the Code of Commerce which gives effect to the Hague-Visby Rules.

France

Court of Appeal of Orleans 9 April 2004, Ahlron MTE and Lloyd's of London v. Alstom Power Turbomachines and Others (2004 DMF 549).

GEC-Alsthom and GEC-Alsthom Electromécanique instructed a forwarding agent, Someport Walon, to procure the carriage of parts of an electrical plant, including two steam turbines, from Bourget (France) to Kawas (India). Several cases were carried by road to Antwerp and loaded on board the Ethnos under time charter to Maritime Transport Entreprises (subsequently called Alhron MTE) who issued, through its agent Navitainer, a clean bill of lading. During the passage the vessel went through a storm in the Gulf of Gascogne and the content of one of the cases, loaded on deck, was seriously damaged. Alstom Power Turbomachines, to which the rights of GEC-Alsthom and GEC-Alsthom Electromécanique had been assigned, and its insurers commenced proceedings against Ahlron MTE and Someport Walon in the Tribunal de Commerce of Paris in order to obtain the payment of the damages suffered by the cargo.

By judgment of 12 December 1996 the Tribunal de Commerce held that Someport Walon and MTE were jointly liable for the 95% of the loss, the negligence of Alstom having contributed for the remaining 5%.

The Court of Appeal of Paris decided instead that they were liable for 100% of the loss and that they should bear the full amount of such loss owing to the damage having been caused by their "faute inexcusable" (a short description of an act or omission done recklessly an with knowledge that damage would probably occur).

The Cour de Cassation by judgment of 14 May 2002 quashed the decision of the Court of Appeal on the ground that it had not given sufficient reasons in respect of the existence of a "faute inexcusable" and remitted the case to the Court of Appeal of Orléans.

Held, by the Court of Appeal of Orléans, that:

[1] Loading of cargo on deck without the consent of the shipper who has not been given notice thereof at any time entails the application of the Hague-Visby Rules nor is such application excluded by a clause in the bill of lading authorising loading on deck irrespective of notice being given to the shipper, such consent being required by article 1(c) of the Rules.[2] Although loading on deck without the consent of the shipper only entails a fault of the carrier, such fault is qualified as "inexcusable", as defined by article 4(5)(e) of the Hague-Visby Rules when a storm warning is issued prior to the sailing of the vessel and when the packing of the deck cargo having been damaged by the heavy weather and was exposed to wetting, no serious measures for the preservation of the cargo were adopted by the carrier, who had been given notice thereof as well as of the rust that had started to affect the steel, nor was the cargo stowed under deck, as it had been suggested.

Portugal

Supremo Tribunal de Justiça 31 May 2001, Victor Hugo Garcia Hierro Cardinali v. Vieira & Silveira Transporte Maritimos S.A. and Empresa do Cabresante Lda. – The “Alfama” (unreported)

The owners of the Circ Cardinali instructed an agent in Funchal, Empresa Cabresante, to load on board the m/v Alfama, owned by Vieira & Silveira Transporte Maritimos S.A. various materials of the circ in view of intended performances in Lisbon. All such materials, including a trailer, were loaded on deck. In particular, the trailer had necessarily to be stowed on deck owing to its dimensions. During the passage the weather conditions worsened and on account of a sudden rolling movement of the vessel, the trailer fell overboard.

Held, by the Supremo Tribunal de Justiça, that:

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[1] Pursuant to Art. 4(2)(q) of the Hague Rules, which is made applicable to deck cargo by Art. 9(3) of D.L. 352/86 when stowage on deck is made with the consent of the shipper, and of Articles 798 and 799 Civil Code the carrier is not liable for the loss of cargo stowed on deck on account of bad weather if he proves that such loss is due to deficiencies of the cargo that the carrier did not know and could not have known by the exercise of the diligence of an average man.

Delay (Art. 3.2)

France

Cour d’Appel of Aix-en-Provence 11 February 2010, Axa Corporate Solutions and others v. CMA-CGM – The “CMA-CGM Normandie”, [2011] DMF 141.

On 5 March 2001 a container in which steel wire reels intended for the fabrication of tyres was loaded in Genoa on board the CMA-CGM Normandie for carriage to Dalian, in China. On 27 March the vessel grounded in the Malacca straits and was refloated on 22April. The container, that was delivered at destination according to the carrier at the end of June and according to the shipper on 1 st August, was rejected by the consignee and was forwarded back to Genoa on 3 rd August. The shippers, Michelin, and its insurers, Axa Corporate Solutions and Avero Belgium, brought proceedings in the Tribunal de Commerce of Marseilles against CMA-CGM claiming damages. By judgment of 9 September 2008 the Tribunal de Commerce of Marseilles rejected the claim of the insurances companies for lack of interest. The insurance companies appealed.

Held, by the Cour d’Appel of Aix-en-Provence, that:

[1] Although the Hague-Visby Rules do not regulate expressly the liability of the carrier for delay in delivery of the goods, the carrier has been in breach of his obligation to carry the goods properly and carefully if he delivers the goods to destination (Dalian, China) after five months from the date of their receipt in Genoa.

Due diligence (Art. 3.1)

France

Court of Appeal of Paris 17 October 2007, Someport Walon v. SNC GE Energy Products (2008 DMF 250)

By contract dated 30 July 1999 S.A. Someport Walon agreed with GE Energy to carry materials for the construction of a gas plant in Bangladesh. During the transshipment in the port of Antwerp of a gas turbine from a barge to the m/v Alemania the turbine fell owing to the wire of the vessel’s crane having broken.

GE Energy and its insurers brought proceedings against Someport Walon and others in the Tribunal de Commerce of Paris claiming damages in the amount of US Dollars 3,033,172. By judgment of 30 May 2005 the Tribunal de Commerce found Someport Walon liable for the full amount of the claim on the ground that the carrier could not invoke the limit of liability pursuant to Article 4(5)(e) of the Hague-Visby Rules. Someport Walon appealed to the Cour d’Appel Paris.

Held, by the Cour d’Appel of Paris, that:

[1] The obligation under article 3(1) of the Hague-Visby Rules to exercise due diligence to make the ship seaworthy is a personal obligation of the carrier.

Germany

Federal Supreme Court (Bundesgerichtshof) 26 October 2006 – M/v “Cita”, I ZR 20/041

In the morning of 26 March 1997 the M/v “Cita” stranded off the Scilly Isles and sank. The cause of the stranding was that the first officer, who had been keeping watch on his own, had changed the course of the vessel and then had fallen asleep. The vessel was equipped with a functioning watch alarm

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the purpose of which was to ensure that the watch keeper does not fall asleep, but it had been switched off as it apparently was the general practice on board. After the establishment of a limitation fund by the time charterers of the vessel, who were the carrier, the assignees of certain cargo interests brought a claim against the fund for the amount of the loss and argued that the carrier was liable because the vessel had been unseaworthy because the behaviour of the first officer, who was only qualified as second officer, evidenced that he was unable to manage the vessel properly because he had been keeping watch without a second watch keeper, as required by the STCW Convention and without the watch alarm. The Landgericht Hamburg held in favour of the claimants but then its judgment was reversed b y the Court of Appeal. The timecharterers appealed against this latter judgment to the Federal Supreme Court.

Held, by the Federal Supreme Court (Bundesgerichtshof), that:

[1] The vessel was not unseaworthy under §559 HGB (corresponding to art.3.1 of the Hague-Visby Rules)because the manning complied with the Safe Manning Certificate and although the crew was unaware of the requirement of two watch keepers, it could not be assumed that such ignorance was due to any fault in the organisation on the part of the carrier since even if at the time of the occurrence the requirement of the two watch keepers was in force in England (the place of the casualty), it was not in force under the law of the vessel’s flag and it would be too high a standard of duty to demand from the carrier that he research in advance the legal provisions that might apply to the route taken by the vessel in any particular time.*

* The Editor wishes to thank Mr. David Martin-Clark and BBL Rechtsanwälte of Hamburg for having made available information on this judgment.

United States

Steel Coils, Inc. v. M/v “Lake Marion” et Al., United States District Court, Eastern District of Louisiana, November 23, 2001 (2002 AMC 1680)

Western Bulk voyage chartered the Lake Marion to Itochu International or its guaranteed nominee. The parties used a standard GENCON form with a typewritten “rider”. Under Clause 2, the owner warranted that the vessel would be seaworthy and equipped to carry the cargo. Clause 31 of the rider incorporates a number of standard shipping terms into the charter party as if written in extenso. In particular, Clause 31 incorporates the USA Paramount Clause.

Hot-rolled coils, cold-rolled coils, and galvanized coils were loaded into the vessel at the load ports in Riga and Ventspils, Latvia.

The vessel departed from Ventspils on March 7, 1997 and arrived at its first stop, Camden, New Jersey, on March 28, 1997. During the voyage, the vessel encountered rough weather. The vessel’s logs reported that the worst weather that the vessel encountered was wind that reached Beaufort Scale Force of 11-12 for about one hour on March 26. Captain Musial testified that he was aware that he might encounter Force 12 winds in the North Atlantic during the late winter. During the rest of the voyage, the vessel did not encounter winds exceeding Beaufort Scale 10, and most readings were below Beaufort Scale 9. Although Captain Musial filed a Note of Protest at the first port of call, he did not claim any structural damage to the ship as a result of the weather that the vessel had encountered during the voyage

At the first discharge port, Camden, the vessel discharged cold-rolled coils from holds No. 1, 2, 4, and 7. Attending surveyors reported evidence of seawater entry into all of these holds. Another report at Camden criticized the vessel’s condition and noted specific deficiencies in each of the seven hatch covers and hatch cover closing fixtures.

The vessel then travelled to New Orleans, where she discharged hot-rolled coils, cold-rolled coils, and galvanized coils from holds No. 1, 2, 3, 4, 6, and 7. Captain Rasaretnam, the cargo surveyor in attendance, reported that the vessel’s hatch covers were in “apparent non-watertight condition, with signs of leakage and/or water ingress into all holds”. The survey indicated positive silver nitrate reactions on the cargo in the stow of holds 1, 3, 4, 6, and 7, which confirmed that seawater had entered the holds. In New Orleans, the No. 1 hold of the vessel flooded up to 16 inches as a result of a crack in the plating that separated the No. 1 hold from the port wing ballast tank. Rasaretnam observed the flooding and inspected the crack. He believed that the crack was an extension of an old crack over which a doubler plate had been welded.

Held, by the U.S. District Court, Eastern District of Louisiana, that:

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[1] The carrier who failed to test the watertight integrity of the hatch covers through which seawater penetrated into the holds and to make the necessary repairs to the covers failed to exercise due diligence to ensure the seaworthiness of the vessel before the commencement of the voyage.


The vessel interests appealed and Steel Coils and Western Bulk cross-appealed from the judgment of the U.S. District Court.

Duty to load and discharge the cargo (Art. 3 (2))

England

Jindal Iron and Steel Co. Ltd. and Others v. Islamic Solidarity Shipping Company Jordan Ltd. - The "Jordan II", (H.L.) 25 November 2004 [2005] 1 Lloyd's Rep. 57; 2005 AMC 1

By a charterparty on the Stemmor form dated 4 December 1997 the owners chartered the Jordan II to TCI Trans Commodities A.G. for a voyage from Mumbai in India to Barcelona and Motril in Spain. Jindal Iran and Steel Company Limited and Hiansa S.A. were respectively the sellers and purchasers of 435 steel coils. The goods were shipped from Mumbai aboard the vessel as evidenced by two bills of lading on the Congenbill form, both dated 2 January 1998, which were issued on behalf of the shipowners at Mumbai. The bills of lading contained or evidenced contracts of carriage from Mumbai to Motril. The bills of lading named Jindal Iron and Steel Company Limited as the shippers and Hiansa S.A. as consignees and incorporated the voyage charterparty. The Hague-Visby Rules as enacted in Indian legislation were applicable to this shipment. They correspond to the draft Hague Rules as enacted in the United Kingdom by the Carriage of Goods by Sea Act 1924, which in material respects are the same as the Hague-Visby Rules scheduled to the Carriage of Goods by Sea Act 1971.Clauses 3 and 17 of the charterparty, so far as material, provided:

3. Freight to be paid at the after the rate of US$ … per metric ton F.I.O.S.T. - Lashed/Secured/Dunnaged 17. Shippers/Charters/Receivers to put the cargo on board, trim and discharge cargo free of expense to the vessel.In February 1998 the cargo was discharged at Motril. The shippers and consignees alleged that the

cargo was damaged by rough handling during loading and/or discharging, and/or inadequate stowage due to failure to provide dunnage, failure to secure the coils and/or stacking them so that the bottom layers were excessively compressed.

Shippers and Receivers commenced proceedings against the Shipowner in the High Court of Justice (Commercial Court) claiming damages. They denied that clauses 3 and 17 transferred the responsibility of the loading, stowing and discharge functions to them and maintained that, if this had been the case, such clauses would have been null and void pursuant to article 3 r. 8 of the Hague Rules.

After their contentions had been rejected by the Commercial Court and the Court of Appeal, Shippers and Consignees appealed to the House of Lords, the only issue before it being whether clauses 3 and 17 were invalidated by article 3 r. 8 of the Hague Rules.


[1] The rule, existing under the common law, that the duty to load, stow and discharge the cargo prima facie rested on shipowners, could be transferred by agreement to cargo interests.[2] Although under the Practice Statement the House of Lords might be persuaded to depart from an earlier decision (G.H. Renton & Co. Ltd. v. Palmyra Trading Corporation of Panama [1956] 2 Lloyd's Rep. 379), where that decision has been demonstrated to work unsatisfactorily in the market place and produce manifestly unjust results, it has not been shown that this is the case for the rule whereby the shipowner may transfer responsibility for loading, stowing and discharge the cargo on the shipper and the consignee.

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[3] Devlin J. adopted in Pyrene v. Scindia Navigation [1954] 1 Lloyd's Rep. 321 a principled and reasonable interpretation of article 3 r. 2 of the Hague Rules, and his interpretation was not based on any technical rules of English law, but was founded on a perspective relevant to the interests of maritime nations generally.

France

Cour de Cassation 30 November 2010, Pakistan National Shipping Corp. v. Axa Corporate Solutions and Others – The “Khairpur” (2010 Revue de droit comm., Maritime, Aerien et des transports 275)

A cargo of rice carried from Karachi to Freetown (Sierra Leone) on the Khairpur, owned by Pakistan National Shipping Corp., arrived at destination in damaged conditions and the cargo insurers after settlement of the insurance indemnity, brought an action against the Owners in the Tribunal de Commerce of Paris. The judgment of the Tribunal de Commerce, by which the claim had been rejected, was affirmed by the Cour d’Appel of Paris with judgment of 11 March 2009, inter alia on the ground that the bills of lading incorporated the FIOS clause. The claimants appealed to the Cour de Cassation.


[1] The FIOS clause, pursuant to which the goods are loaded, stowed and unloaded at the expense of the consignee, is null and void being in conflict with article 29 of law 18 June 1966.*

* Art. 29 of law 18 June 1966 provides that all clauses relieving the carrier from its liability under article 27 are null and void. Article 27 provides that the carrier is liable for the loss of or damage to the goods from the time of receipt to the time of delivery unless he proves that such loss or damage has been caused by an excepted peril.

Entry into force of the 1968 and 1979 Protocols (Art. 13 of the 1968 Protocol and Art. VIII of the 1979 Protocol)

Italy

Corte di Cassazione 14 February 2001, No. 2155, Brendani AB v. Magazzini Generali & Frigoriferi S.p.A. (2002 Dir. Mar. 227).

A consignment of paper rolls carried on the m/v Lech was discharged in Naples in damaged conditions. The consignee sued the carrier in Naples. The Tribunal of Naples held the carrier liable for the damage and its decision was affirmed by the Court of Appeal of Naples who found that the provisions of the Hamburg Rules applied, since its ratification had been authorized by Italy with Law 25 January 1983, No. 40. The carrier appealed to the Supreme Court.


[1] The 1968 and 1979 Protocols to the 1924 Bill of Lading Convention entered into force in Italy on the same day when such Convention ceased to be effective following its denunciation.

Evidentiary value of the bill of lading (Art. 3. 4)

England

The Owners of the cargo lately laden on board the ship "David Agmashenebeli" v. The Owners of the ship "David Agmashenebeli" (High Court of Justice - Q.B.D. (Admiralty Court)) [2003] 1 Lloyd's Rep. 92.

On 10 April 1995 Agrosin Pte Ltd. of Singapore sold to Grand Prestige Enterprises of Hong Kong 35,000 metric tons urea in bulk C&F Free Out CQD one safe berth one safe port South China for delivery during May 1995 and commenced negotiations for the charter of the m/v David Agmashenebeli from Baff Shipping, Riga. The latter company on 19 April 1995 entered into a voyage charter under which it

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chartered the vessel from Meezan Shipping and Trading Inc. of Toronto who had time chartered it from its owners Georgian Shipping Company of Valletta, Malta. Clause 45 of the charter party between Meezan and Baff provided:

"Under supervision of independent surveyor together with Master's/Officers' assistance no damaged cargo to be loaded into the holds. If such fact will take place Master has the right to stop loading but Charterers and Shippers to be immediately informed to arrange removing of any contaminations for Charterers' expenses/time.Quantity/quality of cargo as determined by an International Independent Surveyor (SGS or another neutral international organisation) together with Master to be final and binding for both parties. Owners to be responsible for quantity of cargo taken on board."On the same day Agrosin sub-chartered the vessel from Baff on substantially the same terms.On the following day, 20 April 1995, Meezan instructed the vessel's master that the vessel was to

load bulk urea under a voyage charter between Meezan and Baff for carriage from Kotka to China. The vessel arrived at Kotka and gave notice of readiness to load at 09.30 on 24 April 1995. It had 6 holds and had previously carried a coal cargo and a grain cargo before that. After a dispute on the suitability of the holds on 26 April the original supplier of the urea informed their local agents that with the assent of Agrosin it permitted the commencement of loading. But within three hours of the commencement of loading the master sent a message to all parties stating that the cargo contained rust, plastics and other contaminants and was of a dirty colour. Upon completion of loading the master claused the mate receipt with the following statement: "cargo discoloured also foreign materials, eg. plastic, rust, rubber, stone, black particles found in cargo". Notwithstanding a dispute as to whether the bills of lading should be similarly claused, the master did so.

After a dispute on payment of freight had been settled, the cargo was discharged and the amount of contamination was found to be very small. However having the ultimate buyer's bank refused to accept the claused bills of lading, and following a discussion between the parties a discounted price was agreed.

Held, by the Queen's Bench Division (Admiralty Court), that:

[1] The duty of the carrier under the Hague-Visby Rules is to issue a bill of lading which records the apparent order and condition of the goods according to the reasonable assessment of the master. [That is not any contractual guarantee of absolute accuracy as to the order and condition of the cargo or it apparent order and condition].[2] There is, however, a breach of that duty if the master, even if entitled to clause the bill of lading to refer the fact that a small proportion of the cargo is not in apparent good order and condition, qualifies the bill of lading in a manner that conveys the meaning that the whole or a substantial part of the cargo is not in good order and condition.

Germany

Oberlandesgericht Hamburg (Court of Appeal), 9 November 2000 (Transportrecht 2001, page 92)*

A lot of wheat was carried from Tianjin to Rotterdam. The carrier issued a bill of lading providing for the application of German law stamped with "said to weigh" and containing a "free in liner out, loaded and stowed free in at owners' nominated berth" clause. The consignee claimed damages from the carrier under the bill of lading because the carrier had delivered less wheat than described in the bill of lading. The issue to be decided by the court was whether the carrier could rely on the stipulations contained in the bill of lading so as not to be responsible for the difference in weight.

Held, by Oberlandesgericht Hamburg (Court of Appeal), that:

[1] The carrier cannot rely on the meaning of the clause "said to weigh" for an exclusion of liability because it follows already from Article 3 para. 3 (b) Hague-Visby Rules or para. 645 subs. 1 German Commercial Code that the weight stated in the bill of lading depends on the information provided by the shipper.[2] It does not follow from the clause "free in liner out, loaded and stowed free in at owners' nominated berth" that the carrier has not had reasonable means of checking the weight of the cargo pursuant to article 3 para. 3 Hague-Visby Rules or para. 645 subs. 2 fig. 2 German Commercial Code. The carrier should in fact state that it had no reasonable means of checking the cargo's weight so as to exclude its liability.

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* By the courtesy of Dr. Cristoph Horbach, Lebuhn & Puchta Rechtsanwälte,Vorsetzen 35, D-20459Hamburg - [email protected]

Excepted perils – Act of public enemies (Art. 4.2(f))

United States

Anvil Knitwear, Inc. v. Crowley American Transport, Inc. et Al. (United States District Court, Southern District of New York, 27 July 2001, 2001 AMC 2382)

In May, 1999, Anvil Knitwear, Inc. contracted with Crowley American Transport, Inc. to transport shipments of tee-shirts from a manufacturing plant in Santa Barbara, Honduras, C.A., to its United States’ plant in South Carolina.

Pursuant to this contract, Crowley issued a bill of lading on June 18, 1999, covering the 786 cartons of cotton tee-shirts that were packed into a container. The bill of lading covered the transportation of the container from Santa Barbara, Honduras, to the load port, Puerto Cortes, Honduras, the ocean transportation via the Ambassador, and the ultimate delivery in South Carolina. The bill of lading stated that the Carriage of Goods by Sea Act of the United States, 46 U.S.C. app. §1300, et. seq. would govern the contract throughout the entire time Anvil’s goods were in Crowley’s possession. The “exceptions clause” of the bill of lading set out a long list of events for which Crowley could not be held liable, including hijacking.

Crowley’s local agent, Transportes Hispanos, picked up Anvil’s cartons on or about June 16, 1999 from Anvil’s vendor, M.J. Honduras S.A. Shortly after departing from the vendor’s plant, the truck carrying the shipment was hijacked and the goods were stolen. Both parties have stipulated to the fact the Transportes Hispanos driver, Mr. Ramon Enrique Rosales, was not in any way involved with the hijacking.


[1] Hijacking, mentioned in an exception clause of a bill of lading, is not sufficiently similar to some COGSA §1304(2) exceptions and more specifically to the exception under §1304(2(f) – act of public enemies – so to fall thereunder and, therefore, it falls under §1304(2)(q). Therefore the carrier has the burden of proving the absence of fault.

Excepted perils – Actual fault or privity (Art. 4. 2(q))

Japan

Court of Appeals of Tokyo 1 October 2001, Tokyo Kaijo-kasai Hoken KK. v. Coastal Magic Shipping Ltd. (Kin’yu Shoji Hanrei no. 1132, p. 16)*

Fish meal carried in bags from Ecuador to Japan was found on arrival damaged partly by heat and partly by moisture and mould. The consignee sued the carrier claiming damages. The carrier alleged that the damage had been caused by inherent defect of the cargo because of the insufficient antioxidant added to the fish meal. The consignee denied that allegation and stated that the damage had been caused by rain water that entered into the hold due to the improper closure of the hatches and because of the improper stowage of the cargo.

Held, by the Court of Appeals of Tokyo, that:

[1] The carrier is exonerated from liability pursuant to Art. 4(2)(q) in respect of damage by mould to fish meal stowed in bulk in the lower deck since the IMDG code permits fish meal of Class 9 to be so stowed.

* A summary of this judgment has been kindly supplied by Prof. Souichirou Kozuka of the Sophia University, Tokio - [email protected]

Excepted perils - Arrest or restraint of princes (Art. 4.2(g))

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France

Cour d'Appel of Rouen 23 May 2001, Hanjin Shipping Co. Ltd. v. Thyssen Ascenseurs S.A. (2002 DMF 44).

A container with parts of elevators was shipped by Thyssen Ascenseurs S.A. on the m/v Hanjin San Francisco of Hanjin Shipping Co. Ltd. for carriage to Haiphong in China. The container was transhipped at Hong Kong on the Vosa Carrier but never arrived at destination. It was subsequently found that it had been confiscated by a Chinese Coastguard vessel and that such confiscation had been illegal. Thyssen Ascenseurs S.A. commenced proceedings against Hanjin Shipping Co. Ltd. in the Tribunal de Commerce of Le Havre, whose judgment, allowing the claim, was appealed by the carrier.

Held, by the Cour d'Appel of Rouen, that:

[1] The carrier is exonerated from liability, pursuant to article 4.2(g) of the Hague-Visby Rules, for the loss of a container confiscated by the police of a State when the confiscation has been illegal.

Excepted perils – Burden of proof (Art. 4. 2)

Italy

Tribunal of Genoa 4 December 2002, Llloyd Italico Assicurazioni S.p.A. v. Grandi Traghetti S.p.A. di Navigazione – m/v “Maringa” [2004] Dir.Mar. 1473

A consignment of 1995 bags of coffee, stuffed in containers supplied by the carrier, was loaded at Matadi on the m/v Maringa and carried to Genoa and then by rail from Genoa to the inland terminal of the carrier at Rivalta Scrivia.

When the containers were inspected they were found damaged and several bags of coffee were found wet and stained. The cargo insurers, Lloyd Italico Assicurazioni S.p.A., settled the claim of the consignees and brought an action against the carrier, Grandi Traghetti S.p.A. di Navigazione, in the Tribunal of Genoa.

Held, by the Tribunal of Genoa, that:

[1] The consignee has the burden of proving that the loss of or damage to the goods occurred when the goods were in the custody of the carrier who in turn, in order to be exonerated from liability, has the burden of proving that the loss or damage was caused by one of the excepted perils enumerated in art. 4(2) of the Hague-Visby Rules.

Court of Appeal of Genoa 6 June 2002, Ignazio Messina & Co. S.p.A. v. Pietro Trombi – m/v “Jolly Rubino” [2004] Dir.Mar. 191

On 9 May 1995 a car owned by Pietro Trombi was loaded on the m/v Jolly Rubino in Genoa. Place of destination was Abidjan, where the vessel was supposed to call in the outward voyage. The car was however discharged heavily damaged when the vessel called at Abidjan in the homeward voyage.

Pietro Trombi brought an action against the carrier in the Tribunal of Genoa claiming a full indemnity. By judgment of 10 October 2000 the Tribunal of Genoa found the carrier liable for the full amount of the loss. The carrier appealed on the ground that the limit of liability set out in art. 4.5(e) of the Hague-Visby Rules should have been applied.

Held, by the Court of Appeal of Genoa, that:

[1] Pursuant to article 4.2 of the Hague-Visby Rules, if the carrier proves that the loss or damage has been caused by one of the excepted perils, it shall be presumed that neither his fault nor that of his servants or agents has caused or contributed to the loss or damage, whereupon the claimant may overcome such presumption by proving that the loss or damage has actually been caused or contributed to by the personal fault of the carrier or the fault of his servants or agents.

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United States

United States of Americav. Ocean Bulk Ships, Inc., m/v “Overseas Harriette” and m/v “Overseas Marilyn” (United States Court of Appeals-5th Circuit 10 April 2001) (2001 AMC 1487)

Between 1994 and 1996, the United States, through its Commodity Credit Corporation (CCC), and with the assistance of several private relief organizations, shipped cargoes to famine-stricken areas of Africa on behalf of the Agency for International Development (AID). The cargoes were shipped under various charter parties made expressly subject to COGSA on the m/v Overseas Harriette and the m/v Overseas Marilyn, vessels owned by the defendants, Ocean Bulk Ships, Inc., and Transbulk Carriers, Inc. The shipments included a variety of foodstuffs such as vegetable oil, corn, and bulgur wheat, which were shipped to the African ports of Mombasa, Kenya; Beira and Maputo, Mozambique; Freetown, Sierra Leone; and Tema, Ghana. Clean bills of lading were issued for each shipment after the cargo was stowed, indicating that the cargo was received by the carrier in good condition. Unfortunately, the goods were not received in the same quantity or quality when discharged in Africa. Survey reports documenting the loss and damage indicated several problems. Some parts of the cargo were simply not received at all. Some parts of the cargo were received in a damaged and unusable condition. The total amount of documented loss and damage to the cargo was $203,319.87.

In December 1998, the United States filed the first of five lawsuits, seeking damages for the lost and damaged cargo under COGSA. In February 1999, these suits were consolidated. In September 1999, the matter was tried to the bench. In December 1999, the district court entered judgment in favor of the United States for the limited sum of $7,300.08, the amount of damage that the defendants admit occurred prior to discharge. The judgment was appealed.

Held, by the U.S. Court of Appeals for the 5th Circuit, that:

[1] There does not appear to be any consensus among circuits, or even in the 5 th Circuit, concerning which Cogsa party bears the burden of persuasion (and the risk of non persuasion) with respect to the applicability of the statutory exceptions codified at § 1304(2)(a)-(p) once the shipper makes out a prima facie case.[2] The exception codified at § 1304(2)(q) requires the carrier to bear the burden of persuasion.[3] Without regard to whether the carrier’s rebuttal burden under § 1304(2)(n) is one of production or persuasion, the law is absolutely clear that the carrier must do more than offer mere speculation as to the cause of lost or damaged cargo. When the carrier’s negligence is at least a concurrent cause of the loss, the carrier bears the burden of establishing which portion of the loss is not attributable to its negligence.

Excepted perils - Fault in navigation or management of the ship (art. 4.2(a))

France

Afri Belg Ind. Corp. v. Capitaine du Windsong and Andolina Shipping Ltd., Cour de Cassation (Ch.com.) 30 March 2010, 2010 DMF 414.

A consignment of floor loaded on board the Windsong at Antwerp with destination Angola was damaged by wetting as a consequence of the failure by the crew to close a watertight door between the chain locker and the adjacent cargo hold in the course of maintenance operations. The consignee brought proceedings against the Captain of the vessel and her owners, Andilina Shipping Ltd. The Cour d’Appel of Paris with judgment dated 26 November 2008 held that the carrier was exonerated from liability pursuant to art. 4.2(a) of the Hague-Visby Rules.

The consignee appealed to the Cour de Cassation.

Held, by the Court de Cassation, that:

[1] The decision of the Court of Appeal, that the carrier was exonerated from liability pursuant to article 4.2(a) of the Hague-Visby Rules in respect of damage to the cargo caused by the failure by the crew to close a watertight door during a storm on the ground that such event related to the navigation and affected the safety of the vessel, must be affirmed.

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Germany

Federal Supreme Court (Bundesgerichtshof) 26 October 2006 – M/v “Cita”, I ZR 20/04

(The summary of facts may be found in the section “Due diligence”)

Held, by the Federal Supreme Court (Bundesgerichtshof), that:

[1] The action of setting a new course which led to the grounding of the vessel, the failure to keep a watch with two persons and the switching off of the alarm that would ensure that the personnel on watch does not fall asleep are all faults in the navigation and management of he vessel for which the carrier is not liable.[2] The exoneration of liability of the carrier under § 607.2.1 HGB applies also where the action or omission in the navigation or management is intentional.

New Zealand

Tasman Orient Line Line CV v. New Zealand China Clays Ltd. and Others, Court of Appeal of New Zealand 9 April 2009, [2009] NZCA 135.

The Tasman Pioneer left Yokohama, Japan, in the evening of 1 May 2001, bound for Pusan in South Korea, intending to sail west along Japan’s Pacific coast and then via the Japan Inland Sea across the Korea Strait. On 2 May, the master of the Tasman Pioneer, realising that the ship was behind schedule, decided that, rather than passing west of Okino Shima, the usual route for vessels entering the Inland Sea from the south, he would shorten steaming time by some 30-40 minutes by taking the channel between the island of Biro Shima and the promontory of Kashiwa Shima, the south-western extremity of the island of Shikoku.

Shortly after the master altered course to enter the channel at 0250 hrs on 3 May, the ship lost all images on its starboard radar. It appeared that the master then tried to abort the passage through the channel. This manoeuvre was not successful and the ship struck bottom off Biro Shima with such force that her speed was immediately slowed to some 6 or 7 knots from her running speed of 15 knots. Shortly afterwards the ship took a list to port and water was discovered in the forward ballast tanks and in the forward cargo holds 1 and 2. On the orders of the master, the ship’s pumps were activated. However, the master did not alert the Japanese Coastguard, as he should have done, or seek other assistance. The ship then sailed at close to full speed for a further two hours (some 22 nautical miles), before anchoring in a sheltered bay. It was only then that the master contacted the ship managers in Greece, without, however, specifying the cause of damage or its full extent. The managers then arranged for the Coastguard to be advised of the incident and for salvors to be engaged on LOF 2000. The master’s initial explanation of the casualty was that the ship had hit an unidentified floating object and he schooled the crew to adopt this explanation in the enquiry conducted by the Japanese coastguard, in the course of which the truth eventually emerged.

New Zealand China Clays Ltd. and other cargo owners brought proceedings against Tasman Orient Line Line CV, the owners of the ship, in the New Zealand High Court, Auckland Registry claiming damages for the loss of their cargo.

By judgment of 31 August 2007 the High Court held that the actions of the master of a ship who, after the ship grounded suffering damages, fails to notify promptly the Coastguard and his managers of the casualty and the ship’s position and condition and fabricates the story that the ship hit an unidentified submerged object do not amount to an “act, neglect or default in the “bona fide” navigation and management of the ship” and, as a result, the carrier is not entitled to the benefit of exemption from liability set out in article 4 (2)(a) of the Hague- Visby Rules.

Tasman Orient Line Line appealed.

Held, by the Court of Appeal of New Zealand that:

[1] The nineteenth century ascendancy of the United Kingdom in shipping continued until after WWI. It remained influential in the drafting of the Hague Rules. But to what extent can the former common law of England still be said to inform the interpretation of the Rules? The Rules are to be construed as a comprehensive international convention, unfettered by any antecedent domestic

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law, and the practice of text writers and some judges to hear back to the old English common law is erroneous. But because such practice is deep-seated and relied upon by the High Court it is necessary for us to outline briefly what we are departing from and how the Hague Rules took a different course.Certainly, as the cases show, for the most part the courts must defer to the conduct of the master. The Hague-Visby Rules, hammered out by international expert participants and widely endorsed in domestic legislation, has secured international assent to a trade-off between the competing interests of shippers and ship-owners. Article 4.2(a) is not to be read narrowly so as to substitute second guessing by lay judges for navigational decision-making by expert mariners. Nor however is it to be read so widely as to render meaningless the obligation of the carrier under art 3.2. To exonerate a carrier from conduct of similar quality to deviation, namely conduct that is radically at odds with the art 3.2 obligation, by sacrificing the shipper’s interests for wholly incompatible selfish interests of the master, goes over the boundary of the art 4.2(a) protection.

New Zealand China Clays Ltd. v. Tasman Orient Line CV – The “Tasman Pioneer” – New Zealand High Court, Auckland Registry, 31 August 2007 (http://www.maritimelaw.org.nz/0907.html)*

The Tasman Pioneer left Yokohama, Japan, in the evening of 1 May 2001, bound for Pusan in South Korea, intending to sail west along Japan’s Pacific coast and then via the Japan Inland Sea across the Korea Strait. On 2 May, the master of the Tasman Pioneer, realising that the ship was behind schedule, decided that, rather than passing west of Okino Shima, the usual route for vessels entering the Inland Sea from the south, he would shorten steaming time by some 30-40 minutes by taking the channel between the island of Biro Shima and the promontory of Kashiwa Shima, the south-western extremity of the island of Shikoku.

Shortly after the master altered course to enter the channel at 0250 hrs on 3 May, the ship lost all images on its starboard radar. It appeared that the master then tried to abort the passage through the channel. This manoeuvre was not successful and the ship struck bottom off Biro Shima with such force that her speed was immediately slowed to some 6 or 7 knots from her running speed of 15 knots. Shortly afterwards the ship took a list to port and water was discovered in the forward ballast tanks and in the forward cargo holds 1 and 2. On the orders of the master, the ship’s pumps were activated. However, the master did not alert the Japanese Coastguard, as he should have done, or seek other assistance. The ship then sailed at close to full speed for a further two hours (some 22 nautical miles), before anchoring in a sheltered bay. It was only then that the master contacted the ship managers in Greece, without, however, specifying the cause of damage or its full extent. The managers then arranged for the Coastguard to be advised of the incident and for salvors to be engaged on LOF 2000. The master’s initial explanation of the casualty was that the ship had hit an unidentified floating object and he schooled the crew to adopt this explanation in the enquiry conducted by the Japanese coastguard, in the course of which the truth eventually emerged.

Held, by the New Zealand High Court that:

[1] The actions of the master of a ship who, after the ship grounded suffering damages, fails to notify promptly the Coastguard and his managers of the casualty and the ship’s position and condition and fabricates the story that the ship hit an unidentified submerged object do not amount to an “act, neglect or default in the “bona fide” navigation and management of the ship” and, as a result, the carrier is not entitled to the benefit of exemption from liability set out in article 4 (2)(a) of the Hague- Visby Rules.


Tasman Orient Line CV v. New Zealand China Clays Ltd, and others – The “Tasman Pioneer”, Supreme Court of New Zealand 16 April 2010, [2010] NZSC 37.

On 3May 2001 the Tasman Pioneer, a Cypriot-registered vessel of 16,748 gross tonnes under sub-charter to the appellant, was on a voyage from Yokohama in Japan to Busan in South Korea. Because he was behind schedule, the Master decided to pass through a narrow channel between Biro Shima Island and the mainland of southern Japan, rather than going around the island. In poor weather, the Tasman Pioneer struck rocks on the island side of the channel while steaming at about 15 knots. The Master should have immediately ascertained what, if any, damage had resulted.

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http://www.maritimelaw.org.nz/0907.html

What the Master actually did, apparently motivated by a concern for his own position if the truth emerged, was to attempt to conceal what had occurred from the authorities and the owners. To that end, he steamed for some hours towards a point where he would have rejoined the course he would have taken had he gone outside Biro Shima Island.Meanwhile, the flooding of the vessel by sea water continued and was increased by the ship’s passage through the water. The Master also falsified the course plot on the relevant chart and, when he did report to the coastguard and the owners, downplayed the extent of the damage and incorrectly stated that it had been caused by collision with a semi-submerged object, probably a container. The Master also attempted, necessarily but unsuccessfully, to involve deck officers and crew in a conspiracy to conceal what had actually occurred. By the time salvage assistance was finally sought the respondents’ cargo was a total loss. In the present proceedings, the respondents seek to recover that loss from the appellant.

In the High Court, Williams J rejected the allegations of the respondents that the Tasman Pioneer was unseaworthy at the commencement of the voyage and that the actions of the Master, before and after the grounding, were not in the navigation or management of the ship. However the Judge upheld the respondents’ claim in breach of contract and breach of bailment because he found that the Hague-Visby Rules art 4.2(a) exemption was only available where the actions of those in charge of the ship are “bona fide” (in the navigation or management of the ship) and those of the Master after the grounding were not.

The Judge rejected a claim by one cargo owner, the New Zealand Dairy Board, which raised a different issue. Their cargo of dairy produce was being carried on deck in “reefers” (refrigerated containers), powered by a generator independently of the ship’s generation capacity. Problems occurred with that generator between Auckland and Yokohama, and power was lost. The Board argued that its produce was damaged by that loss of power and not by the events following the grounding.

Williams J found that it was “possible” but “speculative” that the damage had occurred before the Tasman Pioneer reached Yokohama. The claim was therefore not made out.

The carrier appealed to the Court of Appeal and the Dairy Board crossappealed.The Court divided. By a majority (Chambers and Baragwanath JJ), the appeal was dismissed and

the cross-appeal allowed.The reasons of the majority for dismissing the appeal were given by Baragwanath J. He concluded

that the conduct of the Master was not an “act, neglect or default ... in the navigation or in the management of the ship” for the purposes of art 4.2(a) because such “selfish” and “outrageous” behaviour could not be conduct in the navigation or management of the ship. The Judge advanced four related reasons for not giving literal effect to the words of art 4.2(a). First, “the raison d’être of the Hague Rules was to depart to a significant degree from the laissez-faire of the common law and to prohibit exorbitant exemption clauses”. Secondly, there should not be “narrow focus on text without regard to context”. Thirdly, a “purposive” construction is now required. Fourthly, the domestic legislation is giving effect to an international convention.

Chambers J, who gave the reasons of the majority for allowing the cross-appeal, concluded that the damage to the Dairy Board’s cargo had probably occurred after the grounding when it was necessary for the salvors to turn off the generator which supplied the power for the refrigeration of that cargo. Because, however, the damage was accordingly the direct consequence of the post-grounding conduct of Captain Hernandez, which bothWilliams J and Baragwanath J had correctly characterised as “outrageous”, the art 4.2(a) exemption did not apply and the Dairy Board claim should therefore succeed.

Fogarty J, dissenting, thought that the phrase “act, neglect or default of the master” in art 4.2(a) included intentional conduct, “be it laudable or culpable”, and that the application of the clause did not depend on the motive of the master. Contrary to the view of the majority, the Judge considered that it was appropriate to refer to common law authorities interpreting bills of lading in terms similar to art 4.2(a) because the delegates at the convention which developed the Hague Rules knew of the common law provenance of that provision and did not intend to give it a different meaning.

Consistently with his approach to the respondents’ claims generally, Fogarty J held that the decision of the salvors to turn off the generator was made in the management of the ship and the exemption therefore did apply, with the consequence that the claim failed.

Held, by the Supreme Court of New Zealand, that:

[1] The Hague Rules travaux préparatoires reveal that the owners’ representatives, while prepared to concede on quantum issues where liability was imposed, were insistent on retaining the exclusion of liability in the circumstances specified in what became art 4.2(a). The cargo interests accepted this position, provided that it was understood that liability for barratry was not excluded. The owners’ representatives accepted this qualification. Far from changing the position

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at common law, the Hague Rules therefore reaffirmed that (in the absence of barratry) the owners’ exemption from liability at common law remained.

Excepted perils - Fire (Art. 4.2 (b)

England

Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another - The “Eurasian Dream” [2002] 1 Lloyd’s Rep. 719.

On July 23, 1998, a fire started on deck 4 of the pure car carrier Eurasian Dream while in port at Sharjah. The fire, which was not contained or extinguished by the master and crew, eventually destroyed or damaged the vessel’s cargo of new and second-hand vehicles and rendered the vessel itself a constructive total loss.

The relevant cargo interests commenced proceedings in London against the carrier before the Queen’s Bench Division (Commercial Court)


[1] Where the cargo owners allege that the fire that destroyed or damaged the cargo was due to the unseaworthiness of the vessel they have the burden of proving (i) that the vessel was unseaworthy before and at the beginning of the voyage and (ii) that the loss or damage was caused by that unseaworthiness.[2] If the cargo owners discharge the burden in respect of 1(i) and (ii) above, the burden passes to the carrier to prove that it and those for whom it is responsible exercised due diligence to make the ship seaworthy in the relevant respects. If it fails to do so, it is not entitled to rely upon the exceptions in Article 4 r. 2, including the fire exception.[3] The fire is caused by the unseaworthiness of the vessel if it would not have broken out if the master and crew had been properly instructed and trained.

Excepted perils – Inherent vice (Art.4. 2(m))

Japan

Court of Appeals of Tokyo 1 October 2001, Tokyo Kaijo-kasai Hoken KK. v. Coastal Magic Shipping Ltd. (Kin’yu Shoji Hanrei no. 1132, p. 16) *

Fish meal carried in bags from Ecuador to Japan was found on arrival damaged partly by heat and partly by moisture and mould. The consignee sued the carrier claiming damages. The carrier alleged that the damage had been caused by inherent defect of the cargo because of the insufficient antioxidant added to the fish meal. The consignee denied that allegation and stated that the damage had been caused by rain water that entered into the hold due to the improper closure of the hatches and because of the improper stowage of the cargo.


[1] The excepted peril under Art. 4(2)(m) cannot be invoked to the extent that the damage to a cargo of fish meal has been caused by rain entered into the hold due to the hatch cover having not been properly closed.

* A summary of this judgment has been kindly supplied by Prof. Souichirou Kozuka of the Sophia University, Tokio - [email protected]

Scotland

Albacora S.r.l.v.Westcott & Laurence Line Limited (Inner House, Court of Session, Edinburgh, 23 March 1965 (reported 1965 S.L.T. 270) *

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Following a voyage from Glasgow (Scotland) to Genoa (Italy) a cargo of fish shipped on board the m.v. Maltasian was found to be damaged. The bills of lading provided that the liability of the carrier would be determined by the Hague Rules contained in the 1924 Convention on Bills of Lading.

The damage was caused by bacteria within the fish cargo. The bacteria, although present while the fish were alive, multiplied when temperature in the holds increased. The issue arose as to whether the cargo had been properly and carefully carried by the vessel in terms of Article 3 of the Convention; and whether the carrier might benefit from the exception contained in Article 4 of the Convention as “damage arising from inherent defect, quality or vice of the goods”.

Held, by the Court of Session (Inner House), that:

[1] The damage to cargo was caused by ‘inherent vice’ within the meaning of the 1924 Convention; the Defenders were not negligent in the carriage, and accordingly were not liable to the shipper for any losses sustained.

* The synopsis of this decision has been kindly prepared by Ed Watt, LLB (Hons) LLM, Solicitor, Henderson Boyd Jackson W.S., 19 Ainslie Place, Edinburgh EH3 6AU, UK. Fax +44 131 225.2086 – E-mail: [email protected] – Internet: www.shippinglawyer.com

Excepted perils – Insufficiency of packing (art. 4(2)(n)

France

Court of Appeal of Douai 11 February 2010, S.A. Thyssen Krupp Electrical Steel Ugo and S.A. Axa Corporate Solutions Assurance v. SBTC Sotramar NV and United Arab Shipping C., 2010 Revue de Droit Commercial, Maritime, Aérien et des Transports 93 *

(The summary of facts may be found in the section “Excepted perils – Perils of the sea (art. 4(2)(c)”)

Held, by the Court of Appeal of Douai, that:

[1] The carrier is not liable, pursuant to article 4(2)(n) of the Hague-Visby Rules, in respect of damage suffered by steel rolls inside containers owing to improper stowage by the shipper.[2] The forwarding agent instructed by the shipper to load a shipment of steel rolls inside containers and to ship them to destination is liable for the damage suffered by the rolls owing to bad stowage, nor can he invoke as a defence the presence during stowage operations of a representative of the shipper since he and not his client is supposed to have the required professional expertise.

