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Akabogu & AssociatesAna Cristina Pimentel & Associados,Sociedade de Advogados, SP, RLArias, Fábrega & FábregaBLACK SEA LAW COMPANYClyde & Co LLPDardani Studio LegaleDingli & DingliD. L. & F. DE SARAMDQ AdvocatesEsenyel|Partners Lawyers & ConsultantsEstudio Arca & Paoli AbogadosFernandes Hearn LLPFoley Gardere, Foley & Lardner LLPFRANCO & ABOGADOS ASOCIADOSFRANCO, DUARTE, MURILLOARREDONDOGraham ThompsonGrossman, Cordova, Gilad & Co.Law Offices (GCG)

Guantao Law FirmHFWHill Dickinson LLPInce & Co Middle East LLPJensen NeugebauerJIPYONGKegels & CoKOCH DUKEN BOËSLee and Li, Attorneys-at-LawLERINS & BCWLEX NAVICUS CONCORDIALP LAW | LOPES PINTO ADVOGADOSASSOCIADOSMeana Green Maura y Asociados SLP(MGM&CO.)Mulla & Mulla & Craigie Blunt & CaroeNASSAR ABOGADOSNoble Shipping Law

ICLGThe International Comparative Legal Guide to:

A practical cross-border insight into shipping law

6th Edition

Shipping Law 2018

Peter Doraisamy LLCQ.E.D INTERLEX CONSULTING SRLRosicki, Grudziński & Co.Sabatino Pizzolante AbogadosMarítimos & ComercialesSSEK Legal ConsultantsStephenson HarwoodThomannFischerTomasello & WeitzVan Traa Advocaten N.V.Vieira de Almeida | Guilherme Daniel& AssociadosVieira de Almeida | RLA – Sociedadede Advogados, RLVUKIĆ & PARTNERSWikborg Rein Advokatfirma ASYoshida & Partners

DisclaimerThis publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

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The International Comparative Legal Guide to: Shipping Law 2018

General Chapters:

Country Question and Answer Chapters:

1 Key Recent Cases Considering Package/Unit Limitation under the Hague and Hague-Visby Rules – Ed Mills-Webb & Mark Tilley, Clyde & Co LLP 1

2 Industry Risks (Legal and Non-Legal) within the Offshore Energy Sector in Mexico – Daniel Aranda & Alejandro Gómez-Strozzi, Foley Gardere, Foley & Lardner LLP 6

3 The Changing Face of Maritime Law and Risk – Cyber, E-Commerce, Automation of Vessels – Julian Clark & Beatrice Cameli, Hill Dickinson LLP 8

4 Legal and Regulatory Overview of Wet Cargo Shipping in Nigeria – Emeka Akabogu & Victor Onyegbado, Akabogu & Associates 14

5 International Liability and Compensation Conventions: Panacea or Ideal? – Donald Chard, BIMCO 19

6 Drafting a New Baltic Code – Mark Jackson, The Baltic Exchange 23

7 Angola Vieira de Almeida | RLA – Sociedade de Advogados, RL: João Afonso Fialho & José Miguel Oliveira 25

8 Australia HFW: Hazel Brewer & Nic van der Reyden 31

9 Bahamas Graham Thompson: Michelle Pindling-Sands 37

10 Belgium Kegels & Co: André Kegels 42

11 Brazil LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS: Alessander Lopes Pinto & Patricia dos Anjos 50

12 Canada Fernandes Hearn LLP: James Manson 54

13 Chile Tomasello & Weitz: Leslie Tomasello Weitz 59

14 China Guantao Law Firm: Shouzhi An & Frank Fulong Huang 63

15 Colombia FRANCO & ABOGADOS ASOCIADOS: Javier Franco 69

16 Costa Rica NASSAR ABOGADOS: Tomás Nassar Pérez & María Fernanda Redondo Rojas 73

17 Croatia VUKIĆ & PARTNERS: Gordan Stanković 79

18 Denmark Jensen Neugebauer: Mads Poulsen 84

19 Dominican Republic Q.E.D INTERLEX CONSULTING SRL: Luis Lucas Rodríguez Pérez 89

20 France LERINS & BCW: Laurent Garrabos & Rémi Racine 94

21 Germany KOCH DUKEN BOËS: Dr. Axel Boës & Henrike Koch 100

22 Guatemala NASSAR ABOGADOS: Tomás Nassar Pérez 106

23 Honduras NASSAR ABOGADOS: René Serrano & Jessy Aguilar 111

24 Hong Kong Stephenson Harwood: Andrew Rigden Green & Evangeline Quek 117

25 India Mulla & Mulla & Craigie Blunt & Caroe: Shardul Thacker 122

26 Indonesia SSEK Legal Consultants: Dyah Soewito & Stephen Igor Warokka 129

27 Ireland Noble Shipping Law: Helen Noble 134

28 Isle of Man DQ Advocates: Mark Dougherty & Kirsten Middleton 140

29 Israel Grossman, Cordova, Gilad & Co. Law Offices (GCG): Avi Cordova & Roy Gilad 145

30 Italy Dardani Studio Legale: Marco Manzone & Lawrence Dardani 149

31 Japan Yoshida & Partners: Norio Nakamura & Taichi Hironaka 155

32 Korea JIPYONG: Choon-Won Lee & Dahee Kim 160

33 Malta Dingli & Dingli: Dr. Tonio Grech & Dr. Fleur Delia 166

34 Mexico FRANCO, DUARTE, MURILLO, ARREDONDO: Rafael Murillo 171

35 Mozambique Vieira de Almeida | Guilherme Daniel & Associados: João Afonso Fialho & José Miguel Oliveira 175

36 Netherlands Van Traa Advocaten N.V.: Vincent Pool & Jolien Kruit 180

37 Norway Wikborg Rein Advokatfirma AS: Gaute Gjelsten & Morten Lund Mathisen 187

Contributing EditorEd Mills-Webb, Clyde & Co LLP

Sales DirectorFlorjan Osmani

Account DirectorOliver Smith

Sales Support ManagerToni Hayward

EditorNicholas Catlin

Senior EditorsSuzie LevyCaroline Collingwood

CEODror Levy

Group Consulting EditorAlan Falach

PublisherRory Smith

Published byGlobal Legal Group Ltd.59 Tanner StreetLondon SE1 3PL, UKTel: +44 20 7367 0720Fax: +44 20 7407 5255Email: info@glgroup.co.ukURL: www.glgroup.co.uk

