Legal Review: Marine Year ending 31 December 2006

Transcription

1 Legal Review: Marine Year ending 31 December 2006

2 The matters covered in this publication are intended as a general overview and discussion of the subjects dealt with. They are not intended, and should not be used, as a substitute for taking legal advice in any specific situation. DLA Piper LLP will accept no responsibility for any actions taken or not taken on the basis of this publication. NB For copyright and/or technological reasons, any internet addresses in the electronic version of this publication may not be active links.

3 CONTENTS INTRODUCTION ALLEGATIONS OF DISHONESTY ENTIRE AGREEMENT CLAUSE FRAUD - NO ARBITRATION AGREEMENT INCORPORATING AN ARBITRATION CLAUSE INSURANCE CONTRACT LAW REFORM LABOUR STANDARDS LAW AND JURISDICTION CLAUSE MEASURE OF DAMAGES FOR LATE REDELIVERY NOTICE OF ARBITRATION PROCEEDINGS OIL SPILL COMPENSATION POLLUTION DIRECTIVE CHALLENGE SEAWORTHINESS AND DUE DILIGENCE STRAIGHT BILLS AND THE PRESENTATION RULE UNLAWFUL CARGO... 5 APPENDIX

4 INTRODUCTION For the first time this year, in addition to our Legal Review 2006 covering legal developments during the year affecting businesses in the UK generally, we have produced a number of industry sector supplements such as this one in some of the more bespoke areas in which we provide advice. Here is a list of all the 2006 Legal Reviews and supplements with links to the publications. If you have received this in hard copy only, you will need to or ring your usual contact to access these publications. Legal Review 2006: England Legal Review 2006: Scotland International Legal Review 2006 Aviation Film Finance Food Insurance and Reinsurance Marine Media Sport Telecoms In many cases, sources of further information have been given although partners and staff here at DLA Piper will be pleased to give advice. Details of key contacts are set out in appendix 1. Nigel Knowles January 2007 DLA Piper UK LLP Legal Review 2006 Marine 1

5 1. ALLEGATIONS OF DISHONESTY The Court of Appeal upheld the High Court's decision that allegations of dishonesty made in foreign court proceedings were material and should have been disclosed to insurers, even though the charges were subsequently dismissed. North Star Shipping Ltd and Others v Sphere Drake Insurance Plc & Others (Court of Appeal ) 2. ENTIRE AGREEMENT CLAUSE An entire agreement clause is a binding agreement that the full and final contractual terms are to be found in that contract, not elsewhere. In this case, entire agreement clauses in two shipbuilding contracts effectively removed any obligation the shipyard had under a prior option agreement to offer the buyer early delivery. Ravennavi SPA v New Century Shipbuilding Co Ltd (QBD ) 3. FRAUD - NO ARBITRATION AGREEMENT Where a contract was rescinded on the grounds that it was procured by bribery, the whole contract had gone, including the arbitration clause. The fraud went to the very existence of the contract, in that the claimants never truly agreed to be bound by the contract at all. Consequently, their claims for damages or restitution could not be said to arise "under" the contract and arbitrators had no jurisdiction. Fiona Trust & Holdings Corporation and Others - Yuri Privalov and Others (QBD ) 4. INCORPORATING AN ARBITRATION CLAUSE General words of incorporation were sufficient to incorporate this arbitration clause in the defendant's Rules into the insurance contract. The court distinguished this from a "twocontract" situation (such as bill of lading-charterparty or insurance-reinsurance) where a stricter rule applies. Sea Trade Maritime Corporation v Hellenic Mutual War Risks Association (Bermuda) Ltd (QBD ) 5. INSURANCE CONTRACT LAW REFORM The Law Commission of England and Wales embarked on a joint project with the Scottish Law Commission to examine (amongst others) two key areas of insurance contract law: nondisclosure and breach of warranty. The review will include within its scope marine, aviation and transport risks. These were specifically excluded from the 1980 report. The current Commission, however, takes the view that concerns over some areas of insurance law - such as nondisclosure and breach of warranty - are sufficiently fundamental to warrant review, regardless of the type of risk. In January 2006, the Commission published a scoping paper to invite views on which other areas should be included and also whether a single statutory code for insurance law is necessary or desirable. The deadline set for responses was April DLA Piper UK LLP Legal Review 2006 Marine 2

