Marine Brief: latest decisions March 2021

In this briefing, we consider some recent, global decisions addressing issues including: the application of the Collision Regulations; a Master’s responsibilities when presented with a draft bill of lading; a statutory moratorium’s effect on in rem writs in Singapore; the general average position when insurance provisions are contained in the contract of carriage; and the interpretation of letters of undertaking wordings.

Nautical Challenge Ltd v Evergreen Marine (UK) Ltd (The “Alexandra 1” and The “Ever Smart”) [19.02.21]

The Supreme Court has unanimously and emphatically overturned rulings from the Admiralty Court and Court of Appeal in the first judgment in nearly half a century on the application of the Collision Regulations.

Following a collision between the "Alexandra I" and the "Ever Smart" in a channel leading to Jebel Ali, the parties disputed whether the narrow channel rule or the crossing rule (Rules 9 and 15 of the Collision Regulations) applied.

The lower courts held that where a vessel is waiting to enter a narrow channel, the narrow channel rule applies in place of the crossing rule. The Supreme Court overturned the lower courts’ decisions and found that the crossing rule 15 did apply, noting:

  • Where a vessel is intending and preparing to enter a narrow channel, but is waiting to enter rather than actually entering, the crossing rules continue to apply until the vessel is shaping her course to enter the channel.
  • Neither vessel had to be on a steady-course for the crossing rules to be engaged.

The Supreme Court judgment will be of great assistance to the maritime industry as it sets out in detail how the Collision Regulations are to be interpreted across a range of scenarios. This matter will now be returned to the High Court for apportionment to be re-determined on the basis that the crossings rules applied.

Contacts: Craig Boyle-Smith and Ingrid Hu

Noble Chartering Inc v Priminds Shipping (HK) Co Ltd (The "TAI PRIZE") [28.01.21]

Everyone in the shipping trade” knows that the representation on a bill of lading with respect to the order and condition of the cargo is based on the Master’s own reasonable assessment of the cargo (Nogar Marin (1987)). This principle of English law was tested in the MT Tai Prize where the Master, without an opportunity to inspect the cargo, relied on statements as to the good order and condition from the shippers.

The Court of Appeal held that the tender of a draft bill is a request by the shipper that the Master should satisfy himself as to the cargo’s apparent condition, even when there is damage which the shippers would have been able to discover by reasonable means before it was loaded.

This is a reminder to owners that, as far as the condition of the cargo is concerned, it is for the Master to assess the condition himself and decide whether or not it is in apparent good order and condition. The presentation of a draft bill from shippers does not derogate the Master’s responsibility.

Contact: Michael Biltoo

Related item: Shippers' tender of draft clean bill is only an invitation for Master to assess the condition of the cargo

THE “OCEAN WINNER” [15.01.21]

The Singapore High Court considered whether the rights of a maritime claimant filing protective admiralty writs would be affected by a statutory moratorium under Singapore insolvency rules.

On 17 April 2020, Ocean Tankers Pte Ltd (OTPL) was granted an automatic moratorium while it prepared a restructuring proposal. Under the Singapore Companies Act, the effect of the moratorium was that no proceedings may be commenced against the company or for execution against the company’s property except with the court’s permission.

On 22 April 2020, without obtaining the court’s permission, PetroChina filed admiralty in rem writs against four vessels demise chartered by OTPL.

OTPL’s judicial managers applied to set aside these writs arguing that PetroChina should have obtained the court’s permission before filing the writs.

The court dismissed the judicial manager’s application and held that admiralty in rem writs may be filed without the court’s permission, even if there is a statutory moratorium in place protecting the company.

The case brings welcome clarification and now makes it clear that a statutory moratorium does not prevent a claimant from filing in rem writs – as they may need to do in order to preserve in rem rights against the vessel or to prevent claims from being time barred. The court’s permission will however still be required if the claimant wishes go further and to serve the writ or to arrest the vessel.

Contact: Karnan Thirupathy

Herculito Maritime Ltd v Gunvor International Bv & Ors. (“MT POLAR”) [04.12.20]

Bills of lading will often seek to incorporate the terms of an underlying charterparty to complement the express terms in the bill itself. In this case, the Court of Appeal considered whether the agreement in the charter between owners and charterers concerning the payment of additional war premiums was incorporated into the bill – which would have a consequent effect on whether the cargo interests could be liable for general average contributions.

The court found that cargo interests were liable for the general average contribution and confirmed that if insurance provisions are contained in the contract of carriage, it can affect the general average position as well as any breach of contract position. This is a valuable finding for future general average cases.

Contact: Michael Biltoo

Related item: MT Polar: novel incorporation and insurance code questions addressed by High Court

Lavender Shipmanagement Inc v Ibrahima Sory Affretement Trading SA and Others (The “Majesty”) [16.12.20]

This case involved the carriage of a cargo of bagged rice from Myanmar to Guinea, pursuant to a voyage charterparty and five bills of lading which provided for English law and LMAA Arbitration. Disputes arose due to shortage, damage and wetting of the cargo.

Following discharge, two letters of undertaking (LOU) were issued, with one superseding the other. The LOU was addressed to the first defendant “as receivers with title to sue and their subrogated underwriters”, not to the second defendant charterer. However the LOU was stated to be: “In consideration of the owners of and other parties entitled to sue in respect of the above mentioned claim concerning the cargo referred to above … refraining from taking action …”.

Time extensions were subsequently sought by the cargo claimants and arbitration was commenced in London against the owners. The arbitration notice was drafted broadly to commence the arbitration either pursuant to the ad hoc arbitration agreement in the LOU or pursuant to the LMAA arbitration clauses incorporated into the bills of lading.

Owners challenged the tribunal’s jurisdiction and the consolidation of the claims. The tribunal concluded that the terms of the LOU confirmed the parties’ agreement to consolidate arbitrations and to have them heard in a single ad hoc arbitration.

The owners then applied to set aside the tribunal’s order. The court found that the parties’ intention in the LOU was to refer all separate claims to one consolidated arbitration in respect of the lost/damaged/short cargo and that the notice of arbitration was a valid one.

Contact: Jonathan Biggins

Read other items in Marine Brief - March 2021