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ISBN 978-1-912509-21-8ISSN 2052-5419

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Continued Overleaf

EDITORIAL

Welcome to the sixth edition of The International Comparative Legal Guide to: Shipping Law.This guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of shipping laws and regulations.It is divided into two main sections:Six general chapters, which explore topical issues affecting shipping law from a cross-border perspective.Country question and answer chapters. These provide a broad overview of common issues in shipping laws and regulations in 47 jurisdictions.All chapters are written by leading shipping lawyers and industry specialists, and we are extremely grateful for their excellent contributions.Special thanks are reserved for the contributing editor Ed Mills-Webb of Clyde & Co LLP for his invaluable assistance.Global Legal Group hopes that you find this guide practical and interesting.The International Comparative Legal Guide series is also available online at www.iclg.com.

Alan Falach LL.M.Group Consulting EditorGlobal Legal GroupAlan.Falach@glgroup.co.uk

Country Question and Answer Chapters:

The International Comparative Legal Guide to: Shipping Law 2018

38 Panama Arias, Fábrega & Fábrega: Jorge Loaiza III 193

39 Peru Estudio Arca & Paoli Abogados: Francisco Arca Patiño & Carla Paoli Consigliere 204

40 Poland Rosicki, Grudziński & Co.: Maciej Grudziński & Piotr Rosicki 210

41 Portugal Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL: Ana Cristina Pimentel 216

42 Russia LEX NAVICUS CONCORDIA: Konstantin Krasnokutskiy 221

43 Singapore Peter Doraisamy LLC: Peter Doraisamy & Rafizah Gaffoor 227

44 Spain Meana Green Maura y Asociados SLP (MGM&CO.): Jaime Soroa & Edmund Sweetman 232

45 Sri Lanka D. L. & F. DE SARAM: Jivan Goonetilleke & Savantha De Saram 237

46 Switzerland ThomannFischer: Stephan Erbe 243

47 Taiwan Lee and Li, Attorneys-at-Law: Daniel T.H. Tsai & James Chang 247

48 Turkey Esenyel|Partners Lawyers & Consultants: Selcuk S. Esenyel 252

49 Ukraine BLACK SEA LAW COMPANY: Evgeniy Sukachev & Anastasiya Sukacheva 257

50 United Arab Emirates Ince & Co Middle East LLP: Mohamed El Hawawy & Sheridan Steiger 263

51 United Kingdom Clyde & Co LLP: Ed Mills-Webb 269

52 USA Foley Gardere, Foley & Lardner LLP: Peter A. McLauchlan & Anacarolina Estaba 274

53 Venezuela Sabatino Pizzolante Abogados Marítimos & Comerciales: José Alfredo Sabatino Pizzolante & Iván Darío Sabatino Pizzolante 284

1WWW.ICLG.COMICLG TO: SHIPPING LAW 2018© Published and reproduced with kind permission by Global Legal Group Ltd, London

Chapter 1

For almost 20 years there has been no reported English Court judgment on the meaning of the carrier’s per package or unit limitation under the Hague Rules and/or the Hague-Visby Rules. Now, very much as the saying goes with London buses, we have had two such cases in quick succession, both of which have resulted in leading judgments of the Court of Appeal being delivered in 2018. Since the applicable carrier’s limitation and its interpretation/method of calculation will, in almost all cases, determine the maximum recoverable amount in any claim for loss and/or damage to cargo carried by sea, it is obviously important to understand the current law on this critical issue and this article summarises the decisions in both cases. The two recent cases on package limitation under Article IV Rule 5 are:

The ‘Aqasia’ [2018] EWCA Civ 276

The Court was asked to consider whether the word “unit” in Article IV Rule 5 of the Hague Rules could be read to refer to a unit of measurement, such as a metric ton or kilogram, so as to extend the application of the limitation to cargoes carried in bulk. This question has generated a number of articles from eminent academics and practitioners over the years and features in all leading texts on the carriage of goods. However, in the 92-year history of the Hague Rules, the question has never been answered determinatively under English law until now.The case is significant commercially because the Hague Rules are still regularly applied as a result of their incorporation into sea waybills, charterparties (as in this case) and bills of lading issued in and relating to cargoes loaded in non-Hague Visby Rules contracting states. Currently, the Hague Rules are in force in 68 states, whereas the Hague-Visby Rules are in force in 29 states (15 states have enacted domestic legislation similar to the Hague-Visby Rules but they are not party to the Hague-Visby Rules). So issues of limitation under the Hague Rules 1924 will still frequently arise.

The ‘Maersk Tangier’ [2018] EWCA Civ 778

The Court of Appeal has issued a leading judgment (upholding the decision of the Commercial Court) determining for the first time under English law what constitutes a “unit” for the purposes of limitation under Article IV Rule 5 of the Hague Rules and the Hague-Visby Rules. The decision also provides important guidance on whether the Hague-Visby Rules can be compulsorily applicable even though the carrier issued a sea waybill rather than a bill of lading.

The ‘Aqasia’ [2018] EWCA Civ 276

In this case, the claim arose from damage to a cargo of fish oil carried on board the m/v ‘Aquasia’ from Iceland to Norway. The carrier, as disponent owner, chartered the Vessel to the Cargo Interests by way of a charterparty evidenced by a Fixing Note dated 23 August 2013. The Fixing Note allowed the Parties to rely on the like privileges, rights and immunities that are contained in sections 2 and 5 of COGSA 1924. These sections contain the Hague Rules. Article IV Rule 5 of the Hague Rules provides as follows: “Neither the carrier nor the ship shall in any event be or

become liable for any loss or damage to or in connection with goods in an amount exceeding [£100] per package or unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.”

