Salvage Convention time limit and recovery of items from wreck

 

The time limit for salvage claims under article 23(1) of the 1989 Salvage Convention article 23(1) is two years commencing on the day on which the salvage operations are terminated. Where items are salved from a historic wreck, when does the two year limit start to run? This was the issue before Teare J. in  The Queen (on the application of David Knight) v Secretary of State for Transport [2017] EWHC 1722 (Admin).

Mr Knight undertook dives from various wrecks and claimed salvage from the Receiver of Wreck. The claim was denied on the ground that the two year limit had expired by the time salvage was claimed in respect of the items raised from the wrecks. Mr Knight argued that salvage operations of a wreck on the sea-bed cannot, as a matter of law, be considered to be finished or complete until everything is raised from the sea-bed or the salvor abandons his operations.

Teare J rejected this contention. The day on which salvage operations are terminated is the day on which the activities to assist a vessel or any other property in danger and which have given rise to a claim under the Convention have been terminated. This was a question of fact to be determined in every case. Here, the salvage operations in question had terminated after the salved items left the site. Although further diving operations on the wrecks continued in subsequent years this was not enough to show that they were part of the same operations as resulted in the recovery of the items for which salvage was claimed. Further preservation work on the items once ashore did not continue the salvage operations which ended once the items were rescued from danger on navigable or other waters.

The claim had also been rejected on the ground of fraud or dishonest conduct on the part of Mr Knight who had been convicted of offences in relation to the salved items under s. 237 of  the Merchant Shipping Act 1995. Teare J was of the view that the discretion under art. 18 to refuse a salvage award in whole or in part due to fraud or dishonest conduct was not limited to conduct committed by the salvor in the actual salvage operations.

EU Member States urged to ratify/accede to 2010 HNS Convention by 6 May 2021.

 

COUNCIL DECISION (EU) 2017/769 of 25.4.2017 authorises Member States to ratify or accede to the 2010 Protocol of the HNS Convention with the exception of the aspects related to judicial cooperation in civil matters. The decision also provides that they “shall endeavour to take the necessary steps to deposit the instruments of ratification of, or accession to, the Protocol of 2010 within a reasonable time and, if possible, by 6 May 2021”.

 

A parallel COUNCIL DECISION (EU) 2017/770 contains a similar authorization in relation to those aspects related to judicial cooperation in civil matters, subject to depositing the standard declaration preserving the effect of the Brussels I (Recast) Regulation, the Lugano Convention, and the 2005 agreement between the EU and Denmark in respect of judgments covered by the 2010 HNS Protocol.

OW Bunkers (again). Interpleader and maritime liens in Canada.

 

The collapse of the OW Bunker group in late 2014 has led to a series of interpleader claims in different jurisdictions in which competing claims to the deposited funds have been made by the physical bunker suppliers and ING Bank, the assignee of OW. An interpleader claim has recently been heard by the Federal Court of Appeal in Canada in ING Bank NV and Others v Canpotex Shipping Services Ltd and Others 2017  FCA 47. It concerns the effect of funds deposited by the time charterer and the  potential liability of the vessel under a maritime lien.

In 2014 OW UK supplied bunkers in Vancouver to two vessels on charter to Canpotex. Following the collapse of the OW group, competing claims for payment for the bunkers supplied were made by the physical supplier, Petrobulk, and ING Bank as the assignee of OW UK’s receivables. Canpotex interpleaded and obtained an order that the of OW UK’s invoice be paid into the US trust account of its solicitors, which payment would be treated as a payment into court. The interpleader covered only Canpotex’s liability.

Canpotex subsequently added the shipowners as plaintiffs to its statement of claim and sought a judgment as to whether Petrobulk or ING was entitled to all or part of the trust fund and a declaration  that following payment out any and all liability of both Canpotex and the shipowners was extinguished. In July 2015 Russell J heard the claims against the trust funds, (2015 FC 1108). There was a dispute about which terms governed OW UK’s supply of the bunkers to the vessel: the OW Group standard terms; or Schedule 3 of the OW Fixed Price Agreement. Both terms provided for the variation of the contract where the physical supply of the fuel was undertaken by a third party, but were worded differently.