Excepted perils - Latent defects (Art. 4.2(p))

Italy

Corte d’Appello of Genoa 28 December 1998, Hori Maschinen und Anlagen GmbH v. Tarros S.p.A.–The “Vis” (2000 Dir. Mar. 538)

A consigment of potatoes, loaded at Tripoli, Lybia on the m/v Vis of Tarros S.p.A., arrived to La Spezia, Italy in damaged conditions owing to the excessive duration of the voyage caused by the breakdown of the vessel’s engine. The consignees, Hori Machinen und Anlagen GmbH, sued Tarros before the Tribunal of Genoa claiming damages. The judgment of the Tribunal, allowing a very small amount to the claimant, was appealed both by the claimant and by the carrier who alleged that the engine breakdown was due to a latent defect.

Held, by the Corte d’Appello of Genoa, that:

[1] Failing the proof that before sailing it has carried out all necessary checks in respect of the conditions of the engine, the carrier cannot invoke, in order to exonerate himself from liability,

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the possibility that the damage occurred after the commencement of the voyage was due to a latent defect.

Excepted perils – Perils of the sea (Art. 4. 2(c))

Australia

Great China Metal Industries Co. Ltd. v. Malaysian International Shipping Corp.–The “Bunga Seroja” (High Court, 22 October 1998, 1999 AMC 427):

A consignment of 40 cases of aluminium can body in coils loaded in Sydney on board the m/v Bunga Seroja was partly damaged during the passage from Sydney to Keelung, Taiwan on account of heavy weather. Great China Metal Industries Co. Ltd., to which the property in the goods had passed, claimed damages from the carrier, Malaysian International Shipping Corp. but the claim was rejected by the trial Judge whose decision was affirmed by the New South Wales Court of Appeal. The claimant appealed to the High Court of Australia contending that the exception of perils of the sea did not apply because damage to the cargo resulted from sea weather conditions which could reasonably be foreseen and guarded against. The question to which the submission primarily was directed was the meaning and effect of art. 4 r. 2(c) of the Hague Rules.

Held, by the High Court of Australia, that:

[1] The perils of the sea exception cannot be limited to those events which are beyond the ordinary experience of mariners or that are wholly unforeseen or unpredicted.

France

Court of Appeal of Aix-en-Provence 30 June 2010, Michele D. v. Comptoir de Démenagement et Transit, 2010 Revue de Droit Commercial, Maritime, Aérien et des Transports 93 Revue de Droit Commercial, Maritime, Aérien et des Transports 108

Michele D. entrusted to S.a.r.l. Comptoir de Démenagement et Transit the transfer of his furniture, family and personal effects, including the personal collection of paintings by Maurice M., from Marseilles to Durban and Comptoir stowed everything in a container loaded by Comptoir on the forward deck of the “Jolly T.”, operated by Ignazio M. When the ship arrived off Durban, owing to the rough seas the container fell overboard. Michele D. and his insurers, Cia d’Assurance W.V.AG. that had paid him an indemnity of 100,000 euro, brought proceedings against Comptoir in the Tribunal de Commerce of Marseilles. By judgment of 25 February 2005 the Tribunal de Commerce held Comptoir liable to pay to the insurers 100,000 Euro and to pay to Michele D. and his family additional 2,800 and 26,500 Euro. It also held the carrier liable to indemnify Comptoir the aforesaid sum of 100,000 Euro. Michele D. appealed to the Court of Appeal of Aix-en-Provence in respect of the amount of damages liquidated in his favour. Also the carrier appealed denying liability on the ground that the loss of the container had been due to perils of the sea.

Held, by the Court of appeal of Aix-en-Provence, that:

[1] The exoneration of the liability of the carrier for loss or damage caused by perils of the sea pursuant to art. 4(2)(c) of the Hague-Visby Rules is not applicable in respect of the loss of a container washed overboard when the weather conditions were moderate gale and the height of the waves was between 2.5 and 3 meters and the carrier did not provide any evidence of freak waves.

Court of Appeal of Douai 11 February 2010, S.A. Thyssen Krupp Electrical Steel Ugo and S.A. Axa Corporate Solutions Assurance v. SBTC Sotramar NV and United Arab Shipping C., 2010 Revue de Droit Commercial, Maritime, Aérien et des Transports 93

In February 2002 SA Thyssen Krupp Electrical Steel UGO entrusted to SBTC Sotramar the carriage of laminated steel rolls from France to India. Sotramar entrusted to SAS Nord Frances Terminal International – NFTI the stowage of the rolls in containers and to United Arab Shipping Co. the carriage

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of the containers to India with the m/v “Asir”. Since, however, the “Asir” did not call at Dunkerk, but only at Rotterdam, United Arab entrusted to GIE Nord Containers Service.-NCS, who operated a feeder service between Dunkerque and Rotterdam, the carriage of the containers to Rotterdam. The m/v “Eastwind”, on which the containers had been loaded, met with heavy weather during the passage from Dunkerque to Rotterdam and a great number of steel rolls went lose inside the containers, and were heavily damaged. AXA paid to Thyssen the insurance indemnity in respect of the damage suffered by the steel rolls and together with Thyssen, brought proceedings against Sotramar and United Arab in the Tribunal de Commerce of Dunkerque which by judgment of 16 June 2009, rejected the claims. Axa and Thyssen appealed to the Court of Appeal of Douai.

Held, by the Court of Appeal of Douai, that:

[1] For the purposes of the exoneration of the carrier from liability in respect of loss of or damage to the goods carried, winds force 8-9-7 and then 8-7 of the Beaufort scale even though creating difficulties in the navigation, cannot be considered exceptional or abnormally serious in the North Sea in the winter months.

Cour d’Appel of Aix-en-Provence 11 February 2010, Axa Corporate Solutions and others v. CMA-CGM – The “CMA-CGM Normandie”, [2011] DMF 141.

(The summary of facts may be found in the section “Delay”)


[1] The carrier is liable for the loss of or damage to the goods where the claimant can prove that to such loss or damage, in respect of which the carrier has invoked an excepted peril has contributed the breach by the carrier of one of its obligations under article 3(1) or (2)

Cour d'Appel of Aix-en-Provence 14 May 2004, Compagnie Marocaine de Navigation v. Comitran, Office de Commercialisation et d'Exportation and Covea Fleet - The "Al Hoceima" (2005 DMF 322)

In March 1987 the Moroccan company Office de Commercialisation et d'Exportation-OCE loaded at Tangiers on board the Al Hoceima, of Compagnie Marocaine de Navigation-COMANAV 47 trailers with its merchandise. The trailers were owned by Rentco France and had been let by Rentco to OCE.

The trailer were loaded on board and secured by the stevedoring company COMANAV.The vessel sailed from Tangiers on 27 March 1987 and, having met bad weather, with wind force

8 and 9 of the Beaufort Scale, was compelled to seek refuge in the roads of Vinaroz, where the crew carried out a general control of the conditions of the vessel and its cargo. After having found that everything was in order and that the weather appeared to have improved, the master sailed off the place of refuge but during the night the weather considerably worsened with wind force 9-10 of the Beaufort Scale. While the master was trying to alter course and seek again shelter in the bay of Rosas, the vessel took a lift of 30°. Since the lift increased even further, the crew abandoned the vessel that soon after sunk.

The insurer of the trailers, La Neuchateloise, after having settled the claim of Rentco for the loss of all its trailers, brought proceedings against COMANAV and OCE in the Tribunal de Commerce of Perpignan. Subsequently Covea Fleet, to whom La Neuchateloise had assigned its claim, joined the proceedings.

With judgment of 26 July 1994 the Tribunal de Commerce of Perpignan found the carrier COMANAV and COMITRAN jointly liable, the former in the proportion of 75% and the latter in the proportion of 25%. On appeal by COMITRAN the Cour d'Appel of Montpellier held that COMANAV only was liable for the loss of the trailers. The decision of the Cour d'Appel was quashed by the Cour de Cassation and the case was remanded to the Cour d'Appel of Aix-en-Provence.

Held, by the Cour d'Appel of Aix-en-Provence, that:

[1] The master of a vessel who, after having sought shelter in a roadstead on account of the adverse weather conditions, sails out of the shelter notwithstanding the adverse weather conditions, with the consequent loss of the vessel commits a nautical fault for which the carrier is not liable under article 27(b) and (d) of law 18 June 1966.*

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* In law 18 June 1966 enacted in French domestic law reference is made to the nautical faults of the master, pilot or other servants of the carrier; in article 27(d) reference is made to events not imputable to the carrier.

United States

Steel Coils, Inc. v. M/v “Lake Marion”, et Al., United States District Court, Eastern District of Louisiana, November 23, 2001 (2002 AMC 1680)

Western Bulk voyage chartered the Lake Marion to Itochu International or its guaranteed nominee. The parties used a standard GENCON form with a typewritten “rider”. Under Clause 2, the owner warranted that the vessel would be seaworthy and equipped to carry the cargo. Clause 31 of the rider incorporated a number of standard shipping terms into the charter party as if written in extenso. In particular, Clause 31 incorporated the USA Paramount Clause.

Hot-rolled coils, cold-rolled coils, and galvanized coils were loaded into the vessel at the load ports in Riga and Ventspils, Latvia.

The vessel departed from Ventspils on March 7, 1997 and arrived at its first stop, Camden, New Jersey, on March 28, 1997. During the voyage, the vessel encountered rough weather. The vessel’s logs reported that the worst weather that the vessel encountered was wind that reached Beaufort Scale Force of 11-12 for about one hour on March 26. Captain Musial testified that he was aware that he might encounter Force 12 winds in the North Atlantic during the late winter. During the rest of the voyage, the vessel did not encounter winds exceeding Beaufort Scale 10, and most readings were below Beaufort Scale 9. Although Captain Musial filed a Note of Protest at the first port of call, he did not claim any structural damage to the ship as a result of the weather that the vessel had encountered during the voyage.

At the first discharge port, Camden, the vessel discharged cold-rolled coils from holds No. 1, 2, 4, and 7. Attending surveyors reported evidence of seawater entry into all of these holds. Another report at Camden criticized the vessel’s condition and noted specific deficiencies in each of the seven hatch covers and hatch cover closing fixtures.

The vessel then travelled to New Orleans, where she discharged hot-rolled coils, cold-rolled coils, and galvanized coils from holds No. 1, 2, 3, 4, 6, and 7. Captain Rasaretnam, the cargo surveyor in attendance, reported that the vessel’s hatch covers were in “apparent non-watertight condition, with signs of leakage and/or water ingress into all holds”. The survey indicated positive silver nitrate reactions on the cargo in the stow of holds 1, 3, 4, 6, and 7, which confirmed that seawater had entered the holds. In New Orleans, the No. 1 hold of the vessel flooded up to 16 inches as a result of a crack in the plating that separated the No. 1 hold from the port wing ballast tank. Rasaretnam observed the flooding and inspected the crack. He believed that the crack was an extension of an old crack over which a doubler plate had been welded.


[1] The peril of the sea defence is not applicable when the winds and waves encountered by the vessel (wind up to Beaufort Scale 11-12) were foreseeable in the North Atlantic during the late winter months and no damage to the vessel resulted from the voyage.


The vessel interests appealed from the judgment of the US District Court and Steel Coils and Western Bulk cross-appealed.


[1] The wind velocity and the time during which a given velocity prevailed as well as the nature and extent of damage to the ship itself are of great importance in determining whether a storm constitutes a peril of the sea.

Excepted perils - Seaworthiness as an “overriding obligation” (Art. 4. 2)

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England

Paper Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another - The "Eurasian Dream" (2002) 1 Lloyd's Rep. 719.


The relevant cargo interests commenced proceedings in London against the carrier before the Queen’s Bench Division (Commercial Court).


[1] The exceptions under art. 4, r. 2, may not be relied upon where the carrier is in breach of the “overriding obligation” to provide a seaworthy ship under art. 3, r. 1 and that breach is causative of the loss/damage.

Excepted perils – When may be invoked (art.4(2))

France

Cour de Cassation 3 May 2006, IMTC v. Weisrock (2006 DMF 49)

On request of Robert Weisrock Co., a forwarding agent (Comti) agreed to carry from Saulcy-sur-Meurthe (France) to Rabat (Morocco) two trailers loaded with wood beams and Comti subcontracted the carriage by sea to IMTC. During the carriage by sea the beams loaded on one of the trailers became loose and were damaged. The damaged beams beams were rejected by the consignee and carried back to France where Robert Weisrock Co. took care of the necessary repairs and subsequently brought an action against Comti and IMTC in the Tribunal de Commerce of Marseille, claiming the cost of transportation back to France and the cost of repairs. By judgment of 3 November 2000 the Tribunal de Commerce allowed the claim on the ground that the remark made by the carrier on the manner in which the stowage of the beams on the trailer had been made by the shipper had not been endorsed on the bill of lading. The decision of the Tribunal de Commerce was affirmed by the Court of Appeal of Aix-en-Provence with judgment dated 23 September 2004. Weisrock appealed to the Cour de Cassation.


[1] The failure by the carrier to insert a qualifying clause in the bill of lading does not prevent the carrier from proving that the damage to the cargo was caused by one of the excepted perils enumerated in article 4(2) of the Hague-Visby Rules.

Freedom of contract (art. 7)

France

Cour de Cassation (Ch.Com.) 22 May 2007, CMA-CGM Antilles-Guyane v. Axa Corporate Solutions Assurance and Others (2007 DMF 811)

A refrigerated container with foodstuff was shipped on board the "Fort Fleur d'Epée"at Le Havre for transportation to Pointe-à-Pitre. Delivery was agreed to take place alongside. On arrival at destination the carrier after giving notice of arrival to the consignee unloaded the container and left it on the quay. The consignee having been unable to collect the container, the foodstuff deteriorated due to the lack of supply of electricity to the container. The insurers after having settled the claim of the consignee, brought proceedings against the carrier in the Tribunal de Commerce of Le Havre. The judgment of the Tribunal de Commerce whereby the carried was held liable for the loss of the goods was affirmed by the Cour d'Appel of Paris on the ground that it was the duty of the carrier to make sure that the consignee was in a position to take delivery of the container alongside the ship. The carrier appealed to the Cour de Cassation stating that the decision of the Court of Appeal was in breach of article 7 of the Hague-Visby Rules, since

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the clause alongside exonerated the carrier from any liability for loss of or damage to or in connection with the custody and care of the goods subsequent to their discharge from the ship.


[1] Where the delivery of the goods at destination has been agreed alongside delivery is not deemed to have taken place if the carrier after having giving notice of arrival of the goods to the consignee does not prove that the consignee would have been in a position to collect the goods.

Identity of the carrier (Art. 1(a))

France

Cour de Cassation (Ch.com.) 30 March 2010, Afri Belg Ind. Corp. v. Captain of the “Windsong” and Andolina Shipping Ltd. [2010] DMF 414

(The summary of facts may be found in the section “Excepted perils-Fault in the navigation and management of the ship”)


[1] Where the claimant whose cargo had been damaged during the voyage brought proceedings against the owners of the ship, on the assumption that they might be the carrier but alleging that they were only a sham, as well as against the Captain as agent for the carrier, the exclusion of the Captain from the proceedings without any specific finding in respect of the actual identity of the carrier is deprived of any justification.

Cour de Cassation 5 November 2003, Compagnie Maritime d'Affrètement v. Power Shipping Company - The "Oriental Knight" (2004 DMF 368)

On 14 June 1992 several containers in which drums of phosphorus were stuffed were loaded in Hong Kong on board the Oriental Knight by Power Shipping Company.

A bill of lading was issued by the Compagnie Maritime d'Affrètement (CMA) in which a carrier's identity clause provided that the registered owner should be deemed to be the carrier.

A fire broke in the hold where the containers had been loaded and CMA brought an action against Power Shipping in the Tribunal de Commerce of Marseilles, claiming damages. Following the rejection of the claim by the Tribunal of Marseilles and the appeal of Power Shipping the Cour d'Appel of Aix-en-Provence held that CMA had no right of action since the carrier's identity clause identified the carrier in the registered owner.

CMA appealed to the Cour de Cassation denying the validity of the identity clause under the Hague Rules.


[1] A carrier's identity clause is not prohibited by the Hague Rules.

Court of Appeal of Aix-en-Provence 25 April 2005, Möller A.P. v. GIE Réunion Européenne and Others - The "Christian Maersk" (2006 DMF 207)

A refrigerated container was loaded at the Havre by Omega Trading on board the Christian Maersk with destination Cotonou. A bill of lading with the heading "Maersk Line" was issued by S.A. Maersk France as agents. On arrival a destination the cargo of apples stuffed in the container was found damaged and its insurers, Les Mutuelles du Mans IARD Assurance, GIE Reunion Européenne and other insurance companies, acting in subrogation of the shipper, brought proceedings in the Tribunal de Commerce of Salon de Provence against Möller A.P. and the master of the vessel. By judgment dated 7th September 2001 the Tribunal de Commerce of Salon de Provence held that the defendants were liable for the payment to the plaintiffs of the insurance indemnity. The defendants appealed and A.P. Moller stated that from the bill of lading it appeared that S.A. Maersk France had acted as agents for Dampskibsseslskabet af 1912 Aktieseiskab and Aktieselskabet Svendborg as carrier.

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Held, by the Court of Appeal of Aix-en-Provence, that:

[1] Even though the name of A.P.Möller did not appear on the bill of lading, that name appeared on the stationery of S.A. Maersk France from which the claim had been handled; that although A.P. Möller had stated that the names of Dampskibsseslskabet af 1912 and Aktieselskabet Svendborg appeared in small type in the bill of lading under the signature of S.A. Maersk France, followed by the description as carrier, in the verso of the bill of lading they were described as owners or charterers, whilst from the ships registry the owner was indicated as Maersk A/S Arthus; that no explanation was given as to the capacity in which the two companies had acted in connection with the carriage in question; that there appeared to be a flow and a curtain of smoke created by the drafters of the bill of lading and by S.A. Maersk France which permits, on the strength of the doctrine of the "apparence" to hold that A.P. Möller had acted as carrier.[2] Even if service of the proceedings against the Master has been made to the agents, the agent had accepted it on behalf of the owners and/or charterers and therefore it entails the summons of the carrier.



(The summary of facts may be found in the section "Bills of lading")


[1] Where a bill of lading is signed by the person whose name appears on its heading "as agent only" and contain on its reverse side a carrier's identity clause carrier must be deemed to be the person whose name is indicate in the identity clause.

Italy

Court ofAppeal of Genoa 3 May 2007, Banco Espanol de Credito SA – Banesto v. Porto Leone Shipping Company, Ltd. – The “Apollo” (not yet published)

A shipment of 850,000 kilograms of olive oil was loaded in Motril (Spain) on the m.v. “ Apollo”, owned by Porto Leone Shipping Company, Ltd. with destination Imperia (Italy). The bill of lading was issued on the Congenbill form and on the recto contained the following clause: “Freight payable as per charter party dated 24/06/98”. Clause 1 overleaf so provided: “All terms and conditions, liberties and exceptions of the charter party dated overleaf are herewith incorporated”. The bill of lading did not indicate the name of the carrier and was signed by the master of the vessel “as master”.

Following the misdelivery of the entire shipment Banco Espanol de Credito SA – Banesto, to whom the bills of lading had been endorsed in pledge, brought proceedings in the Tribunal of Imperia (Italy) claiming the full value of the shipment. The judgment of the Tribunal of Imperia by which the claim was allowed, was appealed by Porto Leone inter alia on the ground that the claimant had no right of action since it was not the owner of the goods and that carrier had been a different company.


[1] If the name of the carrier is not indicated in the bill of lading and the bill of lading is signed by the master the registered owner of the vessel must be deemed to be the carrier, nor the identity of the carrier may be established on the basis of a charter party incorporated by reference in the bill of lading which is not made available to the holder of the bill of lading.

Jurisdiction clause (Art. 3. 8)

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United States

Kanematsu USA, Inc. et Al. v. m/v Ocean Sunrise et Al., U.S. District Court, Eastern District of Louisiana, 23 May 2003 (2003 AMC 2200)

A shipment of steel tubing was carried on the m/v Ocean Sunrise from Japan to New Orleans, Louisiana and Houston, Texas. When the steel tubing arrived at the ports of New Orleans and Houston, the tubing was allegedly damaged and depreciated in value. Plaintiffs, Kanematsu USA Inc., and Mitsubishi Corporation, as owners of the cargo, and Tokio Marine & Fire Insurance Company, as insurer of the cargo, brought an admiralty action under the Carriage of Goods by Sea Act, 46 U.S.C. app. §1300, et seq. seeking recovery for the damage to the cargo. Defendant Sirhan Compania Maritime S.A., the vessel owner, filed a motion to dismiss in favor of litigation in Japan, based on a forum selection clause in the bill of lading.


[1] A forum selection clause providing for Japanese jurisdiction is null and void and of no effect under COGSA, 46 U.S.C. app. §1303(8) (art. 3(8) of the Hague-Visby Rules) where there is a substantial uncertainty as to whether Japanese courts would treat the claim against the owner of the carrying vessel as a contract claim, rather than a tort claim.

Reed & Barton Corp. and Others v. MV “Tokio Express” and Others (U.S.D.C. Southern District of New York 22 February 1999, 1999 AMC 1088)

Plaintiffs Reed & Barton Corp. and Others brought an action against MV “Tokio Express” and the shipowners of the vessel Pol Gulf International (Pte.) Ltd. to recover damages in admiralty for non delivery and damage to cargoes on board the “Tokio Express”. Defendants moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(d) on the grounds of a mandatory forum selection clause in the bill of lading covering the action. The clause so provided:

25. Law and jurisdiction. Except as otherwise provided specifically herein any claim or dispute arising under this bill of lading shall be governed by the law of the Federal Republic of Germany and determined in the Hamburg Courts to the exclusion of the jurisdiction of the Courts of any other place. In the event this clause is inapplicable under local law then jurisdiction and choice of law shall lie either in the port of loading or port of discharge at carrier’s option.


[1] A jurisdiction clause in a bill of lading whereby any claim or dispute arising thereunder shall be governed by German law and shall be determined in the Hamburg Courts is broad enough to cover in rem claims and the unavailability of in rem proceedings in Germany does not deprive the plaintiffs of their substantive rights under COGSA when they have agreed to accept a Letter of Undertaking giving up their right to arrest the vessel.

Limitation of liability (Art. 4. 5)

Australia

El Greco (Australia) Pty Ltd. v. Mediterranean Shipping Company S.A., Federal Court of Australia, Queensland District Registry, 10 August 2004 (2004 AMC 2886)

(The summary of facts may be found in the section "General principles - Rules of interpretation")

Held, by the Federal Court, that:

[1] For the purpose of Article 4 rule 5(c) of the Hague-Visby Rules the enumeration of the number of packages or units in the bill of lading needs not to be contractually binding and cannot be adversely affected by any contrary statement of the carrier.[2] The reference in Article 4 rule 5(c) to the number of packages or units enumerated in the bill of lading "as packed" in the container indicated that the bill of lading must use words which

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make clear the number of packages or units separately packed for transportation and, therefore, an enumeration of a number of pieces of cargo that could be packed in a variety of ways is not an enumeration called for by Article 4 rule 5(c).

England

Serena Navigation Ltd. v. Dera Commercial Establishment – The “Limnos”, Queen’s Bench Division (Commercial Court) 28-29 April; 15 May 2008, [2008] 2 Lloyd’s Rep, 166.

A shipment of US corn was carried from Louisiana to Aqaba on the vessel Limnos owned by Serena Navigation Ltd. arrival at Aqaba, after a passage through very heavy weather, a small amount of wetting damage was discovered in the holds, primarily holds 2 and 3, but also, it is alleged by the Cargo Owners, to a limited extent, holds 5 and 8, apparently caused by leakages through the vessel’s hatch covers. The quantity of wet damaged cargo was segregated and disposed of, though the owners alleged that some wet damaged kernels were not segregated, and were discharged along with the apparently sound cargo and that up to 250 tons of cargo in holds 2 and 3 had to be discharged by bulldozers, and, as a result, suffered an increased number of broken kernels.

As a condition of allowing any discharge of the cargo from holds 2 and 3 it was required that the whole of that cargo be fumigated and treated with chemicals and transferred to pre-fumigated and disinfected silos.

In order to carry out the required fumigation and treatment, the cargo had to be moved within the silos, and, as a result, the number of broken kernels within the cargo increased, resulting in a depreciation in value of the cargo amounting to US $362,142.

The whole of the cargo as a result acquired a reputation in the market as a distressed cargo, and its sound arrived market price was depressed as a result by US $13 per ton: thus the total cargo of 43,998.66 tons (less the 12 tons damaged) was reduced in value by US $13 per ton, namely a loss of US$ 571,842.26.

A range of other expenses and liabilities were incurred by the Cargo Owner in relation to the fumigation, segregation and silo storage of the cargo.

In proceedings brought by the shipowners against the Cargo Owners, Dera Commercial Establishment, counterclaimed, in addition to the market value of the cargo which was not delivered, for the total amount of US$ 1,742.40, all losses and expenses referred to in paragraphs (i)-(ii). The preliminary issue that had to be decided was how the limitation of liability had to be calculated.

The Carrier’s case was that the limit of liability under Article IV.5(a) of the Hague-Visby Rules, where, as in that case, gross weight is the applicable test, and loss of the goods is not in issue, is by reference to the gross weight of the goods physically damaged. The Cargo Owner asserted instead that the limit was applicable by reference to the whole cargo of 43,999.86 tons.

Held, by the Commercial Court, that:

[1] Under article 4, paragraph 5 (a) of the Hague Visby Rules the limit of liability applies only to the goods that are physically lost or damaged and therefore cannot apply to goods in respect of which only an economic loss has occurred

France

Court of Appeal of Aix-en-Provence 30 June 2010, SA CMA-CGM v. Transglory and Others (2011 DMF 224)

The Spanish company Telstar instructed a Spanish forwarding agent, Transglory, to arrange for the transportation of three vehicles sold to a Chinese buyer from Barcelona to China. Transglory asked CMA-CGM to arrange for their transportation to the final in-land destination in China and in turn CMA-CGM instructed Sinotrans to arrange for the inland transportation in China. The vehicles were damaged during the land leg of transportation and were returned to Spain for the necessary repairs. Transglory was found by the Supreme Spanish Court liable for the damages claimed by Telstar and successfully sued CMA-CGM before the Tribunal de Commerce of Marseilles. The judgment was appealed by CMA-CGM on the ground, inter alia, that its liability was subject to limitation under the Hague-Visby Rules.

Held, by the Court of Appeal of Aix-en-Provence, that:

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[1] The limit of liability set out in article 4.5 of the Hague-Visby Rules is not applicable where the value of the goods is stated in the bill of lading and the carrier does not prove that it has not accepted the declaration of the shipper.*

* The question whether the Hague-Visby Rules apply in respect of loss of r damage to the goods occurred during the land leg of a multimodal carriage does not seem to have been discussed and consequently decided by the Court of Appeal.

Cour de Cassation (Ch.com.) 19 October 2010, S.tè Delmas v. Heli Union, [2011] DMF 155

Heli Union requested SDV Logistique Internationale to arrange transportation on an helicopter to Gabon and SDV in turn asked Delmas to take care of the maritime leg of the carriage. The helicopter was loaded on the Rosa Delmas. During the carriage the helicopter was damaged by a bolster on which were loaded chandeliers, that slipped owing to the breakage of chains that secured it. Heli Union and SDV sued Demas in the Tribunal de Commerce of Le Havre that found the carrier and the stevedoring company liable each for a certain percentage of the loss. With judgment 7 May 2009 the Court of Appeal of Rouen found that the carrier had acted recklessly and with knowledge that damage would probably occur and found that stevedoring company liable to reimburse the carrier 40 per cent of the loss within the limit of liability under the Hague-Visby Rules. Delmas appealed.


[1] The carrier who decided to stow an helicopter in the vicinity of a bolster on which chandeliers had been stowed did not act recklessly and with knowledge that damage would probably occur.[2] The allocation of liability for loss of or damage to goods must be made with respect to the global amount of the loss and not with respect to the amount resulting from the application of the limit of liability.

Germany

The MV "New York Express", Oberlandesgericht Hamburg (Court of Appeal) 2 November 2000, Transportrecht 2001, p. 87 *

Two containers with machinery were carried from Bremerhaven to Newark/New Jersey on the MV New York Express. The carrier issued an express cargo bill. The express cargo bill provided for the application of German law. It further contained a Paramount Clause in favour of the US COGSA extending the application of the US COGSA also to losses and damages occurring prior to the loading and after the discharging of the cargo. After discharging had been completed at Newark and in the course of the handling of the cargo on the terminal, the terminal operator being the carrier's subcontractor, part of the cargo was damaged. The consignee claimed damages from the carrier under the contract of carriage. The issue to be decided by the Court was whether the limitation of liability was effective.


[1] The Carrier can limit its liability to US$ 500.00 per package pursuant to US COGSA para. 1304 (5) (cfr. Art. 4 para. 5 Hague-Visby Rules).

* By the courtesy of Dr. Cristoph Horbach, Lebuhn & Puchta Rechtsanwälte, Vorsetzen 35, D-20459 Hamburg - [email protected]

Italy

Tribunal of Naples 27 February 2004, Fertilizers and Chemicals Ltd. v. Grimaldi Compagnia di Navigazione S.p.A. [2004] Dir.Mar. 451

A truck loaded at Rotterdam on the m/v Grande Africa, of Italian flag, with destination Lagos, was not delivered at destination. Fertilizers and Chemicals Ltd., holder of the bill of lading issued by the

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carrier, Grimaldi Compagnia di Navigazione S.p.A., commenced proceedings against Grimaldi in the Tribunal of Naples, claiming as damages the value of the truck, in the amount of US$ 24,727. The carrier invoked the application of the limit of liability of the Hague-Visby Rules.

Held, by the Tribunal of Naples, that:

[1] If the carrier fails to deliver at destination the goods and is incapable to provide any explanation on the cause of the loss, such loss must be deemed to have been caused by his gross negligence.[2] When the loss of the goods is due to the gross negligence of the carrier the limit of liability provided by the Hague-Visby Rules is null and void, since it is contrary to ordre public.

Tribunale of Naples 7 October 2003, Embroidered Centre S.a.s. v. Air Seatransport Inc. and Coscos S.r.l. - The "Hua Li He" [2004] Dir.Mar. 451

A consignment of textiles, stowed in a container carried from Quingdao to Naples on the m/v Hua Li He, arrived in damaged conditions and the consignee, Embroidered Centre S.r.l., brought proceedings against the agents in Naples of the carrier, Cosco S.r.l. and the logistic provider, Air Seatransport Inc., in the Tribunale of Naples.

A dispute arose between the parties on the conversion of the 100 gold pounds limit of the Hague Rules, applicable to the contract of carriage.

Held, by the Tribunale of Naples, that:

[1] The limit of liability of the carrier under article 4(5) of the Hague Rules must be converted into Italian currency on the basis of the market value at the time of the occurrence of the gold content of the gold pound in 1924.

Japan

The Buen Viento, Chiho Saibansho (District Court) of Tokyo, 16 October 2003, Kaijihou Kenkyûkaishi no.178, p.66.*

The owners of the Buen Viento, that has sunken during a voyage from Japan to the United States, commenced limitation proceedings under the Japanese law that implemented the LLMC Convention (Act on Limitation of Liability of Shipowners) in the District Court (Chiho Saibansho) of Tokyo. The owners of some valuable cargo claimed the full value of the cargo but other claimants objected that the amount of the claim should be calculated on the basis of the per kilo limitation set out by the Japanese law that implemented the Hague-Visby Rules (International Carriage of Goods Act).

Held, by the Tokyo District Court (Chino Saibansho) that:

[1] The per kilo limitation set out by the International Carriage of Goods Act applies automatically to any claim against the carrier, irrespective of the carrier invoking its application or not.[2] The amount of the claim in respect of loss of or damage to cargo that may be filed in limitation proceedings is not based on the value of the goods lost or damaged, but on the amount that may be claimed on the basis of the per kilo limitation of the International Carriage of Goods Act.

* By the courtesy of Prof. Souichirou Kozuka of the Sophia University, Tokio - [email protected]

Tokyo Chiho Saibansho (Tokyo District Court) 13 May 1998, Nicholas D. Carner v. Global Silver Hawk, Inc. et al. (Hanrei Jihô no. 1676, p. 129) *

Nicholas D. Carner shipped on board the “Silver Hawk” owned by Global Silver Hawk Inc. unspecified goods and, at the time he entered into the contract of carriage, declared to the carrier the value of the goods that had been delivered to it. However the declaration of the value was not inserted in the bill

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of lading. Upon arrival at destination in Japan, loss and damage was found in the consignment and the shipper sued the carrier before the Tokyo District Court claiming payment of the damages on the basis of the value declared to the carrier. The carrier denied the validity of the declaration of value on the ground that it had not been inserted in the bill of lading.

Held, by the Tokyo District Court, that:

[1] The declaration of the nature and value of the goods does not need to be endorsed on the bill of lading when it is made to the performing carrier.

* Summary prepared by by Prof. Souichirou Kozuka, Sophia University, Tokyo.

New Zealand

Dairy Containers Ltd., Moriah Co. Ltd. and Posteel v. The Ship “Tasman Discoverer” and Tasman Orient Line CV (High Court of New Zealand-Auckland Registry 27 July 2001, [2002] 1 NZLR 265; [2002] 2 Lloyd's Rep. 528 *

During the voyage from Busan (Korea) to Tauranga (New Zealand) 55 coils of electrolytic tin plates part of a consignment of 70 coils loaded on board the m.v. Tasman Discoverer were damaged as a result of sea water ingress, and were sold as scrap. After salvage recovery, the agreed net claim of the receiver, Dairy Containers Ltd. was US$ 613,667.25. The carrier, Tasman Orient Line CV, accepted liability but stated that the package limit of £ 100 applied. Dairy Containers instead stated that the applicable limit was per each package the present value in gold of £ 100 in 1924. Clause 6(B)(b)(i) of the bill of lading provided that where no international convention or national law was applicable the liability of the carrier would be determined by the Hague Rules contained in the 1924 Convention on Bills of Lading and for the purpose of that provision the limitation of liability was deemed to be £ 100 sterling lawful money of the United Kingdom per package or unit. Clause 8.2 provided that any provision in conflict with the applicable international convention or national law shall be null and void. Dairy Containers commenced proceedings in rem against the m.v. Tasman Discoverer and in personam against Tasman Orient Line before the High Court of New Zealand-Auckland Registry.

Held, by the New Zealand High Court, that:

[1] The Hague Rules being incorporated in the bill of lading the effect of clause 8.2 is to nullify the package limitation in clause 6(B)(b)(i) to the extent that it may be in conflict with or repugnant to the Hague Rules.[2] The first paragraph of article 9 of the Hague Rules is intended to qualify the reference in article 4(5) to £ 100, so that the figure in sterling must be taken to be a gold value figure, viz. the gold value of $ 100 sterling in 1924.

* A copy of this judgment has been kindly provided by Dr. Paul Myburgh, University of Auckland.

On appeal by Tasman Orient Line CV the New Zealand Court of Appeal reversed the decision and held that the limitation of liability under the Hague Rules was determined by both articles 4(5) and 9 and the effect of clause 6(B)(b)(i) was to replace the limit set out by the provisions of the Rules by the £100 sterling limit nor was the application of that limit prevented by article 3(8) of the Rules since the intention of the parties had been to incorporate the Rules subject to the change of the limit of liability.

Dairy Containers Limited appealed from the decision of the Court of Appeal of New Zealand to the Privy Council. The decision of the Court of Appeal was affirmed by the Privy Council (Judicial Committee) with judgment dated 20 May 2004 [2004] 2 Lloyd's Rep. 647.

Held, by the Privy Council, that:

[1] The opening words of cl. 6(B)(b)(i) serve to incorporate the Hague Rules if no international convention or national law governs and the loss or damage is proved to have occurred at sea or on inland waterways. One of the subsequent deeming provisions, expressed to take effect "for the purposes of this sub-paragraph", is to the effect that the deeming provision gives effect to art. IV, r. 5 as it if were unqualified by art. IX.

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[2] A term in the bill cannot be repugnant to any provision of the Hague Rules if the term in question represents a modification of the Hague Rules provision agreed by the parties in exercise of their freedom to agree what they will. It would similarly be absurd to hold that a clear contractual limitation agreed by the parties is invalidated by art. III, r. 8 of the Hague Rules.

United States

Ferrostaal, Inc. v. m/v Sea Phoenix, Delaro Shipping Co. Ltd., Interway Shipping Co. Ltd. and Others, United States Court of Appeals for the Third Circuit, 3 May 2006 (http://www.ca3.uscourts.gov/opinarch/051837p.pdf)

Ferrostaal, Inc., the consignees of a shipment of 402 coils, carried from Tunisia to Gloucester City, New Jersey, sued the Sea Phoenix and its owners, Delaro Shipping Company, in the U.S. District Court for the District of New Jersey claiming that 280 coils had been exposed to sea water for a total damage of $ 507,892. Delaro moved for partial summary judgment claiming that COGSA paragraph 4(5) limited their liability to $ 500 per package. The District Court granted the motion for partial summary judgment. It found that COGSA applied and then applied the fair opportunity doctrine and concluded that the bills of lading provided Ferrostaal with the necessary opportunity. At Ferrostaal's request, the District Court certified for immediate appeal the issue whether an ocean carrier is entitled to invoke COGSA in order to limit recovery of damages without having incorporated a reference to COGSA or COGSA's $ 500 per package limitation in the bill of lading.

Held, by the United States Court of Appeals for the Third Circuit, that:

[1] The fair opportunity doctrine is not consistent with the text and the policies of COGSA paragraph 4(5).

United States of Americav. Ocean Bulk Ships, Inc., m/v “Overseas Harriette” and m/v “Overseas Marilyn” (United States Court of Appeals-5th Circuit 10 April 2001, 2001 AMC 1487)

Between 1994 and 1996, the United States, through its Commodity Credit Corporation (CCC), and with the assistance of several private relief organizations, shipped cargoes to famine-stricken areas of Africa on behalf of the Agency for International Development (AID). The cargoes were shipped under various charter parties made expressly subject to COGSA on the m/v Overseas Harriette and the m/v Overseas Marilyn, vessels owned by the defendants, Ocean Bulk Ships, Inc., and Transbulk Carriers, Inc. The shipments included a variety of foodstuffs such as vegetable oil, corn, and bulgur wheat, which were shipped to the African ports of Mombasa, Kenya; Beira and Maputo, Mozambique; Freetown, Sierra Leone; and Tema, Ghana. Clean bills of lading were issued for each shipment after the cargo was stowed, indicating that the cargo was received by the carrier in good condition. Unfortunately, the goods were not received in the same quantity or quality when discharged in Africa. Survey reports documenting the loss and damage indicated several problems. Some parts of the cargo were simply not received at all. Some parts of the cargo were received in a damaged and unusable condition. The total amount of documented loss and damage to the cargo was $203,319.87.

In December 1998, the United States filed the first of five lawsuits, seeking damages for the lost and damaged cargo under COGSA. In February 1999, these suits were consolidated. In September 1999, the matter was tried to the bench. In December 1999, the district court entered judgment in favor of the United States for the limited sum of $7,300.08, the amount of damage that the defendants admit occurred prior to discharge. The judgment was appealed.

Held, by the U.S. Court of Appeals for the 5th Circuit, that:

[1] Cogsa allows the shipper to declare the cargo’s value, and inclusion of this value on the bill of lading evidences the carrier’s acquiescence to this declaration. The declared value is therefore prima facie evidence of the cargo’s value and, absent any rebuttal evidence from the carrier, is adequate to set the value of the cargo for damage calculation purposes.

Loss of right to limit liability (Art. 4. 5(e))

France

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Court of Appeal of Aix-en-Provence 21 January 2010, S.A. CMA-CGM v. Jean Charles Hidoux and Others (2011 DMF 350)

Two containers in which 252 packages with radio equipment had been stowed were loaded at Odessa on the m/v Szechuen time chartered to Feeder Associate Systems, a company fully owned by CMA-CGM, with destination Algiers. The transhipment at Varna originally agreed was subsequently replaced by a transhipment at Malta. The bill of lading was issued by CMA-CGM. The containers were unloaded at Malta from the Szechuen but when they had to be loaded on another ship bound to Algiers they could not be found. The shippers, Kintex S.A., brought proceedings against CMA-CGM in the Tribunal of Marseilles but their claim was rejected with judgment dated 14 September 2007 on the ground that they had no right of action. Kintex appealed claiming the full value of the goods on the ground that the loss of the containers resulted from a “faute inexcusable” of the carrier and that consequently article 4(5)(e) of the Hague-Visby Rules applied.

Held, by the Court of Appeal of Aix-en-Provence, that

[1] The disappearance of two containers in a port where they had been unloaded from the carrying ship for their loading of a second ship and their carriage to the final destination did not result from an act or omission done recklessly and with knowledge that loss would probably result, but from a human failure in the management of information retrieval and of the procedures albeit very sophisticated, on the basis of which the position of individual containers is traced.

Court of Appeal of Paris 17 October 2007, Someport Walon v. SNC GE Energy Products (2008 DMF 250)

By contract dated 30 July 1999 between GE Energy and S.A. Someport Walon agreed to carry materials for the construction of a gas plant in Bangladesh. During the transshipment in the port of Antwerp of a gas turbine from a barge to the m/v Alemania the turbine fell owing to the wire of the vessel’s crane having broken.

GE Energy and its insurers brought proceedings against Someport Walon and others in the Tribunal de Commerce of Paris claiming damages in the amount of US Dollars 3,033,172. By judgment of 30 May 2005 the Tribunal de Commerce found Someport Walon liable for the full amount of the claim on the ground that the carrier could not invoke the limit of liability pursuant to Article 4(5)(e) of the Hague-Visby Rules. Someport Walon appealed to the Cour d’Appel Paris.


[1] The damage caused to a turbine during its loading on board the ship owing to the wire of the crane having broken resulted from an omission of the carrier done recklessly and with knowledge that damage would probably result when it is proved that the wire was worn out and corroded

Cour de Cassation 19 October 2010, S.A. Delmas v. S.A. Heli Union and Others (2010 Revue de droit comm., Maritime, Aerien et des transports 261)

An helicopter was stowed on board the m/v Rosa Delmas, owned by S.A. Delmas, near parcels of steel bars placed on a bolster and owing to the shifting of the bolster the helicopter was damaged. The shippers and their insurers brought proceedings against S.A. Delmas in the Tribunal de Commerce of Le Havre which with judgment of 4 May 2007 allowed the claim within the limits of liability set out in article 4(5)(a) of the Hague-Visby Rules. On appeal by the plaintiffs the Cour d’Appel of Rouen with judgment of 7 May 2009 held that the limit of liability was not applicable since the damage to the helicopter had been due to the carrier having acted recklessly and with knowledge that a damage would probably result, since the court appointed expert had stated that the likelihood of a shifting of the bolster on which the steel bars had been loaded, considering the habitually unfavourable weather conditions in the area in which the voyage was performed, was “important”. Delmas S.A. appealed to the Cour de Cassation.


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[1] The Court of Appeal, by holding that the carrier had acted recklessly and with knowledge that a damage would probably result, because the probability of damage to the helicopter was significant, has not given a legal basis to its decision.

Borchard Lines Limited v. Alte Leipziger – The “Grace Church Comet”, Cour de Cassation 5 December 2006 (2006 Revue de Droit Commercial, Maritime, Aerien et des Transports, 208)

In January 1999 Spare Time France requested Borchard Lines to carry from Marseilles to Ashdod in Israel a container loaded with ball point pens. The container was delivered to Intramar Acconage, acting as agent for the carrier, on 19th January 1999 and was stacked on the ground in an area where no watch service was provided, waiting for its loading on the m/v Grace Church Comet, expected to take place on 25th January 1999. At the time of its loading on board it was found that the seals of the container had been replaced and that that container was empty.

Alte Leipziger, the insurers of the cargo of pens, settled the claim of Spare Time France and commenced proceedings in the Tribunal de Commerce of Marseilles against Borchard Lines and Intramar Acconage claiming the full amount of the indemnity paid to their assured, being € 160,457.92. The case was then submitted to the Cour d’Appel of Aix-en-Provence who by judgment dated 10th June 2004 held the carrier fully liable and denied the benefit of limitation of liability on the ground that by stacking the container in such a manner the carrier acted recklessly and with knowledge that the theft of the goods would probably occur. Borchard Lines and Intramar Acconage appealed to the Cour de Cassation.


[1] The carrier who prior to the loading of a container on board stacks the container for several days in an open area, without any watch service acts recklessly and with knowledge that damage or loss would probably occur and therefore cannot invoke the limit of liability in case of theft of the goods loaded in the container.

Groupement d’Intérêt Economique Scadoa and Others v. Société de Navigation et Transports–The “Woemann Bannière” (Cour de Cassation 4 January 2000, 2000 DMF 466)

The Groupement d’Intérêt Economique Scadoa carried on board the vessel “Woemann Bannière” two cases of electrical materials from Le Havre to Douala in Cameroon. One of the cases was damaged during carriage on account of bad weather conditions and the other one was short delivered. The cargo underwriters, acting under subrogation of the owners of the goods, sued the carrier before the Tribunal de Commerce of Le Havre requesting the payment of damages in respect of the case short delivered and held that the limit of liability was not applicable on the ground that the loss was attributable to a “faut inexcusable”. The claim was allowed and the decision of the Tribunal de Commerce was upheld by the Cour d’Appel of Rouen. The judgment of the Cour d’Appel of Rouen was appealed to the Cour the Cassation by the carrier.


[1] The unexplained loss of a case during carriage implies an action or omission of the carrier done recklessly and with knowledge that damage would probably result.

Cour d'Appel of Rouen 18 February 1999, Hapag Lloyd GmbH v. Cie Mutuelles du Mans Assurance IARD – The “Düsseldorf Express” (2000 DMF 231)

An industrial press carried from New Orleans to Le Havre on board the Düsseldorf Express was discharged in damaged conditions. Mutuelles du Mans Assurance IARD settled the claim to their assureds and sued the carrier, Hapag Lloyd GmbH, before the Tribunal de Commerce of Le Havre. By judgment of 4 July 1997 the Tribunal de Commerce held that the carrier should pay the full amount of the damages because the package/kilo limitation was not applicable. Hapag Lloyd appealed.

Held, by the Cour d’Appel of Rouen, that:

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[1] The benefit of the limit cannot be invoked when the damage is the consequence of the carrier having performed the voyage in conditions such as to initially give rise to such damage.