6 The English and Scottish Law Commissions then published an Issues Paper on reform of the law of misrepresentation and non-disclosure. As well as proposing changes to the remedies available to insurers, the main proposals in the Paper for business insurance are that a new "reasonable insured" test would apply to nondisclosure and misrepresentation. To establish that the insured was in breach of its duties, the insurer would have to show: inducement (ie had it known the truth it would not have entered into the same contract on the same terms), and that a reasonable insured in the circumstances would understand the information to be material to the underwriter in question. The Law Commission has also published its proposals for the reform of the law on warranties in insurance contracts. The main change proposed is the removal of the automatic discharge of insurers following a breach, as set out in section 33 of the Marine Insurance Act and enshrined in ''The Good Luck'' [1992] 1 AC LABOUR STANDARDS The International Labour Organisation adopted a Convention on labour standards for seafarers. It covers conditions of employment and working conditions for seafarers, including health, safety, minimum age, recruitment, working hours, accommodation on ships and social protection. For the Consolidated Maritime Labour Convention to come into force, it must be ratified by 30 states representing 33% of world tonnage. 7. LAW AND JURISDICTION CLAUSE The mere fact that an exclusive English law and jurisdiction clause in a bill of lading went against Colombian public policy was not a good enough reason for not holding the parties to their bargain. Horn Linie Gmbh & Co v (1) Panamericana Formas E Impresosa (2) Ace Seguros SA (QBD ) 8. MEASURE OF DAMAGES FOR LATE REDELIVERY In a claim arising from late redelivery, the owners' loss of profit on a subsequent fixture was not too remote to be recoverable. The question was whether a reasonable man in the contractbreaker's position would have realised that such a loss was sufficiently likely to result from the breach to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation. Transfield Shipping Inc. v Mercator Shipping Inc. (QBD ) DLA Piper UK LLP Legal Review 2006 Marine 3

7 9. NOTICE OF ARBITRATION PROCEEDINGS Under section 76 of the Arbitration Act 1996, notice of arbitration proceedings can be served "by any effective means". That includes sent to the address held out to the world as the address of the recipient party. The fact that the recipient's staff assumed the was spam and ignored it did not affect the validity of service. Bernuth Lines Ltd v High Seas Shipping Ltd (QBD ) 10. OIL SPILL COMPENSATION New levels of compensation for victims of oil pollution came into force in the UK on 8 September under the Supplementary Fund Protocol. This follows the UK's ratification on 8 June. The total amount now available has risen from 161m to 596m, meaning that limits have been increased by approximately 270%. 11. POLLUTION DIRECTIVE CHALLENGE A coalition of industry bodies led by Intertanko issued proceedings in the High Court in London seeking a judicial review of the EU Directive on ship-source pollution (2005/35), which has to be implemented by member states by 1 March 2007 ("Directive"). The Directive, which imposes criminal sanctions for ship-source pollution, adopts the definition of illegal operational and accidental discharges in MARPOL but applies a lower liability threshold for infringements in territorial waters. The High Court held that questions concerning the validity of the Pollution Directive were sufficiently well founded to be referred to the European Court of Justice. The questions were as follows: Is it lawful to legislate independently of MARPOL for third country vessels on the high seas or in the Exclusive Economic Zones? Is it lawful for the EU to legislate for the territorial seas otherwise than in accordance with MARPOL? Does the standard of liability of "serious negligence" in the Directive breach the right of innocent passage? Is the standard of liability of "serious negligence" consistent with legal certainty or the duty to give reasons for the Directive? R on the application of Inertanko & Others v Secretary of State for Transport (QBD ) DLA Piper UK LLP Legal Review 2006 Marine 4

8 12. SEAWORTHINESS AND DUE DILIGENCE A double hook on this brand new vessel broke while loading the claimant's process vessel. It transpired that none of the hooks on the Happy Ranger's cranes had ever been tested to their safe working load. The court held that the owners were not responsible for the negligence of others before delivery of the vessel, but they had failed to exercise due diligence after handover. Parsons Corporation & Ors v CV Scheepvaartonderneming Happy Ranger (QBD ) 13. STRAIGHT BILLS AND THE PRESENTATION RULE The Hong Kong Court of First Instance, following the approach taken by the Court of Appeal in Singapore and the House of Lords in England, dismissed the carriers' argument that the presentation rule (that goods must be released to the consignee only against presentation of an original bill of lading) should not apply to straight bills of lading. The carriers were, however, relieved from any liability for misdelivery by a clearly worded exemption clause in the contract. Because the misdelivery took place after discharge of the goods, the prohibition in the Hague-Visby Rules against such clauses could not apply. Carewins Development (China) Ltd v Bright Fortune Shipping Ltd (Hong Kong Court of First Instance, ) 14. UNLAWFUL CARGO The charterer's obligations not to load unlawful cargo or cargo that would expose the vessel to seizure were absolute and had been breached by the presence of contraband oil on board. Had the cargo been legitimate, however, the actions of the UAE authorities in seizing the vessel would have been the predominate cause of the loss, so the express and implied indemnities against losses caused by complying with charterer's orders would not have applied. Ullises Shipping Corporation v Fal Shipping Co Ltd (The Greek Fighter) (QBD ) 15. FURTHER INFORMATION See, also, the Hong Kong and Norway sections in the separate International Legal Review 2006 for additional information relating to shipping. DLA Piper UK LLP Legal Review 2006 Marine 5

9 APPENDIX 1 Contributors and contacts This Marine review has been prepared by: Matt Illingworth (Associate) and Christopher Chan (Trainee) Contact details: Group: Partner contact: Litigation & Arbitration Mike Pollen Telephone: +44(0) mike.pollen@dlapiper.com

10 Regulated by the Law Society. DLA Piper UK LLP and DLA Piper Scotland LLP are part of DLA Piper, a global legal services organisation, the members of which are separate and distinct legal entities. For further information please refer to A list of offices can be found at UK switchboard +44 (0) DLAP 0479/01.07