Russell J found that there had been an oral agreement to apply the latter terms and the consequence was that Canpotex became jointly and severally liable under the contracts made between OW UK and Petrobulk.  Upon payment of that purchase price to Petrobulk, Canpotex would come be under no obligation, contractual or otherwise, to pay any amount representing the purchase price for the marine bunkers to OW UK or the Receivers. He then ordered Petrobulk be paid out of the trust fund and that ING be paid the mark up due to OW UK and that Canpotex’s and the shipowners’ liability in regard to the bunker delivery should be extinguished, as well as any and all liens.

The Federal Court of Appeal has overruled the decision. Interpleader proceedings had to be conflicting claims over the same subject matter which were mutually exclusive. The contractual claims against Canpotex advanced by OW UK and by Petrobulk were such claims, but Petrobulk’s assertion of a maritime lien was not a conflicting claim, and was a claim against the shipowners, and not against Canpotex.  If OW UK was contractually entitled to payment of the trust funds, that would extinguish Canpotex’s contractual liability, but Petrobulk’s maritime lien claim would remain alive. The Judge had been wrong to extinguish the shipowner’s liability for that claim and had also wrongly admitted oral evidence as to the terms of the spot bunker purchases. The terms applicable were those found in the OW Group standard terms and the case was returned to the judge for reconsideration.

If the judge finds that OW UK is contractually entitled to payment of the trust funds, this raises the prospect of ING recovering in full under the OW UK invoices from the trust fund established by Canpotex, and of Petrobulk doing likewise through its maritime lien against the vessel, if the vessel can be arrested in Canada.

 

 

General average and cargo interests.

 

In Offshore Marine Services Alliance Pty Ltd v Leighton Contractors Pty Ltd and Another [2017] FCA 333 the Federal Court of Australia was called on to  decide whether parties interested in the cargo, other than the cargo owners at the date of the GA incident, were liable to contribute in general average. A tug and barge carrying construction materials grounded on its voyage from Henderson to Barrow Island and the disponent owner of the barge and tug incurred expenses and costs in securing the common safety of the barge and the cargo, including costs of some Aus $4m associated with stabilising the damaged hull of the barge, re-floating it and towing it back to Henderson with the cargo intact and undamaged.

The disponent owners claimed GA contributions from Leighton and Thiess who had supplied the cargo pursuant to contracts with Chevron. At the time of the incident ownership in the cargo had passed to Chevron, but the disponent owners claimed that Leighton and Thiess had a relevant interest in the goods because under their contracts they remained “on risk” in respect of the goods, and/or were “responsible for the care, custody, control, safekeeping and preservation of” the goods prior to their acceptance by Chevron.

McKerracher J held that a liability to contribute in GA attached only to the owner of the cargo that benefitted from the general average act, or someone contractually liable to contribute would be liable to contribute.

Admiralty jurisdiction over torts in the UK’s EEZ.

 

Virgin Media Ltd v Joseph Whelan T/A M and J Fish [2017] EWHC 1380 Admlty is an interesting decision on whether the Admiralty Court has jurisdiction in personam over a tort claim arising in the exclusive economic zone of the United Kingdom.  The claimant alleged that its fibre optic telecommunications cable, which ran across the Irish Sea between Dublin and Lytham St Annes, was damaged by a trawler at a location within the exclusive economic zone of the UK, but outside its territorial waters. The issue before the Admiralty Court was whether the courts of England and Wales had jurisdiction under the 2012 Recast Judgments Regulation. Under art.4 of the Regulation the defendant should be sued in the place of its domicile, the Republic of Ireland, subject to any of the additional grounds of jurisdiction provided for in the Regulation. Here the relevant one was contained in art 7(2) which provides that “A person domiciled in a Member State may be sued in another Member State in matters relating to tort, delict or quasi-delict in the courts for the place where the harmful event occurred or may occur”.

The Admiralty Registrar held that the Admiralty Court had no greater rights over a collision with a fixed structure than it would in respect of any collision between ships which would be none unless the action is brought in rem or falls within one of the exceptions in s.22 of the Senior Courts Act 1981. Any extension of jurisdiction would have to be established by reference to an international convention or treaty. The relevant treaty would be the UN Convention on the Law of the Sea (UNCLOS).

