Wikborg Rein is a full service international law firm with over 230 lawyers. Headquartered in Oslo, the firm is particularly strong in shipping and offshore matters, dispute resolution, energy and natural resources, corporate, and banking and finance. Wikborg Rein is notable for its unique global network, with offices in Norway (Oslo and Bergen), London, Singapore and Shanghai. Extensive cooperation between these offices provides international clients with high quality advice in a series of key strategic jurisdictions.Show more
Shipping & Transport
The new sulphur content limits in Annex VI of the International Convention for the Prevention of Pollution from Ships recently came into effect. With the upcoming carriage ban at the forefront of everyone's minds, this article outlines some of the contentious issues which may arise as a consequence of the shift to compliant fuels or scrubbers for shipowners, charterers and operators – from disputes with bunker or scrubber suppliers to challenges with regulatory enforcement.
Since May 2019, six oil tankers have been attacked in the Strait of Hormuz. However, despite these attacks, vessels are still taking orders to sail through the strait, albeit with higher war risk insurance rates and, most likely, heightened crew concerns. At what point under UK law can owners refuse such voyage orders on the basis that the strait is contractually unsafe?
A recent High Court decision provided guidance on the rules of interpretation when construing guarantees that display characteristics of both on-demand and true guarantees. The case concerned a charterer guarantee, which was described as a parent company guarantee and had characteristics of both an on-demand guarantee and a true guarantee.
The Supreme Court recently clarified that when determining whether a vessel is a constructive total loss under the Institute Time Clauses Hulls conditions, regard should be had to the costs incurred prior to the owner's notice of abandonment, but not to remuneration payable under a special compensation protection and indemnity clause. The decision is a landmark decision on marine insurance because of its financial and practical implications.
The UK Supreme Court's recent landmark decision in the Renos case clarifies that when determining whether a vessel is a constructive total loss under the English Institute Time Clauses Hulls conditions, regard should be had to the costs incurred prior to the owner's notice of abandonment, but not to remuneration payable under a special compensation protection and indemnity clause. But what would the position be under the 2019 version of the Nordic Marine Insurance Plan 2013?
Using liquefied natural gas (LNG) rather than fuel oil is one of a range of options available to owners seeking to comply with the International Maritime Organisation's 2020 regulations. Given that shipbrokers have long predicted the emergence of a two-tier shipping market with 'greener' ships commanding a premium over older, less eco-friendly vessels, what is the future for LNG bunkering and what challenges does it present?
The High Court recently upheld two worldwide freezing orders in a multinational shipping fraud case were upheld, rejecting the defendant's allegations of breaches of full and frank disclosure. Among other things, the judgment is a useful confirmation and strengthening of the standing of intermediary charterers to sue for the full value of the hire in circumstances where the claimant's ultimate loss may be substantially lower.
A recent High Court decision will provide comfort for vessel owners and serve as a reminder to charterers of the importance of documentary obligations within a bareboat charter. The court held that where a vessel is on bareboat charter, the obligation on charterers to keep the vessel with unexpired class certificates at all times is an absolute obligation and a condition of the contract.
International conventions and local regulations combine to create a complex legal regime, which is often overlooked. The sale of a ship or rig to an intermediate buyer, which then sells the asset on to a shipbreaking facility, will not necessarily insulate the original owner from future liability or reputational damage. This article addresses a number of frequently asked questions which owners and other parties involved in transboundary movements of marine assets for recycling may find helpful.
In charterparties where no expected time of arrival or readiness to load at the loading port is stated, the question will be whether an equivalent can be identified which can be used as the basis for an absolute obligation requiring the owners to proceed to the loading port by a particular time. The Court of Appeal recently held that the itinerary for an intermediate voyage was such an equivalent.
A 2017 Commercial Court judgment clarifies the concept of barratry and confirms that there is no qualification to fire when seeking to rely on the fire defence under the Hague or Hague-Visby Rules (assuming that the vessel is seaworthy and that the fire was not caused by the actual fault or privity of the owner). It also confirms that, absent fire, an owner cannot escape liability for deliberate wrongful acts of the crew under the Hague or Hague-Visby Rules even if there is no actual fault or privity on its part.
The High Court recently considered the wording "exposure to sanctions" and ruled that the underwriters of a marine insurance policy could not rely on that wording to avoid a claim on the basis of a "risk of exposure" to the US-Iran sanctions. Rather, for underwriters to do so, there would need to be an actual prohibition on paying the claim in question. This latest judgment deals with a number of key points for drafting effective sanctions exclusion clauses in commercial maritime agreements.
Court of Appeal decision confirms that Article IV(5) of Hague Rules does not apply to bulk and liquid cargoesUnited Kingdom | 05 December 2018
A recent Court of Appeal decision concerned a claim by charterers against disponent owners in respect of contaminated fish oil in bulk carried on board a tanker. The owners accepted liability for the damaged cargo, but argued that they were entitled to limit their liability under Article IV(5) of the Hague Rules. However, the court confirmed that Article IV(5) does not apply to bulk and liquid cargoes; therefore, a carrier cannot limit liability for such cargoes under the Hague Rules.