The cargo was described in the charterparty as “2,000 tons cargo of fish oil in bulk, 5% mol chopt” and freight was described as a lump sum of NOK817,500. The cargo was loaded in Iceland and a clean bill of lading was issued by the Master, describing the cargo as 2,056,926 kg of fish oil in bulk, of which about 550,000 kg was loaded into tanks 1P, 2P and 5S (“the Subject Cargo”). The Vessel sailed to Norway where a further cargo of fish oil was loaded and co-mingled with the Subject Cargo. On arrival at the discharge port(s), it was discovered that 547,309 kg of the Subject Cargo was contaminated. The Cargo Interests claimed damages from the carrier for loss of and/or damage to the Subject Cargo in the sum of USD367,836.The carrier accepted liability for the damage but argued that they were entitled to limit its liability under Article IV Rule 5 of the Hague Rules to £100 per “unit”, the relevant “unit” being a metric ton of cargo damaged. If correct, the carrier’s liability would be limited to £54,730.90. The Cargo Interests contended that the word “unit” was intended to mean a physical unpackaged item of cargo and not a unit of measurement so that limitation could not apply to a bulk cargo. The Parties agreed to submit this issue to the High Court to be determined as a preliminary issue. In the High Court, the Judge held that the carrier was not entitled to limit its liability for a bulk cargo, as the term “unit” in Article IV Rule 5 of the Hague Rules meant an unpackaged physical item (such as a car or a boiler) and not a “unit of measurement”, such as a metric ton or kilogram.

Mark Tilley

Ed Mills-Webb

Clyde & Co LLP

Key Recent Cases Considering Package/Unit Limitation underthe Hague and Hague-Visby Rules

2 ICLG TO: SHIPPING LAW 2018WWW.ICLG.COM© Published and reproduced with kind permission by Global Legal Group Ltd, London

Package/Unit Limitation: Key CasesClyde & Co LLP

Court of Appeal

Before the Court of Appeal, the carrier argued:■ that the Judge had failed to give effect to the intention of

the Parties that the “package and unit” limitation, expressly incorporated into the contract of carriage, should apply in respect of the cargo envisaged in the contract, i.e. liquid fish oil; and

■ that the Judge was wrong to conclude that the limitation of liability provision in the Hague Rules (applicable as an International Convention and not just a contractual term) does not apply to a cargo carried in bulk.

It was common ground between the parties that, as a matter of ordinary language, “unit” can be both a reference to a physical item or a unit of measurement. However, in the context of the Hague Rules, the Court of Appeal held that “unit” means only a physical item of cargo and not a unit of measurement for, amongst others, the following reasons:1. The term “package” in the Hague Rules clearly refers to a

packaged physical item and the terms “package” and “unit” are used together and in the same context. This suggests that both terms are concerned with physical items, instead of units of measurement.

2. Article III Rule 3(b) of the Hague Rules refers to “packages or pieces” as opposed to “quantity” or “weight”. The Court of Appeal held that “unit” was another term for “piece”. These terms referred to physical items of cargo that were incapable of being packaged or were simply not packaged. The Court of Appeal noted that the Hague Rules refer to the weight of cargo, but not in the section applicable to limitation of liability.

3. The Court of Appeal did not consider that the wide definition of “goods” in Article I of the Hague Rules assists with the interpretation of the term “unit”. The carrier argued that the wide definition of “goods” indicated that Article IV Rule 5 in turn applied to bulk cargo. The Court of Appeal did not agree, as there are other provisions in the Hague Rules that do not apply to bulk cargo.

4. If a dual meaning of “unit” is accepted, there is no guidance in the Hague Rules to assist with how it should be applied, for example if the cargo is described in the contract of carriage with reference to both the number of physical items and weight. In this dispute, for example, the Subject Cargo is described with reference to metric tons in the charterparty and kilograms in the bill of lading. The difficulties in adopting this approach were held to favour the interpretation of “unit” as a physical item of cargo only.

It was also noted that, at the time that the Hague Rules were adopted in the 1920s, the price of bulk cargo was much below the value of £100 per tonne. The limitation provisions therefore would not have been relevant to bulk cargo. In circumstances where Article IX of the Hague Rules, the “gold value clause”, is excluded from the contractual incorporation of the Hague Rules (it was excluded in this dispute), limitation is £100, at today’s value, per “package or unit”. Today, the price of commodities often exceeds £100 per metric ton and the effect of inflation has led to limitation arguments being raised by carriers of bulk cargoes. The Court of Appeal agreed with the first instance Judge’s comment that, if on its true construction, Article IV Rule 5 did not apply (and was not meant to apply) to bulk cargo, it was not acceptable to strain the language of the provision to make it apply to bulk cargo today.

High Court

The key findings in the High Court judgment were as follows:a. The language of the Hague RulesThe Judge acknowledged that the word “package” related to a physical item and that the words “unit” and “package” together and in the same context suggested that both terms were concerned with a physical item (or composite items) rather than to a unit of measurement. b. The Hague-Visby RulesThe Judge held that the terms of the Hague-Visby Rules cannot affect the construction of the Hague Rules. That said, it was pointed out that Article IV Rule 5(c) of the Hague-Visby Rules strongly suggests that the draftsmen considered that a “unit” constitutes a physical item rather than a freight unit, otherwise it would be meaningless to speak of the “number of packages or units enumerated in the bill of lading as packed in such article of transport”.c. The Travaux Préparatoires to the Hague RulesThe Judge’s review of the Travaux Préparatoires led him to the conclusion that whilst concepts of weight and volume were discussed initially, they were abandoned and were never resurrected, whether by the introduction of the word “unit” or otherwise. The Judge was also persuaded by the fact that in light of the economic situation in 1921–1924, the £100 limit would never have applied to bulk cargoes due to their low value per mt.d. The 1936 United States Carriage of Goods by Sea ActThe Hague Rules wording was amended for the purposes of US COGSA so that the corresponding provision to Article IV Rule 5 referred to “per package or customary freight unit”. This had the effect that the limitation provisions of US COGSA do apply to bulk cargoes and meant that the US position did not offer any guidance in considering the meaning of the words “per package or unit”, even though owners argued that it did. e. Authorities from other jurisdictionsThe Judge recognised that there were authoritative decisions on this question in other jurisdictions. The Court specifically highlighted the decision of the Canada Supreme Court in Falconbridge, where the Court needed to decide whether a tractor and generator set constituted “units” for the purpose of limitation under Article IV Rule 5 of the schedule to the Canadian Water Carriage of Goods Act 1936. The Court held that the word “unit” in Article IV Rule 5 applied to a physical unit of goods and not a unit of measurement. It was considered that the word “unit” within the phrase “package or unit” had been added to cover instances where a cargo had been packed up or made up for portability in a way that may not strictly fall within the scope of the term “package” (for instance a car) but this addition was not intended to extend the scope of Article IV Rule 5 to bulk cargoes.f. Commentaries and textbooksThe Judge made specific reference to International Maritime Conventions Volume 1 (1st edition, 2014) by Professor Francesco Berlingieri and to Professor Tetley in Marine Cargo Claims (4th edition, 2008) in which he found the arguments that the term “unit” was used as a complement to “package” in the Hague Rules compelling.