Italy

Corte di Cassazione 19 April 2001, No. 8328, Empresa Consolidada Cubana de Aviacion v. Maria Angela Toscano and Others [2002] Dir.Mar. 1288

On 3 September 1989 an aircraft owned by Empresa Consolidada Cubana de Aviacion crashed in the vicinity of the airport of Habana, Cuba, almost immediately after having taken off in adverse meteorological conditions, notwithstanding the warning of the control tower. All the 113 passengers and the crew lost their lives in the accident.

The next-of-kin of several passengers, all of Italian nationality, sued the air carrier before the Tribunal of Milano. By judgment of 10 January 1996 the Tribunal of Milano held the carrier liable for the accident and held further that the benefit of the limitation of liability under article 22 of the Warsaw Convention, as amended by the Hague Protocol of 1955, was not applicable since the pilot acted recklessly and with knowledge that an accident would probably occur. The decision of the Tribunal of Milano was affirmed by the Court of Appeal of Milano with judgment of 13 January 1999. The Empresa Consolidada Cubana de Aviacion appealed to the Supreme Court.

Held, by the Corte di Cassazione that:

[1] Pursuant to art. 22 of the 1929 Warsaw Convention, as amended by the 1955 Hague Protocol, in order that the carrier loses the right to limit its liability it must have acted recklessly, i.e. contrary to the most elementary rules of prudence, and with knowledge that damage would probably occur, i.e. with the subjective awareness of the likelihood of a damage and is comparable, in Italian law, to the fault with foresight of its consequences reference to which is made in art. 61.3 of the penal code.

Court of Appeal of Turin 15 December 2005, Medlift S.r.l. v. Zati S.p.A. and Others - The "Tina Med"(not yet reported)

A transformer, loaded at Southampton on the MV "Tina Med" of Italian flag for carriage to Genoa, during unloading operations fell into the hold and was severely damaged. It was established that the accident occurred owing to the steel wire of the derrick, with which the transformer was lifted had broken. The consignees brought an action in the Tribunal of Turin against the forwarding agents claiming damages. The forwarding agents denied that they had acted as carrier and joined in the proceedings the owner of the ship, Medlift S.r.l. By judgment dated 21 November 2003 the Tribunal of Turin found the forwarding agents liable but allowed their recourse action against the owner of the ship. Medlift appealed to the Court of Appeal of Turin. In the appeal proceedings the issue of the limit of liability under the Hague-Visby Rules was discussed and the claimants alleged that the limit was not applicable. Held, by the Court of Appeal of Turin, that:

[1] The carrier is not entitled to the benefit of the limitation of liability provided for in article 4(5)( a ) of the Hague-Visby Rules because the damage resulted from an act or omission of the crew done recklessly and with knowledge that damage would probably result.

Court of Appeal of Genoa 6 June 2002, Ignazio Messina & Co. S.p.A. v. Pietro Trombi – m/v “Jolly Rubino” [2004] Dir. Mar. 191

On 9 May 1995 a car owned by Pietro Trombi was loaded on the m/v Jolly Rubino in Genoa. Place of destination was Abidjan, where the vessel was supposed to call in the outward voyage. The car was however discharged heavily damaged when the vessel called at Abidjan in the homeward voyage.

Pietro Trombi brought an action against the carrier in the Tribunal of Genoa claiming a full indemnity. By judgment of 10 October 2000 the Tribunal of Genoa found the carrier liable for the full amount of the loss. The carrier appealed on the ground that the limit of liability set out in art. 4.5(e) of the Hague-Visby Rules should have been applied.


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[1] The subjective situation to which pursuant to art. 4.5(e) of the Hague-Visby Rules is linked the loss of the limit of liability corresponds, in its psychological and vouluntaristic components, to that qualified in the Italian penal system as dolus eventualis, characterized by the fact that the crime though not pursued nor considered as certain and unavoidable by the person liable, is deemed committed intentionally in that it is accepted by him as a consequence of his action or omission with acceptance of the related risk. [2] The claimant who challenges the benefit of the limit of liability on the ground that the loss suffered by him was due to the greater length of the voyage has the burden of proving the causal relationship between the loss and the length of the voyage and the facts in connection with which the reckless behaviour of the carrier and his knowledge that a loss would probably result must be assessed

United States

Doris Cristina Piamba Cortes v. American Airlines. Inc. (Court of Appeals, Eleventh Circuit, 15 June 1999, 1999 AMC 2286)*

On December 20, 1995, American Airlines flight 965 crashed as the plane attempted to navigate its arrival to the Alfonso Bonilla Aragon Airport in Cali, Colombia. The crash killed 151 passengers, including Maria Constanza Piamba Cortes, who was returning home. Doris Cristina Piamba Cortes started suit in the Florida State Court and then the case was removed to the Federal Court where it was consolidated for multidistrict pretrial proceedings with almost 160 other passengers lawsuits. The District Court concluded that all the passengers suits against American Airlines fell under the terms of the Warsaw Convention and held that the decision of the pilot to continue descending at night in mountainous terrain when the circumstances made clear that the plane had strayed dramatically from the published arrival route amounted to anything less than wilful misconduct. The District Court reached this conclusion by applying its objective standard for reckless disregard although the Court held on the alternative that, even if reckless disregard contemplates a subjective test, the evidence compelled a conclusion that the pilot engaged in wilful misconduct.

American Airlines appealed arguing inter alia that wilful misconduct requires a subjective rather than an objective test and the evidence created a question of fact for the jury under this test.

Held, by the United States Court of Appeals, Eleventh Circuit, that:

[1] As it is known, the first Convention in which the wording now adopted in order to describe the situations in which the right to limit is lost is the Warsaw Convention, as amended by the 1955 Hague Protocol. The history of the amendment of Art. 25 is, therefore, relevant for all subsequent conventions.

* The interpretation of Montreal Protocol No. 4 which has adopted the language of Art. 25 of the Warsaw Convention as amended by the 1968 Hague Protocol is relevant because the language of Art. 4 r. 5(e) of the Hague Visby Rules is the same and when this provision was adopted its origin was known. Although very little discussion took place in respect of this provision, when article 4 bis was discussed at the CMI Stockholm Conference in 1963 reference was expressly made to Article 25 of the Hague Protocol (The Travaux Préparatoires of the Hague Rules and of the Hague-Visby Rules, edited by F. BERLINGIERI, p. 622).

Bayer Corporation v. British Airways PLC (U.S. Court of Appeals-4th Cir., 17 April 2000, 2000 AMC 1947)

Bayer Corporation contracted with British Airways to transport seventy cartons of medical products from London Heathrow airport in England to Dulls international airport in Virginia. Before the flight the medical products were packed in wet ices. The air bill noted “packed in wet ices, store between 2-8 degrees C. Do not freeze”. The labels did not note how long the reagents would be safe without refrigeration. After arrival at Dulls, British Airways placed the cargo in its refrigerated warehouse such as it had done with past Bayer shipments. Because of past dealings, Bayer and its customs broker were aware that British Airways did not provide refrigerated storage at Dulls. According to the course of

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conduct established among the parties, Bayer custom agents did immediately pick up the cargo and the result of such cargo being unrefrigerated for nine days, the shipment was determined to be a total loss.

Held, by the United States Court of Appeals for the Fourth Circuit, that:

[1] Pursuant to Art. 25 of the Warsaw Convention as amended by Montreal Protocol No. 4 the claimant must show that the carrier either intended to cause the damage or acted recklessly with subjective knowledge that the damage would probably result.

Management of the ship and management of the cargo (Art. 4 r.2(a)

France

Cour de Cassation 20 February 2001 Island Insurance Co. v. Delmas (2001 DMF 919).

A cargo of sugar carried to Le Havre was delivered damaged by sea water owing to the valve connecting the ballast tank to the hull having been opened by mistake by one of the officers.


[1] The fact that an operation relates to the management of the ship does not necessarily entail that the fault committed during such operation has the same nature. Consequently the Court of Appeal that did not state in which manner the fault affected the safety of the ship rather than the cargo has not given a legal basis to its decision.

France

Cour d’Appel of Versailles 20 December 2001, S.A. CGM Antilles Guyane v. Les Mutuelles du Mans Assurances IARD and Others – The “Fort Fleur d’Epée” (2002 DMF 251)

Various refrigerated containers were loaded on the m.v. Fort Fleur d’Epée of CGM Antille Guyane at Havre and Montoir. During loading operations at Montoir the officer in charge ordered the filling of ballast tank no. 8 in order to prevent a list of the ship and seawater entered into the hold through a port hole incorrectly closed, flooding the containers. Upon arrival of the ship at destination it was found that the poultry loaded in the containers was lost. The cargo insurers commenced proceedings against the carrier before the Tribunal de Commerce of Nanterre which by judgment of 13 October 1998 allowed their claim. The carrier appealed against such judgment to the Cour d’Appel of Versailles alleging that the loss had been caused by a fault in the management of the ship.

Held, by the Cour d’Appel of Versailles, that:

[1] Nautical fault includes, in addition to the fault in the navigation, the fault in the management of the vessel that adversely affect the safety of the vessel and of the maritime adventure; while a fault that endangers the cargo is a commercial fault for which the carrier is responsible. A ballasting operation carried out during loading that, owing to a defective closing of an inspection port, causes the flooding of containers stowed in the hold is not a nautical fault.

Multimodal transport

United States

Kawasaki Kisem Kaisha Ltd. et Al. v. Regal-Beloit Corp. et Al. – Supreme Court of the United States No. 08-1553, decided 21 June 2010

Regal-Beloit Corporation and Victory Fireworks, Inc., delivered four different container shipments in China to Kawasaki Kisen Kaisha, Ltd. for transportation to inland destinations in the Midwestern United States. Its agent, “K” Line America Inc.(to which reference jointly with Kawasaki will be made as the “Carrier”), issued through bills of lading that covered the entire course of shipment.

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The bills required the Carrier to arrange delivery of the goods from China to their final destinations in the United States, by any mode of transportation of Carrier’s choosing. The through bills contained five relevant provisions. First, they included a “Himalaya Clause,” which extended the bills’ defences and limitations on liability to parties that sign subcontracts to perform services contemplated by the bills. Second, the bills permitted the Carrier to sub-contract on any terms whatsoever for the completion of the journey. Third, the bills provided that COGSA’s terms governed the entire journey. Fourth, the bills required that any dispute would be governed by Japanese law. Fifth, the bills stated that any action relating to the carriage must be brought in “Tokyo District Court in Japan.” The forum selection provision gave rise to the dispute submitted to the Supreme Court.

The Carrier, pursuant to the bills of lading, arranged for the entire journey. It subcontracted with Union Pacific Railroad Company, for rail shipment in the United States. The goods were to be shipped in a vessel to a port in Long Beach, California, and then transferred to Union Pacific for rail carriage to the final destinations. After the goods had been safely transported across the Pacific Ocean to California, they were then loaded onto a Union Pacific train and that train, or some other train operated by Union Pacific, derailed in Tyrone, Oklahoma, allegedly destroying the cargo.

The cargo owners and their insurers filed four separate lawsuits in the Superior Court of California, County of Los Angeles. The suit named the Carrier and Union Pacific as defendants. Union Pacific removed the suits to the United States District Court for the Central District of California. Union Pacific and the Carrier then moved to dismiss based on the parties’ Tokyo forum-selection clause. The District Court granted the motion to dismiss. It decided that the forum selection clause was reasonable and applied to Union Pacific pursuant to the Himalaya Clause in the Carrier’s bills of lading. 462 F. Supp. 2d 1098, 1102–1103 (2006).

The United States Court of Appeals for the Ninth Circuit reversed and remanded. 557 F. 3d 985 (2009). The court concluded that the Carmack Amendment applied to the inland portion of an international shipment under a through bill of lading and thus trumped the parties’ forum-selection clause. Id., at 994–995). The Supreme Court granted certiorari to address whether Carmack applies to the inland segment of an overseas import shipment under a through bill of lading.

Held, by the Supreme Court of the United States, that:

[1] For Carmack’s provisions to apply the journey must begin with a receiving rail carrier, which would have to issue a Carmack-compliant bill of lading. It follows that Carmack does not apply if the property is received at an overseas location under a through bill that covers the transport into an inland location in the United States. In such a case, there is no receiving rail carrier that “receives” the property “for [domestic rail] transportation,” §11706(a), and thus no carrier that must issue a Carmack-compliant bill of lading. The initial carrier in that instance receives the property at the shipment’s point of origin for overseas multimodal import transport, not for domestic rail transport.[2] If a rail carrier, which acted as a connecting or delivering carrier during an international through shipment, were treated as a receiving carrier under Carmack, that would in effect outlaw through shipments under a single bill of lading. Applying two different bill of lading regimes to the same through shipment would undermine COGSA and international, container-based multimodal transport. As Kirby explained, “[t]he international transportation industry ‘clearly has moved into a new era—the age of multimodalism, door-to-door transport based on efficient use of all available modes of transportation by air, water, and land.’” 543 U. S., at 25.

Negligent stowage (Art. 3.2)

United States

American Home Assurance Co. v. M/v Tabuk et Al., United States District Court, Southern District of New York, November 5, 2001 (2002 AMC 184)

One container in which one hundred missiles, placed on pallets had been stowed, was loaded on the deck of the m/v Tabuk for carriage from Wilmington to Kuwait. In the course of the voyage the container was lost overboard during a storm. American Home Assurance Co. indemnified the shipper, Raytheon System Company and brought an action against the m/v Tabuk and the carrier, United Arab Shipping Company, claiming US$ 2,560,250.00 in damages, stating that the package limitation was not applicable because the stowage of the container on deck was an unreasonable deviation and in any event

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the deviation was per se unreasonable, the total number of containers on deck exceeded that contemplated in the stowage manual of the ship and the container was improperly secured.


[1] Negligence of the carrier in properly loading and securing containers on deck is not an unreasonable deviation.

Notice of loss of damage (Art. 3.6)

Italy

Tribunal of Genoa 4 December 2002, Llloyd Italico Assicurazioni S.p.A. v. Grandi Traghetti S.p.A. di Navigazione – m/v “Maringa” [2004] Dir. Mar 1473

A consignment of 1995 bags of coffee, stuffed in containers supplied by the carrier, were loaded at Matadi on the m/v Maringa and carried to Genoa and then by rail from Genoa to the inland terminal of the carrier at Rivalta Scrivia.



[1] If notice of loss of or damage to the goods is not given by the consignee to the carrier as prescribed by art. 3.6, the goods are deemed to be delivered in the conditions described in the bill of lading and the consignee has the burden of proving that the loss or damage was caused by a fault of the carrier.

Obligation to make the ship seaworthy (Art. 3. 1)

Australia


A consignment of 40 cases of aluminium can body in coils loaded in Sydney on board the m/v Bunga Seroja was partly damaged during the passage from Sydney to Keelung, Taiwan on account of heavy weather. Great China Metal Industries Co. Ltd., to which the property in the goods had passed, claimed damages from the carrier, Malaysian International Shipping Corp. Berhad but the claim was rejected by the trial Judge whose decision was affirmed by the New South Wales Court of Appeal. The claimant appealed to the High Court of Australia contending that the exception of perils of the sea did not apply because damage to the cargo resulted from sea weather conditions which could reasonably be foreseen and guarded against. The question to which the submission primarily was directed was the meaning and effect of art. IV r. 2(c) of the Hague Rules.


[1] Seaworthiness must be judged having regard to the conditions the vessel will encounter. The standard of fitness rises with improved knowledge of shipbuilding and navigation. In Art. 3 r. 1 the term “seaworthiness” should be given its common law meaning; nothing in the Rules generally or in the travaux préparatoires suggests otherwise.

England

Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another – The “Eurasian Dream” [2002] 1 Lloyd’s Rep. 719.

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The relevant cargo interests commenced proceedings in London against the carrier before the Queen’s Bench Division (Commercial Court).


[1] Seaworthiness is not an absolute concept; it is relative to the nature of the ship, to the particular voyage and even to the particular stage of the voyage on which the ship is engaged and must be judged by the standards and practices of the industry at the relevant time, at least so long as those standards and practices are reasonable.[2] The components of the duty (as illustrated by the case law) are as follows:(a) The vessel must be in a suitable condition and suitably manned and equipped to meet the ordinary perils likely to be encountered while performing the services required of it. This aspect of the duty relates to the following matters:(i) The physical condition of the vessel and its equipment;(ii) The competence/efficiency of the master and crew;(iii) The adequacy of stores and documentation.(b) The vessel must be cargoworthy in the sense that it is in a fit state to receive the specified cargo. [3] Incompetence or inefficiency of the master and crew may consist of a “disabling want of skill” or a “disabling want of knowledge”.[4] Incompetence is to be distinguished from negligence and may derive from:(a) an inherent lack of ability;(b) a lack of adequate training or instruction: e.g. lack of adequate fire-fighting training;(c) a lack of knowledge about a particular vessel and/or its systems;(d) a disinclination to perform the job properly;(e) physical or mental disability or incapacity (e.g. drunkenness, illness). [5] The test as to whether the incompetence or inefficiency of the master and crew has rendered the vessel unseaworthy is as follows: Would a reasonably prudent owner, knowing the relevant facts, have allowed this vessel to put to sea with this master and crew, with their state of knowledge, training and instruction?[6] The duty of “due diligence” is an “inescapable personal obligation”: it is non-delegable. The carrier will therefore be responsible for negligence of those to whom it delegates due diligence. The question is whether unseaworthiness is due to any lack of diligence in those who have been implicated by the carrier in the work of keeping or making the vessel seaworthy. Such persons are the carriers’ agents whose diligence or lack of it is attributable to the carrier. This principle is relevant in two respects: (1) the carrier under the bills of lading is liable for the want of due diligence by the owners or managers; (2) the carrier is liable for the want of due diligence of the master insofar as the carrier or the owners or managers have delegated to him their duties as to seaworthiness.

France

Cour d’Appel of Versailles 20 December 2001, S.A. CGM Antilles Guyane v. Les Mutuelles du Mans Assurances IARD and Others – The “Fort Fleur d’Epée” (2002 DMF 251)

Various refrigerated containers were loaded on the m.v. Fort Fleur d’Epée of CGM Antille Guyane at Havre and Montoir. During loading operations at Montoir the officer in charge ordered the filling of ballast tank no. 8 in order to prevent a list of the ship and seawater entered into the hold through a port hole improperly closed, flooding the containers. Upon arrival of the ship at destination it was found that the poultry loaded in the containers was lost. The cargo insurers commenced proceedings against the carrier before the Tribunal de Commerce of Nanterre which by judgment of 13 October 1998 allowed their claim. The carrier appealed against such judgment to the Cour d’Appel of Versailles alleging that the loss had been caused by a fault in the management of the ship.

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Held, by the Cour d’Appel of Versailles, that:

[1] The carrier is exonerated from liability for loss of or damage to the goods due to the unseaworthiness of the vessel only if it proves that it has complied with the obligations set out in article 21 of law 18 June 1966, namely that it has put the vessel in the condition to perform the service it has undertaken to do, account being taken of the voyage the vessel must carry out and of the goods to be carried.[2] Nautical fault includes, in addition to the fault in the navigation, the fault in the management of the vessel that adversely affect the safety of the vessel and of the maritime adventure; while a fault that endangers the cargo is a commercial fault for which the carrier is responsible. A ballasting operation carried out during loading that, owing to a defective closing of an inspection port, causes the flooding of containers stowed in the hold is not a nautical fault

Japan

Tokyo Kôtô Saibansho (Court of Appeals of Tokyo) 14 September 2000, Taiwan Fire and Marine Insurance Co. Ltd. v. Unison Navigation Corp. (Kôtô Saibansho Minji Hanreishu vol.53, no.2, p.124) *

The ship that had carried Malaysian lumber from Miri, Malaysia, to Su-ao, Taiwan, took a heavy list on her port side before unloading due to leakage caused by a crack in her port bow. All the lumber fell into the sea and was totally damaged by the oil spilt from the ship. The cargo insurer sued the carrier, alleging that the carrier had breached his duty to make the ship seaworthy. During the proceedings it appeared that the ship, fifteen years old, had had her starboard bow repaired one month before the accident at issue, after a leakage due to another crack.


[1] The carrier has not exercised due diligence to make the ship seaworthy when, after a leakage in the port side had occurred and it was found that such leakage was due to a crack in the plate it failed to cause the starboard side to be inspected and the cargo was severely damaged as a consequence of a further crack in the hull.

* Summary prepared by by Prof. Souichirou Kozuka, Sophia University, Tokyo.

Obligation to properly care for the goods (Art. 3. 2)

Australia


A consignment of 40 cases of aluminium can body in coils loaded in Sydney on board the m/v Bunga Seroja was partly damaged during the passage from Sydney to Keelung, Taiwan on account of heavy weather. Great China Metal Industries Co. Ltd., to which the property in the goods had passed, claimed damages from the carrier, Malaysian International Shipping Corp. Berhad but the claim was rejected by the trial Judge whose decision was affirmed by the New South Wales Court of Appeal. The claimant appealed to the High Court of Australia contending that the exception of perils of the sea did not apply because damage to the cargo resulted from sea weather conditions which could reasonably be foreseen and guarded against. The question to which the submission primarily was directed was the meaning and effect of art. IV r. 2(c) of the Hague Rules.


[1] The fact that responsibility under Art. 3 r. 2 is expressly made subject to the exemptions in Art. 4 does not mean that the duty of care imposed by Art. 3 r. 2 is in some way qualified by Art. 4 r. 2.

Paramount clause

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England


(The summary of facts may be found in the section “Amount recoverable”)


[1] In a Paramount Clause the words “compulsorily applicable” used in connection with the incorporation of the Hague-Visby Rules have consistently, as a matter of English law, been given the meaning of “applicable” according to the proper law of the contract.

Seabridge Shipping S.A. v. A.C. Orssleff’s EFTF’s A/S, Queen’s Bench Division (Commercial Court) 6 and 9 August 1999 ([1999] 2 Lloyd’s Rep.685).

By charter party on Gencon form dated 18th April 1996 A.C. Orssleff’s EFTF’s A/S chartered to Seabridge Shipping AB a vessel to be nominated for five voyages with cargoes of equipment to Avondale Shipyard at New Orleans. The charter party was expressly governed by English law. Disputes were to be referred to arbitration in London, one arbitrator to be chosen by the charterers and one by the owners. Clause 27 provided as follows:

“P&I bunker clause, both to blame collision clause, New Jason clause and Paramount clause are deemed to be incorporated into this charter party”.

The owners nominated the Fjellvang for the voyage. She loaded a cargo at Gdinya, Poland, under bills of lading issued by both owners and charterers. The cargo interests under a bill of lading issued by the charterers brought a claim against the charterers in respect of the cargo carried. The bill of lading incorporated the Hague Rules as enacted in the country of shipment; Poland had brought the Hague-Visby Rules into force by the time of that shipment.

On 17th June 1997, one day before the expiry of the 12 months time limit which would apply if the Hague Rules had been incorporated into the charter party, the charterers P&I Club sent a fax to Allan E. Oakley with copy to the owners asking Mr. Oakley if he would accept appointment as charterers arbitrator and asked owners if they were prepared to accept Mr. Oakley as sole arbitrator. Mr. Oakley replied accepting the appointment as charterers arbitrator whereupon, since the owners had not reacted, owners took steps to have Mr. Oakley appointed sole arbitrator.

Mr. Oakley held that the Hague Rules were incorporated and not the Hague-Visby Rules and that the arbitration had not been brought within the one year time limit applicable under the Hague Rules.


[1] The provision in a charterparty that the Paramount Clause is deemed to be incorporated has the effect of incorporating the Hague Rules and not the Hague-Visby Rules.

United States

Foster Wheeler Energy Corp. v. An Ning Jiang MV and Industrial Maritime Carriers, United States Court of Appeals for the Fifth Circuit 13 September 2004 (2004 AMC 2409)

On December 13, 2000, Foster Wheeler filed suit against the An Ning Jiang, in rem, and IMC, as the carrier, in the Eastern District of Louisiana seeking to recover damages in the amount of $ 228,576.73 as a result of IMC's alleged breach of its duties under COGSA, 46 U.S.C. §§ 1300 et seq., and/or the Harter Act, 46 U.S.C. §§ 190 et seq. IMC answered that pursuant to the terms of the bills of lading, the quantum of its liability, if any, should be limited in accordance with COGSA's $500 per package limitation, which in this case would cap IMC's exposure for cargo damage at $39,453.74. The three bills of lading at issue contained the following pertinent conditions of carriage:

2. General Paramount ClauseThe Hague Rules contained in the International Convention for the Unification of certain rules

relating to Bills of Lading, dated Brussels the 25th of August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the

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corresponding legislation of the country of destination shall apply, but in respect of shipments in which no such enactments are compulsorily applicable, the terms of the said Convention shall apply.

Trades where Hague-Visby Rules ApplyIn trades where the International Brussels Convention 1924 as amended by the Protocol signed at

Brussels on February 23, 1968-the Hague Visby Rules apply compulsorily, the provisions of the respective legislation shall be considered incorporated into this Bill of Lading. The Carrier takes all reservations possible under such applicable legislation, relating to the period before loading and after discharging and while the goods are in charge of another carrier, and to deck cargo and live animals.

3. JurisdictionAny lawsuit arising under this Bill of Lading shall be filed at New Orleans, the Carrier's principal

place of business, in the U.S. District Court for the Eastern District of Louisiana. U.S. Law shall apply.IMC filed a motion for partial summary judgment seeking a declaration that, pursuant to the Jurisdiction clause, COGSA and its $500 per package liability limitation governed this action rather than the Hague-Visby Rules referenced in the bills' General Paramount Clause. Foster Wheeler opposed IMC's motion, contending that the Hague-Visby Rules as enacted in Spain and their higher limitation-of-liability provision, not COGSA, governed this carriage by operation of law and by incorporation into the bills of lading, entitling it on the facts of this case to a full recovery. Foster Wheeler further asserted that because Spain's Hague-Visby Rules applied compulsorily by force of law, Article III (8) of these Rules nullified any contractual term in the bills of lading - namely, the Jurisdiction clause - to the extent that it invoked COGSA's lower per package limitation. Foster Wheeler's uncontroverted summary judgment evidence included the affidavit testimony of an expert on Spanish maritime law attesting that a voyage from Spain to China is a trade line to which the Spanish enactment of the Hague-Visby Rules applies compulsorily.

Nonetheless, on September 30, 2002, the district court granted IMC's motion, reasoning that the Jurisdiction clause designating "U.S. law" was a forum selection and choice-of-law clause "call[ing] for the application of COGSA" and, as such, was entitled to a presumption of validity that Foster Wheeler failed to overcome. The district court also found that, as a matter of contractual interpretation, the Jurisdiction Clause was specific, and therefore could not "be trumped by the terms of an amorphous General Paramount clause" that merely "suggest[ed] that in some circumstances the Hague-Visby rules might apply." In order to expedite Foster Wheeler's ability to appeal the district court's summary judgment ruling, the parties filed a joint notice of consent to entry of judgment. Accordingly, on December 9, 2002, the district court entered final judgment in favor of Foster Wheeler, calculating the quantum of damages owed under COGSA. Foster Wheeler filed notice of appeal.

Held, by the Court of Appeals, V Circ., that:

[1] Pursuant to the General Paramount clause, the Hague-Visby Rules as enacted in Spain govern claims involving cargo damage occurring during the tackle-to-tackle period, whereas U.S. law applies under the Jurisdiction clause to the litany of non-cargo maritime claims that may be brought as well as to cargo claims stemming from damage outside the tackle-to-tackle period.

Period of application (Art. 1(e))

England


(The summary of facts may be found in the section “Amount recoverable”)


[1] The parties to a contract of carriage subject to the Hague Rules of the Hague-Visby Rules are free to agree on terms other than the said Rules for periods outside the actual period of carriage but if no agreement is made for the period after discharge it might be easy to say that they have impliedly agreed that the obligations and immunities contained in the Rules continue after actual discharge until the goods are taken into the custody of the receiver.

Germany

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The MV "New York Express", Oberlandesgericht Hamburg (Court of Appeal) 2 November 2000, (Transportrecht 2001), p. 87*

Two containers with machinery were carried from Bremerhaven to Newark/New Jersey on the MV New York Express. The carrier issued an express cargo bill. The express cargo bill provided for the application of German law and contained an exclusion of liability for damages occurred prior to loading and after discharging of the cargo. After discharging had been completed at Newark and in the course of the handling of the cargo on the terminal, the terminal operator being the carrier's subcontractor, part of the cargo was damaged. The consignee claimed damages from the carrier under the contract of carriage. The issue to be decided by the Court was whether the exclusion of liability was effective.


[1] The carrier can exclude its liability for damages to the cargo which occur before loading on and after discharge from the ship pursuant to para. 663 subs. 2 fig. 2 German Commercial Code (cfr. Art. 1 (e) Hague-Visby Rules).

* By the courtesy of Dr. Cristoph Horbach, Lebuhn & Puchta Rechtsanwälte,Vorsetzen 35, D-20459 Hamburg - [email protected]



(The summary of facts may be found in the section "Bills of lading")


[1] An exoneration clause contained in a bill of lading which incorporates the U.S. Carriage of Goods by Sea Act, 1936 is not subject to the provision of article III(8) is the loss of the goods has occurred after completion of discharge.

Italy

Tribunal of Genoa 4 December 2002, Lloyd Italico Assicurazioni S.p.A. v. Grandi Traghetti S.p.A. di Navigazione – m/v “Maringa” [2004] Dir.Mar. 1473

A consignment of 1995 bags of coffee, stuffed in containers supplied by the carrier, were loaded at Matadi on the m/v Maringa and carried to Genoa and then by rail from Genoa to the inland terminal of the carrier at Rivalta Scrivia.


Held, by the Tribunale of Genoa, that:

[1] The Hague-Visby Rules apply from the time when loading on the ship commences until the time when discharge from the ship terminates.

United States

United States of America v. Ocean Bulk Ships, Inc., m/v “Overseas Harriette” and m/v “Overseas Marilyn”, United States Court of Appeals-5th Circuit 10 April 2001 (2001 AMC 1487)

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Between 1994 and 1996, the United States, through its Commodity Credit Corporation (CCC), and with the assistance of several private relief organizations, shipped cargoes to famine-stricken areas of Africa on behalf of the Agency for International Development. The cargoes were shipped under various charter parties made expressly subject to COGSA on the m/v Overseas Harriette and the m/v Overseas Marilyn, vessels owned by Ocean Bulk Ships, Inc., and Transbulk Carriers, Inc. The shipments included a variety of foodstuffs which were shipped to various African ports. Clean bills of lading were issued for each shipment after the cargo was stowed, indicating that the cargo was received by the carrier in good condition. Unfortunately, the goods were not received in the same quantity or quality when discharged in Africa. Survey reports documenting the loss and damage indicated several problems. Some parts of the cargo were simply not received at all. Some parts of the cargo were received in a damaged and unusable condition. The total amount of documented loss and damage to the cargo was $203,319.87.

In December 1998, the United States filed the first of five lawsuits, seeking damages for the lost and damaged cargo under COGSA. In February 1999, these suits were consolidated. In September 1999, the matter was tried to the bench. In December 1999, the district court entered judgment in favor of the United States for the limited sum of $7,300.08, the amount of damage that the defendants admit occurred prior to discharge. The judgment was appealed by the United States.


[1] Cogsa extends through discharge, and a Cogsa carrier is subject to statutory obligations to “properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried". However § 1304(2)(q) may shield a carrier from liability when the carrier has absolutely no control with respect to the selection of port stevedores and, further, no control with respect to how or when the cargo is discharged.

Schramm, Inc. and Atlantic Mutual Insurance Co. v. Shipco Transport, Inc. - m/v "Csav Guaya" and Others, U.S. Court of Appeals - IV Circuit 15 April 2004 (not yet reported).

In October 1999, Schramm sold a mobile drilling rig to Perforaciones San Rafael S.R.L. of Cochabamba, Bolivia. The drilling rig consisted of a large drill and the truck on which it was mounted. The total cost of the rig was $160,725.42, which included freight and insurance charges.

Schramm arranged to have Shipco transport the rig from the Port of Baltimore, Maryland, to the Port of Arica, Chile, via an oceangoing vessel. Shipco, a "non-vessel-operating common carrier," contracted with the owner of the m/v Csav Guayas to transport the rig from the United States to Chile.

The rig, secured on a flat rack container with a bottom and two sides, was loaded onto the vessel m/v Csav Guayas in Baltimore on October 21, 1999. While en route to Chile, the vessel stopped at an intermediate port in Charleston, South Carolina. There, on October 22, 1999, the vessel's operator ordered the rig offloaded so that it could be restowed on a lower deck of the vessel. The master retained Stevedoring Services of America ("SSA") to handle the offloading, transportation, storage, and reloading of the rig in Charleston. SSA offloaded the rig, still attached to its flat rack container, and placed it on a chassis for dockside transport. While it was being moved, the rig fell over onto the concrete dock and was damaged beyond repair. It was later declared a total loss by marine inspectors.

Pursuant to its insurance obligations, Atlantic Mutual paid Perforaciones San Rafael S.R.L. the purchase price and related costs, on Schramm's behalf. Then, on October 20, 2000, Schramm and Atlantic Mutual filed suit against Shipco, among other parties, to recover breach of contract damages from the destruction of the rig.

Shipco filed for partial summary judgment, claiming that its liability was limited to $500 either by COGSA or by the contractual bill of lading. At first, the district court denied Shipco's motion. It held that COGSA did not apply to the period of time during which the rig was destroyed - while the rig was being transported on land in Charleston and was not "hooked up" to the vessel.

Upon reflection, however, the district court granted Shipco's Rule 59(e) motion for reconsideration and concluded that COGSA did indeed apply to the period of time during which the rig was destroyed. It held that the "tackle-to-tackle" application of COGSA covers goods from the port of loading until the final port of destination, and that COGSA thus applies during restowage of cargo at intermediate ports regardless of whether damage occurs while goods are on land or aboard the vessel. The court thus granted appellants' motion for summary judgment against Shipco on the question of liability and granted Shipco's motion to limit its liability to $500. Appellants now challenge the district court's decision to limit Shipco's liability under COGSA

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Held, by the Court of Appeals for the Fourth Circuit, that:

[1] Unloading of the goods from the carrying ship at an intermediate port for the purpose of restowing them does not constitute discharge under COGSA and, therefore, the 500 dollars limit of liability applies in respect of damage to the goods occurring when they are ashore at such intermediate port.

Qualifying clauses (Art. 3. 3)

Italy

Corte di Cassazione 29 November 1999, No. 13341, Rocco Giuseppe & Figli S.p.A. v. DI.A.R. Maritime S.r.l. (unreported)

Out of a cargo of 17.200 tons of wheat unloaded at Naples from the m/v Lydi about 250 tons were found missing. The consignee sued the agents of the ship requesting payment of the quantity allegedly short delivered. The carrier objected that the claimant had not proved the quantity loaded, the statement of the weight in the bill of lading having been qualified by a clause “said to weigh”. The claim was rejected by the Tribunal and then by the Court of Appeal of Naples.


[1] The Hague-Visby Rules do not exclude the validity, where the required conditions exist, of qualifying the description of the goods in the bill of lading rather than omitting such description. A qualifying clause is effective even if in print, in view of the possibility of its deletion, when it is reasonably impossible to establish if the carrier has no reasonable means of checking the information furnished by the shipper. A clause qualifying the weight of a cargo of cereals in bulk is effective.

Right of suit

Italy

Court ofAppeal of Genoa 3 May 2007, Banco Espanol de Credito SA – Banesto v. Porto Leone Shipping Company, Ltd. – The “Apollo” (not yet published)

(The summary of facts may be found in the section “Identity of the carrier”)

Held, by the Court of Appeal of Genoa, that:[1] The rights under a bill of lading may be asserted by the holder of the document who is not required to prove an interest in the goods covered by the bill of lading.

Japan

Tokyo Kôtô Saibansho (Court of Appeals of Tokyo) 25 October 2000, Tessin Sempaku KK v. Kyoei Kasai Kaijo Hoken Sogokaisha (Kin’yu Shoji Hanrei no. 1109, p. 43) *

After carriage from Shanghai, China, to Okayama, Japan, the cargo (artificial powder to be used as material for the production of bricks) was found soaked with water and had lost commercial value. The carrier alleged that the cargo had already been damaged prior to loading. The insurer subrogated to the right of the cargo owner, sued the carrier as holder of the bill of lading alleging that from the bill of lading it appeared that the cargo had been “shipped in apparent good order and condition”. The District Court of Tokyo held the carrier liable for the damage to the cargo.

Held, by the Court of Appeals of Tokyo, that

[1] For the purposes of article 9 of the Act on International Carriage of Goods by Sea the expression holder of the bill of lading includes any person that can show having obtained the due transfer of the document, even if the continuity of the endorsements is lacking. **

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* Summary prepared by Prof. Souichirou Kozuka, Sophia University, Tokyo.** Art. 9 of the Act on International Carriage of Goods by Sea provides as follows: “The carrier shall not rely on facts that are contrary to the statements in the bill of lading as against the holder of the bill of lading acting in good faith.” The “holder of the bill of lading” here means the legally qualified holder of the bill. Since the holder of the bill of lading is entitled to exercise the right on the bill by proving that the document has been duly transferred to him, even when he lacks the formality of continuation of endorsements, it shall be understood that such a holder of the bill of lading as has proved the due transfer of the document is included in the “legally qualified holder.”

Scope of application (Art. 1 (b))

England

J. I. MacWilliam Company Inc. v. Mediterranean Shipping Company S.A. - The "Rafaela S." , [2005] URHL 11; [2005] 1 Lloyd's Rep. 347; 2005 Amc 913

In about January 1990 four containers of printing machinery were damaged in the course of their carriage by sea from Felixstowe to Boston, U.S.A. That carriage was the continuation of a carriage from Durban to Felixstowe in respect of which a straight bill of lading had been issued and although no document had been issued in respect of the leg from Felixstowe to Durban, it was agreed that if a document had been issued, it would have been in the same form. The arbitrators to whom the dispute was submitted concluded that a straight bill of lading did not fall within section 1(4) of the Carriage of Goods by Sea Act 1971 and article 1(b) of the Hague-Visby Rules and that therefore the applicable limit of liability was that set out in the US Cogsa of 1936. Their opinion on this point was shared by the Commercial Court [2002] 2 Lloyd's Rep. 403, but the Court of Appeal reached the conclusion that a straight bill of lading is subject to the Hague-Visby Rules [2003] 2 Lloyd's Rep. 113.


[1] The expression "bill of lading or any similar document of title" in article 1(b) of the Hague-Visby Rules is apt to cover a straight bill of lading.[2] A straight bill of lading must be regarded as a document of title since its production is a necessary condition pre-condition of requiring delivery even when there is no express provision to that effect.

Parsons Corporation and Others v. C.N. Scheepvaartonderneming Happy Ranger and Others – The Happy Ranger (Queen’s Bench Division – Admiralty Court [2001] 2 Lloyd’s Rep. 530

By a contract dated 7 October 1997 between C. V. Scheepvaart onderneming Happy Ranger (the Owners) and Parsons Corporation the Owners agreed to carry on board the Happy Ranger three reactors from Porto Marghera (Venice) to Al Jubail in Saudi Arabia

Clause 5 of the contract provided that the carrier’s regular form of bill of lading was applicable and was to form part of the contract. The specimen form of bill of lading provided inter alia:

3. General Paramount Clause. The Hague Rules contained in the International Convention for the Unification of certain rules

relating to Bills of Lading, dated Brussels 25 August 1924, as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, Articles I to VIII of the Hague Rules shall apply. In such case the liability of the Carrier shall be limited to £100 sterling per package.

Trades where Hague-Visby Rules apply.In trades where the International Brussels Convention 1924 as amended by the Protocol signed at

Brussels on 23 February 1968 – the Hague-Visby Rules – apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Lading.Clause 11 so provided:

The Master will deliver the cargo only upon presentation of duly endorsed original Bill(s) of Lading. In case of non-presentation of these documents all time lost in waiting to count as laytime or time for which damages for detention are due.Clause 15 so provided:

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Any dispute arising under this Contract of Carriage and Bill of Lading shall be decided by the competent Court of London and English Law shall apply.

On 11 March 1998 one of the reactors, when being loaded on board by two cranes of the vessel, fell to the ground owing to a hook of one of the cranes having broken. No bill of lading was issued. Parsons Corp. claimed damages in the amount of about US$ 2.4 million. The owners denied liability stating that if liability existed it would be limited to £ 100.

The trial of certain preliminary issues was ordered by the Commercial Court, including the following:

Do the Hague/Hague-Visby Rules apply to the contract of carriage and if so which Hague Rules?Do the Hague Rules apply in relation to the loading of the process vessel (i.e. the reactor)?Can the defendants limit their liability by reference to art. IV, r. 5 of the Hague/Hague-Visby

Rules?


[1] Although the fact that no bill of lading was issued in respect of the goods is not of itself conclusive against the applicability of COGSA 1971 or of the Hague-Visby Rules, their applicability must be excluded if the parties did not intend or expect that as between themselves any bill of lading issued would be of any contractual effect independent of the contract made between themselves.[2] The Hague-Visby Rules that have been enacted in Italy are not applicable pursuant to a clause paramount providing for the application of the 1924 Bills of Lading Convention “as enacted in the country of shipment”, since Italy has repealed its enactment of the 1924 Convention when enacting the Hague-Visby Rules.

Held, by the Court of Appeal ([2002] 2 Lloyd’s Rep. 359), that:

[1] If a bill of lading is or is to be issued or its issue is contemplated by the contract of carriage, the contract is “covered” by the bill of lading and consequently he contract is a “contract of carriage” as defined by Article 1(b) of the Hague-Visby Rules [2] A bill of lading issued to a named consignee or to his assigns is not a “straight” bill of lading and, therefore, is a bill of lading within article 1(b) of the Hague-Visby Rules

Germany**

Oberlandesgericht Hamburg 19 August 2004, Transport insurer of X v. Freight forwarder Y - m/v "Atlantic Concert", Transport R 2004, 403

The defendant freight forwarder was instructed to arrange for the transport of a consignment of printing machines from Bremerhaven via Portsmouth to Durham, North Carolina, in the United States of America. The transport was covered by a Multimodal Bill of Lading issued by the defendant. The goods were stowed in crates, which were loaded onto mafi trailers. The trailers carrying the crates were loaded on board m/v "Atlantic Concert" at Bremerhaven. After arrival at Portsmouth, the trailers and crates were discharged and hauled to a warehouse for on-carriage by truck. After one crate had already been removed from one of the trailers and heaved onto the truck, the trailer was moved to allow the removal of the second crate. When the trailer was moved, the second crate (weight: 25,490 kgs) fell to the ground and the goods inside were severely damaged.

After the defendants had compensated the plaintiffs on the basis of 2 SDR per kilogram, the plaintiffs claimed an additional amount of EUR 173,041. They argued that the limitation of liability was 8.33 SDR per kilogram pursuant to the general German law of transport. The loss had occurred during a separate land transport leg of the voyage and was thus not subject to the maritime law limitations and exclusions of liability. The defendants were of the opinion that the transhipment in port after discharge from the sea vessel constituted an annex to the sea voyage which was governed by maritime law.The Landgericht Hamburg had ruled in favour of the defendants that the loss was governed by maritime law and that the defendants' liability was limited to 2 SDR per kilogram. The plaintiffs appealed.

Held, by the Oberlandesgericht Hamburg, that:

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[1] The transport within the port area that covered a distance of several hundred meters of cargo discharged from a ship is a separate leg of the carriage and not part of the carriage by sea and is therefore governed by the general transport law and the limit of liability, pursuant to section 431 HGB, is 8.33 SDR and not 2 SDR per kilogram.

** The Editor wishes to thank Mr. David Martin-Clark and BBL Rechtsanwälte of Hamburg for having made available information on this interesting judgment of the Oberlandesgericht Hamburg.

Italy

Tribunal of Genoa 11 April 2005, Sharp Electronics (Italia) S:p.A. v. C.S.A. Agenzia Marittima and Others (not yet reported)

A container with products of Sharp Electronics was loaded at Yokohama on the m/v Hyundai Nobility. The bill of lading issued by the carrier indicated Genoa as port of discharge and Milano as place of destination of the container. The consignee, Sharp Electronics (Italia) S.p.A., found that part of the cargo was missing and commenced proceedings in the Tribunal of Genoa against the local agents of the carrier who denied the liability of the carrier on the ground that the loss had occurred during the transportation by railway from Genoa to Milano and, alternatively, invoked the Hague-Visby Rules limit of liability.


[1] The Hague-Visby Rules are not applicable to a multimodal contract of carriage even if the sea leg is much longer than the subsequent railway leg.

Tribunal of Milano 13 October 2004, Ichemco S.r.l. v. SITTAM S.p.A. and Agenzia Marittima Le Navi S.p.A. (not yet published)

In January 2001 Ichemco S.r.l. entered into a contract of carriage of a consignment of 7,400 kilos of resins from Syracuse (New York) to Milano via La Spezia with the forwarding agent SITTAM S.p.A. SITTAM in turn entrusted the carriage by sea to Mediterranean Shipping Company (MSC). The goods arrived at destination in damaged conditions and Ichemco brought judicial proceedings against SITTAM and Agenzia Marittima Le Navi, as agent for MSC.

Held, by the Tribunal of Milano, that:

[1] The Hague-Visby Rules are applicable only to contracts of carriage performed exclusively by sea and therefore a mixed transport, partly by sea and partly by land, even if the sea leg is much longer is subject to the provisions on carriage of goods of the Italian Civil Code.

Tribunal of Gorizia 28 May 2003, Elifriulia S.r.l. v. Italia di Navigazione S.p.A. and Autamarocchi S.p.A. [2005] Dir.Mar 212

A container with parts of a helicopter was loaded at Los Angeles on the m/v D'Albertis of Italia di Navigazione S.p.A. with destination Monfalcone, in Italy. The container was discharged from the ship in Genoa and carried by road to Monfalcone, where the cargo was found damaged.The bill of lading incorporated the U.S. Cogsa and so provided in section (C) of Clause 6:

"C) Combined Transport. Whenever the goods are to be precarried from an inland "place of receipt" and or on-carried to an inland "place of delivery" and freight is paid for the combined transport, the Carrier undertakes to perform the entire transport from the place where the goods are taken in charge to the place designated for delivery and to be fully liable to the Shipper for such combined transport.

When loss or damage occurs during the combined transport, but it can not be determined which carrier had custody or control of the goods at the time of the loss or of the damage, the Shipper and Carrier agree that it shall be deemed that the loss or damage occurred during sea carriage and the following clauses shall apply.