In a recent case concerning the enumeration of units for the limitation of containerised cargo, the Court of Appeal was asked to determine whether the Hague-Visby Rules are compulsorily applicable if a bill of lading is not issued, what constitutes a 'unit' under the rules and what enumeration of cargo is required under Article IV.5(c) of the rules. The claim arose following damage to a cargo of frozen bluefin tuna packed into three refrigerated containers, which had occurred during carriage from Cartagena to Japan.
The Aconcagua Bay was voyage chartered for the carriage of cargo from the US Gulf. While the vessel was loading, a bridge and lock were damaged and the vessel could not leave the berth for 14 days. The owners claimed damages for detention from the charterers for the period of delay. The main issue was whether a warranty in a voyage charter that the berth is 'always accessible' means that the vessel can always enter and leave the berth.
The Court of Appeal recently provided important clarification in relation to the apportionment of liability for cargo claims as between shipowners and charterers under the Inter-club Agreement. The issue before the Court of Appeal was whether the word 'act' in the phrase 'act or neglect' in Clause 8(d) of the Inter-club Agreement means a culpable act in the sense of fault or whether it means any act, culpable or not.
In Songa Winds, the London High Court found that letters of indemnity requesting delivery without the production of bills of lading to an intermediate trader of cargo are triggered even if delivery is to the trader's buyer. The use of letters of indemnity to allow the delivery of cargo to a named party without the production of a bill of lading is relatively common, but infrequently called upon.
The English High Court recently confirmed when it will order the sale of liened cargo which is the subject of arbitration proceedings. This decision may be of interest to shipowners that are faced with a situation in which cargo belonging to a charterer remains on board a vessel for a long period without the owners receiving hire, while still incurring operating costs.
A recent Court of Appeal decision overturned the High Court judgment against the time charterers of a ship, reinstating the arbitration award in their favour. The decision has added another reason for delaying a final assessment of the loss of profit on a repudiated long-term charter by waiting to see whether the owners will sell the vessel.
The Supreme Court recently handed down its judgment in New Flamenco (Globalia Business Travel SAU of Spain v Fulton Shipping Inc). In this long-awaited decision, the court considered whether a benefit obtained by the owners relating to the sale of the vessel following the charterers' repudiatory breach of a charter should be taken into account in assessing the damages that the owners were entitled to recover.
A recent Commercial Court decision held that a charterer is 100% responsible under the Inter-Club Agreement for damage to cargo arising from an order to the vessel to delay discharge until the receivers are able to pay for the cargo. Given that it is common for shipments to be delayed, more disputes relating to deliberately delaying discharge can be expected in the future.
The Supreme Court recently handed down a judgment addressing three issues of importance to shipowners, charterers and insurers alike, defining the parameters of the safe port undertakings, the rights of subrogation of insurers where vessels are operated under bareboat charter and the right of charterers to limit their liability under the Convention on the Limitation of Liability of Shipowners.
In a recent case, the Court of Appeal decided unequivocally that missing a single instalment of hire under a time charter is not a breach of condition. In other words, there is no right to terminate for one missed instalment and claim damages for loss of bargain – usually the difference between the charter and market rate for the remainder of the charter period. The court also set out useful guidance on what constitutes 'renunciation' (anticipatory repudiatory breach) of a time charter.
Two recent London decisions involving shipping companies have highlighted problems that can be encountered when starting an arbitration. The first decision concerned an issue with identifying whether a non-signing counterparty is bound by the agreement containing the arbitration clause. The second decision concerned the question of which parties are authorised to accept service of arbitration notices.
A recent Court of Appeal decision acknowledges the difficulties of laying down general principles of law in connection with an innocent party's obligation to mitigate its loss following a repudiatory breach of contract. The case arose in the context of assessing damages for early redelivery where there was no available market at the time of the breach against which to measure the loss.
A recent arbitration decision raises a number of interesting points in connection with lay-up agreements and how much can be claimed for continuing to provide services after the original contract has been terminated. It will be of interest to parties that see their unpaid charges increasing, as well as to other involuntary bailees, such as vessel owners left holding cargo with no bills of lading binding them after their charterers have ceased operations.
Unlike many civil law countries, there is no implied application of the doctrine of force majeure under English law. Rather, the treatment of an event of force majeure comes from the contract. It is usual for English courts to apply contracts strictly, according to their wording and respecting the parties' freedom to contract on terms they see fit.
In a potentially problematic decision, the Court of Appeal recently upheld a High Court judgment that a contract to supply bunkers on credit terms, with a retention of title clause in favour of the sellers until full payment but with permission to consume the bunkers (or some of them) before payment was due, was not a contract for the sale of goods under the Sale of Goods Act.