As a result of errors in transhipment, delivery of the three containers was delayed and although it was initially envisaged that a bill of lading would be issued, instead, in order to avoid any further delay the parties subsequently agreed to the issue of three sea waybills, one for each of the three containers and each of which identified the Respondent as consignee. The cargo was described in the same way in each sea waybill, for example, as follows:One container, said to contain 206 pcs frozen bluefin tuna loins – 18,740.00 kgUpon delivery, the cargo in all three subject containers was found to have suffered damage allegedly due to reefer machinery failure.IssuesA hearing took place before the Commercial Court in 2017 to determine agreed preliminary issues and from that judgment three issues came to be considered by the Court of Appeal as follows:■ Issue 1: Is the carrier’s liability limited pursuant to the Hague

Rules or the Hague-Visby Rules?■ Issue 2: If the Hague Rules apply, are the relevant packages

or units for the purposes of Article IV Rule 5, the containers or each individual piece of tuna?

■ Issue 3: If the Hague-Visby Rules apply, are the containers deemed to be the relevant package or unit, or are the individual pieces of tuna packages or units “enumerated” in the relevant transport document “as packed” in each container, for the purposes of Article IV Rule 5(c)?

Issue 1: Is the carrier’s liability limited pursuant to the Hague Rules or the Hague-Visby Rules?

The Appellant argued that because sea waybills had been issued instead of bills of lading, the Hague Rules applied contractually. The Respondent argued that the Hague-Visby Rules applied by force of law pursuant to the Carriage of Goods by Sea Act 1971 (“the Act”) because shipment was from Spain, a contracting state and, although no bill of lading was ever issued, the contract of carriage was nevertheless “covered by a bill of lading” for the purposes of the Act and the Hague-Visby Rules Article 1(b)”. This was because when the contract was made the parties contemplated that a bill of lading would be issued and the Respondent was entitled to demand the issue of a bill of lading (see Pyrene v Scindia [1954] 2 QB 402 as approved by the Court of Appeal in The ‘Happy Ranger’ [2002] 2 Lloyd’s rep 357 – both cases in which cargo was damaged during the loading operation and no bill of lading was issued).At first instance the judge followed Pyrene and found that so long as the terms of the contract require a bill of lading to be issued or the Respondent is entitled to demand one, it is immaterial whether a bill of lading is ever issued, or even whether a waybill is issued instead, and decided that the Hague-Visby Rules applied by force of law.Delivering the judgment of the Court of Appeal, Flaux LJ upheld the decision of the Commercial Court, noting as follows: “In my judgment, in circumstances where the appellant

expressly eschews any case of variation or waiver or estoppel, the fact that sea waybills were issued can make no difference to the correct analysis. Because the contract of carriage entitled the respondent to ask for the issue of a bill of lading on demand, the contract of carriage was from its inception one which was “covered by a bill of lading” within the meaning of Article I(b) of the Hague-Visby Rules and a contract which “by implication provides for the issue of the bill of lading” within the meaning of section 1(4) of the 1971 Act.”

Given its conclusion that the Hague-Visby Rules were compulsorily applicable, the Court of Appeal felt it appropriate to turn next to Issue 3.

The Court of Appeal found support for this interpretation in the Travaux Préparatoires which covered the negotiations that led up to the final text of the Hague Rules. It was found that reference to limitation by weight/volume or by freight was removed from the draft provision. The addition of the word “unit” was a late addition to cover items shipped as single units and not packaged in any way, such as cars or boilers. The term was not intended to reintroduce weight or volume limitation, which had been abandoned by that stage in the negotiations.The carrier argued that US COGSA 1936, which limits liability by reference to “per package or per customary freight unit”, clarifies the limitation provision in the Hague Rules. The Court of Appeal favoured the view that the addition of the words “per customary freight unit” was an amendment of the wording of the Hague Rules so as to change its application. Therefore, US COGSA 1936 did not support the carrier’s interpretation of the word “unit”. The new language in the Hague-Visby Rules was also held to be irrelevant.There is no English authority directly on this issue in the context of the Hague Rules prior to the decision of the High Court. Any comments in the case law were strictly obiter (i.e. not binding) but they appeared to favour the construction that “unit” refers to an individual piece or pieces of cargo only and not to the unit of measurement of freight unit.The Court of Appeal further held that the interpretation of the word “unit” as a physical unpackaged item is accepted by courts in other common law jurisdictions and this interpretation is favoured by the majority of academic commentators and textbooks.

Conclusion

Despite the carrier’s attempts to persuade the Court that it is commonly accepted in the shipping market that the package and unit limitation of the Hague Rules applies to bulk cargo, the Court of Appeal has not left any doubt in finding that the clear meaning of “unit” is a physical unpackaged item of cargo and not a unit of measurement or a freight unit. Accordingly, Article IV Rule 5 of the Hague Rules does not apply to bulk cargo.In any event, the Court of Appeal also found that even if “unit” could be held to be a unit of measurement or freight unit, there was no identifiable measurement or freight unit on the facts. This decision appears to be consistent with what we believe is a widely held view, that a carrier cannot limit its liability under the Hague Rules for loss and/or damage to cargo carried in bulk.The consequence is that it is now settled, after 92 years of uncertainty, that under English law shipowners will not be able to limit liability under the Hague Rules for loss and/or damage to bulk cargo.

The ‘Maersk Tangier’ [2018] EWCA Civ 778: What is the situation regarding containerised cargo under the Hague-Visby Rules?