The consignee, Elifriulia S.p.A., brought an action against Italia di Navigazione and the road carrier, Autamarocchi S.p.A. in the Tribunal of Gorizia.

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Held, by the Tribunal of Gorizia, that:

[1] When the carrier by sea has undertaken to perform a multimodal transport, by sea and road, the Hague-Visby Rules are not applicable, even if the sea leg of the carriage is significantly longer than the road leg.

Tribunal of Turin 5 June 2002, Chinese Polish Joint Stock Shipping Co. v. Zust Ambrosetti S.p.A. (2003 Dir. Mar. 1042)

In a contract of carriage of granite in containers from Genoa to Shanghai the shipper, Zust Ambrosetti S.p.A., agreed with the Italian agents of the carrier, Polish Joint Stock Shipping Co., that the carrier would also take care of forwarding the containers to the inland loading place and of their transportation to Genoa. Damage to the cargo was found upon arrival of the containers at Shanghai and Zust Ambrosetti commenced proceedings against the carrier in the Tribunal of Turin. Amongst others, the question whether the contract was subject to the Hague-Visby Rules was debated between the parties.

Held, by the Tribunale of Turin, that:

[1] The Hague-Visby Rules are not applicable to a mixed road/sea contract of carriage, even if the carriage is characterized by the absolute prevalence of the sea leg.

Scope of applicazion (Art. 1(e))

Germany

Bundesgerichtshof 18 October 2007*

Plaintiffs, the cargo insurers of a German exporter, sued the carrier, which had been instructed by the insured to transport printing machines from Bremerhaven/Germany to Durham/North Carolina via Portsmouth/Virginia. During the ocean carriage from Bremerhaven to Portsmouth two crates of the consignment had been stowed on a mafi-trailer. After arrival in Portsmouth the mafi-trailer with the crates had been trucked for 300 metres out of the vessel into a warehouse to be loaded on a truck for the further road transportation.

After the chains securing the crates to the trailer had been removed, one of the crates was successfully loaded onto the truck. In order to bring it into a better position for loading the second crate onto the truck, the trailer had to be moved again. During that process the second crate fell off the trailer and was damaged.

Plaintiffs argued that the legal provisions for road transport should apply and consequently defendants should only be allowed to limit their liability to 8.33 SDR per kilogram which would be sufficient to cover the damages completely. Defendants argued that, at the time of the damage, the ocean carriage had not yet ended and therefore their liability should – according to the German enactment of the 1924 Bills of Lading Convention – be limited to 2 SDR per kilogram.

Held, by the Bundesgerichtshof, that:

[1] Although the haulage of the mafi-trailer out of the vessel and into the warehouse did not constitute a separate road leg of the multimodal transportation but was a dependent annex of the ocean carriage, the damage occurred during the process of loading the goods from the mafi-trailer onto the truck and that operation was part of the subsequent road transport. Consequently, the applicable limit of liability was 8.33 SDR per kilogram, according to §431 of the Handelsgesetzbuch.


Italy

Corte di Cassazione 2 September 1998, No. 8713, Andrea Merzario S.p.A. v. Vismara Associate S.p.A. and Others (2000 Dir. Mar. 1349)

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Vismara Associate S.p.A. and Fedegari Autoclavi S.p.A. entered into a contract of carriage of machinery from Pavia, Italy to Norfolk, Virginia with Andrea Merzario S.p.A. During the land carriage from Pavia to Genoa the machinery was damaged and the shippers commenced proceedings against Andrea Merzario in the Tribunal of Milano. Both the Tribunal and the Court of Appeal of Milano rejected the one year time bar defence under Article 3 r. 6 of the Hague-Visby Rules raised by Andrea Merzario. Andrea Merzario appealed to the Supreme Court.


[1] A contract of carriage to be performed partly by sea and partly by road is not governed by the provisions of the Hague-Visby Rules but by the provisions of the Civil Code.

Scope of application (arts. 2 and 4))

Italy

Tribunal of Busto Arsizio 18 September 2006, Kenda Farben S.p.A. v. Bongiorno S.r.l. (non yet reported)

Kenda Farben S.p.A. brought proceedings in the Tribunal of Busto Arsizio against Bongiorno S.r.l. claiming damages on account of the breach by the defendant of the instructions to deliver the goods carried from Italy to Tunisia only against signature by the consignee of a bill of exchange for the price of the goods. The defendants stated that the claim was barred since the six months prescription period provided by Italian law had expired and the claimant stated that the time for suit was one year under the Hague-Visby Rules.

Held, by the Tribunal of Busto Arsizio, that

[1] The Hague-Visby Rules are not applicable in respect of a claim by the shipper based on the failure of the carrier to obtain, following the shipper’s instructions, the signature by the consignee of a bill of exchange for the purchase price of the goods.

Scope of application - Claim by a third party (art. 3(6 bis))

France

Cour d'Appel of Aix-en-Provence 14 May 2004, Compagnie Marocaine de Navigation v. Comitran, Office de Commercialisation et d'Exportation and Covea Fleet - The "Al Hoceima" (2005 DMF 322)

(The summary of facts may be found in the section "Excepted perils - Perils of the sea")

Held, by the Cour d'Appel of Aix-en-Provence, that:

[1] The claim against the carrier of the trailer used by the shipper for the shipment on board the carrying vessel of its goods and lost following the loss of the vessel is subject to the provisions of the Hague-Visby Rules.

Scope of application (Art. 10)

France

Cour d’Appel of Aix-en-Provence 2 December 1999, Roscoe Shipping Co. and Others v. Compagnie Sénégalaise d’Assurance et de Réassurance – The “World Apollo” (2001 DMF 308).

A consignment of 525,000 bags of rice was loaded on the World Apollo on 7 April 1994 at Koshichang (Thailand) with destination Dakar (Senegal). The bill of lading covering the consignment was issued by the agents of the carrier in Senegal and incorporated a Paramount Clause providing for the application of the Hague Rules. The cargo was found damaged upon discharge at Dakar and the insurers, acting under subrogation, commenced proceedings against the carrier in the Tribunal de Commerce of

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Marseilles. By judgment dated 23 March 1996 the Tribunal de Commerce held that the contract was governed by the Hamburg Rules, ratified by Senegal. The carrier appealed.


[1] The 1924 Bill of Lading Convention applies to a contract of carriage in respect of which a bill of lading has been issued in Senegal, notwithstanding the ratification by Senegal of the Hamburg Convention of 1978 (Hamburg Rules) since Senegal has not denounced the 1924 Convention.

Italy

Court of Appeal of Palermo 29 November 2003, Conatir S.p.A. v. Salvatore Patané - The "Espresso Trapani" [2005] Dir. Mar. 565

On 29 April 1990 the ferry Espresso Trapani sank off the Sicilian coast, near Trapani, with loss of lives and the complete loss of the cargo on board. The vessel was trading between the Italian mainland and Sicily.

The owners of goods loaded on a trailer commenced proceedings in the Tribunal of Trapani against the owners of the vessel, Conatir S.p.A., claiming damages, seeking the application of the Hague-Visby Rules. The claim was allowed by the Tribunal of Trapani. Conatir appealed to the Court of Appeal of Palermo.

Held, by the Court of Appeal of Palermo, that:

[1] The Hague-Visby Rules do not apply to a contract of carriage between Italian ports.

Tribunal of La Spezia 3 September 1998, Seafortune S.r.l. v. La Spezia Container Terminal-L.S.C.T. S.p.a. (2000 Dir. Mar. 936)

The yacht Lhurs Tournament carried from a port in the United States to La Spezia, Italy, was damaged after discharge from the carrying vessel. The terminal operator, from whom the consignee had claimed damages, stated that it had acted as agent for the carrier and that the Hague-Visby Rules applied.

Held, by the Tribunal of La Spezia, that:

[1] The provisions of the 1924 Brussels Convention on bills of lading to which Italy has given the force of law, owing to the special character inherent to all uniform rules prevail over those of State law; in particular art. 10 of the Convention prevails over the relevant private international law provision of the Code of Navigation.

Scope of application- Claims against the shipper

Italy

Court of Appeal of Turin 24 October 2005, Chinese Polish Joint Stock Shipping Co. v. Zust Ambrosetti S.p.A. and ECSEL S.p.A. - The "Boleslaw Prus" (not yet reported)

By a contract of carriage made between Tripcovich S.r.l. as agents for the Chinese Polish Joint Stock Shipping Co.(the Carrier) and Zust Ambrosetti S.p.A. (the Shipper). the Carrier agreed to carry from Genoa to Shanghai at FCL/FCL terms 10 containers in which the Shipper would stow granite slabs. The agents of the Carrier delivered the empty containers to the Shipper who loaded therein the slabs. Upon arrival at destination then consignees found that many slabs were broken, on account of bad stowage and brought proceedings against the Carrier in the court of Shanghai claiming damages. The Carrier then brought a recourse action in Italy, in the Tribunal of Turin, against the Shipper, claiming payment from the Shipper of all sums it would be ordered to pay to the consignee. By judgment dated 5 June 2002 (2003 Dir. Mar. 1402) the Tribunal of Turin held that the Hague-Visby Rules were not applicable to an action of the shipper against the carrier and that the Shipper was liable for the damages the Carrier would be required to settle to the consignee. The Shipper appealed.

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Held, by the Court of Appeal of Turin, that:

[1] The Hague-Visby Rules are not applicable in respect of an action of the carrier against the shipper for damages resulting from the bad stowage of goods made by the shipper in containers carried under FCL/FCL terms.

Scope of application – Claim of a shipper against another shipper

France

Cour de Cassation (Ch.Com.) 10 March 2009, Amlin Underwriting Ltd. v. Gan Assurances Iard and Others (2009 DMF 369)

Several vehicles carried on board the m/c Panther were damaged by a fire originating from a lorry owned by Ar Mors Vivier during a voyage from Ireland to Cherbourg. The owners of the vehicles and their insurers, Amlin Underwriters Ltd., brought proceedings in the Tribunal de Commerce of Paris against Ars Mors Vivier and its insurers, Gan Assurances Iard claiming damages. The Tribunal rejected the claim and its decision was upheld by the Court of Appeal of Paris with judgment of 16 January 2007 (2007 DMF 756). Amlin Underwriters and the owners of the vehicles appealed to the Cour de Cassation.


[1] When it is established that a claim of the owners of goods carried on a ship against the owners of other goods on board that ship for damages caused by such goods is not subject to the Hague-Visby Rules, there is no need for the Court to decide whether or not the Hague-Visby Rules are applicable to contracts of carriage.[2] The owners of goods carried on a ship damaged during transportation by other goods on board that ship have a right of action against the owners of such goods pursuant to articles 25 and 26 of law 18 June 1966, the prescription period being one year.

Servants or agents (art. 4 bis. 2)

Italy

Tribunal of La Spezia 18 February 2003, Royal Fish S.r.l. v. Agenzia Marittima Lardon & Co. [2005] Dir. Mar. 1365

A refrigerated container loaded on the m/v Trade Sol at Capo Town, was discharged at La Spezia from the vessel and then carried to its inland destination by road where the frozen fish stowed in the container was found damaged.

The consignee, Royal Fish S.r.l., brought an action in the Tribunal of La Spezia against the agents of the carrier by sea and the terminal operator.


[1] Article 4 bis(2) of the Hague-Visby Rules applies also to independent contractors*.

*The English and French text of Article 4 bis (a) differ. Whilst in fact the words "such servant or agent not being an indipendent contractor" have been added in the English text following a suggestion made by the U.S. Delegation at the CMI Stockholm Conference in order to clearly exclude indipendent contractors from the scope of that provision , the corresponding French words "pourtant que ce préposé ne soit pas un contractant indépendant" that appeared in the text prepared by the Commission during the 1967 session of the Diplomatic Conference, were subsequently deleted, probably for the reason that in French legal language a "préposé" cannot be an indipendent contractor. The Tribunal of La Spezia probably considered the French text and gave to it a wide interpretation, ignoring the travaux préparatoires.

Stowage on deck

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France

Court of Appeal of Aix-en-Provence 30 June 2010, Michele D. v. Comptoir de Démenagement et Transit, 2010 Revue de Droit Commercial, Maritime, Aérien et des Transports 93 Revue de Droit Commercial, Maritime, Aérien et des Transports 108

(The summary of facts may be found in the section “Excepted perils – Perils of the sea (art. 4(2)(c)”)

[1] The carrier is not liable in respect of the loss of a container stowed on deck with the consent of the shipper, but the forwarding agent, who shipped the goods, is liable for the loss of a container with household effects, including valuable paintings of whose value he was aware that he had allowed to be stowed on the forward deck of a ship.

Time bar (Art. 3.6)

Israel

Bellina Maritime S.A. and Others v. Menorah Insurance Co. Ltd., Israel Supreme Court 29 May 2001; 3 June 2002 [2002] 2 Lloyd’s Rep. 575.

Pardess Cooperative Society exported a shipment of citrus fruit from Israel to England by means of the sea carrier Bellina Maritime S.A. The shipment had been insured with Menorah Insurance Company Ltd. The carrying vessel arrived at the port of destination on 16 January 1996 and the goods were delivered the following day in damaged conditions.

Menorah Insurance Company, after having settled the claim of the assured, instituted proceedings against the owner and the charterer of the ship in an Israel Magistrate Court on 15 March 1998. The claimant invoked the application of Article 3(6)(a) stating that its claim was for indemnity and that therefore the action was timely instituted the prescription period in Israeli’s law being seven years.

The Magistrate Court rejected such constitution on the ground that according to the interpretation given in England art. 3(6) bis applies only when the law suit for indemnity relies on a bill of lading different from that on which the main action is founded, whilst in the present case the claim of the insurance company relied on the same bill of lading of the main action. The appeal of the insurance company was upheld by the District Court.

Leave to appeal to the Supreme Court was granted on the agreement of the parties.

Held, by the Supreme Court, that:

[1] The subrogation claim of an insurer against a carrier is not a claim against a third party covered by art. 3(6) bis and the time bar applicable is that set out in art. 3(6).

Italy

Tribunal of Bergamo 4 December 2002, Ditta Canali fu Camillo S.r.l. v. Zaninoni International Forwarding Agent S.p.A. - The "Nedlloyd Houtman" (not yet reported)

ST Logistics (UK) Ltd. entered into a contract with Zaninoni International Forwarding Agent S.p.A. for the carriage of a consignment of Fiat spare parts from Milano to Singapore.

Zaninoni sub-contracted the carriage to Zust Ambrosetti S.p.A. who in turn sub-contracted the carriage to Malaysia International Shipping Corporation Berhad (MISC) who issued the bill of lading. Upon arrival at Singapore the receiver, Singapore Technologies Logistics Pte. Ltd., found that nine cases were missing and obtained the payment of the insurance indemnity from Mitsui Marine & Fire Insurance (Asia) Pte. Ltd.

The insurer brought an action against Zaninoni in the Tribunal of Bergamo. The defendants rejected the claim on the ground that the bill of lading provided for a time bar period of nine months and that the extension granted to the insurer was not valid, since the insurers were not parties to the contract of carriage.

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Held, by the Tribunal of Bergamo, that:

[1] A clause of the contract of carriage whereby the claims against the carrier are time-barred if an action is not brought within nine months after delivery of the goods is null and void pursuant to article 3(8) of the Hague-Visby Rules incorporated in the contract by a Paramount Clause.[2] For the purpose of the extension of the one year period the parties reference to whom is made in sub-paragraph 4 of article 3(6) must be deemed to include, in addition to the shipper and the carrier, the receiver and the insurer acting in subrogation of the receiver.

Time for suit (Art. 3. 6)

England

Trafigura Beheer B.V. v. Golden Stavraetos Maritime Inc. - The "Sonia" (C.A.) 3 April and 15 May 2003 [2003] 2 Lloyd's Rep. 201

By a voyage charter party on amended Beepeetime form dated 16 December 1999 the owners of the Sonia, Golden Stavraetos Maritime Inc., chartered that vessel to Trafigura Beheer B.V. for a voyage from 1/2 safe ports in Saudi Arabia to 1/2 safe ports in various places including West Africa at charterers' option. Clause 46 provided that the provisions of articles III (other than r. 8), IV, IV bis and VIII of the Schedule to the Carriage of Goods by Sea Act, 1971 should apply to the charter party. Between 8 and 10 January 2000 the vessel was loaded with a cargo of some 30,596.93 tonnes of Jet A-1 fuel for carriage from Rabigh in Saudi Arabia to Mombasa in Kenya. The port of discharge was subsequently changed to Lagos in Nigeria where the vessel arrived on 2 February and the master tendered notice of readiness. The cargo was subsequently sampled by the receivers who rejected it on the ground that it was off specification.

On 11 February the charterers ordered the vessel to proceed to Abidjan for orders. The master complied and the vessel sailed from Lagos on the same day and arrived the following day at Abidjan where she remained until 11 March. Further samples were taken and the charterers indicated that they would like to sell the cargo, without prejudice to any future claim, in an effort to mitigate damages. Discussions then took place between the parties and the owners observed that the basis on which the vessel was presently employed had yet to be formalized and that for a new voyage an addendum to the present charter or a new agreement needed to be made. On 11 March the charterers orally agreed to the owners' quotation for freight for the voyage to the Mediterranean and to the proposal that they should pay storage charges at the demurrage rate plus the costs of the deviation to Abidjan. The vessel accordingly sailed from Abidjan towards Gibraltar for orders on 11 March. During the voyage the payment of freight and demurrage was discussed between the parties and on 14 March the owners faxed the charterers with an invoice covering the lump sum freight to Lagos under the charter party of US$ 21,370 in respect of deviation costs to Abidjan and US$ 426,257.64 in respect of "demurrage/storage" until departure from Abidjan. On 22 March the owners told the charterers that the vessel was proceeding to Gibraltar for orders "for the final port of discharge" and on the same day the charterers asked the owners to instruct the vessel to proceed to Agioi Theodori to deliver the cargo to Motor Oil (Hellas) S.A. Still on 22 March the owners faxed the charterers with a further invoice in respect of freight from Abidjan to Agioi Theodori.

In the event discharge of the cargo at Agioi Theodori by delivery to Motor Oil (Hellas) S.A. was completed on 1 April.

No further written agreement was drawn up, either by way of fresh charter party or by way of addendum to the existing charter party.

The charterers claimed damages from the owners on the ground of the cargo having been severely damaged due to contamination by residues of a preceding cargo of soya bean oil plus additional freight and demurrage.

On 27 March 2001 the charterers brought proceedings against the owners in the Queen's Bench Division (Commercial Court) claiming that the owners were in breach of the charter party and of art. III rr.1 and 2 of the Hague-Visby Rules. The owners issued an application under Part 24 of the CPR on the basis that the claim had no real prospect of success.

They relied on art. III, r. 6 and contended that the claim was time barred by the time the charterers' claim form was issued on 27 March 2001. They said that the voyage from Abidjan to Agioi Theodori could not fairly be held to have been under the contract of carriage and that, accordingly, there was no delivery under the contract of carriage, albeit varied.

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The Commercial Court held that the claim was time barred, on the basis that the one year period ran from the date that the goods should have been delivered at Lagos. The charterers appealed.


[1] On the basis of the following considerations:(i) the cargo delivered was the same jetoil as was shipped in Rabigh. It remained on the same ship and was delivered by the same shipowners at the same charterers' request to receivers nominated by the charterers, albeit at a different destination;(ii) although the voyage to Agioi Theodori was a new voyage it was made necessary because of problems at Lagos, whatever the causes of those problems were; both parties were faced with the problem of what should be done with the cargo on board after it had been rejected by the proposed receivers in Lagos;(iii) in these circumstances both the voyage to Abidjan and the subsequent voyage to the Eastern Mediterranean arose out of the original charter-party and the fact that the cargo remained on board the vessel; whether the oral agreement was a variation of the charter-party or a new charter-party, it was not an entirely separate and distinct transaction; both parties contemplated that an addendum to the charter-party would be drawn up and that many of the terms of the charter-party would continue to apply;(iv) there was no transhipment of the cargo and no new bill of lading was issued in respect of it;there was delivery within the meaning of art. III r. 6 of the Hague-Visby Rules at Agioi Theodori and suit was therefore brought within a year of delivery.

France

Cour d’Appel of Rouen 16 September 2010, S.A. Omega Trading International v. Société Delmas and S.A. SDV Togo, [2011] DMF 175.

Omega Trading International delivered containers and other goods to Delmas for carriage from Singapore to Lomé. Some of such goods were delivered at destination against presentation of falsified bills of lading and the shipper brought proceedings against Delmas in the Tribunal de Commerce of Le Havre claiming damages for wrong delivery. Delmas raised as a defence the lapse of the one year time limit whereupon the claimant objected that the one year time for suit did not commence to run from the time of wrong delivery, but rather from the time when the claimant had knowledge of such wrong delivery.

The Tribunal de Commerce by judgment of 12 June 2009 held that the claim was time barred. The claimant appealed.

Held, by the Court d’Appel of Rouen, that:

[1] The one year time for suit of article 3(6) commences to run from the date of completion of delivery even in case of wrong delivery.

Cour de Cassation (Ch. Com.) 20 January 2009, Léoville v. Copenship

Mr. Léoville instructed Sud Marine to provide for the carriage of a craft from Toulon to Port-Louis (Maurice Island) and Sud Marine subcontracted the carriage to Pol-Asia Shipping which had entered into a space charter in the Viktor Kurnatosvkiy with the time charterers of the vessel, Azov Shipping. Pol-Asia issued a bill of lading to Mr. Lèoville, as shipper. During carriage the craft, that had been loaded on deck, shifted and the vessel had to deviate in order to discharge the craft en route to its destination, Mr. Lèoville brought proceedings in tort against Copenship claiming damages. On appeal of a judgment of the Tribunal de Commerce the Court of Appeal of Aix-en-Provence held the claim against the carrier was subject to the one year time bar of article 3.6 of the Hague-Visby Rules. Mr. Léoville appealed to the Cour de Cassation.


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[1] The one year time for suit of the Hague-Visby Rules is not applicable in respect of an action in tort brought against a company which is not a party to the contract of carriage.

Cour de Cassation 2 March 1999, Sea Land Service v. FMT Production (2000 DMF 245)

Out of a quantity of 226 containers of frozen meat carried from Rotterdam to Agadir and Casablanca 6 were rejected by the consignee and carried back to Rotterdam where the carrier, Sea Land Service, exercised its right of retention until payment of its claim for freight. Sea Land Service sued the shipper in the Tribunal de Commerce of Rochefort-sur-Mer claiming payment of freight and the shipper made a counterclaim for damages. The counterclaim was allowed by the Tribunal de Commerce and then by the Cour d’Appel. Sea Land Service appealed to the Supreme Court inter alia because the counterclaim had been made after more than one year from the date when the containers should have been delivered.


[1] The one year prescription period of Art. 3 r. 6 of the 1924 Brussels Convention on Bills of Lading does not run in favour of the carrier who refuses delivery invoking the right of retention of the goods.

Italy

Tribunal of La Spezia 17 December 2007, Consortium Group S.r.l. v. Tarros International S.p.A.(not yet reported).

A consignment of marble slates , stowed by the shipper in four containers, was loaded at Cagliari on board the m/v Vento di Maestrale of Tarros International S.p.A. with destination Istanbul. When the vessel called at La Spezia it was found that several slates were damaged and the carrier discharged the containers requesting shipper to collect its cargo. Since the shipper failed to collect its cargo the carrier brought proceedings against the shipper in the Tribunal of La Spezia seeking payment of the demurrage in respect of the containers. The shipper in turn claimed damages for the damage to the marble slates and the carrier alleged that the claim was time barred.

Held, by the Tribunal of La Spezia that

[1] The one year time bar period under article 3 (6) of the Hague-Visby Rules commences to run, in case the goods have not arrived at destination, from the date when they should have arrived and, where such date is unknown, from the date when the shipper has become aware of the loss of or damage to the goods

Corte di Cassazione 24 February 1999, F.lli Ferri S.p.A. v. Adriatica di Navigazione (2000 Dir. Mar. 239)

F.lli Ferri S.p.A. had purchased a parcel of seeds and had agreed that loading should take place partly in December 1983 and partly in January 1984. Payment of the second lot was made by F.lli Ferri against presentation of a bill of lading dated 26 January 1984. Subsequently the buyers established that loading had actually taken place in February 1984 and sued the carrier, Adriatica di Navigazione, before the Tribunal of Livorno claiming damages in contract and in tort. The claim was rejected by the Tribunal of Livorno. The Court of Appeal of Florence held that the claim was time barred under the Hague-Visby Rules and rejected the claim in tort. F.lli Ferri appealed to the Supreme Court, on the ground that a claim for damages caused by the antedating of a bill of lading was not governed by the Hague-Visby Rules.


[1] The one year time limit does not apply in respect of claims for damages arising out of the antedating of the bill of lading.

Corte di Cassazione 19 November 1999, no. 12829, Caleca & Costantino S.n.c. v. Sea Land Service Inc.–The “Panarea” (2000 Dir. Mar. 861)

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A consignment of nuts carried on board the Panarea by Sea Land Service Inc. from Italy to London was delivered in damaged conditions on 18 October 1981. On 1 December 1981 the shippers, Caleca & Costantino S.n.c., applied to the Tribunale of Patti for the appointment of a surveyor who filed his report five years later, on 3 November 1986. Caleca & Costantino then commenced proceedings against Sea Land Service on 26 November 1986 stating that the application for the appointment of an expert had prevented the running of the one year time bar. This was denied by the Tribunal of Patti and then by the Court of Appeal of Messina. The claimants appealed to the Supreme Court.


[1] The application to the Court for the appointment of an expert does not prevent the lapse of the one year time limit set out in art. 3.(6) of the Hague Rules.

Tribunale of Venice 15 June 2000, Helvetia Assicurazioni v. Elmar Shipping Agency - The “Balkan” (2001 Dir. Mar. 670).

Ilva S.r.l. arrested in Venice the m/v Balkan as security for a claim against the carrier for loss of and damage to a parcel of glasses, unloaded from the Balkan. The vessel was subsequently released upon the carrier providing security. Helvetia Assicurazioni paid the insurance indemnity to the consignee and sued the carrier in the Tribunal of Venice. The carrier alleged that the claim was time barred, service of proceedings having been made after the lapse of one year from delivery.

Held, by the Tribunal of Venice, that:

[1] The application for the arrest of the ship as security for the claim against the carrier prevents the running of the one year time limit set out in Art. 3 r. 6 of the Hague-Visby Rules.

Tort claims (Art. 4 bis. 1)*

United States

Polo Ralph Lauren L.P. and Others v. Tropical Shipping & Construction Co. Ltd. (U.S. Court of Appeals-11th Cir. 21 June 2000, 2000 AMC 2129)

While en route from the Dominican Republic to Florida, a container containing Polo’s cargo was lost overboard in rough seas. Polo, in a three-count complaint against the carrier, Tropical Shipping & Construction Co. Ltd., filed in the Southern District of Florida, asserted claims for breach of contract, bailment, and negligence. In a motion for partial summary judgment, Tropical sought judgment on the contract claim or, in the alternative, to limit the extent of damages recoverable by Polo to the value of the fabric. The district court granted the motion as to the contract claim on the ground that Polo did not have standing because it was not named in the bills of lading. The court also granted summary judgment to Tropical on the bailment and negligence claims as preempted by COGSA. Polo appealed, challenging inter alia the district court’s conclusion that COGSA provides an exclusive remedy.

Held, by the Court of Appeals for the 11th Circuit, that:

[1] Cogsa affords only one cause of action for lost or damaged goods and although claims under Cogsa comprise elements of both contracts arising from the breach of the contract of carriage, and tort, issuing from the breach of the carrier’s duty of care, they are a unitary statutory remedy.

* The United States has not ratified the Visby Protocol.

Steel Coils, Inc. v. M/v "Lake Marion", in rem; Lake Marion, Inc. and Bay Ocean Management, Inc., in personam - v. Western Bulk Carriers K/S Oslo - v. Itochu International, Inc., United States Court of Appeals for the Fifth Circuit, May 13, 2003 (2003 AMC 1408)

Steel Coils, Inc., an importer of steel products with its principal office in Deerfield, Illinois, ordered flat-rolled steel from a steel mill in Russia. Itochu International, Inc., which then owned ninety

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per cent of the stock of Steel Coils, purchased the steel and entered into a voyage charter with Western Bulk Carriers K/S Oslo for the m/v Lake Marion to import the steel to the United States. Western Bulk had time chartered the vessel from Lake Marion. Inc. As Lake Marion, Inc.'s manager, Bay Ocean Management, Inc. employed the master and crew of the vessel.

The Lake Marion took on the steel coils at the Latvian port of Riga and discharged them at New Orleans and Houston. Steel Coils alleged that the coils were damaged by salt water and filed suit under COGSA against the m/v Lake Marion in rem and against Lake Marion, Inc., Bay Ocean Management and Western Bulk in personam, requesting US$ 550,000 in damages, with a separate claim of negligence against Bay Ocean.

After a bench trial, the U.S. District Court for the Eastern District of Louisiana held the defendants jointly and severally liable to Steel Coils for US$ 262,000 and Bay Ocean liable for an additional US$ 243,358.94.

From this judgment the vessel interests appealed and Steel Coils and Western Bulk cross-appealed.Held, by the U.S. Court of Appeals for the Fifth Circuit, that:

[1] The manager of a vessel, who is not a party to the contract of carriage can be held liable in tort outside of COGSA and, therefore, cannot avail itself of the COGSA package limitation.

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THE 1926 CONVENTION ON MARITIME LIENS AND MORTGAGES

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Maritime lien for supplies and services (Art. 2.5)

South Africa

Bridge Oil Limited v. The Fund constituting the proceeds of the sale of the m/v "Megas" , High Court of South Africa 12 June 2000 (not yet reported).

In April 2000 Bridge Oil obtained from the Tribunal of Tuzla a pledge right on the m/v Aksu, of Turkish flag as security for a claim for supply of bunker. Later that year the mortgagees of the vessel, Hamburgische Landesbank Girozentrale, arrested and sold the vessel in Denmark. The vessel was purchased by Barrington Enterprises S.A. who in turn sold it to Mega Navigation Ltd., a Maltese company, who registered the vessel in Malta without obtaining its prior deregistration from the Turkish register.

In the year 2002 the vessel was arrested at Cape Town by Hamburgische Landesbank Girozentrale and sold. A dispute arose between Hamburgische Landesbank and Bridge Oil on the ranking of their respective claims, the latter maintaining that its claim had priority over the mortgage since it was secured by a maritime lien under Turkish law.

Held, by the Supreme Court of Court of South Africa, that:

[1] Under the 1926 Brussels Convention on Maritime Liens and Mortgages, implemented by Turkey, the claim for the supply of bunker is secured by a maritime lien only if the supply has been ordered by the master of the vessel.

United States

Loginter S.A., Parque Industrial Agua Profunda S.A. UTE et al. v. M/V Nobility, in rem, United States District Court, District of Maryland 10 September 2001 (177 F. Supp. 2d 411)

Loginter S.A., Parque Industrial Agua Profunda S.A. UTE and other companies, based in different countries, brought an in rem action against the M/V Nobility, of Maltese flag, for services provided in various ports on the ground that their claims were secured by a maritime lien. One of the plaintiffs, Poseidon & Frachtcontor Junge Ltd., served as husbanding agent for the Nobility during its call at the port of Szezecin, in Poland and provided and arranged for services for the vessel which were not paid. There was agreement that the law of Poland applied but there was disagreement as to whether the Polish Maritime Code gave Poseidon a maritime lien against the Nobility. It was accepted that the 1926 Brussels Convention on Maritime Liens and Mortgages did not apply, since Malta was not a Contracting State, and that consequently the relevant provision was article 68.5 of the Polish Maritime Code which so provides (the provision is practically identical to article 2.5 of the Convention):

“The following claims are privileged:… (5) [claims arising out of] contracts entered into or other legal acts done, by the master [acting]

within the scope of his statutory authority while the vessel is away from her home port, [where such contracts or acts are] actually necessary for the preservation of the vessel or the continuation of [her] voyage, whether the master is [or is not] at the same time operator or owner of the vessel, and whether the claim is his own or (that) of shipchandlers, persons repairing the vessel, lenders, or other contracting parties.”

The services were provided by Poseidon on request of the charterers, rather than of the master, and included supervision, equipment, labor for loading of cargo, garbage removal, emergency tug boat services in port, tonnage fees, inspection of ship’s bunkers, technology and assistance in arriving and departing the port.

Held, by the United States District Court, District of Maryland, that:

[1] Since the Polish Maritime Code was enacted in 1961, prior to modern advances in communication technology, there is now persuasive reason not to limit the claims secured by a

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maritime lien under article 68.5 of the Polish Maritime Code to contracts entered into by the master himself, particularly in light of the modern widespread practice of distant charterers directly ordering services for their ships.

Maritime lien for claims arising out of the contract of engagement (Art. 2.2)

France

Cour de Cassation (Ch. comm.) 8 June 2010, J.-M. Aguirre v. Etablissement national des invalides de la marine (2010 Revue de Droit Commercial, Maritime, Aerien des Transports, 105)

M.A. Aguirre, owner of the m/v “Le Sainte Barbe”, bareboat chartered to M. Dieu, paid to the Etablissement National des Invalides de la Marine on its request social insurance contribution in respect of the crew of the ship and subsequently, considering that that payment was not due by him but by the bareboat charterer, brought proceedings against the Etablissement in order to recover the amount due.


[1] Pursuant to art. 31 of law 3 January 1967 (corresponding to art. 2(2) of the 1926 Convention on maritime Liens and Mortgages) the claims arising out of the contract of engagement of the crew are secured by a maritime lien of the ship but does not require that the claim is against the owner of the ship.

Scope of application (art. 14)

Italy

Tribunal of Trieste 14 August 2008, Cobantur Turizm Ticaret ve Naklyat Ltd. v. UN RO-RO Isletmeleri A.S. – m/v “Und Adriyatik” (unreported)

On 6 February 2008 a serious fire developed on board the m/v “Und Adriyatik”, of Turkish flag, owned by UN RO-RO Isletmeleri A.S., during the voyage from Turkey to Trieste. The vessel, whose cargo of vehicles was almost wholly destroyed by the fire, was towed to Trieste where it was arrested on application of the owners of certain vehicles. The Owners applied for the release of the vessel from arrest on the ground that the vessel, who should be considered a wreck, had been sold to third parties and the claimants claims were non secured by a maritime lien since the 1926 Brussels Convention was not applicable

Held, by the Tribunal of Trieste, that

[1] A vessel severely damaged that must be deemed to be a wreck even if capable of being towed, cannot be treated as a vessel for the purposes of the 1924 Brussels Convention on bills of lading.[2] The 1926 Convention on Maritime Liens and Mortgages does not apply when both the claimant and the owner of the vessel are nationals of the same contracting State.

Tribunal of Trieste 14 August 2008, Ramazan Gunduz v. UN RO-RO Isletmeleri A. S. and Cemsan Gemi Söküm Demir Çelik San. Ve Ticaret Ltd. – m/v “Und Adriyatik” (unreported)

On 6 February 2008 a serious fire developed on board the m/v “Und Adriyatik”, of Turkish flag, owned by UN RO-RO Isletmeleri A.S., during the voyage from Turkey to Trieste. The driver of one of the vehicles carried on board was severely injured when the fire developed and on arrival of the vessel to Trieste, where she was towed by the salvors, applied to the Tribunal of Trieste for the arrest of the vessel that had meanwhile been sold by her owners to another Turkish company, Cemsan Gemi Söküm Demir Çelik San. Ve Ticaret Ltd. The previous Owners and the Buyers applied for the release of the vessel from arrest on the ground that the vessel should be considered a wreck and that no maritime lien could be enforced on a wreck since the 1926 Convention on Maritime Liens and Mortgages was not applicable on wrecks and for a declaration that Italian Courts had no jurisdiction on the merits of the claim since art. 7 of the 1952 Arrest Convention was not applicable to vessels flying the flag of a non contracting State

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parties and the claimant’s claims was not secured by a maritime lien since the 1926 Brussels Convention was not applicable.

Held, by the Tribunal of Trieste, that:

[1] The 1926 Convention on Maritime Liens and Mortgages is not applicable to a vessel that, owing to the extensive damages caused by fire, must be deemed to be a wreck.

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THE 1952 ARREST CONVENTION

•Arrest in respect of claims other than maritime claims (Art. 8.2) •Arrest of a ship other than that in respect of which the claim has arisen (art. 3.1)•Arrest of a sister ship (Art. 3.4) •Arrest of a ship not owned by the person liable (art. 3.4) •Associated ships (Art. 3.2) •Claim against the time charterer (Art. 3.4) •Claims in respect of which a ship may be arrested (Art. 2) •Claims in respect of which a ship may not be arrested (Art. 2) •Corporate veil •Damages for wrongful arrest (Art. 6) •Definition of "Arrest" (Art. 1.2) •Definition of “Claimant” (Art. 1.4) •Droit de suite (Art. 9) •Financial conditions of the person liable (Art. 2) •Forced sale (Art. 9) •Jurisdiction (Art. 5) •Jurisdiction for the arrest (Art. 4) •Jurisdiction on the merits (Art. 7.1) •Maritime claims (Art. 1.1) •Maritime claims - Claims of maritime agents (Art. 1.1(n)) •Maritime claims - Disputes as to property (Art. 1.1(o)•Maritime claims - Mortgage or hypothecation (Art. 1. 1(q)) •Maritime claims - Notions of claimant (Art. 1(3) and (4)) •Maritime claims - Notion of goods (art.1(f)) •Maritime claims - Salvage (Art. 1.1 (c)) •Maritime claims - Supplies (Art. 1 (1) (k)) •Multiple Arrest (Art. 3.3) •Notion of owner (Art.3(1)) •Notion of ship – Offshore Drilling Unit (Art. 2) •Proceedings on the merits (Art. 7.2)•Prohibition of re-arrest (art. 3.3)•Re-arrest (Art. 3.3)•Release from arrest (Art. 5) •Release of the ship upon provision of bail (Art. 5)•Rules of procedure (Art. 6) •Scope of application (Art. 8.2) •Scope of application (Art. 8.3) •Scope of application (Art. 8.4) •Ships that may be arrested (art. 3.4) •Ship not owned by the person liable (Art. 3(4)) •Sister ships (Art. 3.2)

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Arrest in respect of claims other than maritime claims (Art. 8.2)

Greece

Single Member First Instance Court of Piraeus 864/1979 (Maritime Law Review, Vol. 9 (1985), p.6)

The claimants applied for arrest of a vessel in order to secure claims for amounts due to them arising out of their services as maritime agents of the vessel. The defendant argued that that was not a maritime claim under the 1952 Convention.

Held by the Single Member First Instance Court of Piraeus, that:

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[1] The arrest within the jurisdiction of Contracting States of a ship not flying the flag of a Contracting State is permitted for any claim as this is allowed under Greek law (Art. 8(2) of the Convention). *

* Reported by D.K. Voltis, LLM, of Gr. J. Timagenis Law Office, 57, Notara Street, fax +30 210 4221388, E-mail: [email protected], Piraeus, Greece

Italy

Court of Appeal of Genoa 12 February 2000, Morsviazsputnik Satellite Communications and Navigational Electronic Aids v. Azov Shipping Company-The “Yuriy Dvuzhilny” (2001 Dir. Mar. 1113).

Morsviazsputnik Satellite Communications and Navigational Electronic Aids applied to the Court of Appeal of Genoa for the arrest of the m/v Yuriy Dvuzhilny of Ukrainian flag as security for a claim against Azov Shipping Company. One of the issues submitted to the Court was whether the Arrest Convention applied to a ship flying the flag of a non-Contracting State and in respect of what claims the arrest was permissible.


[1] A ship flying the flag of a non-Contracting State may be arrested also in respect of a claim other than a maritime claim if a prima facie evidence (fumus boni iuris) of the claim is provided and proof is given of the danger that assets of the debtor may in the future be unavailable for the enforcement of a judgment (periculum in mora).

Arrest of a ship other than that in respect of which the claim has arisen (art. 3.1)

Italy

Tribunal of Bari 12 August 2011, Adria Ferries v. South Adriatic Shipping Line – The “Adriatica I” (Dir. Mar.****)

Pursuant to a cooperation agreement between two shipowners Adria Ferries carried on one of its ships passengers that had booked a passage on a ship of South Adriatic Shipping Line and since this latter company had failed to pay to Adria Ferries the cost of such carriage, Adria Ferries made an application to the Tribunal of Bari for the arrest of a ship owned by South Adriatic Shipping Line.

Held, by the Tribunal of Bari, that:

[1] Since pursuant to the 1952 Arrest Convention the arrest of a ship is allowed in respect of a claim relating to such ship, the shipowner who has agreed to carry passengers customers of another shipowner and has not received payment of the passage money relating to such carriage is not entitled to arrest a ship owned by that shipowner.

Arrest of a sister ship (Art. 3.4)

England

Aluflet S.A. v. Vinave Empresa de Navegaçao Maritima Limitada–The “Faial” (Queen’s Bench Division (Admiralty Court) 27-28 January 2000, [2000] 1 Lloyd’s Rep. 473)

By a bareboat charter dated 27 February 1999 on Barecon 89 form Vinave Empresa de Navegaçao Maritima Lda chartered for a period of three years the m/v Xove owned by Aluflet S.A. The vessel was delivered on 6 March 1999 and capsized and sank alongside her berth at Aveiro, just five days later. The harbour authorities required the wreck to be removed. Aluflet S.A. paid the removal expenses and arrested the m/v Faial owned by Vinave on the basis of a claim for an indemnity of US$ 1,139,345 pursuant to cl. 18 of the bareboat charterparty which reads as follows:

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“In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Owners against any sums whatsoever which the Owners shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction in navigation.”

The claimant claimed Admiralty jurisdiction under the Supreme Court Act, 1981 relying on s. 20(2)(h). Vinave applied for the warrant of arrest to be set aside. They submitted that the claimant’s assertion of jurisdiction within the 1981 Act failed on two grounds, one being that at the time when the cause of action arose Vinave was not the owner or charterer of or in possession or control of the Xove within the meaning of s. 21(4)(b) of the Act. In fact, under the terms of cl. 18 no cause of action arose until the liability of the claimant was ascertained and established and payment had been made, while neither of these conditions precedent had been fulfilled at the time Vinave was the charterer of the Xove.

Held, by the Queen’s Bench Division (Admiralty Court), that:

[1] Pursuant to section 21(4) of the Supreme Court Act 1981 the arrest of a ship owned by the demise charterer of a ship as security for a claim of the owner of such latter ship against the demise charterer is not permitted when the person liable was not the bareboat charterer at the time the claim arose.

Arrest of a ship not owned by the person liable (art. 3.4)

England

The “Tychi” – Court of Appeal 31 March 1991 ([1999] 2 Lloyd’s Rep. 11).

By a slot charter agreement dated 27 May 1993 MSC Mediterranean Shipping Company agreed to place at the disposal of Polish Ocean Line (POL) 450 TEUs per sailing in each direction on a “whether used or not” basis at an agreed price per TEU, to be reviewed periodically.

On 12 August 1998 an agreement was made between MSC and POL Atlantic for the payment of the outstanding amount owed by POL but since the arrears were not cleared and the arrears outstanding instead increased, POL and POL Atlantic undertook to sell the m/v Tychi and to pay to MSC the proceeds of its sale. On 17 March 1999 MSC issued a writ in rem and arrested the Tychi. POL issued a motion seeking inter alia an order that the warrant of arrest be discharged and the Tychi be released from arrest.

MSC’s case was that it was entitled to arrest the Tychi under section 21(4) of the Supreme Court Act 1981 since POL was the charterer and the Tychi was “any other ship” within the meaning of s. 21(4)(iii).

The application to release the Tychi was refused by Mr. Peter Gross, Q.C. POL appealed.


[1] The expression “charterer” in s. 21(4) of the Supreme Court Act 1981 is not confined to a demise charterer and includes a time charterer and a voyage charterer as well as the charterer of part of a ship and there is nothing in the 1952 Arrest Convention which would support the exclusion of the time and voyage charterers.

France

Cour d'Appel of Montpellier 1 December 2003, SA DK Lines v. Petredec Ltd. - The "Sargasso" (2004 DMF 435).

Petredec Ltd. of Bermuda brought a claim against the bareboat charterer of the Sargasso, Tokumaru, for damages to goods carried by Tokumaru on board the Sargasso and commenced arbitration proceedings against Tokumaru in London. After having obtained an award for US$ 1,010,289 Petredec applied to the Tribunal de Commerce of Aix-en-Provence for the arrest of the Sargasso. The arrest was granted on 8 March 1996, whereupon the owners of the ship, DK Line, having obtained the release of the ship against a security, commenced proceedings against Petredec in the Cour d'Appel of Aix-en-Provence in order to obtain the annulment of the warrant of arrest. By judgment of 25 September 1997 the Cour d'Appel of Aix-en-Provence found that since Panama, whose flag the ship was flying, was not a party to the 1952 Arrest Convention, French domestic law applied and the arrest was not justified because the claimant had not proved that the ship was owned by Tokumaru.

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The judgment of the Cour d'Appel was quashed by the Cour de Cassation with judgment 30 October 2000 (2000 DMF 1012) on the ground that the Convention applied, pursuant to its article 8(2), also in respect of ship flying the flag of non contracting States since France had not availed itself of the right to exclude such application and the case was remitted to the Cour d'Appel of Montpellier.

Held, by the Cour d'Appel of Montpellier, that:

[1] Pursuant to article 3(4) of the 1952 Arrest Convention a bareboat chartered vessel may be arrested as security for a claim against the bareboat charterer.

Cour d’Appel of Aix-en-Provence 24 May 2002, Grand Seaways Limited v. Total Fina Elf – The “Renai I” and “Renai II” (2002 DMF 772)

Pursuant to an order of the Tribunal de Commerce of Marseilles dated 11 January 2002 S.A. Total Raffinage Distribution, subsequently named Total Fina Elf, arrested the ships Renaissance Seven and Renaissance Eight, renamed Renai I and Renai II, at the port of Marseille as security for a claim arising out of the supply of bunker. Grand Seaways Limited, a Liberian company, requested the release of the vessels stating it had purchased them in a judicial sale at Gibraltar. The Tribunal de Commerce of Marseilles rejected the request of release, whereupon Grand Seaways Ltd. appealed to the Cour d’Appel of Aix-en-Provence.

