Marine Brief: latest decisions November 2020

In this briefing, we consider some recent, global decisions addressing issues including: multiple collision liability; the correct defendant when vessel ownership has changed; charterers’ liability for additional heads of loss; service by email on an unattended vessel; and a representative action application in Hong Kong.

The Owners of the Vessel SAKIZAYA KALON v The Owners of the Vessel PANAMAX ALEXANDER; The Owners of the Vessel OSIOS DAVID v The Owners of the Vessel PANAMAX ALEXANDER; The Owners of the Vessel OSIOS DAVID v The Owners of the Vessel SAKIZAYA KALON [05.10.20]

In a hearing conducted virtually, the Admiralty Court recently considered a case involving multiple collisions in the Suez Canal. Three vessels were heading southbound in an eight vessel convoy when the vessel at the head of the convoy suffered engine failure and it became necessary for the vessels behind to moor. As a consequence, the Panamax Alexander collided with the Sakizaya Kalon in front which in turn collided with the Osios David.

Owners of the Osios David and Sakizaya Kalon argued that the collisions were caused by the failure of Panamax Alexander to moor. Owners of the Panamax Alexander argued that the collisions were caused by the failure of Osios David and the Sakizaya Kalon to inform Panamax Alexander where and when they were about to moor. The Admiralty Court held that the Panamax Alexander was wholly at fault by failing to appreciate that there was a risk of collision and failing to moor in time in order to avoid that risk of collision.

Contact: Jonathan Biggins

The “ECHO STAR” ex “GAS INFINITY” [28.09.20]

In April 2019 the vessels ROYAL ARSENAL and GAS INFINITY were involved in a collision in the Straits of Hormuz. In July 2019, GAS INFINITY was sold by Sea Dolphin to Cepheus (who was undisputedly a stranger to the collision) and renamed ECHO STAR. In November 2019, the owners of ROYAL ARSENAL commenced an in rem action against ECHO STAR. Cepheus entered an appearance as the defendant and furnished security for the claim to obtain the release of ECHO STAR. Sea Dolphin subsequently entered an appearance as a defendant following which Cepheus sought consent to withdraw its appearance as a defendant claiming it had been mistakenly filed, and instead enter an appearance as an intervener.

The Singapore High Court in holding that Sea Dolphin were the proper in personam defendant:

  • Allowed Cepheus to withdraw its appearance as a defendant on the basis that it would be “absurd” to insist that in order for Cepheus to protect its rights in respect of ECHO STAR and to secure its release, Cepheus has to enter an appearance as a defendant and render itself potentially liable for a fault-based claim in circumstances where it was a total stranger to the collision.
  • Granted Cepheus leave to intervene, on the basis that, as the current owners of ECHO STAR and having furnished security for its release, it has a clear interest in the vessel.

Contact: Ingrid Hu

K Line Pte Ltd v Priminds Shipping (HK) Co Ltd (The “ETERNAL BLISS”) [07.09.20]

Owners, K Line entered into a Voyage Charter with Charterers Priminds Shipping for the shipment of soya beans from Brazil to China.

Upon arrival at the discharge port, Owners tendered a Notice of Readiness, yet the Vessel remained at anchorage for 31 days. Upon discharge, the cargo was found to have suffered deterioration due to the prolonged retention on board. The receivers and their insurers claimed for the damaged cargo against the Owners. The claim settled for US$1.1 million and Owners sought to claim damages from the Charterers for the costs. The only breach alleged against Charterers was a failure to discharge the Vessel within the contractually agreed laytime.

The following questions arose (as a preliminary point of law):

  • Were Charterers liable to compensate the Owners for a head of loss additional to demurrage as a result of their breach, or
  • Would Owners need to demonstrate a separate, additional breach by Charterers in order to recover such costs (The “Bonde” [1991]).

Mr Justice Andrew Baker found that Charterers were liable to compensate the Owners for the cost of the cargo damage, in addition to any claim Owners had for demurrage. It was not necessary for Owners to prove a separate breach by Charterers in order to recover such sums.

This judgment challenged a number of key academic opinions and has brought clarity to the law. However, Mr Justice Baker has granted Charterers permission to Appeal, so we will have to await the decision from the Court of Appeal to ultimately put an end to the uncertainty.

Contact: Natalie Seal

Bhagwan Marine Pty Ltd v The Ship “TERAS BANDICOOT” [20.08.20]

The Vessel, TERAS BANDICOOT, had been moored in a dead-ship condition in Hudson Creek in Darwin, Australia since February 2018 without crew or apparent attention. Mooring fees were due by the defendant Vessel owners to the claimant mooring owners and remained unpaid despite demand.

The claimant sought an order for service, by email, of a warrant seeking the arrest of the Vessel as security for their claims. The order was sought pursuant to the court’s discretionary power to grant relief from the requirements of the Admiralty Rules 1988 which required that the writ be served by affixing it to a mast or other conspicuous part of the Vessel. The only alternative to that provided that if access to the Vessel could not reasonably be obtained, process might be served on the Vessel by leaving it with a person apparently in charge of the Vessel. However, the Vessel’s registered office appeared to be a vacant plot of land.

The judge in the Federal Court of Australia made the order sought by the claimant permitting the documents be served or executed by email address. This was on the basis that service by e-mail would in all reasonable probability come to the attention of the defendant whereas it was unlikely that documents served on board the unattended Vessel would come to the defendant’s attention.

It is easy to see how the principles established in this case might be applied with the advent of autonomous shipping and in circumstances where vessels may remain unattended for a prolonged period of time.

Contact: Eleonore De Montule

Calm Ocean Shipping SA v Win Goal Trading Ltd And Others [21.05.20]

The claimant owners of the vessel SOPHIA Z carried cargo that was rejected upon arrival in Algeria in September 2015 by the Notify Party. The Vessel sailed to safe anchorage in accordance with new instructions from the time charterer. The claimant applied unsuccessfully for an injunction requiring the first defendant (the shipper, Win Goal) to surrender the bill of lading and provide instructions in respect of discharge. With no fresh instructions, the claimant unloaded and sold the cargo.

The claimant sought an order that Win Goal be appointed to represent all members of a class of persons to defend the action for and on behalf of that class (a representative action application); or, alternatively that the claimant be at liberty to join members of the class as defendants under the style “Persons Unknown”, with an obligation on Win Goal to notify any party from whom it received payment in respect of the cargo of the order.

The Hong Kong Court found it inappropriate to grant the first application as that would impose a duty on Win Goal to defend the claim on behalf of the class and may prejudice them through additional costs and delay. However, the court granted the alternative relief on the basis that the claimant was an innocent party and there existed potential claims against it in connection with the carriage and/or disposal of the cargo. An order against “Persons Unknown wherever situated or incorporated who have any claim against the Plaintiff as the Carrier under [the B/L] or in respect of the Cargo under [the B/L] or its proceeds of sale” would provide finality, so far as possible, in that all interested parties would be before the court.

Contact: Ingrid Hu

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