In this case, the Appellant agreed to carry the Respondent’s cargo of deep frozen tuna, comprising 1,226 unpackaged pieces of tuna loin weighing between about 20 kg and 75 kg each, stuffed into three of the Appellant’s “super freezer” containers. The tuna pieces were not wrapped or individually packed before being loaded onto the containers.It was common ground that the three containers were received by the Appellant pursuant to a contract or contracts of carriage containing an implied term that the shippers were entitled to demand that a bill or bills of lading be issued by the Appellant.

Flaux LJ decided that there is nothing in the wording of Article IV Rule 5 of the Hague Rules which justifies the appellant’s argument that where the cargo is stuffed in containers the cargo claimant must be able to show that the cargo could have been shipped “as is” break bulk without additional packaging.He objected to this argument on the basis that it was an attempt to revive the now discredited “functional economics” test, once used by the US Courts to place the burden on the cargo claimant to show why the container should not be treated as the “package” in cases in which the individual items inside were not “functional” or capable of shipment as they were. The US Courts abandoned the “functional economics” test and their approach was endorsed by Phillips LJ in the English Court of Appeal in The ‘River Gurara’ (1998).Since the decision at first instance, Flaux LJ had considered this issue in a different context in the recent Court of Appeal decision in The ‘Aqasia’. Although that case did not involve containerised cargo, Flaux LJ considered that his own analysis in that case of what constitutes a “unit” under Article IV Rule 5 was inconsistent with the Appellant’s argument. As he noted in The ‘Aqasia’: “I consider that, in the context of the Rules, a ‘unit’ can

be regarded as synonymous with a ‘piece’, they are both descriptive of a physical item of cargo which is not a ‘package’, because, for example, it is incapable of being packaged or is not in fact packaged.”

Flaux LJ recognised that the definition adopted by him in The ‘Aqasia’ was “clearly wide enough” to encompass the frozen tuna loins stuffed in the containers without further packaging. As he put it, “there is simply no warrant for concluding that each cannot be a ‘unit’ within that definition unless hypothetically they could also have been carried break bulk without being packaged in some way”.The decision confirms that the definition of “unit” in the Hague Rules and Hague-Visby Rules is the same and the large pieces of tuna in this case were “units” for the purpose of both.

Conclusion

The decision of the Court of Appeal is a landmark decision that upholds the judgment of the Commercial Court and confirms that for the first time in English law we now have clear authority for the following:■ The Hague-Visby Rules will compulsorily apply when the

contract of carriage requires the issue of a bill of lading and/or entitles cargo interests to demand the issue of a bill of lading, even if (in the absence of any variation, waiver or estoppel) a sea waybill is in fact issued.

■ The definition of “unit” in the Hague Rules and Hague-Visby Rules is the same and the large pieces of tuna in this case were “units” for the purpose of both.

■ To qualify as a “package or unit enumerated in the bill of lading as packed in [a container]” (Article IV Rule 5(c) of the Hague-Visby Rules), it is sufficient that the physical items of cargo are accurately stated in the bill of lading and there is no additional requirement that the physical items must be described “as packed”.

Issue 3: If the Hague-Visby Rules apply, are the containers deemed to be the relevant package or unit, or are the individual pieces of tuna “packages or units” enumerated in the relevant transport document as packed in each container, in each case for the purposes of Article IV Rule 5(c)?

Until the decision of the Commercial Court, there had been no English case law authority on the meaning of Article IV Rule 5(c) and the only guidance has been from the Full Federal Court of Australia’s majority judgment in the El Greco case from 2004. In that case the Australian Court held that the expression “as packed” as used in Article IV Rule 5(c) of the Hague-Visby Rules meant that individual items “enumerated in the bill of lading” will only constitute the relevant “units” under Rule 5(a) (rather than the container itself as a single unit) if it is clear from the bill of lading description how those items are actually packed in the container.At first instance the judge disagreed with the finding in El Greco and decided that Article IV Rule 5(c) merely requires that the number of units in a container is correctly stated on the bill of lading. As the sea waybills correctly stated that the containers were loaded with a number of pieces of tuna, the waybills therefore “enumerated” the number of units for the purposes of Article IV Rule 5(c). In the Court of Appeal Flaux LJ approved of the approach taken in the Commercial Court, which he noted was strongly supported by the French text of Article IV rule 5(c) which refers to the enumeration of the number of packages or units being “included” in the container, whereas the English wording is “as packed”.Flaux LJ agreed that to impose any additional, technical, linguistic requirement to describe how the items of cargo are packed inside the container, would not only give rise to uncertainty and anomalous results, but is also unrealistic and uncommercial.Flaux LJ noted that the majority decision in the El Greco had been criticised by academic commentators and in a number of leading texts and concluded as follows: “In my judgment, these criticisms of the majority judgment in

El Greco are justified and like the judge, I consider that the English courts should not follow the approach of the majority in that case. It seems to me that that approach places an impermissible gloss on Article IV rule 5(c) which is simply not justified by the wording of the provision. Accordingly, I consider that the judge was correct in the conclusion he reached that there was sufficient enumeration of the frozen tuna loins in the waybills that each loin was a separate “unit” for the purposes of limitation under Article IV rule 5(c). It follows that the appeal must be dismissed in relation to Issue 3.”

Issue 2: If the Hague Rules apply, are the relevant packages or units for the purposes of Article IV, Rule 5 of the Hague Rules, the containers or each individual piece of tuna?

Given the finding that the Hague-Visby Rules applied compulsorily, the question of what is a unit under the Hague Rules, did not apply. However, as in the Commercial Court, the Court of Appeal also decided to consider the issue and once again upheld the first instance decision by confirming that the Hague Rules do not require any consideration of how the cargo could have been shipped if not containerised.

Now the largest shipping practice in the world, Clyde & Co has over 300 specialist marine lawyers based in trading hubs around the globe, on call and serving clients’ requirements in all time-zones at any time of day.

We act for the heart of the maritime industry – shipbuilders, owners, charterers, salvors, financiers, port authorities and government, P&I Clubs and insurers – and clients across the broader trade commodities and energy sector.