Held, by the Court d’Appel of Aix-en-Provence, that:[1] Pursuant to articles 3(1) and 9 of the 1952 Arrest Convention arrest of a ship not owned by the debtor on the basis of the sole allegation of a maritime claim relating to that ship is not permissible.

Italy

Tribunal of Genoa 13 January 2003, Nortoil and Shipping LLC v. TR.I.S. Traghetti Isole Sarde S.r.l. [2004] Dir. Mar. 1482

Nortoil and Shipping LLC supplied gasoil to the m/v Incat 045 owned by Incat Chartering Pty Ltd. and bareboat chartered to TR.I.S. Traghetti Isole Sarde S.r.l. Since TR.I.S. failed to make payment for the gasoil, Nortoil and Shipping obtained an order of arrest of the vessel from the Tribunal of Genoa. Incat Chartering obtained the release of the vessel against a bank guarantee and appealed against the order of arrest of the vessel on the ground that the vessel was not owned by the company against whom the claim had arisen and that, since the claim was not secured by a maritime lien, it could not be enforced on the vessel through its force sale.


[1] Under the 1952 Arrest Convention a vessel may be arrested in respect of a claim against the bareboat charterer nor is the fact that such claim cannot subsequently be enforced on the vessel a ground for excluding the right of arrest.

Associated ships (Art. 3.2)

France

Cour de Cassation (Ch. com.) 15 October 2002, Latvian Shipping Co. v. Stocznia Gdanska - The "Taganroga" and The "Razna" (2003 DMF 756).

Latreefers Inc., a Liberian Corporation, entered into a contract with a Polish shipbuilding company, Stocznia Gdanska, for the construction of six reefer ships. Following the failure by Latreefers to pay certain instalments of the purchase price, Stocznia Gdanska commenced proceedings in London against Latreefers and having obtained a judgment in its favour, arrested in France two vessels, the Taganroga and the Razna, the registered owners of which were respectively Taganroga Shipping Corp. and Razna Shipping Corp. The claimants alleged that there existed a community of interests between the

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two owning companies and Latreefers. By judgment of 8 June 1999 the Court of Appeal upheld the arrest. The owners of the vessels appealed to the Cour de Cassation.


[1] The fact that the owners of two vessels arrested as security for a claim against the company who had sold the vessels to the present owners and chartered them back are daughter companies fully owned by the seller and that no evidence is provided of the payment of the purchase price does not entail that they are a sham and does not justify their arrest.

Cour d’Appel of Rouen 14 September 2000, Rederiet M.H. Simonsen APS v. Magnifica Navigation Corp. – The “Oradana” (2001 DMF 1028)

By charter parties dated 12 and 29 May 1998 Mofel Shipping Corp. and Magnifica Navigation Corp. chartered respectively the m/v Chem Fortune and Chem Pioneer to Svendborg Tankers A/S. Since at the end of the charter period the two owners could not obtain payment of the outstanding freight balance, they applied to the Tribunal de Commerce of Le Havre for the arrest of the m/v Oradana, owned by Rederiet M.H. Simonsen APS on the ground that Svendborg Tankers A/S was merely a fictitious entity.

By orders of 2 May 2000 the juge de référés of the Tribunal de Commerce of Le Havre authorized the arrest and by subsequent order of 20 May 2000 if held that Rederiet M.H. Simonsen and Svendborg Tankers were not fictitious entities but affirmed the order of arrest on the ground that evidence had been provided that the two companies were under the same management and there existed between them a “communauté d’intérêts”. Rederiet M.H. Simonsen appealed.


[1] A ship must be deemed to be associated to that in respect of which the claim has arisen and may, therefore, be arrested as security for that claim when the companies owning the two ships are managed as a sole entity and have no financial and commercial autonomy

Spain

Audiencia Provincial of Barcelona 24 May 2002, Mediterranean Shipping España Barcelona v. Tatjana Usova [2004] Dir. Mar. 283

Tatjana Usova applied to the Juzgado de Primera Instancia of Barcelona for the arrest of the m/v MSC Ilaria, owned by Ulmus International Corp. as security for a claim arising our of the death of her father on board the m/v Egoli owing to a fire that had developed on board.

The arrest of the MSC Ilaria was applied for on the ground that at the time of the accident she was owned by Shoreline Shipping SA, a company associated with Ulmus International as it appeared from the fact that both companies had the same shareholders and the same directors and were managed by the same company. The application was granted by the Court and the subsequent opposition of Ulmus International was rejected. Ulmus International then appealed to the Audiencia Provincial of Barcelona.

Held, by the Audiencia Provincial of Barcelona, that:

[1] The arrest of a vessel owned at the time when the maritime claim under the 1952 Arrest Convention has arisen by an associated company and subsequently sold is permissible if the claim is secured by a maritime lien under the 1926 Convention on Maritime Liens and Mortgages of which Spain is a party.

Claim against the time charterer (Art. 3.4)

Italy

Tribunal of Genoa 28 October 2005, ABG v Onur Denizcilik Ve Petrol Ürünleri Sanay Ve Ticaret A.S. - The "Hande Ozgul" (not yet reported)

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By decree dated 3 October 2005 the Tribunal of Genoa authorised the arrest of the MV "Hande Ozgul" as security for a claim of ABG against the owner of the ship in respect of the supply of fuel oil. The ship was then arrested in Ravenna and the owners after having paid into court the amount of the claim applied to the Tribunal of Genoa, competent for the merits of the claim or the release of the ship. The claimant stated that competent for the release of the ship was the Tribunal of Ravenna, where the ship had been arrested. The Owners appealed against the order of arrest on the ground, inter alia, that the claim of the arrestor was against the time charterer and was not secured by a maritime lien.


[1] Pursuant to article 3(4) of the Convention on Arrest of Ships 1952, a ship may be arrest as security for a claim against the time charterer even if the claim is not secured by a maritime lien.

Claims in respect of which a ship may be arrested (Art. 2)

France

Cour de Cassation (Ch. Com.) 3 February 1998, Stardust Marine v. Scorpio Maritime Ltd. ([1998] DMF 260)

By contract dated 4 February 1993 Stardust Marine (Stardust) and Scorpion Maritime Ltd. (Scorpio) agreed that Scorpio would superintend the conversion work of the sailing ship Vendredi 13 into a luxury cruise ship to be named Friday Star. Having failed to receive the full payment of its services, Scorpio obtained a warrant of arrest of the vessel, subsequently affirmed by the Cour d’Appel of Aix-en-Provence. Stardust appealed to the Cour de Cassation on the ground that under the 1952 Convention an arrest was not permissible in respect of claims that are not maritime claims.


[1] When a claim in respect of which the arrest of a ship is applied for has only in part the nature of a maritime claim, arrest can be granted for the full amount of such claim.

Italy

Tribunal of Naples 28 March 2006, Sete Yacht Management S.A. v. Lady Haya Ltd. - The "Lady Haya" (not yet reported)

After its purchase by Lady Haya Limited a yacht, previously owned by the Saudi Royal Family and renamed Lady Haya, was arrested in Naples on 25 January 2006 by order of the Tribunal of Naples, on application of Sete Yacht Management S.A., who alleged to have a claim against the Saudi Royal Family in respect of the management of their assets and that the liabilities of the Saudi Royal Family thereunder had been transferred to Lady Haya Ltd. concurrently with the transfer of title to the yacht. The arrestor alleged that the claim consisted of several items, several of which were maritime claims under the 1952 Arrest Convention. Lady Haya Ltd. denied its liability but furnished a bail in the amount of the claim in order to obtain the release from arrest of the yacht. It then applied to the Tribunal of Naples for the release of the bail on the ground that the arrest had been wrongful because the alleged transfer of liabilities had never taken place and that it had acquired title to the yacht prior to the arrest, nor were the claims of the arrestor secured by a maritime lien.


[1] If the global amount claimed consists of items only a part of which has the nature of a maritime claim and it is not possible to separate the maritime claims from the other claims, the arrest of the ship may be granted for the global amount.

Netherlands

Rechtbank Rotterdam 19 May 2011, Pianura Armatore S.p.A. v. Ferrari Shippimg Agency G.A. – The “Halcyon Star”*

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Ferrari Shipping Agency G.A. provided agency services to various ships managed by Pianura Armatori S.p.A. and arrested at Flushing, as security for its claims in respect of such services, the “Halcyon Star”, owned by Pianura who brought proceedings in the Rechtbank Rotterdam against Ferrari requesting the court to order to Ferrari the lift of the arrest in respect of services rendered to ships other than the “Halcyon Star” on the ground that the other ships in respect of which Ferrari’s services had been rendered were not owned by Pianura.

Held, by the Rechtbank Rotterdam, that:

[1] A ship may be arrested in respect of maritime claims against her owners even where such claims are related to services rendered to other ships, that or not owned by the person liable.

* By the courtesy of David Martin-Clark, Maritime Arbitrator, Commercial Disputes Mediator Barrister, Stone Chambers Shipping & Insurance Consultant, [email protected]

Claims in respect of which a ship may not be arrested (Art. 2)

Greece

Single Member First Instance Court of Piraeus 849/1989 (Maritime Law Review, Vol. 18 (1989), p. 130)

The claimant applied for arrest of a Greek flag vessel within the Greek jurisdiction in order to secure a claim arising out of a loan agreement. The defendant objected that the 1952 Convention prohibits such an arrest.


[1] Article 2 of the 1952 Brussels Convention on Arrest of Ships, prohibiting the arrest of ships flying the flag of a Contracting State in respect of claims other than those listed in Article 1.1, refers to the arrest within the jurisdiction of another Contracting State and not to the arrest within the State whose the flag the ship flies because for the application of this provision the existence of a foreign element in the dispute is required.Note: This is correct under Article 8(4) as long as the claimant has his residence in the same country. This is assumed in this decision but not expressly state. *


Multi Member First Instance Court of Piraeus 2511/1977 (Maritime Law Review, Vol. 6 (1978), p. 42)

A vessel under Greek flag was arrested at Piraeus pursuant to a decision of the Single Member First Instance Court in respect of calls owed to a Mutual Insurance Association based in Bermuda. The owners applied to the Multi Member First Instance Court of Piraeus to vacate the arrest on the grounds that the insurance calls are not a maritime claim listed in the article 1 of the 1952 Convention and in accordance with Article 2 of the Convention “a ship flying the flag of one of the Contracting States may be arrested in the jurisdiction of any of the Contracting States in respect of any maritime claim, but in respect of no other claim”.

Held by the Multi Member First Instance Court of Piraeus, that:

[1] The prohibition of Article 2 of the Convention refers to arrest effected within the jurisdiction of another Contracting State and not of the State whose flag the ship flies and did not vacate the arrest.Note: This seems to be correct only where the claimant has its habitual residence or main place of business in the flag State *


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Single Member First Instance Court of Korinthos 23/1977 (Commercial Law Review, Vol. 28 (1977), p. 95)

The claimant had a claim based on a bill of exchange against a shipowning company and applied for arrest of the vessel as security. Alternatively, the claimant applied for the sequestration of the vessel as security for a first priority maritime mortgage securing the claim evidenced by a bill of exchange

Held by the Single Member First Instance Court of Korinthos, that:

[1] Claims evidenced by bills of exchange do not constitute maritime claims as defined in Article 1(1) of the 1952 Brussels Convention on Arrest of Ships. However the maritime mortgage securing the bill of exchange is a maritime claim for which arrest may be granted. On the other hand sequestration has the same effects as an arrest and it should be deemed as falling within the meaning of “arrest” as defined in the Convention. *


Single Member First Instance Court of Thessaloniki 3456/1980 (Commercial Law Review, Vol. 31 (1980), p.651)

The Seller had a claim against the Buyer (and present owner) of a vessel for the balance of the purchase price and applied to the court for the arrest of the vessel. The Buyer objected on the grounds that the claim did not fall within the scope of the 1952 Brussels Convention on Arrest of Ships, which was applicable because the vessel was flying the flag of Spain. The claimant argued that under the Greek Code of Civil Procedure arrest is permitted not only for maritime claims, but for any claim.

Held by the Single Member First Instance Court of Thessaloniki, that:

[1] When the Brussels Convention is applicable, its provisions prevail over the provisions of the Greek Code of Civil Procedure, which is an internal law. The claim arising out of sale or transfer of a ship does not constitute a maritime claim falling within the scope of the Convention and consequently arrest should not be granted. *


Single Member First Instance Court of Piraeus 2956/1981 (Piraiki Nomologia, Vol. 3 (1981), p.364)

Under a contract of hire of containers between owner of containers and charterers of a vessel, the charterers were indebted to the owners in respect of unpaid hire of the containers. The owners of the containers filed a petition against the owners of the vessel and the charterers for the arrest of the vessel as security for their claim.


[1] A claim for the payment of hire of containers under the contract of hire of containers between the charterer and the owner of the containers is not a maritime claim listed in the Article 1(1) of the 1952 Brussels Convention on Arrest of Ships*



The owners of a vessel had agreed with the Port Authority of a French port to exploit a particular tourist itinerary and the Port Authority had undertaken to cover any shortfall up to a specific amount. Due

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to a default of the owners, the Port Authority claimed damages and applied for the arrest of the ship at Piraeus.


[1] The claim of the Port Authority arising out of a contract with a shipowner under which the owner undertook to call at that port does not constitute a maritime claim within the meaning of the 1952 Brussels Convention on Arrest of Ships. The Port Authority did not have a claim in respect of the use of the ship but in respect of expected profits from the tax and duties imposed on the passengers and cars moving in the area of the port.*



The claimant applied for arrest of the vessel as security for a claim arising out of the acknowledgment of a debt. Under the agreement the debt was admitted independently of its original underlying cause.


[1] A claim arising out of the acknowledgment of a debt (independent from the underlying claim) does not constitute a maritime claim falling within the scope of the 1952 Brussels Convention on Arrest of Ships. This type of acknowledgment creates a new cause of action for the claim.*


Corporate veil

Belgium

King Navigation Ltd. v Bulknedlloyd Holding B.V. The "Alpha Sun", Court of Appeal of Antwerp 1 February 1994 *

Bulknedlloyd Holding B.V. chartered from Lone Eagle Shipping the m/v "Alpha Star" for the carriage of a full cargo of iron ore. Following the total loss of the ship Bulknelloyd applied to the Juge des saisies of Antwerp for the arrest of the m/v "Alpha Sun" , owned by King Navigation Ltd. and the arrest was granted by an order dated 26 January 1994. King Navigation appealed against the order whereby the arrest had been affirmed stating that it was an entity wholly distinct from Lone Eagle Shipping and that consequently the arrest of its ship was not justified. The claimants maintained that the two companies were controlled by the same entity and had a fictitious character.

Held, by the Court of Appeal of Antwerp, that:

[1] The corporate veil can be pierced when it is established that the company owning the ship in respect of which the claim has arisen and the company owning the ship that has been arrested are controlled by the same entity who appears as the assured of both and as the purchaser of the ships and that both companies are registered at the same address and are managed by the same persons.

* By the courtesy of Mr. Wim Fransen, Antwerp, [email protected]

France

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mailto:%[email protected]%20

Cour de Cassation (Ch. Com) 23 November 1999, Planmarine A.G. v. Capt. Stanislav Severov, Maddock Trading and Republic of Ukraine – The “Karelija” (2000 DMF 719).

Planmarine A.G. arrested in the port of Noumea the m/v Karelija, owned by Maddock Trading as security for a claim against Black Sea Shipping-BLASCO on the ground that Maddock Trading was fully owned by BLASCO. The vessel was ordered released by the Cour d’Appel of Noumea and Planmarine appealed to the Cour de Cassation.


[1] The allegation that a State (the Republic of Ukraine) has formed the company owning the vessel in respect of which the claim has arisen and the company owning the vessel the arrest of which is applied for as security for such claim with the purpose of limiting the security of the claimants does not prove the fictitious character of such companies if they have property which is their own.

Italy

Tribunal of Bari 19 July 2002, Morfimare S.r.l. v. Poseidon Lines Shipping and Bellatrix Shipping Co. - The "Sea Serenade", 2004 Dir. Mar.,1424

Morfimare S.r.l. of Bari applied to the Tribunal of Bari for the arrest of the Sea Serenade, of Cypriot flag, owned by Bellatrix Shipping Co. as security for its claim in respect of fees earned as general agent of Poseidon Lines Shipping on the ground that the 1952 Arrest Convention applied, pursuant to its article 8(2), even if Cyprus was not a contracting State and that the two companies were controlled by the same persons.


[1] The deeming provision of article 3(2) of the 1952 Arrest Convention is applicable in respect of a ship owned by a company other than that who own the ships in respect of which the maritime claim has arisen if the two companies are managed and their shares are owned by the same persons.

Spain

Audiencia Provincial of Barcelona 11 February 2002, Maya Maritime S.A. v. Medbridge Shipping Company [2004] Dir. Mar. 280.*

On 17 October 1995 a collision occurred between the m/v Orion Progress owned by Maya Maritime S.A. and the m/v Medlink, owned by Marinav Ltd. and managed by Dealmar Shipping Management.

Maya Maritime applied to the Juzcado de Primera Instancia of Barcelona for the arrest of the m/v Medbridge, owned by Medbridge Shipping Company stating that the corporate veil could be lifted because also the Medlink was managed by Dealmar Shipping.

Following the opposition of Medbridge Shipping the arrest was lifted by the Court, and Maya Maritime appealed to the Audiencia Provincial (Court of Appeal) of Barcelona.


[1] A ship owned by a company other than that in respect of which a maritime claim has arisen may not be arrested under the provision of Article 3(1) of the 1952 Arrest Convention merely because it is under the same management.

Audiencia Provincial of Barcelona 16 May 2002, Mediterranean Shipping España Barcelona v. Tatjana Usova 2004 Dir. Mar. 283 *

MSC Ilaria, owned by Ulmus International Corp. as security for a claim arising our of the death of her father on board the m/v Egoli owing to a fire that had developed on board.

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The arrest of the MSC Ilaria was applied for on the ground that at the time of the accident she was owned by Shoreline Shipping SA, a company associated with Ulmus International as it appeared from the fact that both companies had the same shareholders and the same directors and were managed by the same company. The application was granted by the Court and the subsequent opposition of Ulmus International was rejected. Ulmus International then appealed to the Audiencia Provincial of Barcelona.


[1] The corporate veil of a company may be pierced where the company owning the vessel in respect of which the claim has arisen and that owning the arrested vessel have the same shareholders and the same directors and are both managed by the same manager, since such circumstances constitute evidence of a sham.

* Copy of these judgments has been kindly made available by Adv. Philip Carney, Entenza 127, 4-2, 08015 Barcelona, e-mail: [email protected].

Damages for wrongful arrest (Art. 6)

Spain

Juzgado de lo Mercantil of Malaga, 25 February 2005

An application was made to the Court for the arrest of a Swedish ship as security for a claim in respect of commissions.

Held, by the Juzgado de lo Mercantil of Malaga, that:

[1] Arrest of a vessel is permitted, under the 1952 Arrest Convention, when the claim is related to the operation of the vessel in respect of which the claim has arisen, or of another vessel in the same ownership, but the claimant must provide sufficient security to cover the damages that the arrest may entail.

Definition of "Arrest" (Art. 1.2)

Greece

Single Member First Instance Court of Korinthos 23/1977 (Commercial Law Review, Vol. 28 (1977), p.95)

The claimant had a claim arising out of a bill of exchange against a shipowning company and applied for arrest of the vessel as security. Alternatively, the claimant applied for the sequestration of the vessel as security for a first priority maritime mortgage securing the claim out of Bill of Exchange.


[1] Sequestration has the same effects as an arrest and it should be deemed as falling within the meaning of “arrest” as defined in the Convention. *


Definition of “Claimant” (Art. 1.4)

Belgium

Cour d’Appel of Antwerp 14 February 2000, The "Liman" (2000 Jurisprudence du Port d’Anvers 267).

Following the arrest of the Liman by a claimant, the owners, after having obtained the release of the vessel by providing a bank guarantee, challenged the right to arrest and applied to the Juge des Saisies

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in order to obtain the release of the guarantee. The application was granted on the ground that the requisite of the urgency required in order that an arrest be justified did not exist. The owners appealed.

Held, by the Cour d’Appel of Antwerp, that:

[1] Although urgency is not a condition expressly required by the 1952 Arrest Convention, it is generally accepted that it is actually required. However in maritime transactions urgency is presumed and therefore the burden lies on the owner of the vessel to prove that urgency did not exist. Urgency however does exist when the debtor is a foreigner, the vessel is not employed on a regular line and the owner does not apparently own other vessels.

France

Court of Appeal of Aix-en-Provence 27 May 2010, SA Financière Meeschaert v. Madoff Securities International Ltd. (2011 DMF 340)

In 2006 SA Financière Meeschaert subscribed shares issued by SICAV Luxalpa for a value in excess of 10 million Euro and in turn Luxalpa invested all its assets in Bernard L.Madoff Investment Securities LLC (MIS) that following the arrest of Bernard Madoff was subject to forced liquidation proceedings. SA Financière Meeschaert reimbursed the clients for whom it had purchased the shares of Luxalpa and applied to the Tribunal de Commerce of Antibes for the arrest of the yacht “Bull” that SA Financière Meeschaert had caused Yacht Bull Corp. to purchase. The Tribunal de Commerce of Antibes authorized the arrest applied for by SA Financière Meeschaert as well as the arrest applied for by the liquidators of MIS. Subsequently the arrest by SA Financière Meeschaert was retracted by the Tribunal and SA Financière Meeschaert appealed to the Court of Appeal of Aix-en-Provence.


[1] In order to arrest a ship in respect of one of the maritime claims enumerated in art.1(1) of the 1952 Convention the court must ascertain that the claim is actually a maritime claim but does not need to verify the certainty and seriousness of the claim.


(The summary of facts may be found in the section "Arrest of a ship not owned by the person liable")


[1] In order to arrest a vessel it is sufficient that the claimant may invoke a claim listed in article 1(1) of the Convention that has arisen in respect of that vessel.

Spain




[1] Under the 1952 Arrest Convention the allegation by the claimant of a maritime claim is sufficient and no documentary evidence of such claim is required.

Droit de suite (Art. 9)

Belgium

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Court of Appeal of Gand 24 February 2004, Orca Navigation and Bloomfield Shipping Company, Ltd. v. Galehead Inc. N.E. *

Crescent Towing & Salvage Co.Inc, rendered in August 1999 towage services in the port of Savannah to the M/V "Inanc" and issued an invoice for such services to STFA Maritime Industry of Istambul but was not paid. It then assigned its claim to Galehead Inc. After the towage services were rendered the ship changed its name to "Aeolus" and its owner appeared to be Orca Navigation Co. On 12 December 2001 Galehead arrested the ship (who had meanwhile changed again its name to "Jupiter" upon its being sold to Bloomfield Shipping Navigation Co.) in Gand pursuant to an order of the Juge des saisies of Gand. After the release of the ship against security, Orca Navigation and Bloomfield Shipping appealed to the Court of Appeal of Gand against the judgment of the Juge de Saisies which had affirmed the order of arrest.

Held, by the Court of Appeal of Gand, that:

[1] Pursuant to article 9 of the 1952 Arrest Convention where title to the ship in respect of which the claim has arisen has been transferred by the person liable for the claim to a third party, that ship may be arrested only if such claim is secured by a hypothec or a maritime lien .[2] Where the sale of a ship is evidenced by a Memorandum of Agreement between the seller and the buyer and the agreement on the price is evidenced by correspondence of a bank the fact that there has not been a change in the managing company is not a sufficient element to imply the fictitious character of the sale

* By the courtesy of Mr. Wim Fransen, Antwerp, [email protected]

Hof van Cassatie van Belge 27 March 2003, A/S Condor v. Galehead Inc. - The "Sokna"

Galehead Inc. applied for the arrest of the m/v Sokna as security for a claim against the previous owner of the vessel. The right of the claimant to follow the ship in the hands of a bona fide purchaser was upheld by the Cour d'Appel of Brussels. The new owners of the ship, Galehead Inc., appealed to the Cour de Cassation.


[1] Pursuant to article 9 of the 1952 Arrest Convention the claimant may not arrest the ship in respect of which the maritime claim has arisen after the sale of the ship to a bona fide purchaser, unless the claim is secured by a maritime lien.

France

Cour d’Appel of Aix-en-Provence 24 May 2002, Grand Seaways Limited v. Total Fina Elf – The “Renai I” and “Renai II”. 2002, DMF 722

Pursuant to an order of the Tribunal de Commerce of Marseilles dated 11 January 2002 S.A. Total Raffinage Distribution, subsequently named Total Fina Elf, arrested the ships Renaissance Seven and Renaissance Eight, renamed Renai I and Renai II, at the port of Marseille as security for a claim arising out of the supply of bunker. Grand Seaways Limited, a Liberian company, requested the release of the vessels stating it had purchased them in a judicial sale at Gibraltar. The Tribunal de Commerce of Marseilles rejected the request of release, whereupon Grand Seaways Ltd. appealed to the Cour d’Appel of Aix-en-Provence.

Held, by the Court d’Appel of Aix-en-Provence, that:

[1] Pursuant to article 9 of the 1952 Arrest Convention the arrest of a ship that is not owned anymore by the person liable (droit de suite) is only permissible if the claim is secured by a maritime lien.

Financial conditions of the person liable (Art. 2)

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mailto:%[email protected]

Italy


By decree dated 3 October 2005 the Tribunal of Genoa authorised the arrest of the MV "Hande Ozgul" as security for a claim of ABG against the owner of the ship in respect of the supply of fuel oil. The ship was then arrested in Ravenna and the owners after having paid into court the amount of the claim applied to the Tribunal of Genoa, competent for the merits of the claim or the release of the ship. The claimant stated that competent for the release of the ship was the Tribunal of Ravenna, where the ship had been arrested. The Owners appealed against the order of arrest on the ground, inter alia, that the requisite of the periculum in mora was lacking.


[1] The requisite of the periculum in mora may be related to the nature of the res the arrest of which is applied for (a ship) and of its imminent departure from the port in which it is laying.

Tribunal of Genoa 4 October 2002, Nortoil and Shipping LLC (2004 Dir. Mar. 1463)

Nortoil and Shipping LLC supplied gasoil to the m/v Incat 045 of which at that time TR.I.S. Traghetti Isole Sarde S.r.l. was the operator. Since TR.I.S. did not pay the cost of the gasoil, Nortoil and Shipping applied to the Tribunal of Genoa for the arrest the vessel as security for its claim.

Held, by the Tribunale of Genoa, that:

[1] Pursuant to the 1952 Arrest Convention the danger of the claimant being unable to enforce its claim is not a prerequisite for the right of arrest.

Forced sale (Art. 9)

France

Cour d’Appel of Aix-en-Provence 24 May 2002, Grand Seaways Limited v. Total Fina Elf – The “Renai I” and “Renai II”. 2002, DMF 722

(The summary of facts is pubblished in the section "Droit de suite")

Held, by the Court d’Appel of Aix-en-Provence, that:

[1] Arrest is not permissible after the forced sale of the ship, the forced sale entailing the extinction of the maritime lien.

Jurisdiction (art. 5)

Italy


By decree dated 3 October 2005 the Tribunal of Genoa authorised the arrest of the MV "Hande Ozgul" as security for a claim of ABG against the owner of the ship in respect of the supply of fuel oil. The ship was then arrested in Ravenna and the owners after having paid into court the amount of the claim applied to the Tribunal of Genoa, competent for the merits of the claim or the release of the ship. The claimant stated that competent for the release of the ship was the Tribunal of Ravenna, where the ship had been arrested.


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[1] Pursuant to article 5 of the Convention on Arrest of Ships, 1952, the court competent for the release of the ship from arrest is only the court of the place where the ship has been arrested even if the order of arrest was issued by a different court which under Italian law was competent to order the arrest as the court competent for the merits.

Jurisdiction for the arrest (Art. 4)

Italy

Tribunal of Genoa 24 April 2004, Gie Vision Bail v. Piraeus Bank A.E. - The "European Vision" (2006 Dir. Mar. 524)

The European Vision was arrested in Bridgetown, Barbados, by Crédit Agricole Indosuez who held a first rank hypothèque on the ship as security of a loan granted to GIE Vision Bail.

On 7th April 2004 Piraeus Bank A.E. acting in subrogation of Festival Crociere S.p.A. of Genoa, Italy, applied to the Tribunal of Genoa for the arrest of the European Vision on the ground that Festival Crociere, who was in default in respect of its obligations under a loan agreement with Piraeus Bank, had a very substantial claim for damages against GIE Vision Bail, the owners of European Vision caused by the faulty termination of the bareboat charter party stipulated by GIE Vision Bail with Festival Crociere. Piraeus Bank stated that it was entitled to take action in lieu of Festival Crociere since Festival Crociere had omitted to act and that the claim of Festival Crociere was a maritime claim under art. 1(d) of the 1952 Arrest Convention. It also stated that it had commenced proceedings on the merits against GIE Vision Bail in the Tribunal de Commerce of Paris.

An order of arrest was issued on 7 April 2004 by the Tribunal of Genoa who held that it had jurisdiction pursuant to art. 10 of law 31 May 1995, No. 218 pursuant to which the court of the place where the arrest is made and the court competent for the merits have both jurisdiction for the arrest.GIE Vision Bail appealed. The claimants maintained that the Tribunal of Genoa was a court of competent jurisdiction since the arrest should be deemed to have been made in Genoa, since Genoa was the place of its endorsement on the ships register.


[1] The requirement of endorsement of the arrest of a ship in the register in which that ship is registered does entail that the arrest must be deemed to be made in that place if the ship is outside the Italian jurisdiction.[2] Italian courts have no jurisdiction for the arrest of an Italian ship if they have no jurisdiction on the merits and the ship is outside the Italian jurisdiction.

Jurisdiction on the merits (Art. 7.1)

France

Cour de Cassation 18 July 2000, Akyelken and Others v. Shipping & Trading Co. and Others–The "Obo Basak" (2000 DMF 725)

The crew members of the m/v Obo Basak flying the Turkish flag arrested the vessel in the port of Dunkerque as security for their claims for wages and commenced proceedings for the merits. French jurisdiction was held not to exist by the Cour d’Appel of Douai. The claimants appealed to the Cour de Cassation.


[1] Pursuant to Art. 7(1)(c) of the 1952 Arrest Convention the Courts of the State in which the arrest is made are competent to decide on the merits of the dispute when the claim has arisen during the voyage in the course of which the arrest is made.

Maritime claims - Brokerage Commissions (Art. 1.1(d))

France

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Tribunal de Commerce of Aiaccio 19 October 1999, Cruise Holding Ltd. and Others v. Southern Cross Cruises S.A. – The “Islandbreeze” (2000 DMF 32)

Southern Cross Cruises arrested the m/v Islandbreeze in the port of Aiaccio as security for a claim in respect of brokerage fees. The owners applied for the revocation of the arrest.

Held, by the Tribunal de Commerce of Aiaccio, that:

[1] The claim for brokerage commissions in respect of charter party is a maritime claim covered by Art. 1(1)(d) of the 1952 Arrest Convention.

Maritime claims - Claims of maritime agents (Art. 1.1(n))

Greece

Single Member First Instance Court of Piraeus 864/1979 (Maritime Law Review, Vol. 9 (1985), p.6)

The claimants applied for arrest of a vessel in order to secure claims for amounts due to them arising out of their services as maritime agents of the vessel. The defendant argued that that was not a maritime claim under the 1952 Convention.


[1] A claim arising out of services as maritime agents of a vessel is a maritime claim.*


Italy

Tribunal of Bari 19 July 2002, Morfimare S.r.l. v. Poseidon Shipping Lines and Bellatrix Shipping Company (2004 Dir. Mar. 1424)

Morfimare S.r.l. of Bari applied to the Tribunal of Bari in order to obtain an order of arrest of the Sea Serenade, owned by Bellatrix Shipping Co. as security for claims against Poseidon Shipping Lines, the operators of the ship, arising out of an agency agreement consisting mainly in the severance indemnity. Bellatrix Shipping Co. requested that the ship be released from the arrest on the ground, inter alia, that the claim was not a maritime claim under the 1952 Arrest Convention.


[1] The claim of a maritime agent is a maritime claim covered by article 1(1)(n) of the Arrest Convention even if it is mainly related to matters not directly related to the call of ships at the port where the agent operates.

Maritime claims - Disputes as to property (Art. 1.1(o)

France

Court of Appeal of Aix-en-Provence 27 May 2010, SA Financière Meeschaert v. Madoff Securities International Ltd. (2011 DMF 340)

(The summary of facts may be found in the section “Definition of claimant”)


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[1] The allegation of the liquidators of a company that a yacht that had been arrested is owned by that company gives rise to a dispute in respect of ownership of the yacht and is therefore a maritime claim pursuant to article 1(1)(o) of the1952 Arrest Convention.

Maritime claims – Mortgage or hypothecation (Art. 1. 1(q))

Greece

Single Member First Instance Court of Korinthos 23/1977 (Commercial Law Review, Vol. 28 (1977), p. 95)

The claimant had a claim arising out of a bill of exchange against a shipowning company and applied for arrest of the vessel as security. Alternatively, the claimant applied for the sequestration of the vessel as security for a first priority maritime mortgage securing the claim out of bill of exchange.


[1] A maritime mortgage securing a bill of exchange is a maritime claim for which arrest may be granted.*


Maritime claims – Notions of claimant (Art. 1(3) and (4))

France

Cour d’Appel of Aix-en-Provence 12 June 2008, The Master of the ship “Ocean Breeze” and Sudeley Ltd. v. Republic of Iraq (2009 DMF 150).

By order dated 31 January 2005 the President of the Tribunal de Commerce of Nice authorised the Republic of Iraq to arrest the Ocean Breeze, flying the flag of Cayman Islands and moored in the port of Nice, as security for a claim of 24 million Euro based on Art. 1 (1) (o) of the 1952 Arrest Convention, on the ground that the Republic of Irak was the actual owner of the vessel. The vessel had been built by the Danish shipyard Helsingor Vaerft for the account of the then President of Irak and had been delivered to the Republic of Iraq in June 1981 when for security reasons on account of the war with Iran, it was dry-docked in the port of Jeddah. Her name was then changed from Qadissiyat Saddam to Al Yamamah and was registered in the ships register of Saudi Arabia in the name of the late King of Saudi Arabia. In October 2007 she was registered in the ship register of the Cayman Islands in the name of the Cayman Islands company Sudely Ltd. The master of the vessel and Sudely Ltd. applied to the President of the Tribunal de Commerce of Nice for the release of the vessel from the arrest and by order of 5th March 2008 the application was rejected on the ground that the State of Iran had a maritime claim pursuant to article 1(1) (o) of the 1952 Arrest Convention. The master and Sudely Ltd. appealed to the Court of Appeal of Aix-en-Provence.

Held, by the Cour d’Appel of Aix-en-Provence, that

[1] A dispute as to the title to a ship is a maritime claim under the 1952 Arrest Convention and entitles the claimant to arrest the ship.[2] A statement of the Authority responsible for the ships register that title to the ship had actually been transferred to a new owner does not constitute evidence of the transfer if it is not accompanied by a declaration to that effect of the previous owner.

Maritime claims - Notion of goods (art.1(f))

Singapore

The "Mezen", Singapore High Court

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The Charterers of the "Mezen" who had chartered the ship for sub sea seismic survey work, had put on board equipment for that purpose. They subsequently sold such equipment to the claimant who, while the ship was under arrest by charterers, obtained the leave of the Court to unload the equipment and, in view of a part of such equipment having not been off-loaded, applied for, and obtained a warrant of arrest against the ship. The owners challenged the action and applied to set aside the warrant of arrest.

Held, by the Singapore High Court, that:

[1] The claim of the owners of the equipment placed on board the ship for the purpose of the employment of the ship by the charterers does nit fall within the ambit of s.3 (1) (g) of the Singapore High Court (Admiralty Jurisdiction) Act wherein reference is made to "any claim for loss of or damage to goods carried on a ship".

Maritime claims - Salvage (Art. 1.1 (c))

Greece

Court of Appeal of Nafplion 196/1972. (Commercial Law Review, Vol. 2(1972) p.548)

In a case where salvage services were rendered to a vessel under Turkish flag, the salvor applied for the arrest of the vessel as security.

Held by the Court of Appeal of Nafplion, that:

[1] A vessel flying the flag of a non Contracting State may be arrested within the jurisdiction of any Contracting State in respect of a claim arising out of salvage, which is a maritime claim under the 1952 Brussels Convention on Arrest of Ships*


Maritime claims - Supplies (Art. 1 (1) (k))

Spain

Audiencia Provincial de Almeria, section 2, Judgment of 19 March 2001, Navigatie Maritime S.A. v. The Liverpool and London Steamship Protection and Indemnity Association (El Derecho 2001/3708).

Liverpool and London obtained an order from Juzgado de Primera Instancia of Almeria for the arrest of Navigatie Maritime S.A.’s vessel to guarantee a claim for unpaid protection and indemnity insurance premiums, alleging that this claim fell within article 1(1)(k) of the 1952 Arrest Convention. Navigatie Maritime S.A. formulated opposition to the arrest, alleging that a claim for unpaid insurance premiums was not a maritime claim as defined by article 1 of the 1952 Convention. At first instance, the opposition was dismissed, and the arrest upheld. Navigatie Maritime S.A. appealed.

Held, by the Audiencia Provincial de Almeria, that:

[1] A claim for unpaid insurance premiums does not fall within article 1(1)(k) of the 1952 Convention.

Audiencia Provincial de Huelva, section 2, Judgment of 14 December 2000, Mariscos Rodriguez S.A. v. Ocean Marine Mutual Insurance Association “The Quinto Centenario”(Anuario de Derecho Marítimo, Vol. XIX, p.690).

Ocean Marine obtained an order from Juzgado de Primera Instancia of Huelva for the arrest of the Quinto Centenario, to guarantee a claim for unpaid protection and indemnity insurance premiums, alleging that this claim fell within article 1(1)(k) of the 1952 Arrest Convention. Mariscos Rodriguez S.A. formulated opposition to the arrest, alleging, inter alia, that a claim for unpaid insurance premiums was

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not a maritime claim as defined by article 1 of the 1952 Convention. At first instance, the opposition was dismissed, and the arrest upheld. Mariscos Rodriguez S.A. appealed.

Held, by the Audiencia Provincial de Huelva, that:

[1] A claim for unpaid insurance premium falls within article 1(1)(k) of the 1952 Convention.

Multiple Arrest (Art. 3.3)

France

Cour d’Appel of Rouen 19 May 2000, Export Development Corporation and Montreal Tankers Repairs, Inc. v. Stone Maritime Inc. – The “Dunlin” (2001 DMF 379)

In May 2000 Montreal Tankers Repairs and its insurers, Export Development Corporation applied to the President of the Tribunal de Commerce of Le Havre for the arrest of the m/v Dunlin owned by Stone Maritime Inc. stating that they had a claim against the previous owners of that vessel, Naviera Poseidon, on account of repairs carried out to it and that the vessel of Naviera Poseidon they had previously arrested – the Aiana – was not a sufficient security for their claim. The arrest was granted on 11 May 2000 but was subsequently revoked on application of the owners of the Dunlin on the ground that pursuant to Art. 22 of law 9 July 1991 measures aiming at ensuring a security for a claim cannot exceed what is necessary for that purpose. The claimants appealed stating that pursuant to the French version of Article 3(3) of the 1952 Arrest Convention the arrest of another ship is prohibited only if security has been given, while in the present case no security had been given after the arrest of the Aiana.


[1] In the French version of Article 3(3) of the 1952 Arrest Convention to the conjunction “et” in the sentence “si un navire est saisi dans une desdites juridictions et une caution ou garantie a été donnée” must be given the meaning of “et si” (and if) so to ensure to the phrase the same meaning of that phrase in the English version which reads “if a ship has been arrested in any one of such jurisdictions or bail or other security has been given”.[2] The fact that the 1952 Arrest Convention by instituting the maritime claims permits the arrest of a ship that is not owned any more by the debtor, entails the restrictive character of the security measure and, therefore, the prohibition of a second arrest for the same claim, when an arrest has been made or a security has been offered following such arrest.[3] The burden of proving the insufficient value of the ship that has been arrested, and thereby the existence of a good cause for maintaining the arrest of another ship, rests on the claimant.

Cour de Cassation (Ch.com.) 8 March 2011, Marshall Beneteau Enterprises Corp. v. Panagia Odigitria-M/v “Mastrogiorgis” (2011 DMF 629)

By contract dated 12 November 2007 Panagia Odigitria sold its ship “Mastrogiorgis”, flying the Panamanian flag, to Beneteau Enterprises Corp. the Seller Since the buyer had not timely paid the purchase price gave notice to the buyer of the cancellation of the contract and commenced arbitration proceedings in London pursuant to the arbitration clause of the contract of sale e arrested the ship in Greece pursuant to an order of a Greek court. After Benetau Enterprises had obtained from the Tribunal of Piraeus the release of the ship, Panagia Odigitria applied to the President of the Tribunal de Commerce of Rouen for the arrest of the ship and the warrant of arrest was affirmed by the Tribunal on 16 th March 2009. Beneteau Enterprises appealed and the Court of Appeal of Rouen with judgment 24 March 2009 (2009 DMF 884) held that it was bound by the decision of the Tribunal of Piraeus. Panagia Odigitria appealed to the Cour de Cassation.


[1] Pursuant to art.33(1) of Regulation 44/2001 a court in a State member of the EU may not decide on a request of arrest of a ship that had already been rejected by the court of another member State.

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Notion of owner (Art. 3(1))

Australia

Tisand (Pty) Ltd. v The Owners of the Ship MV "Cape Moreton" (ex "Freya"), Federal Court of Australia 29 April 2005 [2005] FCAFC 68

On 8 June 2004 the MV "Cape Moreton" was arrested on the application of Tisand (Pty) Ltd. in support of a claim for damage to a cargo of zircon sand said to have occurred on a voyage from Richards Bay in South Africa to China. As at the date when the cause of action underlying the claim arose the ship, was recorded as registered under the Liberian flag and Freya Navigation Shipholding Ltd. was the registered owner of the ship. That company was still the registered owner as at the date when the in rem proceedings against the ship were commenced. On 10 June 2004 a notice of motion was brought by Alico Marine Ltd. in which Alico sought an order that the writ in rem under which the ship was arrested be set aside on the ground that as at that date it was the actual owner of the ship of which it had taken unconditional delivery from Freya after having paid in full the purchase price and having obtained a bill of sale. The substantial point of debate between the parties was the meaning of the phrase "the owner" in s. 17(b) of the Australian Admiralty Act 1988 which so provides:

"Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:

(a) was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and

(b) is, when the proceeding is commenced, the owner of the ship or property;a proceeding on the claim may be commenced as an action in rem against the ship or property."

Held, by the Federal Court of Australia, that:

[1] The meaning of the phrase "the owner" in ss 17, 18 and 19 of the Admiralty Act does not necessarily encompass the party entered on any international register of ships. The question is one as to whether the relevant person answers the description of "the owner" in a proprietary sense, in all the circumstances.[2] Where a ship is sold by its owner and delivered to the purchaser who has paid in full the purchase price against delivery of a properly executed bill of sale the buyer must be deemed to be "the owner" of the ship for the purposes of s.17(b) of the Admiralty Act even if the ship is still registered in the name of the seller.[3] Under Article 3(1) of the 1952 Arrest Convention a right of arrest exists only if the ship, at the time of arrest ,is still owned by the person liable on the claim and who owned her when the claim arose.

Notion of ship – Offshore Drilling Unit (Art. 2)

Scotland

Global Marine Drilling Company v. Triton Holdings Limited (Outer House, Court of Session, Edinburgh, 23 November 1999, unreported)*

The semi-submersible drilling rig “Sovereign Explorer” was arrested at Invergordon, Scotland in security of claims in a London arbitration. One of the issues argued before the Scottish Courts was whether a mobile offshore drilling unit fell within the definition of “ship” in the national legislation implementing the 1952 Arrest Convention. If offshore platforms are not to be regarded as ships, the arrestment would be incompetent and invalid.

The word “ship” is not defined in the 1952 Convention. In Scotland the definition of “ship” for the purposes of arrest is stated to “include any description of vessel used in navigation not propelled by oars”. Counsel for the Defender, seeking recall of the arrest, submitted that there was no authority world-wide that was directly in point. Counsel for the opposition agreed that there was a dearth of applicable law in relation to this field anywhere in the world.

The Scottish statute refers only to navigation, and not to self-propulsion. The Court considered and approved a decision of the Irish Supreme Court that held propulsion was not a necessary requisite of a “ship”.

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Held, by the Court of Session (Outer House), that:

[1] The preponderance of authority in relation to the definition of a ship is against the view that either self-propulsion or ability to steer is regarded as essential to the concept of a vessel used in navigation.[2] The mobile offshore drilling unit was a ship in terms of the national legislation implementing the 1952 Arrest Convention, and accordingly the arrest of the “Sovereign Explorer” in terms of this Convention was valid.


Proceedings on the merits (Art.7.2)

France

Court of Appeal of Aix-en-Provence 27 May 2010, SA Financière Meeschaert v. Madoff Securities International Ltd.(2011 DMF 340)

(The summary of facts may be found in the section “Definition of claimant”)


[1] The failure to bring proceedings on the merits by the time fixed by the court pursuant to art. 7(2) does not entail automatically the release of the vessel from arrest, a request of the owner of the ship being required pursuant to art. 7(4).

Prohibition of re-arrest (art. 3.3)

France

Indian Empress Ltd. v. S.a.r.l. Nautech – The “Indian Empress” – Cour d’Appel of Aix-en-Provence 12 November 2009, 2010 DMF 52.

In 2006 Indian Empress Ltd. entered into a contract with S.a.r.l. Nautech Nautical Technologies of Marseille for maintenance and repair work on its ship Indian Empress. Having a dispute arisen between the parties in respect of the payment of the work, the President of the Tribunal of Marseille by order dated 16 November 2008, affirmed by Cour d’Appel of Aix-en-Provence on 21 February 2008, ruled that Indian Empress Ltd. should pay Nautech on account the sum of Euro 190,000 in respect of a total claim of Euro 404,151.11. On the basis of such order Nautech arrested the Indian Empress in Malta and the owners paid into court the sum of Euro 210,000 in order to release the ship. Nautech then brought proceedings against the owners seeking payment of Euro 190,000 that was paid.