Article 60(2) of UNCLOS provides that the coastal state has exclusive jurisdiction over artificial islands, installations and structures within its EEZ, and this formed the basis for Burton J’s decision in Conocophillips (UK) Ltd v Partnereederei MS Jork [2010] EWHC 1214 (Comm) that the Commercial Court had jurisdiction over a negligence claim against a shipowner in connection with a collision between a vessel and an unmanned oil platform 40 miles off the coast of Norfolk. Where there is a collision between a vessel and a platform which is an effective prolongation of the territory of the United Kingdom, the Court would have jurisdiction. The concept of ‘place’ in the predecessor provision to art 7(2) in the 2001 Judgments Regulation was limited to matters addressed in UNCLOS art. 60.

In contrast, art.58(1) provided that all States, and not just the Coastal State had the freedom to lay submarine cables and pipelines within their EEZ, but did not provide for the coastal state to have jurisdiction. Article 56 of UNCLOS gives an English court jurisdiction over matters with respect to fishing, but did not provide that the coastal state may assume jurisdiction with regard to civil disputes arising out of fishing. Accordingly, the Admiralty Court was not a court for the place where the harmful event occurred under art 7(2) and the Court declared it had no jurisdiction over the claim. The appropriate jurisdiction was in the Courts of the Republic of Ireland under art. 4 of the Recast Regulation.

IUU Fishing – Regulatory & Insurance Aspects

eventbright - fisheries

IUU fishing is a global problem that threatens ocean ecosystems and sustainable fisheries. Various public law measures have been taken by the international community and the European Union to combat IUU fishing, but while these efforts, combined with those of various NGOs, have yielded positive results, it is believed that the insurance market could play a more active role in the fight against IUU fishing.

The primary object of this Symposium is to raise awareness of IUU fishing among stakeholders within the London insurance market. To facilitate discussion and inspire engagement from attendees, case studies within the context of the legal and insurance perspective will be presented by experts in the field. 

Speakers and Chairpersons include:

  • Lasse Gustavsson (Senior Vice President and Executive Director, Ocean Europe, Madrid)
  • Associate Professor George Leloudas (IISTL, Swansea University, Swansea)
  • Dana Miller (Marine Scientist, Oceana Europe, Dublin)
  • Kjetil Saeter (Investigative Journalist, Oslo)
  • Professor Barış Soyer (IISTL, Swansea University, Swansea)
  • David Vajnai (Vice President, Marsh Global Marine Practice, London)

Registration and other details:

The Seminar will be held at the Hallam Conference Centre (44 Hallam Street, London, W1W 6JJ) starting at 13:30.

A reception will be held directly after the event from 17:00 – 18:00. 

Register HERE 

Participation is free but please note that places are limited.

Narrow channels and crossings

A rare pure collision case in the Admiralty Court today in Nautical Challenge Ltd v Evergreen Marine (UK) Ltd [2017] EWHC 453 (Admty). Suppose Vessel A is coming out of a narrow channel and Vessel B is entering it: suppose further that Vessel A is approaching Vessel B on the latter’s starboard bow. The Colregs crossing rule says Vessel A has priority: the narrow channel rule says Vessel A must manoeuvre to pass Vessel B port to port. Which applies? Teare J has little doubt: it’s the narrow channel rule, following the Hong Kong decision in Kulemesin v HKSAR [2013] 16 HKCFA 195. Useful to know, and to clear up a long-standing controversy.

Claims against shipowners by physical bunker suppliers. News from Malaysia.

A familiar claim, this time in Malaysia, by Vitol, the physical bunker supplier, in respect of bunkers supplied to a vessel by OW Bunkers. Vitol sent the shipowners a notice stipulating that it had exercised a lien over the bunkers, and that it should pay the supplier and not OWB. The vessel was later arrested in Malaysia and in Vitol’s  application to amend its pleadings the Kuala Lumpur High Court in Vitol Asia PTE LTD v The Owners of the Ship or Vessel Malik Al Ashtar considered the following issues.