No other law firm can match Clyde & Co’s combined size of practice, in-depth industry knowledge, specialist shipping expertise and global reach – adding up to an unrivalled collective offering in the maritime industry. Wet or dry, contentious or non-contentious – our cradle-to-grave industry approach means that we stand alongside clients through the full corporate lifecycle; from establishment and commercial operations through to dispute resolution and corporate exit options.

Mark is a Professional Support Lawyer assisting the marine and international trade teams at Clyde & Co. Mark’s experience of shipping matters spans over 20 years, including as Partner at another City firm, and he has advised on a very wide range of shipping and trading disputes encompassing all forms of dispute resolution. He writes regularly on shipping law issues for circulation to clients and for external publication.

Ed advises clients on all issues relating to the international sale and movement of goods, finance, insurance and regulatory issues, with particular knowledge of commodity, charterparty and bill of lading disputes.

He has significant experience, both in the UK and abroad, of High Court proceedings and arbitration work within the London Maritime Arbitrators Association, London Court of International Arbitration and International Chamber of Commerce.

Ed also acts for a number of clients in the offshore sector and has advised on several significant energy projects in West Africa, including production sharing and farmout agreements. He also deals with vessel construction issues, including specialist offshore vessels and superyachts.

Mark TilleyClyde & Co LLPSt Botolph Building138 HoundsditchLondon, EC3A 7ARUnited Kingdom

Tel: +44 20 7876 5000Fax: +44 20 7876 5111Email: mark.tilley@clydeco.comURL: www.clydeco.com

Ed Mills-WebbClyde & Co LLPSt Botolph Building138 HoundsditchLondon, EC3A 7ARUnited Kingdom

Tel: +44 20 7876 5000Fax: +44 20 7876 5111Email: ed.mills-webb@clydeco.comURL: www.clydeco.com

Chapter 2

Alejandro Gómez-Strozzi

Daniel Aranda

Industry Risks (Legal andNon-Legal) within the OffshoreEnergy Sector in Mexico

Foley Gardere, Foley & Lardner LLP

As discussed in the prior edition of this publication, as the Mexican energy market opened itself to embrace and foster direct participation of foreign investment in the Oil and Gas sector, new opportunities arose along with new challenges for its new players. These challenges implied an early assessment of risk–reward while deciding where to allocate financial, technical and physical resources, since the offshore industry, though lucrative, also bears great risk for its participants.In summary, the risks referred to in the previous issue included the following:1) The Mexican Supreme Court of Justice criteria expanding

the scope of exposure for companies involved in the offshore industry by:(a) denying, in regard to platforms used for exploring

or exploiting the subsoil, the possibility of including limitations to liability under the LLMC 1976, which in that particular case prevented the owners of an Offshore Support Vessel from capping their liability when damaging a platform;

(b) enabling creditors and third parties, including governmental agencies and NGOs, to request the piercing of the corporate veil of the companies holding title to a vessel or naval artifact whenever it is suspected that the relevant company – normally a special purpose vehicle (SPV) – was being used for the sole purpose of limiting the liability exposure of the ultimate beneficiaries with the intention of defrauding third parties due to insolvency of the SPV; and

(c) expanding the traditional concept of damages normally accepted in the Mexican legal tradition by resolving that non-pecuniary damages (pain and suffering and personal injury) are no longer subject to any statutory cap, and that punitive damages may be awarded in favour of plaintiffs, thus opening a wide space for the development of personal injury claims.

2) The need to provide an early assessment of the environmental conditions under which a contractual area is being either received or relinquished, to set a baseline considering that under the provisions of the Environmental Liability Law, punitive and consequential damages have been admitted to the party that causes damages to the environment, and that same have been opened for class actions that could be pursued by either the local or federal environmental protection agencies, as well as NGOs or populations that claim to have been affected by such.

3) The suitability of revisiting the traditional labour and tax structures used in the past to render services, in light of the new thresholds imposed by the Federal Labour Law to consider workers of a provider as independent; as well as revisiting transfer pricing conditions while dealing with a subsidiary.

4) The lack of a qualified workforce in a non-friendly business market considering that, due to its recent expansion, far more personnel are required than those required prior to the opening of the sector to private investors.

5) The usefulness of including specific provisions that consider penalties during the time that it may take to lift a wrongful vessel arrest, or to factor into the daily rent an insurance for loss of profits, since vessel arrests are granted in an ex parte manner; however, the bond requested by the courts to impose the vessel arrest do not contemplate the daily rent of the vessel, nor the administrative burdens triggered by such arrest (e.g., payment to the port authorities, etc.).

Though the Regulations of the Navigation Law and Maritime Commerce have shed light and certainty on the incursion of specialised vessels and naval artefacts related to the offshore Oil and Gas industry, by enabling their entry to the country without the need to flag them as Mexican for either 10 or 15 years depending on whether they are being used for drilling or for offshore support, the current international commercial conditions continue to pose a moving-target challenge. The aforementioned regulations enable such vessels to remain in Mexican waters without being flagged as Mexican, but do not exempt them from being subject to other provisions, such as those dealing with customs. This, in light of the recent possibility that the members of the North American Free Trade Agreement (NAFTA) may walk away from such treaty, poses new factors to be considered in long-term bareboat or services agreements.Along those lines, other challenges have become acute while others have arisen during the course of the past year. Among such risks, security concerns have continued to grow in the northern part of Mexico as well as in Veracruz, which ultimately may impact the deployment and retention of personnel as well as warehousing, reparation and handling of highly specialised equipment, and ultimately will need to be factored into the economics of conducting offshore activities in Mexico. Additionally, in light of the sudden growth of the offshore industry, foreigners will be forced, to a certain extent, to negotiate or liaise with Mexican companies and providers, which could end in a better negotiation position considering the scarcity of such companies. Hence, early negotiations and memorandums of understanding may become more relevant than before. Moreover, foreign companies must consider the heavy compliance requirements and scrutiny to which companies are now being subjected, as well as the international impact and exposure that failure to comply with same may have compared with other markets or projects.Likewise, importation tariffs may become a concern in the immediate market, considering the safeguarding measures being adopted by Mexico and the United States of America. The bilateral relationship