Subsequently Nautech brought proceedings against the owners in the Tribunal de Commerce of Marseille claiming the total sum of Euro 404,151.11 and the owners counterclaimed payment of Euro 238,697.88 allegedly overcharged by Nautech.

By judgment of 4 September 2008 the Tribunal de Commerce allowed the whole claim of Nautech and rejected the counterclaim of the owners. On appeal of the owners the Cour d’Appel of Aix-en-Provence by judgment of 6March 2009 reduced the claim of Nautech to Euro 304,151.11 to which were added Euro 80,000 as damages and Euro 35,000 as costs. In the course of the proceedings in the Tribunal de Commerce Nautech obtained by the Tribunal de Commerce of Cannes an order of arrest of the ship to secure its claim in the amount of Euro 350,000, following payment of Euro 192,000. After the ship had been released on provision of a bank guarantee for Euro 350,000, the owners brought proceedings in the Tribunal de Commerce of Cannes against Nautech claiming the revocation of the order of arrest and the release of the bank guarantee.

The claim of the owners was rejected by the President of the Tribunal de Commerce and the owners appealed to the Cour d’Appel of Aix-en-Provence.

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[1] Pursuant to article 3.3 of the Arrest Convention 1952 a ship may not be arrested more than once in the Courts of contracting States and, therefore, that provision does not prevent the arrest in a Contracting State of a ship that had been previously been arrested in the Court of a non-Contracting State.

Indian Empress Ltd. v. S.a.r.l. Nautech – The “Indian Empress” – Cour de Cassation (Ch.Com) 8 March 2011, 2011 DMF 424.

The judgment of the Cour d’Appel of Aix-en-Provence, affirmed by the Court de Cassation, with the summary of facts is published in 2011 Dir. Mar. 465.


[1] Whereas by holding that article 3(3) of the 1952 Arrest Convention pursuant to which a ship may not be arrested in the jurisdiction of one or several Contracting States for the same claim and by the same claimant limits the scope of the prohibition to arrests made in Contracting States the Court of Appeal has exactly inferred that since Malta was not a signatory of the Convention, the (second) arrest made at Cannes (after a previous arrest at Malta) could not be set aside on the basis of that provision.

Re-arrest (Art. 3.3)

France

Tribunal de Commerce of Aiaccio 19 October 1999, Cruise Holding Ltd. and Others v. Southern Cross Cruises S.A. – The “Islandbreeze” (2000 DMF 32)

Southern Cross Cruises obtained a warrant of arrest of the m/v Islandbreeze from the Tribunal de Commerce of Aiaccio as security for a claim against its owners, Cruise Holding Ltd. The owners applied for the revocation of the arrest under Art. 3(2) of the 1952 Arrest Convention on the ground that the claimants had already arrested the vessel in the United States in respect of the same claim.

Held, by the Tribunal de Commerce of Aiaccio, that:

[1] The rule of Art. 3(3) of the 1952 Arrest Convention prohibiting re-arrest of a ship in respect of the same maritime claim does not apply when the first arrest has been executed in a State which is not party to the Convention.

Spain

Audiencia Provincial of Barcelona 11 February 2002, Maya Maritime S.A. v. Medbridge Shipping Company (2004 Dir. Mar. 280).

On 17 October 1995 a collision occurred between the m/v Orion Progress owned by Maya Maritime S.A. and the m/v Medlink, owned by Marinav Ltd. and managed by Dealmar Shipping Management.

Maya Maritime applied to the Juzcado de Primera Instancia of Barcelona for the arrest of the m/v Medbridge, owned by Medbridge Shipping Company stating that the corporate veil could be lifted because also the Medlink was managed by Dealmar Shipping.

Following the opposition of Medbridge Shipping the arrest was lifted by the Court, and Maya Maritime appealed to the Audiencia Provincial (Court of Appeal) of Barcelona.


[1] Pursuant to article 3(3) of the 1952 Arrest Convention re-arrest of a ship is permitted when the security provided for the release of the ship has become unenforceable owing to the bankruptcy of the guarantor.

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Release from arrest (Art. 5)

Italy

Tribunal of Ravenna 15 June 2004, Goldfish Shipping S.A. v. Odin Denizcilik Anonim Sirketi - The "Pacific Trust" ex "Ahmet Bay" (2005 Dir. Mar. 1423).

(The summary of facts may be found in the section "Re-arrest")

Held, by the Tribunal of Ravenna, that:

[1] When a ship has been released from arrest upon security having been furnished by the owner in the amount established by the Court that ordered the arrest, the claimant cannot apply to the Court of another State for an increase of the security.

Release of the ship upon provision of bail (Art. 5)

Italy

Tribunal of Naples 28 March 2006, Sete Yacht Management S.A. v. Lady HayaLtd - The "Lady Haya" (not yet reported)

(The summary of facts may be found in the section "Claims in respect of which a ship may be arrested")


[1] The vacation of an order of arrest following the provision of bail by the owner of the ship does not entail, pursuant to art. 5 of the 1952 Arrest Convention, an acknowledgment of liability and the owner is, therefore, entitled to request the release of the bond by proving that the arrest was wrongful.

Rules of procedure (Art. 6)

Greece

Single Member Court of First Instance of Thessaloniki 2 March 2001, Groupama Navigation et Transport and Others v. Interaxis Maritime, Inc. - m/v "Ntina Katerina" *

The m/v Maria Nadia, with on board a cargo of 4.390,734 metric tons of fertilizer, sank on 14 December 1998 and the cargo was lost. The insurers of the cargo, after having paid the insurance indemnity to the owners of the cargo commenced an action in the Tribunal de Commerce of Saint Malo, France, against the owners of the Maria Nadia, Vegirma Maritime Inc., Vayamar Shipping, Inc. and Interaxis Maritime Inc. claiming 13 million French francs for the total loss of the cargo. By judgment no. 142/99 the Tribunal de Commerce found the defendants jointly and severally liable on the ground that they all belonged to the same group of companies. The defendants appealed.

Prior to the decision of the Cour d'Appel of Rouen the claimants applied to the Single Court of First Instance of Thessaloniki for the arrest of the m/v Ntina Katerina, owned by Interaxis Maritime, Inc.

Held, by the Single Court of First Instance of Thessaloniki, that:

[1] Pursuant to article 6(2) of the 1952 Arrest Convention the rules of procedure are governed by the law of the State where the arrest is applied for and, therefore, the court competent to grant the arrest must be identified pursuant to the rules of the Greek code of civil procedure.[2] Pursuant to the 1952 Arrest Convention the claimant who applies for the arrest of a ship must provide a prima facie evidence of its claim and of the need for a security measure.[3] The arrest of a ship other than that in respect of which the claim has arisen must be granted when the owner of the ship the arrest of which is applied for has been held to be jointly

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liable with the owner of the ship in respect of which the claim has arisen by a judgment provisionally enforceable issued by a court of a country member of the European Union.[4] In case the judgment of the court on the basis of which the arrest is granted is subject to review, the claimant must be ordered to provide security.

* By the courtesy of. Prof. Anthony Antapassis G. Albouras Law Office, [email protected]

Spain




[1] Although security measures require, as a general rule, a hearing, article 733 permits exceptionally a decision on an application ex parte and from the 1952 Arrest Convention it appears that the arrest of a ship has an urgent character.[2] Under the 1952 Arrest Convention proof of the periculum in mora is not required.

Scope of application (Art. 8.2)

France


(The summary of facts may be found in the section "Arrest of a ship not owned by the person liable")


[1] Since France has not excluded from the benefits of the 1952 Arrest Convention any non-Contracting State, pursuant to article 8(2) the provisions of the Convention apply to a vessel flying the Panamanian flag.

Cour de Cassation 30 October 2000, Petredec Ltd. v. DK Line – The “Stargas” (2000 DMF 1012)

Petredec Ltd. applied for the arrest of the Stargas, of Panamanian flag, owned by DK Line, as security for a claim against a company named Tokumaru. The order of arrest was subsequently revoked by the Cour d’Appel of Aix-en-Provence on the ground that Panama not being a party to the 1952 Arrest Convention, French domestic law applied. Petredec Ltd. appealed to the Cour de Cassation against that order.


[1] The Court of Appeal that applied French domestic law in respect of the arrest of a vessel flying the flag of a State not party to the 1952 Arrest Convention has breached the provisions of the Convention.

Greece

Court of Appeal of Nafplion 196/1972. (Commercial Law Review, Vol. 2(1972) p.548)

In a case where salvage services were rendered to a vessel under Turkish flag, the salvor applied for the arrest of the vessel as security.

Held by the Court of Appeal of Nafplion, that:

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[1] A vessel flying the flag of a non Contracting State may be arrested within the jurisdiction of any Contracting State in respect of a claim arising out of salvage which is a maritime claim under the 1952 Brussels Convention on Arrest of Ship.*


Italy

Tribunal of Trieste 14 August 2008, Ramazan Gunduz v. UN RO-RO Isletmeleri A.S. and Cemsan Gemi Söküm Demir Çelik San. Ve Ticaret Ltd. – m/v “Und Adriyatik” (unreported)

On 6 February 2008 a serious fire developed on board the m/v “Und Adriyatik”, of Turkish flag, owned by UN RO-RO Isletmeleri A.S., during the voyage from Turkey to Trieste. The driver of one of the vehicles carried on board was severely injured when the fire developed and on arrival of the vessel to Trieste, where she was towed by the salvors, applied to the Tribunal of Trieste for the arrest of the vessel that had meanwhile been sold by her owners to another Turkish company, Cemsan Gemi Söküm Demir Çelik San. Ve Ticaret Ltd. The previous Owners and the Buyers applied for the release of the vessel from arrest on the ground that the vessel should be considered a wreck and that no maritime lien could be enforced on a wreck since the 1926 Convention on Maritime Liens and Mortgages was not applicable on wrecks and for a declaration that Italian Courts had no jurisdiction on the merits of the claim since art. 7 of the 1952 Arrest Convention was not applicable to vessels flying the flag of a non contracting State parties and the claimant’s claims was not secured by a maritime lien since the 1926 Brussels Convention was not applicable.

Held by the Tribunal of Trieste:

[1] Article 7 of the 1952 Arrest Convention is not applicable in respect of a vessel flying the flag of a non contracting State

Court of Appeal of Genoa 12 February 2000, Morsviazsputnik Satellite Communications and Navigational Electronics Aids v. Azov Shipping Co. - The “Yuriy Dvuzhilny” (2001 Dir. Mar. 1113)



[1] The 1952 Arrest Convention applies in respect of the arrest of a vessel flying the flag of a non contracting State, the arrest of which is permitted also in respect of claims other than those enumerated in Art. 1(1) for which arrest is permitted by Italian law.


By decree dated 3 October 2005 the Tribunal of Genoa authorised the arrest of the MV "Hande Ozgul" as security for a claim of ABG against the owner of the ship in respect of the supply of fuel oil. The ship was then arrested in Ravenna and the owners after having paid into court the amount of the claim applied to the Tribunal of Genoa, competent for the merits of the claim or the release of the ship. The claimant stated that competent for the release of the ship was the Tribunal of Ravenna, where the ship had been arrested. The Owners appealed against the order of arrest on the ground, inter alia, that the Convention on Arrest of Ships, 1952 was not applicable in respect of a ship flying the flag of a non-contracting State


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[1] The Convention on Arrest of Ships 1952 is applicable, pursuant to its article 8(2), to a ship flying the flag of a non-contracting State.

Spain




[1] The 1952 Arrest Convention is applicable to vessels flying the flag of foreign States parties to the Convention and to vessels flying the flag of foreign States that are not parties to the Convention in respect of which, however, arrest is also permitted under the provisions of Spanish national law; the nationality or domicile of the claimant is irrelevant except where the arrest of a Spanish vessel is applied for by a claimant domiciled in Spain.


Italy

Tribunal of Naples 8 July 2003, Rocco Giuseppe & Figli S.p.A. v. Blue Ocean Navigation Ltd. - The "Alexos N. Agondimos" (2004 Dir. Mar. 1500)

On 30 June 2003 Rocco Giuseppe & Figli S.p.A. applied to the Tribunal of Naples for the arrest of the m/v Alexos N. Agondimos as security for a claim against the owners of that vessel in respect of which they had already obtained a final judgment.


[1] When in respect of a maritime claim a final judgment has been issued, pursuant to article 1(2) of the 1952 Arrest Convention an arrest of the vessel in respect of which the claim has arisen is not permissible any more.

Tribunal of Bari 19 July 2002, Morfimare S.r.l. v. Poseidon Lines Shipping and Bellatrix Shipping Co. - The "Sea Serenade", Dir. Mar., 2004, 1424

Morfimare S.r.l. of Bari applied to the Tribunal of Bari for the arrest of the Sea Serenade, of Cypriot flag, owned by Bellatrix Shipping Co. as security for its claim in respect of fees earned as general agent of Poseidon Lines Shipping on the ground that the 1952 Arrest Convention applied, pursuant to its article 8(2), even if Cyprus was not a contracting State and that the two companies were controlled by the same persons.


[1] The 1952 Arrest Convention applies also to ships flying the flag of a non-Contracting State.

Court of Appeal of Genoa 12 February 2000, Morsviazsputnik Satellite Communications and Navigational Electronics Aids v. Azov Shipping Co. - The “Yuriy Dvuzhilny” (2001 Dir. Mar. 1113)



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[1] The 1952 Arrest Convention applies in respect of the arrest requested by a foreign company that does not have its principal place of business in Italy since Italy has not exercised the option granted by Art. 8(3).


Italy

Tribunal of La Spezia 10 February 2004, Tarros S.p.A. Compagnia di Navigazione v. Cantieri Navali San Marco S.r.l. - The "Vento di Maestrale" (not yet reported)

After the completion of maintenance works of the main engine of the m/v Vento di Maestrale, owned by Tarros S.p.A. Compagnia di Navigazione, by Cantieri San Marco S.r.l., the engine suffered twice of malfunctions. The second occurrence caused the complete stop of the engine and the master had to request the services of a salvage tug. Tarros refused to pay the balance of the cost of the maintenance works, which was lower than the cost of the repairs and of the salvage reward.

Cantieri San Marco applied to the Tribunal of La Spezia for the arrest of the Vento di Maestrale and the arrest was granted but the ship could not be arrested since at that time she was sailing.

Tarros provided security, whereupon the arrest was lifted. Then Tarros requested the release of the security on the ground that the conditions for an arrest had not materialized.


[1] The 1952 Arrest Convention is not applicable, pursuant to its article 8(4), in case the person applying for the arrest has its principal place of business in the country where the arrest is applied for and the ship flies the flag of that country.

Ships that may be arrested (art. 4.3)

France

Cour d'Appel of Rouen 22 May 2003, Wilmington Trust and Others v. La Trinitaine and Others - m/v "Skaufast" (2003 DMF 737)

Bominflot arrested the m/v Skaufast, owned by Skaufast, as security for a claim against the bareboat charterers of the vessel, Alandia Tanker, for the supply of bunker and Skaufast paid into Court the amount of the claim in order to obtain the release of the vessel from arrest. Bominflot then commenced proceedings against Alandia Tanker in the High Court of Justice in London and after having obtained a judgment that found Alandia Tanker liable to pay the cost of the bunker, applied to the Tribunal de Commerce of Le Havre, by which the arrest had be granted, in order to obtain the release in its favour of the funds paid by Skaufast for the release of the vessel. The judgment of the Tribunal de Commerce allowing the release of the funds was appealed by Skaufast.

Held, by the Cour d'Appel of Rouen, that:

[1] Neither article 3(4) nor any other provision of the 1952 Arrest Convention has the effect of making the owner of a ship that has been arrested as security for a claim against the bareboat charterer personally liable for the settlement of such claim.

Cour de Cassation 4 October 2005, Coopérative de Lamanage des Ports de Marseille v. Cruise Invest One - The "Renaissance One" (2006 DMF 47)

On 11 January 2002 the Coopérative de Lamanage des Ports de Marseille et du Golfe de Fos applied for and obtained from the President of the Tribunal de Commerce of Marseilles an order of arrest, pursuant to the 1952 Arrest Convention, of the ship Renaissance One.

On 5 February 2002 Cruise Invest One, a company registered in the Marshall Islands, requested the release of the ship from arrest on the ground that it had purchased the ship on 5 December 2001 following its judicial sale ordered by the Supreme Court of Gibraltar.

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[1] Pursuant to articles 3 and 9 of the 1952 Arrest Convention the claimant may not arrest a ship that, prior to the arrest, had been purchased by a third party in a judicial sale, pursuant to which the maritime lien securing the claim of the claimant was extinguished.

Spain




[1] The arrest of a vessel is permitted, under the 1952 Arrest Convention, when the claim is related to the operation of the vessel in respect of which the claim has arisen, or of another vessel in the same ownership, but the claimant must provide sufficient security to cover the damages that the arrest may entail.

Ship not owned by the person liable (Art.3(4))

Italy

Tribunal of Naples 28 March 2006, Sete Yacht Management S.A. v. Lady HayaLtd - The "Lady Haya" (not yet reported)

(The summary of facts may be found in the section "Claims in respect of which a ship may be arrested")


[1] Pursuant to the second sentence of article 3(4) of the 1952 Arrest Convention a ship may be arrested in any case in which any person other than the owner of that ship is liable in respect of a maritime claim relating to that ship.[2] Articles 2 and 9 of the 1952 Arrest Convention do not entail any limit to the application of article 3(4) but rather indicate that only the rights created by the Convention may be recognised by Contracting States.

Sister ships (Art. 3.2)

France

Cour de Cassation (Ch. Com.) 23 November 1999, Planmarine A.G. v. Capt. Stanislav Severov, Maddock Trading and Republic of Ukraine – The “Karelija” ([2000] DMF 719)

Planmarine A.G. arrested in the port of Noumea the m/v Karelija, owned by Maddock Trading as security for a claim against Black Sea Shipping-BLASCO on the ground that Maddock Trading was fully owned by BLASCO. The vessel was ordered released by the Cour d’Appel of Noumea and Planmarine appealed to the Cour de Cassation.


[1] Art. 3(2) of the 1952 Arrest Convention, pursuant to which ships shall be deemed to be in the same ownership when all the shares therein are owned by the same person or persons, does not apply where the same person (the Republic of Ukraine) holds the whole of the capital of the companies owning the ships.The contention that a State (the Republic of Ukraine) has formed the company owning the ship the arrest of which is demanded as security for such claim in order to limit the security of the

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claimants does not prove the fictitious character of such companies if they are financially independent.

South Africa

Bulkship Union S.A. v. Qannas Shipping Company and Dry Bulk Maritime Ltd. – The “Cape Courage”, The Supreme Court of Appeal, 1 June 2009 (339/08 [2009] ZASCA 74)*

The m/v Cape Courage was arrested on 15 June 2006 in terms of s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 as amended, for the purpose of providing security for claims brought by the Bulkship Union SA, against Dry Bulk Maritime Limited, in arbitration proceedings in London. The claims which were the subject of the arbitration were in respect of alleged breaches of a memorandum of agreement for the sale and purchase of another vessel, m/v Pearl of Fujairah, and for misrepresentations relating to the condition of that vessel.

The m/v Cape Courage was arrested as an “associated ship” pursuant to s 3(6) and (7) of the Act on the basis that Dry Bulk Maritime owned the m/v Pearl of Fujairah when the claims arose, and the same person or persons controlled Dry Bulk Maritime time when the claims arose and Qannas Shipping Company Limited (the owner of the m/v Cape Courage at the time of the arrest). Security was established by the provision of a guarantee and the m/v Cape Courage was released but she remained deemed to be under arrest in terms of s 3(10) of the Act. On 23 August 2006 Dry Bulk Maritime and Qannas Shipping Company Limited brought an application for an order setting aside the deemed arrest and the return of the guarantee. By order of the Durban High Court, on 4 March 2008 the deemed arrest of the the m/v Cape Courage was set aside.

Bulkship Union SA appealed against that judgment.

Held, by the Supreme Court of Appeal, that:

[1] The phrase “when the maritime claim arose” in section 3(7)(iii) of the Admiralty Jurisdiction Regulation Act 105 of 1983, which was taken over from article 3(1) of the Arrest Convention of 1952, indicates the time of the breach of the contract and, as regards claims in tort, the time when the tort was committed even if actual damage was only suffered thereafter.

(*) By the courtesy of Mr. Michael Marks Cohen, Nicoletti Hornig & Sweeney ([email protected])

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THE CLC 1969-1992

•Channelling of liability (Art. III.4(b)) •Costs – Costs in pursuing claim against IOPCF •Economic loss (art. I.6) •Exclusive Jurisdiction (Art. IX) •Limitation proceedings - Time bar for submission of claims •“Pollution damage” – Physical injury and psychological damage •Time bar (Art. VIII)

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Channelling of liability (Art. III.4(b))

France

Tribunalde Grande Instance de Paris – XI Chambre Correctionnelle 16 January 2008 - (The “Erika”) (not yet reported)

On 8th December 1999 the tanker “Erika” of Maltese flag sailed from Dunkerque with a cargo of 30,884.471 tons fuel oil bound to an Italian port to be named. Soon after sailing the ship met with adverse weather conditions and on 12th December the master sent an emergency call stating that the ship was breaking in two. After the crew had been rescued by helicopters the forward section of the ship sank in a position 35 miles south-east of Pointe de Penmarc’h (Finistère) while the aft section. after having been taken in tow in order to move it away from the coast, sank the following day in the position latitude 47°9’ and longitude 4°15’west. The fuel oil escaped from the tanks of the ship caused a grave pollution of the coast.

Criminal proceedings were commenced in the Tribunal de Grande Instance of Paris against several companies, including the owners of the ship and the classification society, and several individuals. Amongst the issues considered and decided by the Tribunal there was that relating to the exemption from liability of the classification society under article III paragraph 4(b) of the CLC 1992.

Held, by the Tribunal de Grande Instance of Paris, that:

[1] The services performed for the ship reference to which is made in article III paragraph 4 (b) of the CLC 1992 are services performed by persons that participate directly in the maritime operations and cannot include classification societies.

United States

Reino de España v. The American Bureau of Shipping – The “Prestige”, United States District Court – Southern District of New York 2 January 2008

The Reino de España brought proceedings in the United States District Court-Southern District of New York against American Bureau of Shipping (ABS) claiming pollution damages caused to its coasts after the casualty of the “Prestige”.

ABS moved, under Rule 56 of the federal Rules of Civil Procedure, for summary judgment dismissing Plaintiff’s case on the ground that Plaintiff was unable to prove the requisite degree of culpability on ABS’ part or, in the alternative, partial summary judgment finding Spain’s pursuit of its claims against ABS in that forum precluded by the International Convention on Civil Liability for Oil Pollution Damage (“CLC”).

ABS argued that the District Court had no jurisdiction over the claim since under article IX (1) of the CLC 1992, of which Spain is a party, all claims for pollution damage should have been brought in the courts of Spain and that in any event no claim for compensation could be made against ABS pursuant to article 3 paragraph 4 (b) of CLC 1992.

Held, by the USDC-Southern District of New York, that:

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[1] A classification society is a person who, without being a member of the crew, performs services for a ship within the meaning of article III paragraph 4 (b) of CLC 1992.

Costs – Costs in pursuing claim against IOPCF

Scotland

Landcatch Limited v. The International Oil Pollution Compensation Fund (Inner House, Court of Session, Edinburgh, 19 May 1999 ([1999] 2 Lloyd’s Rep. 316; 1999 S.L.T. 1208)*

The tanker Braer ran aground at Shetland, an island off the mainland of Scotland in January 1993 during severe weather. Almost 85,000 tonnes of crude escaped. Landcatch, a salmon farming company, claimed £1,900,000 from the owners of the tanker, their insurers and the International Oil Pollution Compensation Fund. The claim was for loss of profits said to have been sustained in 1993 and 1994, attributed to the fall in demand for Shetland salmon following the spill. The plaintiff also claimed for the expenses in pursuing their claim against the IOPCF.

The insurers of the Braer paid the relevant limitation fund into Court under and in terms of CLC 1969; the IOPCF also was a party to the defence of the various claims made upon the fund in Court, further to its contingent liability in terms of the Fund Convention 1971.

It was admitted on behalf of the owners, insurers and IOPCF that they were liable for “damage” in terms of implementing UK legislation that gives effect to the 1969 and 1971 Conventions, but contested the issue of whether the loss of profit claimed by Landcatch fell within that description.

Held, by the Court of Session (Inner House), that:

[1] The owners and insurers were not liable for the plaintiff’s loss of profits caused by the escape of the oil carried by the "Braer"; such loss of profit was not loss or damage caused directly and immediately by contamination within the meaning of the Convention or the implementing UK legislation.[2] If Landcatch had sued the shipowners for damages at common law in regard to those losses, its claim would have failed on the application of the recognised pragmatic rule against secondary or relational claims for purely economic loss.[3] There was no basis for the recovery of costs in pursuing the claim against the IOPCF. The expenses incurred in submitting a claim to the IOPCF are of no concern to shipowners. Since the liability of the IOPCF is contingent upon that of the owners such expenses should not form a separate head of claim against the fund in court.


Economic loss

England

R. J. Tilbury & Sons (Devon) Ltd. v. Alegrete Shipping Co. Inc., Assuranceforeningen Skuld, International Oil Pollution Compensation Fund 1971 and Others - The "Sea Empress" [2003] 1 Lloyd's Rep. 327.

The Sea Empress grounded at St Ann's Head, Milford Haven on 15th February 1996, leading to the escape of some 72,000 tonnes of crude oil into the sea. There followed a fishing ban in an area of sea around Wales extending from St David's Head in the west to the Gower Peninsular in the east.

At the material time R. J. Tilbury & Sons (Devon) Ltd. (Tilbury) had a business which included the processing of whelks in Devon, at Exmouth which is some 200 miles by road from Milford Haven. They had a long term contract for the supply of Welsh whelks to a Korean buyer, Yusung Mulsan Co. Ltd. and had contracted with 8 fishing vessels (based in the South Wales area) to take such whelks as it would catch for the 6 month period ending 31st July 1996. The ban brought an immediate end to the catching of Welsh whelks, and destroyed Tilbury's business with its Korean buyers.

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Tilbury commenced proceedings against the Owners of the Sea Empress, Alegrete Shipping Co. Inc., its P&I Club, Assuranceforeningen Skuld, and the International Oil Pollution Compensation Fund 1971 at the Admiralty Court claiming a loss of gross profits totalling £746,632, less avoided expenses of £103,075 which it accepted would have been incurred but for the contamination of the fisheries.

By judgment dated 29th May 2002 given on the trial of a preliminary issue, David Steel J determined against the claimants that their claim for loss of profits did not constitute "damage caused … by contamination resulting from the discharge or escape of oil from the Sea Empress within the meaning of section 153 of Schedule 4 to the Merchant Shipping Act 1995". The claimants appealed.


[1] The inability to carry out processing and deliveries of processed and packed whelks at points far away from the contaminated areas is a form of secondary economic loss, which is outside the intended scope of a statute (schedule 4 to the Merchant Shipping Act 1995) which is closely focused on physical contamination and its consequences.

Exclusive Jurisdiction (Art. IX)

Italy

Corte di Cassazione – Sezioni Unite 17 October 2002, No. 14769 – International Oil Pollution Compensation Fund 1992 v. RINA S.p.A. and Others – Total Fina Elf S.A. and Others v. RINA S.p.A. and Others – French State v. RINA S.p.A. and Others – m/t “Erika” (2003 Dir. Mar.139).

On 12 December 1999 the m/t Erika, after having loaded 30,000 tons of oil at Dunkerque, during a storm in the Gulf of Guascogne broke into two pieces and sank. Part of the oil carried by the tanker escaped from the tanks of the vessel contaminated the French coast.

RINA S.p.A., the society by which the vessel had been classified, commenced proceedings in the department of Augusta of the Tribunal of Syracuse against the French State, the Conseil Général de la Vendée, the owners of the Erika Panship Management & Services S.r.l., Steamship Mutual Underwriting Association Bermuda Ltd., Total Fina Elf S.A., owners of the oil loaded on board requesting that it be established that it was under no liability in respect of the occurrence. RINA maintained that the Tribunal of Syracuse was the court of competent jurisdiction since the Erika had been classified in Augusta where, therefore, the alleged wrong would have been committed.

The liability insurers of RINA, Assicurazioni Generali, Riunione Adriatica di Sicurtà, Assicurazioni d’Italia, Toro Assicurazioni, Navale Assicurazioni and SASA, joined the proceedings.

In turn Conseil Général de la Vendée commenced proceedings in the Tribunal de Commerce of Nantes against RINA and all other parties sued by RINA in Italy, except the French State.

The International Oil Pollution Compensation Fund (who had joined the Italian proceedings) the French State and Total Fina Elf, who had entered an appearance denying that Italian jurisdiction existed, with three separate petitions applied to the Italian Corte di Cassazione requesting that the issue of jurisdiction be decided immediately by the Supreme Court. Meanwhile the proceedings in the Tribunal of Syracuse were stayed.


[1] Article IX.1 of CLC 1992 must be interpreted in the sense that the exclusive jurisdiction of the courts of the State in the territory, territorial sea or area indicated in Article II of which pollution damage has occurred is not limited to cases where actions are brought against the owner of the ship or its insurer, but exists whoever is the person against whom actions for compensation are brought.

United States

Reino de España v. The American Bureau of Shipping – The “Prestige”, United States District Court – Southern District of New York 2 January 2008

(The summary of facts may be found in the section “Channelling of liability”)

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[1] A State party to CLC 1992 must, pursuant to article IX of the Convention, bring proceedings in connection with pollution damage to its coasts only in its own courts and, therefore, a court of the United States has no jurisdiction to hear a claim of Spain against a United States company allegedly liable for such pollution damage

Limitation proceedings - Time bar for submission of claims

Italy

Corte di Cassazione 3 May 2004, No. 8337, Venha Maritime Ltd., The United Kingdom Mutual Steamship Assurance Association (Bermuda) Ltd. and the 1971 International Oil Pollution Compensation Fund v. Mauro Pesca S.r.l. and Others - The "Haven" (2005 Dir. Mar. 193)

Mauro Pesca S.r.l. and other claimants submitted their claims in the limitation proceedings commenced in the Tribunal of Genoa by Venha Maritime Ltd., following the pollution damage caused by the Haven, who exploded and sank west of the Genoa harbour after the expiry of the time limit set by the Tribunal, pursuant to article 623 of the Italian Navigation Code. Venha Maritime filed an opposition, together with its P&I Club and the 1971 International Oil Pollution Compensation Fund, on the ground, inter alia, that claims that are not included in the list of liabilities drawn up by the Court are forfeited.

The Tribunal of Genoa rejected the claims belatedly submitted on the ground that in the applications reference had wrongly been made to procedural provisions of bankruptcy law. The Court of Appeal reversed that decision and Venha Maritime, its P&I Club and the Fund appealed to the Corte di Cassazione.


[1] In limitation proceedings there is no prescribed time limit for the submission of late claims, in respect of which claimants may only share the balance of the limitation fund after the satisfaction of claimants who have timely submitted their claims.

“Pollution damage” – Physical injury and psychological damage

Scotland

Black v. The Braer Corporation (Outer House 30 July 1998, Scots Law Times, Issue 39, 3.12.99 and 2000 Dir. Mar. 999)

Following the pollution caused by the Braer when it went aground off the Shetland Islands on 5 January 1993, Derrick Black, a farmer, claimed damages on account of the stress, anxiety and depression caused to him by the contamination.

Held, by the Outer House, that:

[1] “Damage” within the definitions of the Merchant Shipping (Oil Pollution) Act 1971 and of the Merchant Shipping Act 1974 includes physical injuries and psychological conditions such as stress, anxiety and depression.

Time bar (Art. VIII)

Scotland

Eunson v. The Braer Corporation and Assuranceforeningen Skuld (Outer House, Court of Session, Edinburgh, 30 July 1998; reported 1999 S.L.T 1405) *

The tanker Braer ran aground at Shetland, an island off the mainland of Scotland in January 1993 during severe weather. The cargo of crude oil was lost, and oil was deposited on the coastline and also carried by the storms further inland.

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A claim was made by Mr Eunson for damage caused by airborne oil to his home. The property was jointly owned by Mr Eunson and his wife. His wife was not a party to the action until more than three years after the grounding of the tanker and the damage to the property took place.

For the claimant, it was argued before the Scottish Court of Session that section 9 of the Merchant Shipping (Oil Pollution) Act 1971, implementing Article VIII of CLC 1969 in the United Kingdom, operated to allow the claim of Mrs Eunson despite the lapse of more than the three years provided for by Article VIII. It was argued by Counsel for the Braer Corporation, the Owners of the vessel, that Article VIII operated such that her right to claim had expired.


[1] Article VIII of the 1969 Convention is an extinguishing time bar; the claim is extinguished after three years. If the claim is not enforced by an action within this time limit the claim is wholly lost, and the Court has no discretion whether to entertain it.


Stephen Gray and Stanley Gray v. The Braer Corporation and Assuranceforeningen Skuld (Outer House, Court of Session, Edinburgh, 29 December 1998; reported 1999 S.L.T. 1410)

The tanker Braer ran aground at Shetland, an island off the mainland of Scotland in January 1993. The cargo of crude oil was lost, and in the surrounding waters an Exclusion Zone was imposed by the UK Government. Fishing was prohibited within the Exclusion Zone, and many of the islanders were prevented in this way from carrying on their business.

Claims were made before the Scottish Court of Session in which the partners of Gray Fishing Company sued the owners and insurers of the Braer for pollution damage alleged by reason of the imposition of the Exclusion Zone around the island.

The claim of the partnership was made in Court more than three years after the oil spill. The issue then arose as a matter of construction of section 9 of the Merchant Shipping (Oil Pollution) Act 1971, implementing Article VIII of CLC 1969 in the United Kingdom. Counsel for the partnership alleged that in the circumstances of continuing losses, the six year time bar period applied, in contrast to a single incident of loss, to which it was said the three year time bar contained in Article VIII applied. Counsel for the Braer Corporation argued that the claim became time-barred three years from the date on which the claim emerged, viz. the date of the oil spill itself, and that the six year time limit applied only to claims that arising more than three years after the first occurrence resulting in the discharge or escape of oil.


[1] Article VIII of the 1969 Convention does not create two alternative time bar periods. The Convention applies one period of three years applicable to all claims, with a long-stop provision that after the elapse of six years from the date of the relevant occurrence no action can be brought to enforce any claim whether for losses already sustained or for losses apprehended.[2] To be timeous any action must meet two requirements. The claim must be raised within three years from the date on which the claim first arose; and in any event it must be raised within six years of the date of the first discharge or escape of oil. These requirements are cumulative and not optional. Article VIII of the 1969 Convention envisages a single date as beginning the time bar period – the date “when the damage first occurred”.

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THE FUND CONVENTION 1971-1992

• Pollution damage (Art.1(2)) • Preventive measures (Art.1(2), referring to art. 1(7) of the Civil Liability Convention • Time bar (Art. 6)

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Pollution damage (art.1(2))

France

Court of Appeal of Rennes 24 May 2005, IOPCF c. M. Gouzer, Tevere Shipping and Steamship Mutual Underwriting (2006 DMF 1014)

After the pollution caused by the shipwreck of the “Erica” on 12th December 1999 the IOPCF and Steamship Mutual Underwriting Association set up an office at Lorient where claims for pollution damage could be submitted. The owner of an oyster farm situated at Saint Philibert, in the bay of Quiberon, Mr. Gouzer, filed a claim for € 70,292 for loss of earnings in the period between 1st January and 31st May 2000. After that claim had been settled, Mr. Gouzer filed a second claim in respect of loss of earnings during the period between 1st October and 31st December 2000. That second claim was rejected by the IOPCF and Steamship Mutual on the ground that the pollution caused by the “Erica” had not affected anymore the oyster farms during that period. Mr. Gouzer did not accept that decision and brought proceedings against IOPCF and Steamship Mutual in the Tribunal de Commerce of Lorient. By judgment of 11th December 2002 the Tribunal de Commerce held that the claim was justified and that it was not bound by the criteria adopted by the IOPCF for the evaluation of the loss and that it sufficed that a causal relationship existed between the escape of oil and the loss. The IOPCF appealed.

Held by the Court of Appeal of Rennes, that:

[1] The courts are exclusively competent for the interpretation and application of the legal notion of pollution damage under the CLC and the Fund Convention 1992 and the criteria established by the IOPCF for the settlement of pollution claims are not binding on them, but may only constitute a reference of an indicative values.

Preventive measures (Art. 1(2), referring to art. 1(7) of the Civil Liability Convention))

Japan

Japan v. The International Fund established by the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage of 1971, Nagasaki District Court 6 December 2000 (Hanrei Times no.1101, p.228)

A Korean Tanker stranded within the territorial waters of Korea and the oil that escaped from it reached the coast of the islands of Tsushima, Japan. The Japanese government had its Self Defence Force and the Japan Coast Guard undertake measures to prevent or minimise pollution damage and incurred costs in the amount of 50,755,568 Japanese yen. Since the tonnage of the stranded tanker was 786 tons, the financial security had not been provided. Having found that the owner of the ship was insolvent, the Japanese government claimed compensation for the above costs from the IOPC Fund. The Fund disputed the reasonableness of some of the measures taken by the Self Defence Force.

Held, by the Nagasaki District Court, that:

[1] Reconnoitring by airplanes on the day after the oil reached the coast was reasonable as a preventive measure, there being no evidence that prevention of oil pollution had been possible to the same extent without the reconnoitring. [2] Taking photographs of the site was reasonable as a measure to ascertain the situation easily and accurately

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[3] Search by naval vessels of the Self Defence Force was reasonable even though it was undertaken simultaneously with the activities by the Coast Guard.

Time bar (Art. 6)

Italy

Tribunal of Genoa 21 April 2007, Mauro Pesca S.r.l. and Others v. Venha Maritime Ltd., The United Kingdom Mutual Steamship Assurance Association Ltd. and International Oil Compensation Fund – The “Haven” (not yet reported).

Mauro Pesca S.r.l. and other claimants submitted their claims in the limitation proceedings commenced in the Tribunal of Genoa by Venha Maritime Ltd., following the pollution damage caused by the Haven, who exploded and sank west of the Genoa harbour. Venha Maritime filed an opposition, together with its P&I Club and the 1971 International Oil Pollution Compensation Fund, on the ground, inter alia, that claims that are not included in the list of liabilities drawn up by the Court are forfeited.

The Tribunal of Genoa rejected the claims belatedly submitted on the ground that in the applications reference had wrongly been made to procedural provisions of bankruptcy law. The Court of Appeal reversed that decision and Venha Maritime, its P&I Club and the Fund appealed to the Corte di Cassazione.

Following the decision of the Corte di Cassazione to the effect that there is no prescribed time limit for the submission of late claims, the limitation proceedings were resumed in the Tribunal of Genoa. After it was established that the CLC limitation fund had been exhausted, the remaining issue was whether the claims of the claimants should be settled by the Fund.


[1] Since the offence resulting from the explosion and sinking of the “Haven” must, pursuant to the principle laid down by the Supreme Court and by the Constitutional Court in respect of criminal offences, be qualified as “instantaneous”, the three years time bar in respect of claims against the Fund commences to run as from the date of the incident and not from the date when the damage occurred.[2] The expiry of the time bar period set out in article 6 (1) of the 1971 Fund Convention is only prevented by an action being brought against the Fund and to this effect it is irrelevant that the Fund is a party to the limitation proceedings in which the claim of the claimants has been filed.

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THE LIMITATION CONVENTION (LLMC) 1976

•History of the Convention •General principles - Rules of Interpretation •Bar to other actions (Art. 13)•Claims excepted from limitation (Art. 3(e)) •Claims subject to limitation (Art. 2.1(a)) •Conduct barring limitation (Art. 4) •Conflict of Conventions •Constitution of the fund (Art. 11.1)•Definition of seagoing ship (Art. 1.2) •Definition of shipowner (Art. 1.2) •Distribution of the fund (Art. 12) •Limits of liability (Art. 6) •Limits of liability – Distinct occasion (art. 6.1)•Loss of the right to limit (Art. 4) •Persons entitled to limit (Art. 1) •Reservations (Art. 18) •Scope of application (Art. 1) •Scope of application (Art. 15.1) •Scope of application (Art. 15(2) (a))•Scope of application (notion of "ship")

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History of the Convention

England

The Owners of the Ship “Herceg Novi” and the Owners of the Ship “Ming Galaxy” (Court of Appeal 16 July 1998, 16 July 1998, [1998] 2 Lloyd’s Rep. 454)

In the decision reported below under the heading “Conflict of Conventions” Sir Chistopher Staughton summarized as follows the history of the Convention (at p. 457):

[1] The 1976 Convention was thus a package deal, whereby the limits were raised considerably but in return the shipowner received the benefit of a limit which was thought to be virtually unbreakable. It was largely the work of the Comité Maritime International, a non-governmental body representing the interests of all those involved in sea transport. The draft was finalized by the CMI at its 1974 Conference in Hamburg (SELVIG, Limitation of Shipowners’ Liability, p. 9) – which one of us attended. As commonly happens, the work was then taken over by governments, in the shape of the IMCO (now the International Maritime Organisation and an organ of the United Nations). We mention these details because it is an important part of the case for the "Herceg" owners that the 1976 Convention is commenced by IMO.

General principles - Rules of Interpretation

Australia

Supreme Court of New South Wales, Equity Division, Admiralty List, Newcastle Port Authority v. Pevitt & Ors [2003] NSWSC 888 (1 October 2003, Palmer J)

The plaintiff sought to limit its liability to pay the costs of the defendant in related proceedings, in which the plaintiff was defendant to a substantial claim for damages for negligence arising out of a collision at sea, to a limitation fund constituted pursuant to the London Convention on Liability for Maritime Claims 1976. The question arose whether or not legal costs fell within the meaning of Article 2.1 of the Convention and thus, whether a limitation fund was inclusive or exclusive of the legal costs of parties that may claim against it. That question had not previously been decided.

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Held by the Supreme Court of New South Wales, that:

[1] An Australian Court should be careful to resist the inclination to construe the Convention against a background of its own domestic law and procedure (at [37]).

Bar to other actions (Art. 13)

Canada

Federal Court of Canada (Order) 7 March 2000 (No. T-1887-99), Canadian Pacific Railway Company v. The Owners and all Others Interested in the Ship “Sheena M”, The Owners and all Interested in the ship “Rivtow 901”, Bayside Towing Ltd., Rivtow Marine Ltd., Eugene Beckstrom and William Frizell *

As a result of the collision between the barge Rivtow 901 in tow of the Sheena M and a railway bridge two actions were commenced, one by the owners of the Sheena M for limitation and the other by Canadian Pacific Railway for damages caused by the collision.

Held, by the Federal Court of Canada, that:

[1] Article 13 of the 1976 LLMC Convention does not bar liability proceedings going forward at the same time as limitation proceedings, but there may be situations in which a stay should be granted.

* Reported by Christopher J. Giaschi, partner of the law firm Giaschi & Margolis, Vancouver, B.C.

England

ICL Shipping Ltd. and Steamship Mutual Underwriting Association (Bermuda) Ltd. v. Chin Tai Steel Enterprises Co. Ltd. and Others - The "ICL Vikraman", Queen's Bench Division (Commercial Court), [2004] 1 Lloyd's L.R. 21

On 26 September 1997 the ICL Vikraman, owned by ICL Shipping Ltd., collided with another vessel in the Malacca Strait and sank with the loss of 26 lives and all cargo on board.

The owners of a cargo of 10,078 tonnes of casting billets, Chin Tai Steel Enterprises Co. Ltd., arrested a sister ship, the ICL Raja Mahendra under proceedings commenced in Singapore. The vessel was released against delivery of a letter of undertaking of the P&I Club, the final wording of which, as decided by the High Court of Singapore, was to the effect that payment would be effected of any sum found due by the High Court of Singapore or by arbitration in London. The letter of undertaking contained no restriction by reference to tonnage limitation.

The claim of Chin Tai was referred to arbitration in London together with claims under other bills of lading and on 9 April 2003 an interim final award concluded that the claim of Chin Tai succeeded. Prior to the publication of the award, on 18 March 2003 ICL commenced limitation proceedings in London and established a limitation fund under CPR 61.11(18) and article 11 of the LLMC Convention 1976 by making a payment into Court of £ 6,265,288.77, Chin Tai's share thereunder being 1,687,593.

On the following day ICL applied to the Admiralty Court in London for an order pursuant to article 3.2 of the LLMC Convention for the release of the letter of undertaking or, alternatively, an injunction restraining Chin Tai in the Singapore action from presenting the letter of undertaking to the club. On 21 March 2003 the Admiralty Court made an order for an injunction against Chin Tai and for permission to serve the limitation form on Chin Tai in Taiwan.

Chin Tai applied to set aside service upon it of the limitation claim form and/or the injunction.

Held, by the Queen's Bench Division (Commercial Court), that:

[1] The release of a ship or other property, whether mandatory or non-mandatory, under article 13.2 can only be effected by the Court of that State Party which is seized of the arrest or attachment and, therefore, there is no basis for the operation of article 13.2 where the arrest or attachment has been made in a State that is not a State Party.

Netherlands

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Supreme Court 29 September 2006, B&N Nordsjöfrakt AB and Northsea Shipping AB v. Westereems B.V.

Following a collision in the North Sea between the MV Seawheel Rhine, of Swedish flag, owned by Northsea Shipping AB (Northsea) and bareboat chartered to B&N Nordsjöfrakt (B&N) and the M/V Assi Eurolink , of Dutch flag, owned by Westereems B.V. and the sinking of the Assi Eurolink,Westereems brought proceedings in the District Court of Gröningen against Northsea and B&N claiming damages for the loss of the ship. Northsea in turn instituted arbitration proceedings in Sweden against B&N requesting a declaratory award to the effect that B&N should be found liable to indemnify Northsea in respect of any amount Northsea would be bound to pay to Westereems. Subsequently B&N commenced limitation proceedings in the Court of Stockholm, and the petition for limitation was granted, whereupon the limitation fund was constituted in the amount of SEK 20,791,629 (€ 2.255,218.62). The order of the Court was ex parte,a prior hearing to which claimants ought to be summoned not being required under Swedish law. Westereems then arrested the Seawheel Rhine in Rotterdam (the vessel was subsequently released against the provision of guarantees in respect of the loss of the Assi Eurolink and the removal of the wreck) and appealed against the decision of the Swedish Court by which limitation had been granted, such appeal being dismissed by the SVEA Court in Stockholm. Westereems then filed a claim in the limitation proceedings, without prejudice of its denial of the jurisdiction of the Swedish Court.

