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In this briefing, we consider some recent decisions covering: choice of law provisions in maritime contracts in the US; liability in general average for ransom payments to Somali pirates; recovery of damages after compensation received; the negligent navigation exemption under the Hague Rules; and which version of the York-Antwerp Rules applies under Congenbill claims.
Choice of law provision held to be presumptively enforceable
Great Lakes Insurance SE v Raiders Retreat Realty Co [February 21, 2024]
The United States Supreme Court has decided the most important marine insurance case in the US since 1955.
The Court held that choice of law provisions in maritime contracts are presumptively enforceable.
This decision is a momentous win for the insurance industry, as it will inevitably reduce legal uncertainty regarding governing law and discourage forum shopping, saving marine insurers considerable legal fees and fostering more fertile grounds for settlement.
Contacts: Forrest Booth, Colin Crug
Related item: Choice-of-law: Uniformity at long last
THE MT POLAR: cargo interests remain liable in GA for ransom payment to Somali pirates
Herculito Maritime Ltd v Guvnor International BV [17.01.2024]
The Supreme Court has dismissed cargo interests’ appeal, holding that they were liable in general average (GA) to contribute cargo’s proportion of US$7.7m paid by the owners of the MT Polar as a ransom to release the vessel and fuel oil cargo onboard after it was seized by Somali pirates in 2010.
The Supreme Court also held that the owners would not have been able to invoke the war clause and refuse to go into the Gulf of Aden unless the risks then were to a significant degree greater than at the time when the charterparty was agreed or unless the Gulf of Aden had become affected by an entirely different war risk. As it was found that there had been no significant escalation of the piracy situation since the charterparty was agreed, the owners would not have been able to refuse.
This judgment may preclude shipowners from refusing to sail through the Red Sea or Gulf of Aden for fear of attack by Houthi rebels where those risks were known at the time of contracting and the charterparty stipulates for a passage through that region.
Contacts: Craig Boyle-Smith, Andy Purssell
Related item: The MT Polar: cargo interests remain liable in GA for ransom payment to Somali pirates
The Doric Valour – title to sue established after assignment of rights
AMS Ameropa Marketing Sales AG and Baloise Belgium SA v Ocean Unity Navigation Inc [19.12.2023]
The Commercial Court was asked to rule whether the first claimant (who had sold a cargo of soybeans to an Egyptian company, Oilex) and the second claimant (cargo insurers) had title to sue against the defendant (Owners of the vessel) for damage to the cargo found upon discharge.
The lawful holder of the bills of lading at discharge was Oilex. Oilex subsequently assigned all rights of suit to the first claimant.
While it was common ground that Oilex had title to sue under the bills of lading, Oilex had recovered compensation from the first claimant. Therefore the defendant argued that Oilex had not suffered a loss and had no claims to assign.
The Court rejected that argument on the basis that any recovery made by Oilex from the first claimant was not to be treated as a benefit obtained in the course of mitigation for which credit must be given to the Owner. Accordingly, it was held that the first claimant did have title to sue against vessel Owners.
The Court held that that second claimant was merely the cargo insurer and therefore had no title to sue.
Contact: Eleonore de Montule
The Afra Oak – negligent navigation under the Hague Rules
Mercuria Energy Trading Pte v Raphael Cotoner Investments Ltd [23.11.2023]
The High Court found that the exemption in Article IV, Rule 2(a) of the Hague Rules of a carrier or ship’s liability for loss arising from negligent navigation applied in circumstances where the Vessel, failing to follow the Charterers’ employment orders, was detained in territorial waters.
The Vessel was ordered by the Charterers to proceed to Singapore Eastern Outer Port Limits to await further orders. Instead, the Vessel waited in Indonesian waters, where anchoring was prohibited by UNCLOS 1982 and under Indonesian law. The Vessel and Master were arrested, the Master convicted of criminal offences and the Vessel was released after eight months’ detention.
In the first instance, the Tribunal found that the Charterers’ orders were not in breach of the safe port warranty because their orders could not be construed as ordering the Vessel to wait in Indonesian waters. The decision to do so by the Master was both contrary to the Charterers’ employment orders and a navigational oversight - the latter entitling Owners to rely on the negligent navigation exemption at Article IV, Rule 2(a).
The Charterers appealed, arguing that the Master had made an error in law, not navigation, and therefore the negligent navigation defence was not available to the Owners.
The High Court dismissed the appeal on the basis that the Master made an error in navigation and seamanship in not accounting for the risk of anchoring in Indonesian waters.
Contact: Ingrid Hu
MV Star Antares – Court decides on which version of the York-Antwerp Rules applied to general average claims
Star Axe LLC v RSA Luxembourg SA and others [10.11.2023]
The Commercial Court was asked to rule on the long debated question of which version of the York-Antwerp Rules is applicable when bills of lading have been issued on the Congenbill 1994 form. It held that the applicable rules were the York-Antwerp Rules 2016, which include a one year time bar from the date of the general average adjustment.
Contacts: Mukut Bhattacharya, Mark Lloyd
Related item: MV Star Antares - Court decides on which version of the York-Antwerp Rules applied to general average claims
Insurance and reinsurance
Shipping and international trade
United Kingdom
United States