In a dry bulk market where a charterer is not paying freight or hire, its counterparty is often left to consider whether it can lien the cargo on board the chartered vessel to obtain payment. When it comes to liening cargo under a Congenbill, English law will look first to the head voyage charterparty as the source of relevant terms to be incorporated into the Congenbill, unless another charter is expressly identified. This can lead to a less-than-obvious outcome.
Owners continue to face uncertainty when charterers fail to pay hire under a time charterparty, particularly in respect of when they can withdraw the vessel or terminate and claim damages for future loss of hire. However, these uncertainties can be managed by including appropriate terms in the charterparty and by a careful and well-advised approach when charterers do fail to pay.
A shipowner's bid to avoid the risk of paying twice for bunkers supplied has been thwarted by a recent High Court decision, which held that a contract for the supply of bunkers is not a sale contract falling within the Sale of Goods Act 1979. The decision is important since, as the court recognised, the contract terms in this case are "typical of hundreds or even thousands of such transactions carried out every year".
If a time charterer redelivers a vessel before the end of the agreed charter period, the owner is faced with the choice of either accepting redelivery and claiming damages or maintaining the charterparty and continuing to claim hire. This decision has both commercial and legal implications. The owner's dilemma remains the same under a bareboat charterparty as under a time charterparty.
In a recent Court of Appeal decision a reference in a bill of lading to an arbitration clause in the underlying voyage charterparty was understood to incorporate the dispute resolution clause in the charterparty which provided for high court jurisdiction. The decision demonstrates that all parties to bill of lading contracts must be conscious of the fact that the words printed on the bill may not provide the whole story.
In a volatile market, many owners face the difficult challenge of having a vessel redelivered early under a profitable charter. Early redelivery may arise where a charterer is no longer willing or able to perform the charter or where, faced with non-payment of hire, the owner decides that it has no choice but to withdraw the vessel and terminate the charter.
There has been uncertainty in terms of the interpretation of Clause 13 of the Norwegian Saleform and, in particular, as to the extent of amounts recoverable where a buyer has failed to pay the deposit in accordance with Clause 2. In Griffon Shipping LLC v Firodi Shipping Ltd the Court of Appeal provided guidance on this point, holding that Clause 13 does not exclude a seller's right to claim the deposit as a debt.
The Commercial Court has handed down its judgment in Ocean Victory. The case concerned a safe port warranty and total loss, but it also addressed whether the insurer – as the assignee of the co-assured demise charterer – was entitled to claim indemnity from time charterers for the demise charterer's liability towards the co-assured head owners in respect of their breach of the safe port warranty.
Life as a shipowner is seldom easy. In addition to the commercial challenges that owners face on a daily basis, time must be given to reading law reports to ensure that benefits are gained and warnings heeded from the misfortunes of those who find themselves embroiled in the legal system - particularly when economic conditions demand strict enforcement of legal rights. Three recent decisions may be of particular interest.
Whether the 1993 Norwegian sale form excludes terms as to satisfactory quality and fitness for purpose, which are implied in contracts of sale by the Sale of Goods Act, has always been the subject of speculation. A recent decision has put this debate to rest, holding that such terms are to be implied unless expressly excluded. This ruling has implications for the terms agreed for the sale and purchase of second-hand vessels.
When a party commits a breach of contract entitling the other party to terminate, the innocent party should not delay in exercising its rights. To do so may raise difficult questions as to whether the right has been waived and whether the late exercise of a right to terminate itself amounts to a repudiatory breach. A recent decision in a case involving a shipbuilding contract highlights that time may be an important consideration before the right to terminate arises.
The English courts have delivered a decision on guarantees and the all-important distinction under English law between guarantees and indemnities or on-demand bonds. The courts have repeatedly attempted to explain the distinction between these two forms of security. In a recent decision the Court of Appeal attempted a more simple solution by seeking to cut – or perhaps unravel – this Gordian knot.
A guarantee designed to provide security for the performance of the obligations of a debtor sometimes turns out to be far from secure. Where the nature and extent of a guarantee is ambiguous, courts are often called on to determine the scope and validity of the security. What seems simple and straightforward when these guarantees are negotiated can become less so when it comes to enforcement against a resistant guarantor.
The Supreme Court recently ruled in favour of the buyers of six Korean newbuildings, Rainy Sky SA and five other entities, reversing the Court of Appeal's decision which rejected their claim under refund guarantees. The decision represents a victory for commercial common sense over the strict legal interpretation of the language used in guarantees.
The procedure for enforcement of a ship mortgage under English law is based on a contractual right. Thus, the rights of a mortgagee are derived from specific terms agreed with the mortgagor. Typically, the loan documentation will identify those events of default by the mortgagor which give rise to the right on the part of the mortgagee to take enforcement action.
In a recent case the charterers argued that a London Maritime Arbitrators Association tribunal had erred as a matter of law in awarding damages to the shipowners despite the fact that they had suffered no loss, and so had ignored a fundamental principle in English law that damages are intended to be compensatory. The decision both simplifies and makes clear the basis on which losses are to be recovered