At about the same time Northsea and B&N brought proceedings in the District Court of Rotterdam against Westereems, the State of the Netherlands and the Ministry of Transport requesting the release of the two guarantees. The claims were dismissed by the District Court by judgment dated 24 April 2003 and the subsequent appeal of the claimants to the Court of Appeal of the Hague was also dismissed. Northsea and B&N then appealed to the Supreme Court.

Held, by the Supreme Court of the Netherlands, that:

[1] The legal consequences including those set out in art.13 of the 1976 LLMC Convention of the decision of a Swedish Court whereby the constitution of the limitation fund is allowed must be determined by Swedish law and, therefore the arrest of a vessel owned by the petitioner after the constitution of the limitation n fund was in breach of art.13 of the LLMC Convention.

* Reported by Mr. Frank Smeele ([email protected]) through Mr. Gregory Timagenis ([email protected]).

Claims excepted from limitation (Art. 3(e))


Fong Yau Hei v. Gammon Construction Ltd. And Others, Court of Final Appeal18 April 2008*

In July 2000 Fong Yau Hei (Fong), employed by the charterers of a tug, Tung Shun Transportation and Engineering Ltd. acting under a contract with Gammon Construction Ltd., while working on board the tug was injured by the rope used for the towage of a barge that had broken.

After hearing the evidence, the Recorder found that the injuries were caused by the negligence of Gammon for not having removed from the barge a large steel tank which protruded over the bow of the barge and fouled the tow rope, and by the master of the tug in failing to require that the tank be removed and in not adequately controlling the tug. For Tung Shun and the master, it was contended that they were entitled to rely on the limitation of liability provided for in Part III of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap. 434 (“the Shipowners Limitation Ordinance”). Section 12 of that Ordinance made the Convention on Limitation of Liability for Maritime Claims 1976 (“LLMC”) part of the law of Hong Kong. The Recorder held that the limitation of liability generally available to shipowners and employees was excluded in this case by s.7(1) of the Control of Exemption Clauses Ordinance, Cap. 71 (“the CECO”), an exclusion contemplated by art.3(e) of the Convention. Section 7(1) states:

A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence.

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On appeal to the Court of Appeal, all three members of the court upheld the view of the Recorder that s.7(1) of the CECO excluded the limitation of liability.

By order dated 28 May 2007, leave was granted by the Court of Appeal for the appellants to appeal to the Court of Final Appeal.

Held, by the Court of Final Appeal, that

[1] For the purpose of the operation of article 3(e) of the LLMC Convention 1976 a specific exclusion of the application of the Convention in respect of claims by servants of the shipowner is not required and a general provision, such as that in section 7.1 of the Control of Exemption Clauses Ordinance, suffices.

* By the courtesy of Patrick Lim ([email protected])

Venezuela

Tribunal Supremo de Justicia-Sala Constitucional 27 June 2008, Sindicato Profesional de Trabajadores Bolivarianos de la Pesca v. Operadora Portuaria S.A. – The “Maersk Holyhead”

On 6 November 2005 a collision occurred in the Maracaibo Lake between the Maersk Holyhead, owned by Maersk and bareboat chartered to Operadora Portuaria S.A.(OPSA), and the Pequot M.C. as a consequence of which bunker oil escaped from the bunkers of the Maersk Holyhead polluting the waters of Lake Maracaibo. OPSA commenced limitation proceedings in the Tribunal de Primera Instancia Marítimo and on 26 June 2006 the Tribunal allowed OPSA to avail itself of the benefit of limitation. Objection was raised to that decision on the ground that article 43.2* of the Ley de Comercio Marítimo excluded from the benefit of limitation claims for pollution damage. The decision of the Tribunal that rejected the objection was affirmed by the Juzcado Superior Marítimo with judgment of 13 October 2006. OPSA appealed to the Tribunal Supremo de Justicia.

* Although Venezuela is not a party to the LLMC 1976/1996, it has adopted most of the provisions of the Convention in its Ley de Comercio Marítimo. Its articles 41 and 43 reproduce articles 2 and 3 of the Convention.

Held, by the Tribunal Supremo de Justicia-Sala Constitucional, that:

[1] The CLC Convention is not applicable to bunker oil pollution damage.[2] A decision allowing the benefit of limitation in respect of claims for pollution damage is in conflict with article 43(2) of the Ley de Comercio Maritimo and the principle of the effective protection of the environment.

Claims subject to limitation (Art. 2.1(a))

Australia

Newcastle Port Corporation v. Pevitt and Others, New South Wales Supreme Court 1 October 2003, [2004] 2 Lloyd's Rep. 47

On 28 July 2000 the pilot vessel Robert Whitmore collided with a dinghy in Newcastle Harbour. Three men in the dinghy were seriously injured and later one died of his injuries. By summons filed in the New South Wales Supreme Court the owner of the pilot vessel, Newcastle Port Corporation, claimed that it was entitled to limit any liability which it may have to the widow of the deceased and the two other persons that suffered injuries in accordance with the provisions of the 1976 LLMC, which was given the force of law in Australia by the Limitation Act. There was no issue between the parties that the plaintiff was entitled to limit its liability under the LLMC Convention and as to how the limit should be calculated. The sole issue that was debated consisted in whether the costs incurred by the defendants should be paid out of the limitation fund or in addition to it.

Held, by the New South Wales Supreme Court, that:

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[1] A limitation fund established under art. 11 of the 1976 LLMC is exclusive of any legal costs which may be incurred in establishing a claim against the fund.

Japan

Tokyo Kôtô Saibansho (Court of Appeals of Tokyo) 25 February 2000, Tokyo Higashi Shin’yo Kinko v. S.K.B. Marine Co. Ltd. (Kaijihou Kenkyûkaishi no. 156, p. 25)*

Following a claim by the consignee of a cargo for the wrong delivery of such cargo the owners of the carrying vessel commenced an action seeking limitation of liability under the Act on Limitation of Liability by which Japan gave effect to the LLMC Convention.


[1] Damages arising out of wrongful delivery of goods by the carrier do not qualify as “loss of or damage to property occurring on board or in direct connection with the operation of the ship” and, therefore, claims in respect of such damages are not subject to limitation under Article 3(1)(1) of the Act on Limitation of Liability.

* Judgment reported by Souichirou Kozuka, Associate professor, Sophia University, Tokyo

Conduct barring limitation (Art. 4)

Canada

Federal Court of Canada 5 June 2011, Société Telus Communications and Hydro Quebec and Bell Canada v. Peracomo Inc. and the owners and all other persons interested in the fishing vessel “Realice”*

*By the courtesy of Michael Marks Cohen, Nicoletti Hornig & Sweeney, [email protected]

In October 1999, Le Groupe QuébecTel Inc. (now the plaintiff Telus Communications) had two ssubmarine fibre optic cables laid across the St. Lawrence river: the first running from Point-au-Père on the south shore to Baie-Comeau on the north. This cable, known as the Sunoque I, is the one that was cut. In large measure, the cable was simply laid down on the riverbed. The other cable runs from Bic on the south shore to Forrestville on the north. All went well until June 2006 when remote monitoring controls indicated that the Sunoque I parted about 8.9 km off Baie-Comeau.

Mr. Vallée, the master of the fishing vessel Realice, was engaged in snow crab and whelk fishing. The Realice is owned by Peracomo Inc. Mr. Vallée is its president and sole shareholder. Strings of cages were laid on the river bottom, secured at both ends by small anchors, which are attached to buoys. One of these anchors got hooked onto the cable. The anchor with the cable attached was hauled out of the water. Mr. Vallée freed the anchor by cutting the cable with an electric saw. A few days later the same thing happened and he cut the cable again.

Despite Québec government notices of consultation published before the installation of the cable, notices published in local newspapers by Telus, various notices to mariners and notices to shipping from the Department of Fisheries and Oceans, and amendments to other marine publications and to the two applicable marine charts, Mr. Vallée believed the cable was not in use.

Telus, its co-owner of the cable, Hydro-Québec, and Bell Canada, which had no ownership interest therein but a right of use, shared the cost of repair in accordance with a pre-existing contract among them. They took action in personam against Peracomo and Mr. Vallée and in rem against the ship. In turn, the defendants instituted third party proceedings against their underwriters, Royal and Sun Alliance Insurance Company of Canada, who denied coverage.


[1] The act of the master of a fishing vessel who, after having hauled out of the water a submarine fibre optic cable that got hooked by an anchor used in fishing operations, freed the anchor by cutting the cable and did that again a few days later is committed with the intent to

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cause the damage or in any event was an act committed recklessly and with knowledge that such damage would certainly result.[2] The loss of or damage to the submarine fibre optic cable is not covered by insurance since it is due to the wilful misconduct of the assured.

Bayside Towing Ltd., Eugene Beckstrom and William Frizell v. Canadian Pacific Railway B.C. Tel and Rivtow Marine Ltd. Federal Court of Canada (Order) 2 February 2000 *

This was a limitation action by the owner of the tug Sheena M in relation to a collision between the barge Rivtow 101 in tow of the Sheena M and a railway bridge owned by the Defendant. The Defendant challenged the right of the Plaintiff to limit liability pursuant to the LLMC Convention. The Plaintiff brought this application to strike out portions of the Statement of Defence.


[1] It cannot be excluded that the elements of knowledge and recklessness, required by article 4 of the LLMC 1976 Convention for the loss of the right to limit liability may exist in case of an allision attributable to negligent navigation.[2] The concept of willfulness may be close to the test under Art. 4 of the 1976 LLMC Convention.

* Reported by Christopher J. Giaschi, partner of Giaschi & Margolis, Vancouver, B.C.

England

Loic Ludovic Margolle & Another v. Delta Maritime Company Ltd. & Two Others – The “Saint Jacques II” (Admiralty Court) 11 November 2002 ([2003]1 Lloyd's Rep. 203).

At about 04.30 on 23 April 2001 the motor fishing vessel Saint Jacques II collided with the motor tanker Gudermes in the English Channel about 13 miles North-East of Dover. The Saint Jacques II had sailed from Boulogne-sur-Mer and was making good a course of 012°, on passage to the Falls Bank fishing grounds and its course involved her crossing the South West Traffic Lane on a heading against the flow of traffic, thereby contravening Rule 10 of the Convention on the International Regulations for Preventing Collisions at Sea 1972 as amended. The Gudermes was proceeding in the South West Traffic Lane and was, at the material time, steering a course of 230°.

On 26 April 2001 the owner of the Saint Jacques II commenced a Limitation Claim, seeking a decree limiting any liability he might have for damages arising out of the collision under the Merchant Shipping Act 1995 and on 8 June 2001 constituted a Limitation Fund.

By an Application Notice dated 2 January 2002 the owner of the Saint Jacques II applied summarily for judgment and a limitation decree seeking an order that the Defence of the owners of the Gudermes be struck out or summary judgment on the ground that the owners of the Gudermes had no real prospect of challenging the right to limitation. By judgment of 26 February 2002 the Admiralty Registrar dismissed the application and the owner of the Saint Jacques II appealed to the Admiralty Court from that decision.

Held, by the Admiralty Court, that:

[1] On the facts of the appalling navigational practice conducted under the personal direction of the owner, coupled with the obviousness of the risk of collision, it would be permissible and open to the court at trial to infer that the owner had, at the relevant time, the actual knowledge that a collision would probably result.

France

Cour d’Appel of Montpellier 7 December 1999, Jumbo Navigation N.V. v. Mague Equipamentos de Movimentaçao and Others ([2000] DMF 813)

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On 1st July 1998, during the discharge of a heavy crane built by Mague Equipamentos de Movimentaçao from the m/v Stella Prima, owned by Jumbo Navigation N.V., the upper portion of the crane pivoted, thereby causing the crane to fall on the port installations.

Jumbo Navigation commenced limitation proceedings seeking permission to pay into Court the limitation fund. The Tribunal de Commerce of Sète after having first granted such permission, subsequently withdrew it on the ground that the owners had apparently committed a faute inexcusable, entailing the loss of the right to limit.

Jumbo Navigation appealed to the Cour d’Appel of Montpellier.

Held, by the Cour d’Appel, that:[1] The Court who has authorized the constitution of the limitation fund may retract its order if it considers that a conduct barring limitation may have occurred. A conduct barring limitation is likely to have occurred when the owner has not made proper arrangements for the testing of a crane prior to the discharge from his ship of a heavy piece of machinery.[2] The discharge of a heavy crane without ensuring that the upper revolving part be safely blocked entails the presumption that the carrier has acted recklessly and with knowledge that a damage would probably occur.

Affirmed by Cour de Cassation 3 April 2002 (2002 DMF 460).

Cour d’Appel of Aix-en-Provence 8 June 2000, Ferme Marine du Cap d’Antibes v. Statecraft Ltd. – The “Moldavia” (2002 DMF 132).

The night of 31 July 1994 the m/y Moldavia, of Gibraltar registry, anchored outside Juan-les-Pins, due to the strong wind dragged its anchor and, having failed to reverse the engines, shifted towards a fishing farm situated nearby causing damage to that farm. The owners of the fishing farm, Ferme Marine du Cap d’Antibes, brought proceedings in the Tribunal de Commerce of Antibes against the owners of the Moldavia, Statecraft Ltd. and its insurers who applied for leave to constitute the limitation fund as provided by article 11 of the LLMC Convention of 1976. By judgment of 28 June 1996 the Tribunal de Commerce of Antibes found the owners of the Moldavia liable for the damage caused to the fishing farm and ordered payment of the limitation fund to the claimants.

The claimants appealed on the ground, inter alia, that the owners of the Moldavia were not entitled to the benefit of limitation, the damage having been caused by their reckless action committed with knowledge that damage would probably occur.


[1] Failing satisfactory evidence of the precise place of anchorage of the vessel who, due to the dragging of its anchor, damaged a nearby fishing farm, the claimant have not met the burden of proving that the master had acted recklessly and with knowledge that damage to the fishing farm would probably occur. [3] Evidence of mechanical trouble does not constitute proof of the unseaworthiness of the vessel at the time of the accident.

Conflict of Conventions

England

The “Herceg Novi” and “Ming Galaxy” Court of Appeal 17, 18 June; 16 July 1998 [1998] 2 Lloyd’s Rep. 454.

On 18 August 1996 there was a collision between Herceg Novi and Ming Galaxy within a traffic separation scheme in the straits of Singapore and the Herceg Novi sank as a result of the collision. Both masters pleaded guilty. On 20 August the owners of the Ming Galaxy, Yangming Marine Transport Corp. of Taiwan, began Admiralty actions in rem and in personam against the owners of the Herceg Novi, South Cross Shipping Ltd. of Malta, and their vessel in the High Court of Singapore. In a separate action in the High Court of Singapore the owners of the Ming Galaxy sought to limit their liability against the Herceg Novi.

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On 28 August the owners of the Herceg Novi issued a writ in an Admiralty action in rem in the Queen’s Bench Division against the Ming Galaxy. The writ was served on a sister ship, the Ming South. On 7 November 1996 the owners of the Ming Galaxy gave notice of motion to stay the English action on the grounds that (1) England was not the appropriate forum and (2) there were proceedings pending in Singapore.


[1] The 1976 Convention has not received universal acceptance, or anything like it. It is not “an internationally sanctioned and objective view of where substantial justice is now viewed as lying”. It is simply the view of some 30 States.[2] The International Maritime Organisation is not a legislature. It may commend the 1976 Convention to the international community. But if by doing so it were found to have enacted an international consensus, that would be to deprive sovereign states to a large extent of their right to stay with some other regime. We say that because jurisdiction could often be obtained by arresting a ship in a 1976 country, and if that action were allowed to proceed despite there being a more appropriate forum where 1957 prevailed, the 1957 country would be left with no effective use for its own law.[3] The preference for the 1976 Convention has no greater justification than for the 1957 regime. The 1976 Convention provides a greater degree of certainty, which they will perhaps welcome. But in terms of abstract justice, neither Convention is objectively more just than the other.

Constitution of the fund (Art. 11.1)

EnglandMetvale Ltd. and Another v. Monsanto International SARL and Others – The “MSC Napoli”, QBD-Admiralty Court 5 November, 9 December 2008 ([2009] 1 Lloyd’s Rep. 246).

(For the summary of facts see the section “Definition of shipowner”)

Held, by the Queen’s Bench Division (Commercial Court) that:

[1] Pursuant to article 11(3) of the LLMC Convention a fund constituted by one of the persons mentioned in article 9 shall be deemed constituted by all the persons mentioned in article 9 and, therefore, since slot charterers are within the definition of ship owner in article 1(2), where the fund is constituted by the owner of the ship it must be deemed constituted also by them.

ICL Shipping Ltd. and Steamship Mutual Underwriting Association (Bermuda) Ltd. v. Chin Tai Steel Enterprises Co. Ltd. and Others - The "ICL Vikraman", Queen's Bench Division (Commercial Court), [2004] 1 Lloyd's L.R. 21

(For the summary of facts see the section "Bar to other actions")

Held, by the Queen's Bench Division (Commercial Court), that:

[1] The institution of "legal proceedings" under article 11(1) of the LLMC Convention 1976 includes the commencement of arbitration.

European Union

European Court of Justice 14 October 2004, Case C-30/02, Maersk Olie & Gas v. Firma M. de Haan en W. ded Boer.

In May 1985 Mærsk laid oil and gas pipelines in the North Sea. In the course of June 1985 a trawler belonging to (the Shipowners) was fishing in the area in which those pipelines had been laid. Mærsk established that the pipelines had been damaged.

By letter of 3 July 1985 Mærsk informed the Shipowners that it held them responsible for that damage, for a total amount of USD 1.700.019 and GBP 51.961.58.

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On 23 April 1987 the Shipowners lodged with the Arrondissementsrechtbank (District Court) Groningen (Netherlands), the place in which their vessel was registered, an application for limitation of their liability. That court made an order on 27 May 1987 provisionally fixing that limitation at NLG 52 417.40 and enjoining the Shipowners to lodge that sum together with NLG 10.000 to cover the legal costs. The Shipowners’ legal representatives informed Mærsk of that decision by telex of 5 June 1987.

On 20 June 1987 Mærsk brought an action for damages against the Shipowners before the Vestre Landsret (Western Regional Court) (Denmark).

On 24 June 1987 Mærsk appealed to the Gerechtshof (Court of Appeal) Leeuwarden (Netherlands) against the decision of the Arrondissementsrechtbank Groningen on the ground that the latter court did not have jurisdiction. On 6 January 1988 the Gerechtshof upheld the decision delivered at first instance, referring to, inter alia, articles 2 and 6a of the Brussels Convention. Mærsk did not lodge an appeal to have the decision of the Gerechtshof quashed.

By registered letter of 1 February 1988 the administrator notified Mærsk’s lawyer of the order of the Arrondissementsrechtbank establishing the limitation fund and by letter of 25 April 1988 requested Mærsk to submit its claim.

Mærsk did not accede to that request, choosing instead to pursue its action before the Danish court. In the absence of any claims submitted by injured parties, the sum lodged with the Arrondissementsrechtbank in the Netherlands was returned to the Shipowners in December 1988.

By decision of 27 April 1988 the Vestre Landsret held that the rulings of the Netherlands courts of 27 May 1987 and of 6 January 1988 had to be treated as being judgments within the terms of Article 25 of the Brussels Convention in view of the fact that Mærsk had had the opportunity to defend its position during the corresponding proceedings.

As it took the view that the proceedings brought in the Netherlands and in Denmark were between the same parties, had the same subject-matter and related to the same cause of action, and that this finding could not be invalidated by the fact that Mærsk had not defended its interests in the proceedings relating to the limitation of liability, the Vestre Landsret ruled that the conditions governing a finding of lis pendens pursuant to Article 21 of the Brussels Convention had been satisfied.

In view of the fact that proceedings had been brought earlier in the Netherlands (23 April 1987) than in Denmark, and in view of the finding of the Arrondissementsrechtbank Groningen, upheld on appeal, that it had jurisdiction to deliver its decision, the Vestre Landsret, acting pursuant to the second paragraph of Article 21 of the Brussels Convention, declined jurisdiction in favour of the Netherlands court.

Mærsk appealed against that decision to the Højesteret (Danish Supreme Court). As it took the view that the case raised questions on the interpretation of Articles 21, 25 and 27 of

the Brussels Convention, the Højesteret decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:

1. Does a procedure to establish a liability limitation fund pursuant to an application by a shipowner under the Brussels Convention of 10 October 1957 constitute proceedings within the meaning of Article 21 of the 1968 Brussels Convention where it is evident from the application, where the relevant names are stated, who might be affected thereby as a potential injured party?

2. Is an order to establish a liability limitation fund under the Netherlands procedural rules in force in 1986 a judgment within the meaning of Article 25 of the 1968 Brussels Convention?

3. Can a limitation fund which was established on 27 May 1987 by a Netherlands court pursuant to Netherlands procedural rules then in force without prior service on an affected claimant now be denied recognition in another Member State in relation to the claimant concerned pursuant to Article 27(2) of the 1968 Brussels Convention?

4. If Question 3 is answered in the affirmative, is the claimant concerned deprived of its right to rely on Article 27(2) by virtue of the fact that in the Member State which established the limitation fund it raised the matter of jurisdiction before a higher court without having previously objected to default of service?

Held, by the EC Court of Justice, that:

[1] An application to a court of a Contracting State by a shipowner for the establishment of a liability limitation fund, in which the potential victim of the damage is indicated, and an action for damages brought before a court of another Contracting State by that victim against the shipowner do not create a situation of lis pendens within the terms of Article 21 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial

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Matters, as amended by the Convention of 9 October 1978 on the Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland. [2] A decision ordering the establishment of a liability limitation fund, such as that in the main proceedings in the present case, is a judgment within the terms of Article 25 of that Convention. [3] A decision to establish a liability limitation fund, in the absence of prior service on the claimant concerned, and even where the latter has appealed against that decision in order to challenge the jurisdiction of the court which delivered it, cannot be refused recognition in another Contracting State pursuant to Article 27(2) of that Convention, on condition that it was duly served on or notified to the defendant in good time.

France

Cour d’Appel of Rouen 26 July 2000, Master of the “Darfur” and Others v. Master of the “Happy Fellow” and Others (2001 DMF 109)

On 20 November 1995 the vessels Darfur and Happy Fellow were in collision on the river Seine. On 21 November the owners of Happy Fellow obtained an order from the Tribunal de Commerce of Rouen for court surveyors to investigate the cause of the collision and on 28 November arrested Darfur at Le Havre. On 22 December the owners of Happy Fellow and other claimants commenced proceedings against the owners of Darfur in the Tribunal de Commerce of Le Havre.

On 13 March 1996 the time charterers of Darfur issued a writ in the London Admiralty Court against the owners of Darfur claiming damages for breach of the charter party and other relief in respect of the collision and the owners of Darfur purported to constitute a limitation fund in England. Two of the claimants in the proceedings in the Tribunal de Commerce of Le Havre acknowledged issue of writ in the London limitation proceedings and applied to set aside or stay these proceedings under art. 21 or art. 22 of the amended 1968 Brussels Convention. In a judgment dated 3 December 1996 Mr. Justice Longmore ([1997] 1 Lloyd’s Rep. 130) decided that although the matter fell outside the provisions of art. 21, the French collision proceedings and the English limitation proceedings were “related actions” within the meaning of art. 22 and stayed the latter. The appeal against the judgment of the Admiralty Court was dismissed by the Court of Appeal ([1998] 1 Lloyd’s Rep. 13).

In the French proceedings the Tribunal de Commerce of Le Havre with judgment of 17 March 2000 accepted jurisdiction. The owners of Darfur appealed.


[1] The Court before which proceedings on the merits have first been commenced is competent to decide on the issue of limitation of liability on the ground that the two actions were related

Cour de Cassation 20 February 2001, Groupe des Assurances Nationales – GAN and Others v. Nautiloc and Others – The “Moheli” (2002 DMF 144).

The yacht Moheli moored alongside the yacht Virus, during the low tide damaged the Virus. The hull insurers of the Virus, Groupe des Assurances Nationales – GAN, after having paid to the owner of the Virus the damage suffered by the yacht, commenced proceedings against the lessee of the Moheli, Nautiloc, and its hull insurers, Commercial Union and Axa. By judgment of 3 June 1998 the Cour d'Appel of Rennes held that Nautiloc was liable for the damages suffered by the Virus and that the limit of liability was 657,145 Francs. GAN and the owner of the Virus appealed to the Cour de Cassation on the ground that the limitation proceedings were conditional to the constitution of the limitation fund and that Nautiloc could not invoke the benefit of limitation having acted recklessly and with knowledge that a loss would probably occur.

Held, by the Cour the Cassation that:

[1] The benefit of the limitation of liability under article 58-69 bis of law 3 January 1967 as amended by law 84-1151 of 21 December 1984* is not conditional to the constitution of the limitation fund.

* Law 84-1151 was enacted when the LLMC 1976 entered into force in France.

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Netherlands

Supreme Court 29 September 2006, B&N Nordsjöfrakt AB and Northsea Shipping AB v. Westereems B.V.

(The summary of facts may be found in the section “Bar to other actions”)

Held, by the Supreme Court of the Netherlands, that:

[1] The decision of the Swedish Court whereby the constitution of the limitation fund was allowed albeit issued in ex parte proceedings, must be deemed to be a decision reference to which is made in art.32 of Brussels I Regulation and its recognition and enforcement cannot be refused even if the claimant appealed against such decision service of which had been timely made.

Definition of seagoing ship (art. 1.2)

New Zealand

Yachting New Zealand Inc. v Birkenfeld [2005] NZAR 727

On 8 August 2002 in the Saronikos Gulf, one and a half miles off the coast of Greece, just before an international windsurfing regatta, there was a collision between a rigid inflatable boat owned by Yachting New Zealand Inc. (YNZ), and driven by Mr. Bruce Kendall, and a windsurfing board, ridden by Ms. Kimberly Birkenfled, an American athlete about to take part in the regatta, and in training for the Olympics. Ms. Kimberly was severely injured and as a consequence of such injuries was confined to a wheelchair. She then brought an action in Wellington in which she sought from Mr. Kendall, YNZ and the International Sailing Federation Ltd. $15m damages. YNZ, in separate but related proceedings, brought in Auckland, applied under the Maritime Transportation Act 1994 for a decree limiting its liability to a figure less than $400,000. The Maritime Transportation Act has given effect to the LLMC Convention, to which New Zealand has acceded.

Held, by the High Court Auckland, that:

[1] A rigid inflatable boat is a ship as defined by s. 84 of the Maritime Transportation Act*

*The definition of ship in s.84 of the Maritime Transportation Act is the following:"Ship means every description of vessel (including barges, lighters, and like vessels) used or intended to be used in navigation, however propelled; and includes any structure (whether completed or not) launched and intended for use as a ship or part of a ship; and also includes any ship used by or set aside for the New Zealand Defence Force.

On appeal by Ms. Kimberly, held by the Court of Appeal of New Zealand, that:

[1] Pursuant to its article 15(2) the LLMC Convention applies to ships of less than 300 tonnes unless provision is made otherwise by Contracting States.

Definition of shipowner (Art. 1.2)

England

Metvale Ltd. and Another v. Monsanto International SARL and Others – The “MSC Napoli”, QBD-Admiralty Court 5 November, 9 December 2008 ([2009] 1 Lloyd’s Rep. 246).

In January 2007 the MSC Napoli, a large container vessel owned by Mediterranean Shipping Co. (MSC), suffered damage in heavy weather and was beached on the south coast of England. That casualty has given rise to considerable claims against the owners of MSC Napoli in excess of £100m. On 27 February 2007 MSC constituted a limitation fund under the 1976 Limitation Convention in the sum of £14,710,000. On 31 July the court made a General Limitation Decree.

On 13 March 2008 the Admiralty Registrar ordered the trial of two preliminary issues:

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i) Whether Hapag-Lloyd AG ("HPL") and Stinnes Linien GmbH ("Stinnes") are shipowners for the purposes of Article 1 of the Convention on Limitation of Liability for Maritime Claims 1976 and are entitled to limit their liability under the Convention and under the Merchant Shipping Act 1995.

ii) Whether, if the answer to (i) is yes, the limitation fund constituted in this action is deemed to be constituted by HPL under and for the purpose of the Convention and under the Merchant Shipping Act 1995.

HPL were slot charterers of the vessel from MSC under a slot charter agreement dated 29 August 2006. HPL issued its own bills of lading or seaway bills in respect of 172 laden containers. The bills provided for German law and jurisdiction. Stinnes were also slot charterers of the vessel from MSC pursuant to a slot charter agreement dated 15 October 2006. Stinnes issued 24 bills of lading which also provided for German law and jurisdiction.

Claims have been notified against HPL and Stinnes by the holders of the bills issued by HPL and Stinnes. HPL and Stinnes have lodged claims against the fund in respect of their claims for an indemnity in respect of cargo claims brought against them, the loss and damage of their own containers, general average and salvage claims and certain transhipment claims.


[1] In accordance with the ordinary meaning of the word charterer and in the light of the evident object and purpose of the convention, a slot charterer is within the definition of shipowner and therefore entitled to limit his liability.

Distribution of the fund (Art. 12)

Australia

Supreme Court of New South Wales, Equity Division, Admiralty List, Newcastle Port Authority v. Pevitt & Ors [2003] NSWSC 888 (1 October 2003, Palmer J)

(The summary of facts may be found in the section "General principles-Rules of interpretation")

Held by the Supreme Court of New South Wales, that:

[1] A domestic court should deal with the question of legal costs of a claim against a limitation fund constituted pursuant to the Convention in accordance with its own domestic law and procedure (at [42]).

Italy

Court of Appeal of Trieste 28 March 2007, Mediterranea di Navigazione v. ENI - The “Fra Diavolo” (not yet published)

On 30th March 1992 the MV “Fra Diavolo” severely damaged a pier in the port of Augusta in Sicily and the owner of the vessel, Mediterranea di Navigazione, commenced limitation proceedings in the Tribunal of Trieste and paid into court the limitation amount. The only claimant in the proceedings was the owner of the pier, ENI S.p.A. who filed a claim in excess of the limitation amount after having brought a claim against the owners in the Tribunal of Catania. After having obtained a judgment in its favour, which under Italian was immediately enforceable even though subject to appeal, ENI claimed payment of the limitation fund in its favour. Mediterranea di Navigazione, after having appealed against the judgment of the Tribunal of Catania, applied to the Tribunal of Trieste for a stay of the limitation proceedings until after delivery of the appeal judgment on the ground that such judgment could reverse the decision of the Tribunal and find that Mediterranea was not liable for the damage caused to the pier. The Tribunal of Trieste rejected the application and Mediterranea appealed to the Court of Appeal of Trieste.

Held, by the Court of Appeal of Trieste, that:

[1] The owner who by commencing limitation proceedings obtains both the benefit of limiting its debt to the limitation amount and the suspension of the enforcement of any claim against its

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ship, may not also request the stay of the limitation proceedings until the claim of the only claimant against the fund already allowed by an enforceable judgment, is finally upheld by a judgment not subject to further appeal.*[2] A claim may be enforced against the limitation fund when the claimant has obtained an enforceable judgment in its favour, even though the judgment is still subject to appeal.

*Although Italy is not a party to the LLMC Convention and the Italian limitation system differs from that of the LLMC Convention, the issue decided by the Court of Appeal of Trieste may arise in a similar manner under the Convention, article 12 (1) of which provides that the fund shall be distributed among the claimants in proportion of their “established” claims.

Limits of liability (Art. 6)

Canada

Bayside Towing, Ltd. et Al. v. Canadian Pacific Railway Company, et Al. (Canada Federal Court, Trial Division, 28 November 2001), 2002 AMC 243

On June 2, 1999 the starboard side of the barge Rivtow 901, towed by the tug boat Sheena M, down the Fraser River hit the upstream side of the protection pier of the Mission Railway Bridge and then the swing-span itself, dislodging it from its pivot and pushing it in a down-river direction. On September 23, 1999 the owners of the Sheena M, Bayside Towing Ltd., filed a statement of claim seeking, inter alia, a declaration that they were entitled to limit their liability to $ 500,000 plus interest pursuant to section 577(1)(b) of the Canada Shipping Act and an order constituting the limitation fund. On October 28, 1999 Canadian Pacific Railway Company commenced an action in the Canada Federal Court against the owners of the Sheena M and of the barge Rivtow 901 and all others interested in the tug and in the barge claiming general an special damages estimated to be in excess of five million dollars arising out of the navigation, management or operation of the Sheena M and of the Rivtow 901. Canadian Pacific stated that the limitation fund should be based on the combined tonnage of the Sheena M and of the Rivtow 901 since the “flotilla principle” adopted by the Supreme Court of Canada in The Rhône (1993 AMC 1697) is no longer applicable as a consequence of the wider definition of “shipowner” adopted in section 576 of Chapter 6 of the Statutes of Canada, when the 1976 Convention on Limitation of Liability for Maritime Claims was adopted by Canada.

Held, by the Federal Court, Trial Division, that:

[1] The principle whereby in a tug and tow situation only in circumstances of common ownership of the vessels as well as common causation the calculation of the limit of liability must be based on the global tonnage of the tug and tow has not been altered by the broad definition of “shipowner” in section 576 of Chapter 6 of the Statutes of Canada as amended in 1998, pursuant to which “shipowner” means an owner, charterer, manager or operator of a ship, whether seagoing or not, and includes any other person having an interest in or possession of a ship from and including the launching of it” and, therefore, the limit of liability must be calculated only with reference to the tonnage of the tug where the tow is not owned by the owner of the tug.

Limits of liability – Distinct occasion (art. 6.1)

Australia

StrongWise Ltd. v. Esso Australia Resources Pty Ltd., Federal Court of Australia, 18 March 2010, [2010] FCA 240

On the afternoon of Saturday 13 December 2008 theMV APL Sydney dragged at anchor during a gale in Port Phillip Bay, Melbourne. The outer and inner anchorages of the Bay are separated by an area through which a submarine pipeline ran. The pipeline carried ethane gas at high pressure fromMordialloc on the eastern side to Altona on the western side. These three areas were marked on the Admiralty chart for Melbourne. The chart carried a warning of the location of the pipeline.

The ship dragged her anchor to the north east from her original position west of the Fawkner Beacon in the outer anchorage in the Bay. Between 15:44 and 15:45 the vessel’s starboard anchor fouled

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the pipeline. This arrested the movement of the ship. The pipeline was a 10 inch thick steel pipe coated with concrete and tar. It was buried about 3 metres below the seabed. Shortly after the fouling, at about 15:46, the vessel’s engine was put astern and about one and a half minutes later, stopped.

APL Sydney then yawed from side to side in the wind and waves for about 35 minutes before her engine was put ahead at about 16:20. Soon after this, the pipeline ruptured and, then, the engine was stopped. About six minutes later, the engine was put astern.

One end of the ruptured pipeline was pulled back towards Mordialloc, dragging it further out of its trench and bending it almost to a right angle before a piece of the pipe broke off, freeing the anchor.

On 19 December 2008, the owner of the APL Sydney, Strong Wise Limited, began limitation proceedings under s 25 of the Admiralty Act 1988 (Cth.). The shipowner claimed that it was entitled to limit its liability pursuant to the Limitation of Liability for Maritime Claims Act 1989 (Cth). The latter gives the force of law in Australia to the Convention on Limitation of Liability for Maritime Claims 1976 as amended by its 1996 Protocol.

The pipeline was owned by Esso Australia Resources Pty Ltd and BHP Billiton Petroleum (Bass Strait) Pty Ltd. The parties agreed that in four other proceedings in this court other plaintiffs have made claims presently estimated at a total of over $66 million.

Article 6(1)(b) of the Convention entitles a shipowner to limit its liability for claims “arising on any distinct occasion”. The case was essentially about the meaning of that expression as used in the Convention. The shipowner argued that the whole episode beginning with the initial fouling and ending on the final separation of the anchor from the pipeline was a single “distinct occasion”. If the shipowner had been correct, then it would have been entitled to establish one limitation fund, comprised of the value of APL Sydney, of about $32 million calculated in accordance with the Convention.

Esso and BHP argued against that result. They asserted that there had been more than one distinct occasion in respect of which claims could be made. They asserted that that was because there had been more than one act, neglect or default giving rise to entitlements of persons to bring claims against the ship and shipowner. They contended that in addition to the claims that arose on the occasion of the initial fouling, there had been at least three further “distinct occasions” on which additional claims arose. The four instances on which Esso and BHP relied were:

(1) the navigational errors leading to the initial fouling of the pipeline by the anchor around 15:44 to 15:45;

(2) the order at 15:46:01 that the ship’s engine go astern. That allegedly caused the pipeline to be pulled further out of its trench for an appreciable distance and bent more;

(3) the order at about 16:19:51 that the engine go ahead. That allegedly caused the pipeline to rupture and to further deform together with the loss of a volume of ethane gas; and

(4) the order at 16:27:59 that the engine go astern. That allegedly caused the anchor to re-engage with a portion of the severed pipeline on the eastern side, drag it further out of its trench, bending it to almost a right angle before severing about 6 to 7 metres of pipe.

Held, by the Federal Court of Australia, that:

[1] While the decisions issued in common law jurisdiction and mainly in England may assist in cases where there is ambiguity or be illustrative of the circumstances in which there may be a separation between different acts, neglects or default giving rise to different maritime claims, the meaning of the LLMC Convention must be arrived at from an examination of its text and structure.[2] Pursuant to the Convention a claim arises on a distinct occasion within the meaning of the Convention in the following way. Where a single act, neglect or default of a shipowner places him in such a relationship that, as a matter of commonsense, it is a cause of loss or damage suffered by a third party, that third party will have a claim under art 2 of the Convention. And, such a claim will be caused by an occurrence and, so, will arise on that distinct occasion for the purposes of arts 6, 7, 9 and 11. But where a subsequent act, neglect or default of the same shipowner separately operates to cause different or separately identifiable loss or damage to the same third party, or to others, then a new claim or claims will arise on that later distinct occasion. The latter occasion is distinct because, first there is a new event (the separate act, neglect or default), secondly, there is new loss or damage and thirdly, the new cause is, as a matter of commonsense, not a necessary or inseparable consequence of the earlier act, neglect or default.[3] The Convention provides a very wide protection for shipowners. This is reinforced by the use of the words “arising” and “arise” in connection with the claims that are to be limited to each distinct occasion. The word “arise” is a word of wide connotation and will embrace a variety of circumstances and causes leading up to the identification of “a distinct occasion”. However, the

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Convention also recognises that there will be circumstances in which more than one distinct occasion will occur from which claims against a shipowner can arise. It will be a question of fact in each case as to whether the particular act, neglect or default said to give rise to “a distinct occasion” has been identified. This is not to encourage the unmeritorious and over analytical dissection of circumstances in each marine casualty in which a shipowner seeks to limit its liability.Where a single act, neglect or default gives rise to or causes a particular incident, such as a single collision with another vessel, a wharf, or even a pipeline, commonsense will say that minute dissection of the circumstances will not lead to identification of more than one “distinct occasion”.[4] There were two distinct occasions that occurred in direct connection with the operation of APL Sydney on the afternoon of 13 December 2008 that gave rise to claims for loss of or damage to property and consequential loss resulting therefrom within the meaning of arts 2(1)(a) and 6(1) of the Convention. The first distinct occasion was the chain of events leading to and immediately following the anchor fouling the pipeline at about 15:44-15:45. The second distinct occasion was the chain of events leading to and immediately following the rupture of the pipeline at about 16:20-16:21.

Loss of the right to limit (Art. 4)

England

Schiffahrts Gesellschaft MS “Mercury Sky” m.b.H. & Co K.G. v. MS Leerort Nth Schiffahrts G.m.b.H. & Co. K.G. – The “Leerort” ((C.A.) [2001] 2 Lloyd’s Rep. 291)

On 19 September 1998 the Zim Piraeus, when in the course of entering the harbour of Colombo, collided with the port side of the Leerort, moored at the Jaya Container Terminal, breaching No. 1 hold. The Leerort subsequently flooded and settled on the bottom and her cargo was lost or damaged.

As the Zim Piraeus came into the harbour, she was in an automatic remote control mode on her bridge console. When in that mode the engine responded to the telegraph command by means of a computer programme. As the vessel came in at 1209.29, the master gave a half astern order to take the way off the vessel. The engine stopped, but the automatic control system failed to start it in the stern mode. The master order “stop” at 1208.05 and engaged emergency manoeuvring mode at 1208.15 and set half astern five seconds later. The engine started working at 1208.31. However this action failed to avoid the collision.

On 14 March 2000 Mr. Justice Sheen, sitting in the Admiralty Court, made an order in the nature of a decree of limitation under which he held that pursuant to the provisions of the Merchant Shipping Act the owners of the Zim Piraeus, Schiffahrts Gesellschaft MS “Mercury Sky” m.b.H. & Co K.G., were entitled to limit their liability.

The owners of the Leerort and of part of her cargo, Leerort Schiffahrts G.m.b.H. & Co. K.G., challenged the order of the Judge.


[1] Pursuant to article 4 of the LLMC Convention to defeat the right to limit it is necessary to identify the causative act or omission on the part of the a person that caused the loss and that such act or omission was committed to cause such loss, or recklessly with knowledge that such loss would probably result, thereby requiring foresight of the very loss that actually occurs, and not merely of the type of loss that occurs.[2] Where the loss in respect of which a claim is made resulted from a collision between ship A and ship B, the owners of ship A, or cargo in ship A, will only defeat the right to limit liability on the owner of ship B if they prove that the owner of ship B intended that it should collide with ship B (or, alternatively, intended that his ship should collide with another ship, or acted recklessly with the knowledge that it was likely to do so).[3] It is totally absurd to suggest that a 50 second interruption in the operation of the engine, as a consequence of which the collision took place, might be attributable to an act or omission of the owners done with the intention of bringing their ship into a collision, or performed recklessly with knowledge that it was likely to produce this result.

France

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Cour de Cassation 20 February 2001, Groupe des Assurances Nationales – GAN and Others v. Nautiloc and Others – The “Moheli” (2002 DMF 144).

(For the summary of facts see section "Constitution of the Fund")

Held, by the Cour the Cassation that:

[1] In order to decide on the character "inexcusable" of the action of the master of a vessel the Court must establish if, in his capacity as a professional, the master should have been aware that a damage would probably result from his action.

Cour d’Appel of Caen 2 October 2001, Captain of the dredger “Johanna Hendrika” and Others v. Pierre Gruel and Others (2001 DMF 981).

On 9 May 1991 the dredger Johanna Hendrika in order to carry out dredging operations in the port of Tréport rested on the bottom securing its position by means of a spud poal. During the low tide the dredger slipped slowly towards the quay and damaged small vessels moored alongside the quay. The owners and the hull insurers of such vessels commenced proceedings against the master of the dredger, the owners and the hull insurers in the Tribunal de Commerce of Eu-Le Tréport. By judgment of 21 December 1993 the Tribunal de Commerce held the master and the owners liable. The judgment was affirmed by the Cour d’Appel of Rouen. The Cour d’Appel denied the benefit of the limitation of liability. The decision of the Cour d’Appel was subsequently quashed by the Cour de Cassation with judgment of 20 May 1997 (1997 DMF 976) in respect of the issue of the loss of the right to limit, on the ground that the Cour d’Appel had not given sufficient reasons for the inference that the “faute inexcusable” of the master entailed also that of the owners and remitted the case to the Cour d’Appel of Caen.

Held, by the Cour d’Appel of Caen that:

[1] The owner of a dredger has committed a “faute inexcusable"* entailing the loss of the right to limit its liability, by having allowed the operation of a dredger whose anchorage system was insufficient in order to prevent the movement of the dredger.

* The expression "faute inexcusable" is used in France as a synonym of recklessness with knowledge that damage would probably occur.

New Zealand

Tasman Orient Line CV v. Alliance Group Limited, Comalco New Zealand Limited and Others - The "Tasman Pioneer" (The High Court of New Zealand, Auckland Registry - [2003] 2 Lloyd's Rep. 713; [2004] 1 NZLR 650

(see the summary of facts in the section "General Principles" - "Rules of Interrpetation"

Held, by the High Court of New Zealand, Auckland Registry, that:

[1] The right to limit of a sub-time charterer of a vessel is not barred under s85(2) of the New Zealand Maritime Transport Act, worded similarly to art. 4 of the LLMC 1989, in case of loss or damage caused by the negligent navigation by the master.

Persons entitled to limit (art. 1)

France

Cour d’Appel de Paris 17 October 2007, SA Someport Walon and Others v. SNC GE Energy Products and Others (2008 DMF 250)

By agreement dated 30 July 1999 GE Energy Products entrusted SA Someport Walon, in its capacity as commissionaire de transport, the carriage to Bangladesh of a gas turbine. Someport Walon

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negotiated the contract of carriage with Poulsen Shipping as agent of Leisure Shipping and signed a booking note. During the loading operations of the turbine on the m.v. Alemania from a barge , the wire of the vessel’s crane broke and the turbine was severely damaged. GE Energy Products and its insurers, AIC, brought proceedings in the Tribunal de Commerce of Paris against Someport Walon, Poulsen Shipping and Leisure Shipping claiming payment of the damages. By judgment of 30 May 2005 the Tribunal held that Someport Walon was liable for the damage and that Leisure Shipping was in turn bound to indemnify Someport Walon. Someport Walon and Leisure Shipping appealed to the Court of Appeal of Paris and Someport Walon sought to benefit of the limitation fund that had meanwhile been constituted by Leisure Shipping.


[1] A commissionaire de transport may not limit its liability under the LLMC Convention since it is not a shipowner, as defined in article 1(1) of the Convention.

New Zealand

Tasman Orient Line CV v. Alliance Group Limited, Comalco New Zealand Limited and Others - The "Tasman Pioneer" (The High Court of New Zealand, Auckland Registry - unreported)

(for the summary of facts see section "Loss of the right to limit")

Held, by the High Court of New Zealand, Auckland Registry, that:

[1] The sub-time charterers of a vessel come under the definition of "owner" in s84 of the New Zealand Maritime Transport Act, 1994 and as such are entitled to limit their liability.