The Offshore Energy Sector in MexicoFoley Gardere, Foley & Lardner LLP

NAFTA renegotiation is overlapping with political calendars in both countries, creating a dangerous mix that may negatively impact the offshore energy sector. It is therefore clear that significant external challenges are present and should be closely watched and laid down by industry participants, so as not to increase the already “natural” risks that are inevitably present in our line of business.

between Mexico and the United States (and Canada as part of NAFTA) is literally being redefined at the time of going to print, with particular emphasis being given to steel and steel-related products – the backbone of the Oil and Gas industry. Mexico has imposed retaliatory import tariffs on over 50 steel tariff lines imported from the United States, in response to the US Section 232 measure on global steel and aluminum imports. Further, Mexico has renewed its ordinary (Most Favoured Nation) import duties, with an increase to over 180 tariff lines on global steel products. The ongoing

Foley & Lardner LLP looks beyond the law to focus on the constantly evolving demands facing our clients and their industries. With over 1,100 lawyers in 24 offices across the United States, Mexico, Europe, and Asia, Foley approaches client service by first understanding our clients’ priorities, objectives, and challenges. We work hard to understand our clients’ issues and forge long-term relationships with them to help achieve successful outcomes and solve their legal issues through practical business advice and cutting-edge legal insight. Our clients view us as trusted business advisors because we understand that great legal service is only valuable if it is relevant, practical and beneficial to their businesses.

On April 1, 2018, Foley combined with Gardere, Wynne & Sewell LLP. Foley & Lardner LLP operates as “Foley Gardere” in Austin, Dallas, Denver, and Houston, and as “Foley Gardere Arena” in Mexico City through its subsidiary, Gardere, Arena y Asociados, S.C.

Alejandro Gómez-Strozzi focuses his practice on providing advisory and consulting services related to international trade, antidumping, customs, foreign trade and Mexican administrative law.

He has advised major multinational companies in the automotive, steel and consumer products sectors. He provides advice regarding available foreign trade programmes, tax implications of foreign trade operations, implementation of free trade agreements entered into by Mexico, customs procedures, trade compliance and unfair trade practices.

Alejandro is the lead trade consultant of the Mexican associations and confederations of pork, poultry and beef producers and provides advice in tariff and nontariff trade regulations and standardisation. He also participates in the defence of their interests on national and international trade panels.

Additionally, during President Vicente Fox’s administration (2000–2006), Alejandro was the undersecretary of economy in charge of foreign investment, standards and trade Remedies. He also led the Mexican Investigative Authority regarding trade remedies (UPCI) in the Ministry of Economy.

Daniel Aranda is a bilingual, bicultural corporate and trial lawyer serving clients in the United States, Mexico and international energy, pipeline, banking and finance sectors. He also serves as leader of Foley Gardere’s Energy and Government Procurement Practice in Mexico City and co-chairs its commercial litigation section.

He represents foreign and domestic clients with all aspects of their energy business needs, including: representation before the Mexican energy authorities (CRE, CNH, Ministry of Energy, Pemex and CFE); mergers and acquisitions; project development and finance transactions; infrastructure and government procurement; divestitures and buyouts; strategic alliances and corporate reorganisations.

Daniel also handles sophisticated contracts and business matters involving both domestic and cross-border deals. His financing work focuses primarily on structuring, documenting and negotiating debt-related transactions. These include workouts representing developers, lenders and borrowers on asset-based and unsecured lending. He has extensive experience representing clients facing conflicts of interest between shareholders and negotiating cash-out mechanisms.

Alejandro Gómez-StrozziFoley Gardere, Foley & Lardner LLPTorre Esmeralda IIBlvd. Manuel A. Camacho No. 36-1802Lomas de ChapultepecMexico City, 11000Mexico

Tel: +52 55 5284 8561Email: agomez@foley.comURL: www.foley.com

Daniel ArandaFoley Gardere, Foley & Lardner LLPTorre Esmeralda IIBlvd. Manuel A. Camacho No. 36-1802Lomas de ChapultepecMexico City, 11000Mexico

Tel: +52 55 5201 4518Email: daranda@foley.comURL: www.foley.com

Chapter 3

Introduction

The global maritime industry is undergoing a technological revolution that is changing how it has always been seen and understood. Of course, this is an industry which has seen continued and dramatic change since the very first vessels put to sea. Developments in technology, operations, safety management, and the needs and requirements of international global trade, have all had their part to play. However, what the industry is facing today is unprecedented both in terms of advancement and effect.All operators in the industry are facing ever-increasing pressure to leave behind what is perceived as the “traditional shipping approach”, to adopt mechanisms which (it is intended) will improve profitability, efficiency and operations in a world where almost everything is now managed and operated by digital means.We are living in a time of increased and swift technological evolution, the results of which are going to be revolutionary and create a whole new playing field and wealth of opportunity – both for those involved in the established areas of the sector, and also in areas that have not traditionally been associated with maritime trade.For centuries, the shipping industry has been open to change and innovation, albeit often at a slower pace than other transport industries. Today, however, advances in technology, and the development of a new digitalised era, have made it impossible for shipping to continue doing business in the traditional way, and the time has now come for the industry to catch up and adapt to the current trends seen elsewhere.If technology, digitalisation and connectivity all seem to be a positive step forward for the marine industry and will present plenty of opportunities, they do not come without challenges. Relying more heavily on e-commerce, artificial intelligence (AI), machine learning (ML) and digital control systems brings with it an increased threat of hacking and other forms of cybercrime increasingly prevalent in the maritime sector, with the potential consequences being progressively more wide-ranging and destructive.In this chapter, we will consider what is causing the maritime industry to change. Specifically, we will focus on: cyber-risk, what it is and what can be done to mitigate the risks associated with it; e-commerce and its application to the shipping world with blockchain; and automation of vessels and the benefits and risks of moving to fully autonomous ships.We will also briefly look at the current legal framework, the guidelines that have been issued by international bodies, and what more needs to be done to ensure that the future of shipping is safe, protected and keeps up with the latest technological developments.

The Changing Face of the Maritime Industry

Digitalisation, connectivity, automation, smart, cyber, AI and ML are all words and abbreviations that are becoming more and more common in the shipping world. Stakeholders in the industry are becoming more familiar with these terms because they are either catching up with the latest technologies in order, for example, to make their fleets and operations more competitive, or they are experiencing the challenges that innovation brings with it.This “new” face of the maritime industry presents various aspects. The most hotly debated ones will be considered in the following paragraphs.