  1. Was OWB contracting on behalf of the owners when it entered into the contract with the Vitol for the sale of the bunkers? The court found that there was no no document conferring actual authority on OWB to contract on behalf of the defendants, nor were there any representations by the shipowners that OWB had actual or apparent authority to enter into any agreements on its behalf.
  1. Were the shipowners liable in conversion? No. The court adopted the views of Males J in The Res Cogitans [2015] EWHC 2022  that despite a clause such as cl. 11.2, there would be no claim for conversion against the shipowner as the physical supplier had consented to the use of the bunkers by the vessel. Here, Vitol knew that OWB was a trader and not an end user and that it would sub-contract with shipowners to whom the bunkers would be delivered.
  1. Was there a claim in unjust enrichment? No, Vitol’s sales order confirmation and tax invoice evidenced its intention to contract directly with OWB only, and it should look solely to OWB for payment under its contract with it.
  1. Was there a direct contract whereby the shipowners would be jointly liable pursuant to Clause L4 of OWB’s general trading terms? No. There was no evidence that the shipowners had agreed to be bound by Vitol’s terms when they entered into a direct contract for supply of the bunkers with OWB. Nor had they agreed or authorised OWB to be bound by the Vitol’s terms when OWB contracted with Vitol for the supply of those bunkers. The Canadian decision in Canpotex Shipping Services Ltd v Marine Petrobulk [2015] FC 1108 on which Vitol relied did not reflect the English position and was not binding on the Malaysian courts.
  1. Was there a lien over the vessel or the bunkers? No. There was no contract between Vitol and the shipowners so no contractual lien could arise. If there were such a lien, it would give no right to payment as against the shipowner but would only give a right to retain possession of the bunkers until payment by OWB. There was no maritime lien in respect of the supply of bunkers under either English or Malaysian law.

Polar Code now in force.

The IMO Polar Code came into force on 1 January 2017 for new vessels constructed on, or after, that date. Older vessels must satisfy the Code’s requirements by their first intermediate or renewal survey after 1 January 2018, whichever occurs first.

The Polar Code applies to vessels operating in polar regions and prohibits: discharge into the sea of oil or oily mixtures from any vessel; discharge into the sea of noxious liquid substances, or mixtures containing such substances; discharge of sewage and garbage unless in accordance with the requirements of the Polar Code and Annexes IV and V respectively of MARPOL.

 

Independent Contractors Facing Unlimited Liability!

JD Irving Ltd v. Siemens Canada Ltd (The SPM 125) 2016 FC 287 (Federal Court of Canada)

 The shipowners, JDI, engaged a firm of marine consultants to prepare stability calculations in respect of the loading of a cargo of large industrial equipment on and off the barge SPM125. During the loading process, the cargo was damaged and the owner of the cargo brought an action against the carrier claiming damages (CAD$45,000,000). The cargo owner also brought an action against the firm of marine consultants and the naval architect (who was the principal of that firm and had carried out the calculations) for the same amount.

The question that arose in this case was whether the firm of consultants had a right to limit their liability under the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the Protocol of 1996, which has been incorporated into Canadian law by Part 3 of the Marine Liability Act.

Article 1(4) of the Convention stipulates:

If any claims set out in Article 2 are made against any person for whose act, neglect or default the shipowner or salvor is responsible, such person shall be entitled to avail himself of the limitation of liability provided for in this Convention.

There is no firm judicial reasoning on this point and differing opinions have been expressed in text books. The Court has subscribed to the view that Article 1(4) would afford limitation to a person if the shipowner or salvor has vicarious liability for the actions of that person. This would be the case when the negligence of a master or crew member gives rise to a claim by a third party against the owner or salvor. The crew or master in that case would accordingly have a right to limit their liability under the Convention. However, the relationship between an employer and an independent contractor would not usually give rise to a claim for vicarious liability and on that basis, such contractors are not afforded a right to limit their liability under Article 1(4) of the Convention. Applying this reasoning, it was held that the marine consultants in the present case could not enjoy the right of limitation.

The decision is a significant one as it adopts a new yardstick in determining whose actions a shipowner and/or salvor is responsible for in the context of the application of Article 1(4) of the Limitation Convention 1976 as amended by 1996 Protocol. The relevant party is able to limit its liability if the shipowner and/or salvor has vicarious liability for the actions of that party. Apart from marine consultants, classification societies, freight forwarders and logistics experts are likely to fall under this category. The judgment is not binding on English courts but obviously its reasoning needs to be considered carefully when the issue does arise, in addition, it sends a strong warning to the liability insurers of independent contractors as lack of the prospect of limitation would mean a huge increase in the exposure that they might face!