Reservations (art. 18)

France

Cour de Cassation (Ch.com.) 11 July 2006, Agence Judiciaire du Tresor v. Tunisian Sea Transport Company (2006 DMF 884)

Following the loss by the Jerba of 800 logs, her owner, Tunisian Sea Transport Company, invoked the limitation of its liability pursuant to the LLMC Convention and was authorised to constitute a limitation fund. However the Agent Judiciaire du Tresor requested the arrest of the vessel on the ground that France had reserved the right to exclude the application of article 2 paragraphs 1 (d) and (e). The release of the vessel from arrest, that had been refused by the Tribunal de Commerce of Le Havre on the ground that the accident having taken place within French territorial waters, French law of 3 January 1967 applied and pursuant to its art. 59 limitation cannot be invoked in respect of claims of the State, was subsequently granted by the Court d’Appel of Caen. The Court of Appeal found that the LLMC Convention applied also in respect of vessels flying the flag of non-contracting States and that France the reservation invoked by the Government had not actually been made since France had only reserved the right to avail itself in the future of the art.18 of the Convention.


[1] Notwithstanding the ambiguous character in the French language of the words used by France in the instrument of ratification of the LLMC Convention (le République française se reserve le droit d’exclure l’application des alinéas d) et e) du §1 de l’article 2), that statement was not a simple declaration of intent, deprived of any legal value, but a unilateral decision to exclude the application of the above provisions.


France

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Tribunal de Commerce of Marseille 19 July 2006, Mutuelles du Mans Assurances IARD v. SAIPEM/Bouygues Offshore SA (2006 DMF 798)

The 19th April 1995 the dredger Jean Maria, owned by Bouygues Offshore SA, subsequently renamed SAIPEM SA, collided with a wharf in the yacht harbour of Marines de Cogolin and damages the wharf. On application of Bouygues Offshore the Tribunal de Commerce of Marseilles opened the proceedings for the constitution of the limitation fund under the LLMC Convention. The leading insurer of the Marines de Cogolin, Mutuelles du Mans Assurances IARD, appealed against the order of the Tribunal on the ground that the Hean Maria was not a navire de mer and that, therefore, the LLMC Convention could not apply.

Held, by the Tribunal de Commerce of Marseilles, that:

[1] A non-self propelled dredger, employed for dredging operations inside harbours, has not the legal nature of a "navire de mer" and, therefore, the LLMC Convention is not applicable.


Greece

Supreme Court (Judgment 869/1999), Titan Ciment S.A. v. Orinoco Navigation Co. – The “Ikariada”

In the limitation proceedings commenced by the Owner of the m/v Ikariada of Cypriot flag a dispute arose as to whether limitation should be governed by the law of the flag of the vessel, pursuant to Article 77 § 6a of Greek Law 1892/1990, or by the LLMC Convention, ratified by Greece, pursuant to its Article 15.1. The dispute was brought before the Supreme Court.

Held, by the Supreme Court, that:

[1] Since pursuant to Article 28 § 1 of the Constitution international conventions ratified by Greece and entered into force form an integral part of the Greek legal system and prevail over domestic rules, Article 77 § 6a of Law 1892/1990, whereby the limitation of liability of the owner is governed by the law of the flag, is no longer in force, Article 15 § 1 of the LLMC Convention 1976 having adopted the rule of the lex fori.[2] Pursuant to Article 15(1) of the LLMC Convention its provisions apply as lex fori, regardless of the lex causae of the claim subject to limitation and of the fact that the person seeking to limit his liability has his habitual residence or principal place of business in a State Party and of the fact that the vessel flies the flag of a State Party or not. Greece has not availed itself of the right granted to States Parties by Article 15(1) and (3).

Scope of application (Art. 15(2)(a))

New Zealand

Kimberley Birkenfield v. Yachting New Zealand Inc. - Supreme Court of New Zealand, 10 November 2006 ([2006] NZSC 93)

On 8 August 2002 in the Saronikos Gulf, one and a half miles off the coast of Greece, just before an international windsurfing regatta, there was a collision between a rigid inflatable boat owned by Yachting New Zealand Inc. (YNZ), and driven by Mr. Bruce Kendall, and a windsurfing board, ridden by Ms. Kimberly Birkenfled, an American athlete about to take part in the regatta, and in training for the Olympics. Ms. Kimberly was severely injured and as a consequence of such injuries was confined to a wheelchair. She then brought an action in Wellington in which she sought from Mr. Kendall, YNZ and the International Sailing Federation Ltd. $15m damages. YNZ, in separate but related proceedings, brought in Auckland, applied under the Maritime Transportation Act 1994 for a decree limiting its liability to a figure less than $400,000. The Maritime Transportation Act has given effect to the LLMC Convention, to which New Zealand has acceded.

An application to the Supreme Court for leave to appeal was made by Ms. Birkenfeld.

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Held, by the Supreme Court of New Zealand, that:

[1] Since s. 84 of the Maritime Transportation Act contains no restriction to the scope of application of the Convention of Limitation of Liability for Maritime Claims, 1976, the Convention applies to all vessels, whether or not intended for navigating inland water ways.

Scope of application (notion of "ship")

France

Tribunal de Commerce of Marseilles 19 July 2006, Mutuelles du Mans Assurances IARD v. SAIPEM and Others (2006 DMF 798)

By order dated 11 January 2000 the Tribunal de Commerce of Marseilles on application of Bouygues Offshore declared the opening of the limitation proceedings in respect of the dredger Jean Maria following its allision on 10 April 1995 with a dock of the pleasure harbour of Marines de Cogolin. On 8 June 2006 Mutuelles du Mans Assurances, acting also on behalf of its co-insurers and the Port de Plaisance Les Marine de Cogolin brought proceedings in order to obtain the revocation of the order on the ground that the Jean Maria is not a seagoing ship and that, therefore, its owners were not entitled to limit their liability.

Held, by the Tribunal de Commerce of Marseilles, that:

[1] Pursuant to article 1 of the LLMC Convention and to article 58 of law of £ January 1967 a dredger is not a ship and, therefore, its owners are not entitled to limit their liability in respect of loss or damage caused by it.

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THE 1976 ATHENS CONVENTION ON THE CARRIAGE OF PASSENGERS AND THEIR LUGGAGE BY SEA

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England

Davis v. Stena Line Limited - The “Koningin Beatrix” - Queen's Bench Division 17 March 2005 ([2005] 2 Lloyd's Rep. 12)

Mr and Mrs Davis and their two young children were passengers on Koningin Beatrix when it sailed at 1040 from Rosslare on the morning of 29 October 2000. The scheduled sailing time from Rosslare was 0900, but departure had been delayed because of particularly bad weather. Although the weather had begun to moderate by the time Koningin Beatrix actually sailed, conditions still remained poor with gale force south-westerly winds and rough seas. Wave heights were about 4 metres and there was a 1.5 metre swell.

Shortly after Mr Davis had left one of his sons and gone outside, a number of passengers saw him in the sea and raised the alarm. Until Mr Davis was actually spotted from the bridge, the bridge team gave no consideration as to how Mr Davis was to be rescued. Thereafter the master decided to recover him to his ship and ignored the alternative of using the rescue boat of another ship in the vicinity, the Celtic King, which was ready to be launched.

It was, however, well known that it was virtually impossible to rescue a man overboard by recovering him to a high-sided vessel like Koningin Beatrix, when its own rescue boats could not be launched because of bad weather.

Unfortunately the attempt to rescue Mr Davis alive failed.The widow of Mr Davis brought then a claim against Stena Line Ltd., the owners of the Koningin

Beatrix, in the Queen's Bench Division.

Held, by the Queen's Bench Division, that:

[1] A passenger who fell overboard a ro-ro ferry travelling from the Irish Republic to England and drowned owing to the negligent manoeuvre conducted by the master in order to rescue him is governed by the Athens Convention 1976 since the passenger died during the course of carriage within the meaning of the Convention.

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THE HAMBURG CONVENTION 1978 (HAMBURG RULES)

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Jurisdiction (Art. 21 (1) (c))

United States

Best Cheese Corporation v. All-Ways Forwarding Int'l Inc. and Hapag-Lloyd Container Linie GmbH (Supreme Court of the State of New York-County of Westchester 6 October 2004) *

In September 2001, Best Foods Corporation ("Best Foods") contracted with All-Ways Forwarding International, Inc. ("All-Ways") to act as freight forwarder of shipments of cheese from Gauda, Slovakia to the United States. In turn, All-Ways contracted with Maritime Freight America, Corp. ("MFA") to provide the ocean transport.

In connection with that arrangement, Maritime Freight Forwarders, a non-party Austrian corporation, executed Hapag-Lloyd Container Linie GmbH ("HLCL")'s Sea Waybills ("Waybills") in Vienna, Austria, listing MFA as consignee. This established HLCL as carrier of the subject cheese from Bremerhaven, Germany, the "port of loading", to New York, New York, the "port of discharge" as noted on the Waybills. The four cargoes of cheese were eventually delivered, allegedly in damaged condition, to the Port of Newark, New Jersey.

Third-party defendant HLCL sought the dismissal of the action and the transfer of proceedings to the courts of Hamburg, Germany. This is required, HLCL argued, since the Waybills contained a mandatory forum selection clause which provides, in pertinent part:

"… any claim or dispute arising under [the Waybill] shall be governed by the law of the Federal Republic of Germany and determined in the Hamburg Courts to the exclusion of the jurisdiction of the courts of any other place …"

Held, by the Supreme Court of the State of New York, that:

[1] The port of discharge, reference to which is made in article 21(1) (c) of the Hamburg Rules, is the actual port of discharge and not the port listed in the transport document.

* By the courtesy of Mr. Michael Marks Cohen, New York, [email protected]


France

Cour d’Appel of Paris 3 December 1997, Ocean View Shipping Ltd. and Others v. Cargill International Antigua and Others (1998 DMF 588)

In August 1994 a full cargo of rice was loaded at Yangon (Burma) on the Teesta. A shortage was ascertained during discharge at Conakry (Guinea) and the consignee, Cargill International Antigua commenced proceedings against the carrier, Ocean View Shipping Ltd. in the Tribunal de Commerce of Paris. By judgment dated 23 January 1996 the Tribunal de Commerce affirmed its jurisdiction pursuant to Art. 21 of the Hamburg Rules, since the bill of lading had been issued in Paris. The Tribunal de Commerce held that the Hamburg Rules applied since the port of discharge was in a State party to the Hamburg Rules. The carrier appealed against the judgment.


[1] France has not ratified the Hamburg Rules and therefore Art. 25 thereof is not applicable, even if the port of discharge is located in a State party to the Hamburg Rules.

Italy

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mailto:%[email protected]

Corte di Cassazione 14 February 2001, No. 2155, Brendani AB v. Magazzini Generali & Frigoriferi S.p.A. (2002 Dir. Mar. 227).

A consignment of paper rolls carried on the m/v Lech was discharged in Naples in damaged conditions. The consignee sued the carrier in Naples. The Tribunal of Naples held the carrier liable for the damage and its decision was affirmed by the Court of Appeal of Naples who found that the provisions of the Hamburg Rules applied, since its ratification had been authorized by Italy with Law 25 January 1983, No. 40. The carrier appealed to the Supreme Court.


[1] The Hamburg Convention of 1978 is not in force in Italy since its ratification, although authorized by Parliament, has never taken place.

United States

Caterpillar, Inc. v. m/v Karonga, United States District Court for the Southern District of New York 23 April 2008 (2008 AMC 1128)

Five generators carried on board the m/v Karonga were damaged during an ocean voyage from Cristobal (Panama) to Valparaiso (Chile). Shippers (Caterpillar, Inc.) brought proceedings against Neptune Lines, Inc., owners of the Karonga in the United District Court for the Southern District of New York claiming damages, maintaining that the Hamburg Rules applied since they had been ratified by Chile. Neptune Lines instead argued for the application of the Carriage of Goods by Sea Act of the United States. The bill of lading contained a Paramount Clause of the following tenor:

“Except where the Carriage covered by this Bill of Lading is to or from a port of locality where there is in force a compulsorily applicable ordinance or statute similar in nature to the International Convention for the Unification of Certain Rules relating to Bills of Lading, dated at Brussels, August 25, 1924, the provisions of which cannot be departed from, this Bill of Lading shall have effect subject to the Carriage of Goods by Sea Act of the United States (COGSA), approved April 18, 1936.”

Claimants argued that pursuant to the terms of the Paramount Clause the Hamburg Rules should apply since they were in force in Chile and they were “similar in nature” to the Hague Rules.

Held, by the U.S. District Court for the Southern District of New York, that:

[1] A bill of lading clause providing that except where the carriage is to or from a port where there is in force a compulsorily applicable ordinance or statute similar in nature to the Hague Rules the United States Cogsa applies cannot entail the application of the Hamburg Rules that are in force in the country of destination since the Hamburg Rules cannot be deemed to be similar in nature to the Hague Rules.

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UNITED NATIONS CONVENTION ON THE LAW OF THE SEA, 1982

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Damage to environment (art. 228)

France

Cour de Cassation 5 May 2009, The “Trans Arctic” (2009 DMF 717)

In proceedings brought in the Tribunal de Grande Instance of Brest against the master of the “Trans Arctic”, flying the Norwegian flag, in respect of pollution caused by the vessel within the French EEZ the Tribunal refused direct application of article 228 of UNCLOS and maintained its competence even after the request by Norway to stay the proceedings in order to carry our an investigation on the accident and held the master liable to pay a fine. The decision of the Tribunal was subsequently reversed by the Cour d’Appel of Rennes with judgment of 27 September 2007 (2008 DMF 36). Third parties that suffered loss on account of the pollution appealed to the Cour de Cassation.


[1] The Court that has declared the proceedings brought in France against the master of a Norwegian vessel on account of pollution within the French EEZ terminated after delivery in Norway of a final judgment, in connection with that accident, has made correct application of article 228 of UNCLOS and of article 4(2) of MARPOL.

Cour de Cassation 5 May 2009, The “Fast Independence” (2009 DMF 719)

In proceedings brought in the Tribunal de Grande Instance of Brest against the master of the “Fast Independence”, flying the Maltese flag, in respect of pollution caused by the vessel within the French EEZ the master and the owner were condemned to the payment of a fine of globally 500,000 Euro. In the meantime the Malta Maritime Authority had issued proceedings and condemned the master to pay a fine of 9,500 Maltese pounds (corresponding to about 24,000 Euro). Neither the Tribunal nor the Court of Appeal of Rennes considered that decision relevant, in view of the very small amount of the fine, as compared with that applied by the Tribunal of Brest. The owners appealed to the Cour de Cassation.


[1] The Court of the state within whose EEZ a foreign flag vessel has caused pollution damage, that has refused to take into consideration the decision of the competent authority issued in the state of the flag of the vessel, on account of the small amount of the fine applied by that authority, has misapplied article 228 of UNCLOS.

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SUA CONVENTION 1988

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Article 3(1)

United States

United States of America v. Lei Shi, U.S. Court of Appeals for the IX Circuit, 24 April 2008

On March 14, 2002, the Full Means No. 2, a Taiwanese fishing vessel registered in the Republic of the Seychelles, was sailing in international waters off the coast of Hawaii. The Captain of the vessel was Taiwanese, while its 29 crewmembers, including Lei Shi, the ship’s cook, were mainland Chinese. According to Shi, the Captain and First Mate beat and harassed him repeatedly and, on this date, demoted Shi from the position of cook to deck hand, punctuating the decision with a beating that was particularly severe. A few hours later, Shi responded. He retrieved two large knives from the kitchen, ascended to the deck of the ship, and fatally stabbed both men.

According to the government, Shi then ordered the Second Mate to “drive the ship” and ordered the other crewmembers to throw the captain’s body overboard. Shi stated he would kill anyone who disobeyed him and refused to let his fellow crewmates use the radio. Shi retained control of the ship for two days, setting a course for China and threatening to scuttle the vessel if his instructions were not obeyed.

On March 16, 2002, the crew overpowered Shi and imprisoned him in a storage compartment on the ship. The crew then set a course for Hawaii.

On March 19, 2002, a Coast Guard cutter intercepted the ship approximately 60 miles from Hilo, Hawaii.

On March 21 at approximately 3:00 pm, FBI agents boarded the vessel and arrested Shi for violating 18 U.S.C. § 2280, which prohibits acts of violence that endanger maritime navigation.

The government filed an indictment charging Shi with several violations of § 2280, which proscribes certain acts of violence that endanger maritime navigation. The statute codifies the United States’ obligations under the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation (SUA), which authorizes any signatory state to extradite or prosecute offenders, regardless of where the offender’s acts occurred. Accordingly, § 2280 authorizes federal jurisdiction over any offender “later found” in the United States after a prohibited act is committed. 18 U.S.C. § 2280(b)(1)(C). In a published order, the district court concluded that it had jurisdiction under the statute. United States v. Shi, 396 F. Supp. 2d 1132 (D. Haw. 2003).

Shi initially pled guilty, but soon withdrew the plea, and the government filed a superseding indictment. The new indictment charged Shi with one count of seizing control over a ship by force, in violation of § 2280(a)(1)(A), and two counts of performing an act of violence likely to endanger the safety of the ship, in violation of § 2280(a)(1)(B). The indictment alleged that the acts charged in all three counts “resulted in death,” elevating the maximum statutory penalty for each from 20 years to life in prison. The jury convicted Shi on all counts, and the district court sentenced him to 36 years in prison.

Shi filed an appeal.

Held, by the U.S. Court of Appeals for the IX Circ., that:

[1] Section 2280 codifies the United States’ obligations under the Maritime Safety Convention to extradite or to prosecute those who commit acts of maritime violence. Section 2280 is an exercise of Congress’s constitutional authority to define and punish “Felonies on the high Seas” because it proscribes felony offenses and expressly applies to international waters.. In addition, §§ 2280(a)(1)(A) and (B), the provisions under which Shi was charged, proscribe offenses which meet the definition of piracy. All three acts require the use of force. Section 2280(a)(1)(A) prohibits “seiz[ing] or exercis[ing] control over a ship by force or threat thereof,” and § 2280(a)(1)(B) prohibits “act[s] of violence against a person on board a ship” that are “likely to endanger the safe navigation of that ship.”

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THE SALVAGE CONVENTION 1989

•Authority to conclude the salvage contract (art. 6(2)) •Danger of being lost (articles 1(a) and 10)•Limitation of actions (art. 23) •Reward (Art. 13) •Salvage contracts (Art. 6) •Salvage of property (Art. 1(c)) •Salvage operations controlled by public Authorities (Art. 5) •Scope of application (Art. 2) •Services rendered under existing contracts (Art. 17) •Special compensation (Art. 14)

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Authority to conclude the salvage contract (art.6(2))

England

Tsavliris Salvage (International) Limited v. Grain Board of Iraq, Queen’s Bench Division (Commercial Court) 1st April 2008 [2008] EWHC 612 (Comm)

On 28th August, 2006, in the course of a voyage from Rostock to Umm Qasr, in Iraq, the m/v Altair grounded, close to her destination but in Kuwaiti waters. Thereafter, various unsuccessful efforts were made to re-float the vessel, involving the use of her engines and local tugs. The vessel was successfully re-floated by Tsavliris on the 7th September, 2006. On the 9th September, the vessel berthed at Umm Qasr and a certificate of redelivery was signed (bringing the salvage services to an end).

The claim of the salvors against owners was settled at an early stage, but that against the cargo interests was not and the salvors were advised that the cargo, owned by the Grain Board of Iraq, could not be arrested in Iran. They therefore commenced arbitration proceedings in London pursuant to the arbitration clause contained in the Lloyd’s Standard Form of Salvage Agreement, 2000 edition that had been signed by a representative of Tsavliris and, purportedly on behalf of the “property” to be salved, by an employee of the managers of the vessel, acting on behalf of owners.

In the arbitration proceedings it was argued on behalf of the Grain Board that the arbitrator had no jurisdiction over the dispute because the Grain Board enjoyed immunity as a State entity and because the power to sign a salvage agreement on behalf of the cargo was granted under Article 6(2) of the Salvage Convention only to the master and the owner of the salved vessel. The arbitration award that rejected both exceptions was appealed by the Grain Board.


[1] Article 6.2 of the Salvage Convention 1989 applies also when the salvage contract is concluded by an employee of the agents of the owners and, therefore the signature by him of the LOF 2000 entails the jurisdiction of the arbitrator appointed pursuant to the arbitration clause thereof in respect of the salvage reward due by the owners of the cargo laden on board the salved ship.

Danger of being lost (articles 1(a) and 10)

Italy

Tribunal of Oristano 18 January 2011, Rimorchiatori Sardi v. Francesco de Santis, Yacht “Morgana” (2011 Dir.Mar. 1340)

On 21 August 1997 the forestay of the yacht “Morgana” broke, while the yacht was sailing in calm sea from Francoforte to Alghero. The owner asked for assistance since the engine of the yacht was out of order. The Port Authority of Oristano requested the tug “Vincenzo Onorato” of Rimorchiatori Sardi to provide assistance. The tug reached the yacht at 05.00 hours and took the yacht in tow to Oristano

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where it arrived at 0800 hours. Rimorchiatori Sardi brought proceedings against the owner of the yacht in the Tribunal of Oristano claiming a salvage reward.

Held, by the Tribunal of Oristano, that:

[1] In the Salvage Convention 1989 the expression “danger of being lost” is used only in respect of assistance to persons in danger while in respect of salvage of vessels or property only the word “danger” is used and, therefore, the condition for the Convention to apply is merely the generic danger of a vessel being damaged.[2] A sailing yacht that after repairing its rigging may reach under sail the nearest port is not in danger.

Limitation of actions (art. 23)

Italy

Tribunal of Cagliari 17 December 2008, Moby S.p.A. v. D’Amico Società di Navigazione S.p.A. and Others – The “Zhora” ( not yet reported)

In December 2000 Rimorchiatori Sardi S.p.A., subsequently incorporated in Moby S.p.A. rendered salvage services with its tug “Silvia Onorato” to the m/v “Zhora”, owned by Sius di Navigazione S.p.A., subsequently incorporated in D’Amico Società di Navigazione S.p.A. (D’Amico) and its cargo and on 28th November 2003 brought proceedings in the Tribunal of Cagliari against D’Amico and the owners and insurers of the cargo laden on board the Zhora claiming payment of a salvage remuneration for the services rendered, The Defendants raised inter alia the exception of time bar under article 23 of the Salvage Convention 1989, proceedings having been brought more than two years after the date when he services had been completed.

Held, by the Tribunal of Cagliari, that:

[1] The legal nature of the time limit by which pursuant to the Salvage Convention 1989 any action relating to payment under the Convention must be brought is that of a “decadenza” (“déchéance”) rather than that of a prescription.[2] The provision of the Italian Civil Code (article 2966) pursuant to which the “decadenza” is prevented by the acknowledgment of the debt cannot not apply because under the Convention the only manner by which, in addition to the institution of judicial proceedings, the time bar may be prevented is, pursuant to article 23 (2), the extension of the limitation period by the person against whom the claim is made.

Reward (Art. 13)

England

The Owners of the vessel “Ocean Crown” and Others v. Five Oceans Salvage Consultants –The “Ocean Crown”, Queen’s Bench Division (Admiralty Court) [2009] EWHC 3040 (Admlty)

The m.v. “Ocean Crown”, a modern, handy sized, geared bulk carrier, of 52,347 DWT, laden with 49,850.6 tonnes of copper concentrates in bulk, when, in August 2007, in the course of a voyage from Chile to Indian ports, ran aground on an uncharted rock in the Canal Darwin, in about a position 45º 24.57’ S, 074º 03.717’W.

By an agreement dated 7th August, 2007, on the LOF standard form of salvage agreement made between the Contractors and the owners of the ship, her cargo, bunkers and stores it was agreed that the Contractors would exercise their best endeavours to salve the vessel and her cargo and that the Contractors’ remuneration for doing so would be determined by arbitration in London.

The services were lengthy and successful. They lasted for some 66 days to the redelivery of the ship on the 11th October, 2007 and about 107 days until completion of redelivery of the transhipped cargo (an operation arranged by the Contractors under the LOF) on the 24th November, 2007. The salved fund was of a very high value. The value of the ship (at the termination of the LOF services and so after

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the casualty) and her stores was US$66,096,259.79, that of her bunkers was US$243,291 and that of her cargo US$99,846,280.00, making a total salved fund of US$166,185,830.79.

The arbitrator awarded the Contractors salvage remuneration in the amount of US$34,500,000 plus interest and costs; the appeal arbitrator increased that award to the sum of US$40,750,000, plus interest and costs.

The owners of the salved property were granted leave to appeal on three questions of law arising out of the appeal award:

i) Whether, when assessing salvage remuneration payable pursuant to a Lloyds Open Form salvage agreement in the standard form, it is correct to take into account, as an enhancing feature, the possibility that the salvor and/or the salvage industry may experience difficult economic conditions in the future;

ii) If, in principle, it is relevant to take such matters into account, whether it is permissible to take into account the actual economic conditions experienced between the date of termination of the services and the date of the award;

iii) Whether the principle in The Amerique (1874) LR 6 PC 468 is applicable to all types of salvage cases, including complex and comprehensive cases, or whether, as the appeal arbitrator found, a different principle applies in such cases.


[1] The value of the salved fund is in any case a significant element in the assessment of a salvage award. Additionally and in accordance with the principle of encouragement already discussed, where the value of the salved property is very high and it is at risk of damage or loss in the absence of assistance, then it is right to give some real effect to the very high value of the salved property beyond simply recognising it as furnishing a sufficient fund out of which to reward salvors. [2] However, the high value of the fund must not be allowed to raise the quantum of a salvage award to an amount altogether out of proportion to the services actually rendered; this is the moderating principle, for which The Amerique stands as authority. Moreover, as observed in the authorities, where the value of the property is high, an award of a small proportion may well provide adequate compensation. [3] The moderating principle in The Amerique (itself a case of derelict) is equally applicable to all cases, whether straightforward, or involving high dangers, or complex services. [4] The application of this moderating principle is necessarily fact sensitive; whether an award will be “altogether out of proportion” to the services actually rendered must involve a consideration (inter alia) of the applicable dangers and the nature of the salvage services. So, an award which is “altogether out of proportion” in a case of low dangers, involving short and simple salvage services may well not be disproportionate in a case where the risks to the salved property are serious and complex salvage services have been provided. The key point is that the value of the salved property by itself must not be allowed to result in an award “altogether out of proportion” to the services actually rendered.[5] Although there is necessarily a “future” element in the principle of encouragement” now expressly mentioned in art. 13(1) of the Salvage Convention 1989, the risk of future economic downturns and the actual economic conditions experienced by the salvor after termination of the salvage services are not factors enhancing the award.

The “Voutakos” [2008] EWHC 1581 (Comm), Queen’s Bench Division (Admiralty Court), [2008] 2 Lloyd’s Rep. 516

On 19 October 2006 the motor bulk carrier Voutakos (“the vessel”) suffered a main engine breakdown in the South Western approaches to the English Channel. She was in position Latitude 48° 17’ North, Longitude 07° 58’ West. She was in the course of a voyage from Puerto Prodoco, Columbia to Rotterdam with about 174,496 tons of coal.

Very quickly a salvage agreement was entered into between the owners and the salvors on the terms of a Lloyd’s Standard Form of Salvage Agreement 2000 (“the LOF”) and steps were taken by the respondents to identify a suitable tug to take the vessel in tow.

In due course the salvors chartered in the ocean going tug Fairmount Glacier from Fairmount Marine. The tug proceeded to the vessel’s position and established a towage connection during the

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morning of 30 October. The tug then commenced towing the vessel to Rotterdam in good weather conditions.

On 31 October the wind increased in force causing the vessel to shear. On 1 November with the wind having increased to force 6 – 7 and the flotilla approaching the Dover straits, the salvors decided to hire in another tug to act as a steering vessel for the casualty.

Accordingly the Alphonse Letzer was hired from URS. She made fast to the vessel at 1510 on 1 November and the tow continued.

On 2 November the flotilla was close to the entrance channel to Europort where she was due to pick up a pilot. However difficulties in controlling the tow led to the pilot slot being missed.

The wind reduced in force and at 08.20 on 3 November the flotilla picked up a pilot and the vessel was duly berthed in Rotterdam at 19.00.

The tow had covered some 560 miles. By Final Interim Award dated 7 January 2008 made by Mr. John Reeder Q.C. in his capacity as

the Lloyd’s Salvage Appeal Arbitrator substantially increased the salvage remuneration payable for salvage services rendered to Voutakis and her cargo in late October 2006 from US$1,750,000 to US$2,700,000.

An appeal against such award was brought by the owners of the Voutakis.

Held, by the Queen’s Bench Division (Admiralty Court), that:

[1] The “disparity principle” pursuant to which in salvage cases where there is only immobilisation, there exists no great urgency and only straightforward towage is required to effect a cure, it is important that the sum awarded should not be wholly out of line with commercial towage rates. However the question whether any influence should be restricted to straightforward towages cases expressed in such a limited sense is unworkable given the gradations of danger in cases of immobilisation, taken with the problem of identifying the proper status of the salvors to be adopted for the purpose of the claim and the uncertainties as to the terms on which such services might have been performed by others.[2] Although a general increase of commercial towage rates is required properly to comply with the requirements of the 1989 Salvage Convention and the policy issues underlying it, given the current conditions in the shipping and salvage industry as a whole short commercial rates are admissible and relevant but their significance will depend on the facts of each case. In the simplest of towage cases they may be particularly influential and provide, subject to values, a floor to any award that could begin to be regarded as encouraging.

The "Star Maria" [2002] EWHC 1423 (Admlty), Queen's Bench Division (Admiralty Court), [2003] 1 Lloyd's Rep. 182 and 2004 Dir. Mar. 455

Shortly after midnight on 2 January 2001 the Star Maria, a steel single screw motor general cargo vessel of 2386 dwt, at the material time she was laden with a cargo of 1300 tonnes of steel products in the course of a voyage from Grimsby to Gemlik in Turkey, was involved in a collision with the Unden about six miles southeast of Dover. As a result of damage caused by the collision water entered the steering gear room and the vessel was effectively immobilised. The casualty requested tug assistance and her starboard anchor was dropped.

Far Turbot, an anchor handling tug with a bollard pull of 100 tonnes, was instructed by the Coastguard to proceed to the casualty. She was underway by 0058. At 0113 Doughty, a steel twin screw tug with a bollard pull of 55 tonnes owned by the Board, also set out from Dover to the casualty.

The weather conditions were bad. The wind was south south westerly force 7-8 with rough seas and a swell of about 4 metres. High water at Dover was predicted for 0309. At about 0121 contact was established between Doughty and the casualty by vhf. Doughty offered her assistance on the terms of Lloyd's Standard Form of Salvage Agreement ("LOF") and that offer was accepted.

By about 0200 Doughty was in the vicinity of the casualty and attempted to make fast. However, although a messenger line was put on board the casualty it parted and the tow wire fouled the tug's propeller. Doughty was as a result unable to provide any assistance and returned to Dover.

By about 0300, when Doughty was attempting to make fast, Far Turbot arrived. When it was apparent that Doughty was unable to assist Far Turbot offered her services under LOF which offer was accepted. Far Turbot made fast a tow line and the casualty recovered her starboard anchor. By 0357 towage commenced to Dover.

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At about 0441 Far Turbot and the casualty approached the eastern entrance to Dover Harbour. The master of Far Turbot requested the assistance of Dauntless, a sister tug to Doughty, to assist in the task of bringing the casualty into the harbour. In response Dauntless left Dover harbour and came up with the casualty at about 0505. By about 0520 Dauntless made fast to the stern of the casualty with a tow rope (not a heavy wire because all that was envisaged was steerage assistance). By this time the casualty was about eight cables due east of the eastern entrance. The wind was force 8-9, there was a four metres swell and, it being over 1 hour after high water, the tidal current off the eastern entrance was running in a north easterly direction.

At 0529 the Far Turbot's tow line parted. At this time the casualty was about 4 cables east of the eastern entrance. Captain Billowes, the master of Dauntless, attempted to pull the casualty's stern into the wind but the task was extremely difficult and he did not succeed in doing so. He did not wish to put his own tug beam onto the seas and he had to be careful that his towage connection did not part as a result of snatching. By about 0534 the casualty had dropped her starboard anchor and Far Turbot instructed Captain Billowes to assist the casualty in heading into the wind and hold the casualty whilst Far Turbot established another towage connection.

Under the influence of the wind and tide, notwithstanding that she had her starboard anchor out and Doughty was made fast, the casualty drifted in a north north easterly direction. By 0545 the casualty had drifted to a position about two cables off shore. She was just outside the five metre sounding contour, inside which Captain Billowes knew there to be rocky outcrops. It was clear to Captain Billowes that the casualty's starboard anchor was not holding her and that he now had to pull the stern of the casualty out of the shallow water. He succeeded in pulling the casualty to a position about one cable to the south and to seaward of the 10 metre sounding contour. The casualty was advised by Far Turbot to drop her port anchor also which she did.

Holding the casualty in that position was a difficult task for Captain Billowes on Dauntless. There were heavy seas and he had to be careful not to allow the towline to part as a result of snatching. This required extremely careful use of his engine power. But he was successful in doing so and the Court had no doubt that he displayed extremely high standards of seamanship.

By 0605 Far Turbot re-established her towage connection and the towage into Dover harbour re-commenced. By 0645 the casualty was inside the harbour and brought alongside a berth. Dauntless was released. Later that day, at about 1242 Far Turbot left Dover and resumed her coastguard patrol duties.


[1] Having taken into account the criteria listed in Article 13 of the Salvage Convention 1989, that has the force of law in England, and having sought to fix an award with a view to encouraging salvage operations, a fair salvage award to the owner of the Dauntless against the whole salved fund would have been £20,000 plus the costs of repairing damage sustained in providing the service, £1,360.20, making a total award of £21,360.20. Since the claim was against the owners of Star Maria only and ship's proportion of the fund is 12.29%, the salvage remuneration payable by the owners of Star Maria is therefore £2,626.40 plus interest on that sum at the rate of base rate plus 1 per cent from Jan. 3, 2001.

Italy

Tribunal of Rome 23 January 2003, SE.MAR.PO. v. Finagen - m/y "Gold" 2004 Dir. Mar. 252

In June 1996 the m/y Gold, with about 10,000 litres of gasoil on board as bunker caught fire at Fiumicino. Two tugs of SE.MAR.PO. S.r.l. towed the yacht to Fiumicino where the yacht sank, thus becoming a constructive total loss. The salvors brought an action against the owners of the yacht in the Tribunal of Rome, claiming special compensation under article 14 of the Salvage Convention, 1989.

Held, by the Tribunal of Rome, that:

[1] No salvage reward is due when the salvage services have not had a useful result.

South Africa

Transnet Limited v. m.v. Mbashi, The Cargo Laden on board the m.v. “Mbashi” and Safbank Line Limited.

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On 1 August 1997 at about 17.20 hours the m.v. Mbashi, a 20.000 ton container vessel, sailed out of Durban harbour towards Port Elisabeth. When it reached a point some 3.5 miles from the southern breakwater of the harbour a fire broke out in the engine room and could be doused by pumping carbon dioxide into the engine room. As a result of the fire the vessel lost all power: the helm could not function properly, there was no lights save for emergency lights operated by a battery and the vessel’s radio did not function, so that radio communications could only take place with a VHF short-range portable radio. The master radioed the Durban port authorities informing them of the situation and requesting that two tug boats be sent out to assist the vessel. The port authority gave instructions for two tug boats to proceed to the vessel and render assistance to it. In addition instructions were given to a pilot to proceed on a pilot boat to the vessel. The tugs Bart Grové and Dupel Erasmus reached the vessel and the former was made fast at 19.20 hours, about 1 hour 20 minutes after assistance had been requested.

The pilot had already boarded the vessel using a rope ladder and directed the salvage operations. The following morning the ship was towed into Durban harbour. The salvage operations lasted for approximately 17,15 hours. The pilot was engaged for about 17 hours and so was the Bart Grové, whilst the Dupel Erasmus was released after 5.30 hours.

The salvors brought proceedings against the m.v. Mbashi, the owners of the cargo laden on board the vessel and the charterers before the High Court of South Africa, Durban and Coast Local Division claiming a salvage reward pursuant to art. 13 of the 1989 Salvage Convention. The defendants argued that the element of voluntariness was lacking since the claimants were under a statutory duty to perform the particular service that had been rendered.

Held, by the High Court of South Africa, Durban and Coast Local Division, that:

[1] The vessel was in an extremely dangerous situation and a reward of 2.30 per cent of the value of the salved properties (R 128,498,396) must be fixed pursuant to Art. 13 of the Salvage Convention 1989 for the salvage services rendered by the two tugs and the pilot.

Salvage contracts (Art. 6)

England


(See the summary of facts in the section "Reward")


[1] To constitute a salvage service by a tug under contract to tow, two elements are necessary: (1) that the tow is in danger by reason of circumstances which could not reasonably have been contemplated by the parties; and (2) that risks are incurred or duties performed by the tug which could not reasonably be held to be within the scope of the contract. That pursuant to those principles the services of "Dauntless" became services in the nature of salvage when, at about 0529, the towage connection with "Far Turbot" parted. The casualty was then in danger of grounding which could not reasonably have been foreseen when "Dauntless" was instructed to assist "Far Turbot" and the "Dauntless" incurred risks and performed duties which could not reasonably be held to be within the scope of her contractual duty to act as a steering tug. The services remained in the nature of salvage until 0605 when the towage connection with "Far Turbot" was re-established and all that "Dauntless" then had to do was assist in steering the casualty into Dover harbour.

Salvage of property (Art. 1(c))

Canada

Early Recovered Resources, Inc. v. Gulf Log Salvage Co-operative Association, Her Majesty in Right of the Province of British Columbia and Jim Doyle, Minister of Forests (Federal Court of Canada, Trial Division 15 February 2002)*

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Early Recovered Resources, Inc. sued the provincial Crown claiming salvage of certain logs they stated to have taken from the tideway in the navigation channel of the Fraser River. The Crown resisted the claim on the basis that the Log Salvage Regulation for the Vancouver Log Salvage Regulation District adopted under the provincial Forest Act exclude the claim because that Act and those regulations enact a comprehensive scheme with respect to the salvage of logs in the Fraser River amongst other places. The defendants moved for summary judgment denying the jurisdiction of the Court on the ground that the claim was not within the scope of Canadian maritime law.

Held, by the Federal Court of Canada, Trial Division, that:

[1] The Salvage Convention, 1989, incorporated into Canadian domestic law, applies to the salvage of logs, in view of the broad notion of “property” adopted in its Article 1(c).

* A copy of this judgment has been kindly supplied by Michael Marks Cohen, Esq., Burlingham Underwood LLP, One Battery Plaza, New York, NY 10004-1484.

Salvage operations controlled by public Authorities (Art. 5)

South Africa

Transnet Limited t/a National Ports Authority and The Cargo Laden on board the “Cleopatra Dream”, High Court of South Africa – Western Cape High Court, Cape Town, Case No. AC 54/2004, 22 January 2010.

The plaintiff, Transnet Limited trading as the National Ports Authority, is a company vested with legal standing by virtue of section 3 of the Legal Succession to the South African Transport Services Act 9 of 1989 and administers the port of Saldanha. As such is a public authority as contemplated by article 5 of the International Convention on Salvage of 1989.

The “Cleopatra Dream” arrived in the port of Saldanha on 31 March 2004 and completed loading the cargo at approximately 02h50 on the morning of 2 April 2004.A sailing pilot was requested for 04h00 and at approximately 03h54 pilot De Kock, an employee acting in the course and scope of his employment by the plaintiff, boarded the vessel while she was alongside. At approximately 04h00 the vessel commenced casting off the last of her mooring lines and at approximately 04h14 all lines were clear and on board. At 04h40, and within the limits of the port of Saldanha, the vessel experienced a power failure which resulted in the stoppage of her main engines.

On the occurrence of the vessel’s main engine stoppage the pilot requested that the plaintiff provide tug assistance to the vessel. The vessel drifted without power in the south-westerly direction towards shallow water and Jutten Island. Thereafter, and at approximately 06h18 to 06h28, the plaintiff’s tug “Jutten“ came alongside and commenced pushing the vessel’s port bow. At approximately 07h05-07h20 a second tug operated by the plaintiff, the “Meeuw“, came alongside and was made fast to the vessel.

At approximately 07h36-07h42 pilot De Kock left the vessel. The vessel was towed to a place of safety within the port of Saldanha. Notwithstanding the various admissions by the defendants, including that the services rendered by the plaintiff constituted a “salvage operation”, they denied that the services gave rise to a salvage award in terms of the Wreck and Salvage Act, 94 of 1996 and the 1989 International Convention on Salvage, a Schedule to that Act, since, it was contended, they were rendered in the performance of a statutory and common law duty and were not voluntary. This in turn is denied by the plaintiff. The two questions of law and fact to be decided prior to and separately from the other matters in issue are the following:

(1) Whether the salvage operation carried out by the plaintiff in connection with the defendants was rendered voluntarily and not in the performance of a statutory and/or common law duty to perform the salvage operation in question.

(2) In the event of it being found the salvage operation was carried out in the performance of a statutory and/or common law duty, and accordingly not voluntarily (as pleaded by the defendants), whether the plaintiff is nonetheless entitled to a salvage reward by virtue of the provisions of the Salvage Convention and clause 4.3 of the Tariff Book.

Held, by the High Court of South Africa-Western Cape High Court, that:

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[1] Article 5 of the Convention does not recognise the entitlement of a public authority to a salvage award irrespective of the existence of any duty, whether statutory or otherwise, pursuant to which the services were rendered but rather stipulates that, in considering whether a public authority is entitled to a salvage award, regard must be had to the existing national law.[2] The plaintiff rendered the relevant services to the Cleopatra Dream pursuant to, and within, both a statutory and common law duty and thus not voluntarily as that term is understood in the law of salvage.

Transnet Limited v. m.v. Mbashi, The Cargo Laden on board the m.v. “Mbashi” and Safbank Line Limited.*


Held, by the High Court of South Africa, Durban and Coast Local Division, that:

[1] The requirement of voluntariness is not lacking in case salvage services are rendered by a company, fully owned by the State to which the State has transferred, as a going concern, its commercial enterprise that had inter alia the power to control and exploit harbours and other services, and was entitled as such to claim a reward for salvage services rendered to a vessel in distress.

* A copy of this judgment has been kindly supplied by Michael Marks Cohen, Esq., Burlingham Underwood LLP, One Battery Plaza, New York, NY 10004-1484.


Italy

Tribunal of Rome 23 January 2003, SE.MAR.PO. v. Finagen - m/y "Gold" 2004 Dir. Mar. 252



[1] The Salvage Convention, 1989 is applicable in respect of salvage services rendered prior to the Convention becoming effective in Italy.

Services rendered under existing contracts (Art. 17)

England




[1] Once "Doughty" left the casualty at about 0300 unable to render assistance by reason of her propeller being fouled and "Far Turbot" obtained her own LOF the LOF with the Board came to an end because both the Board and the master of the casualty must have regarded it as an end. There was no scope for any further service by "Doughty" and the master of the casualty did not look to the Board for any further service.

Special compensation (Art. 14)

Italy

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Tribunal of Rome 23 January 2003, SE.MAR.PO. v. Finagen - m/y "Gold", 2004 Dir. Mar. 252



[1] The conditions for the application of article 14 of the Salvage Convention materialize when a yacht carrying about 10,000 litres of fuel oil as bunker with fire on board is towed to a berth where the gasoil is unloaded, and no salvage reward may be claimed, because the yacht sank after the discharge of the fuel oil.[2] The owner of the yacht is liable for the payment of the special compensation due under article 14 of the Salvage Convention.[3] In case the services rendered by the salvors have prevented damage to the environment the special compensation due to them under article 14 of the Salvage Convention must be calculated taking into account the expenses incurred during the salvage operations, a fair compensation in respect of the materials and personnel employed calculated in consideration of the promptness of the services rendered, the availability and use of vessels, the state of readiness and efficiency of the salvors' equipment and the amount so calculated must be increased by 30%.[4] The "fair rate" indicated in article 14(3) of the Salvage Convention does not correspond merely to the expenses incurred, but must be the subject of an equitable assessment by the judge.

United States

International Towing & Salvage, Inc. v. The “Lindsey Jeanette” (U.S.D.C. Middle District of Florida, Orlando Div., 1999 AMC 2465)

On June 3, 1997, the Lindsey Jeanette, a 45’ commercial fishing vessel, capsized about 30 miles off Brevard County within the United States’ Exclusive Economic Zone following a collision with a freighter. International Towing responded to a Coast Guard Marine Assistance Request. Captains Ryan Moore and Konrad Birchfield set out in the Neon Moon, their rescue vessel. They arrived at the Lindsey Jeanette around 2:30 p.m.

Upon arriving at the scene, Moore noticed that the hull had suffered extensive damage and was leaking fuel. He then dove under the vessel to assess her situation and the sources of oil leaking from her. He secured the drifting vessel, capped her remaining unruptured port fuel tank, and stabilized the capsized hull to capture the contents of her ruptured starboard fuel tank along with other pollution sources under the hull. By capping the unruptured fuel tank and stabilizing the inverted hull with airbags, Moore succeeded in trapping the pollutants under the hull so it became a rigid containment boom for towing.

After completely stabilizing the vessel, Moore and Birchfield towed her in a capsized position with the inverted hull serving as a containment boom.

The Neon Moon was met outside Port Canaveral by International Towing’s salvage tug, the Tuff-E-Nuff. Moore and Tuff-E-Nuff’s captain dove the capsized vessel, restabilized her, and prepared her for entering the port.

The next day, International Towing succeeded in righting the vessel and removing her from the water intact. International Towing also contained and removed the contents of her ruptured fuel tank and other pollution sources.

International Towing brought an action in rem against the vessel and an action in personam against the owner, the operator and the insurer in the United States District Court, Middle District of Florida (Orlando Division).

The parties agreed that International Towing was due money for services rendered; however, the parties disputed that amount. International Towing claimed that it was entitled damages greater than the salved value of the vessel under Article 14 of the International Convention on Salvage. In Defendants’ Motion for Summary Judgment, they contended that Article 14 did not apply.

Held, by the U.S.D.C., Middle District of Florida, that:

[1] There is a threat of damage to the environment, which is a condition for Article 14 of the Salvage Convention 1989 to apply, when there is a danger of discharge of oil from a vessel, capsized after a collision and, if the vessel had sunk, its fiberglass hull could cause toxic problems.

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[2] The condition for the application of Article 14 of the Salvage Convention 1989 materializes when the value of the salved property is lower than the expenses incurred by the salvor.

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