90% of global world trade continues to be moved by sea. Currently there are in excess of 50,000 merchant ships trading, operated from over 150 nations worldwide, employing in excess of one million seafarers. The United Nations Conference on Trade and Development (UNCTAD) and BIMCO, amongst others, have confirmed that 2018 is largely seeing a recovery in the shipping markets, with a significant contribution towards total world trade figures. The combination of the value of the trading assets, the commodities carried, the complexity of the transportation regime, and the high number of personnel involved in the industry, all make the marine sector an ideal target for cybercrime.But what is cybercrime? In its most simple definition, cybercrime is a criminal activity that involves the Internet, a computer system, or computer technology as a means of gaining criminal advantage.Shipping – like many other industries – has become more exposed to this type of attack due to the increased digitalisation that it has undergone over recent years, combined with the lack of proper regulation and legal protection and scope of risk, which is even today underestimated. In particular, certain of the operational and navigational systems that have been developed have made ships more vulnerable to cyber-attacks, due to their reliance on digital means and connectivity to shoreside systems. Examples are:■ Systems using global navigation satellites such as GPS which

are able to pinpoint the vessel’s precise location and can be accessed and altered to give incorrect position data – and possibly cause the crew wrongly to change course.

■ Electronic Chart Display & Information Systems (ECDIS) providing electronic charts of ocean routes that, when given false information, can cause the crew to believe they are on a correct course, when they are not, or to plot a wrong course.

Beatrice Cameli

Julian Clark

Hill Dickinson LLP

The Changing Face of Maritime Lawand Risk – Cyber, E-Commerce, Automation of Vessels

The Changing Face of Maritime Law and RiskHill Dickinson LLP

that never actually materialise? Unfortunately, the answer is that we are now regularly experiencing real-life examples of these risks in action.The Port of AntwerpIn 2011, the Port of Antwerp was attacked after it introduced a new electronic release system (ERS) for containerised cargo. This was intended to replace the system in use at that time for the authorisation of cargo release through delivery orders or release notes. A number of carriers using the port decided to adopt this system which would send computer-generated pin codes via email to cargo receivers or their agents, as well as the port terminal.However, a sophisticated criminal gang managed to break into the system and attacked the port over a two-year period, starting in 2011. Following an initial “staged” break-in, where Trojan RAT malware was uploaded into certain PCs, the gang accessed data that provided them with the location and security details of containers. This, in turn, allowed them to smuggle drugs and weapons in the containers and extract them in Antwerp before the legitimate owners of the remaining cargo arrived to empty the containers.It is estimated that significant amounts of contraband were moved through the terminal for a number of years before the authorities became aware of the system. Indeed, it was only due to the fact that the criminals had operated so effectively without interruption for such a prolonged period of time that they became confident enough to start to remove entire containers from the port. It was this loss of entire containers which alerted the authorities and eventually led to the discovery of the cyber-breach.Maersk NotPetya In 2017, the container line AP Moller Maersk announced that it had been hit by NotPetya, a ransomware attack that prevented people from accessing their data unless they paid $300 in bitcoin. This caused the company to shut down completely its booking systems, which cost it in the region of $300 million in lost revenue.Maersk should be congratulated by the entire industry, both for its openness in publishing the details of the attack, which has led to a significant increase in shipping corporations taking cyber-risk seriously and introducing risk-prevention measures, but also for the speed with which it was able to deal with the incident due to its advanced and detailed cyber-protection regimes.However, even with this level of sophistication and protection in place, the attack caused Maersk to replace 45,000 PCs, 4,000 servers and 2,500 applications.Oil RigsIn Mexico, an entire oil rig had to be shut down because its networks had been accidentally infected with viruses that smart devices had caught as a result of employees visiting various online sites, together with the use of unauthorised flash drives.Similarly, off the coast of Africa, the networks of another oil rig were allegedly hacked by a group of individuals who were simply testing their hacking abilities. By tampering with ballast controls, the rig was dangerously destabilised, resulting in its being completely shut down, with all drilling services suspended for over a week while the incident was identified and fixed.AIS and SpoofingThere has been a considerable increase in evidence to suggest significant infiltration of vessel-navigation systems with criminal intent. In 2016, over 280 vessels were forced to return to port, reporting significant navigational errors, largely thought to be as a result of action taken by the North Korean government.In 2017, 20 ships in the Black Sea region were affected by AIS spoofing from land-based towers, resulting in them charting their position some 32 kilometres inland of their actual position. Jamming

■ Automatic Identification Systems (AIS) allowing vessels and shoreside stations to monitor traffic, continuously broadcast a ship’s location and access details which can be intercepted, thereby providing incorrect information on a ship’s location, identity or movements.

All of the above systems can be hacked from remote locations by relatively inexpensive and uncomplicated hardware readily available to those wishing to infiltrate the systems. The risk, however, is not restricted to access gained via completely external sources but by the increased ease of infiltrating the systems, due to the huge range of potential access points for a cyber-attack. Think, for example, of crew members, passengers or other third parties who are allowed access to go on board vessels and who could infect systems, either intentionally or innocently, via their own flash drives, laptops and even mobile phones. Hackers can gain information by taking as simple a step as plugging a phone cable into any one of the various onboard computers or access points. Once connected to the system, or having downloaded a form of remote access technology (RAT), they are able to access significant amounts of potentially sensitive information which they can then use in order to gain a criminal advantage, be that by way of ransomware (effectively freezing systems and sending an electronic threat that unless a ransom is paid, data will be permanently deleted), industrial espionage (the selling of trade secrets), criminal advantage (the obtaining of confidential information so as to benefit from trade secrets and trading activities), or even as a means of international terrorism.Who carries out these attacks? This in itself is another significant problem. Cyber-attacks can be perpetrated by a wide range of individuals including criminals, terrorists and government organisations, hackers, employees and ex-employees who are aggrieved or acting under duress, or simply experimenters who usually have no malicious intent; for example, young cyber-enthusiasts trying their hands at infiltrating and taking control of advanced systems. Such attacks can either be untargeted or targeted: the former are normally less sophisticated and carried out on the assumption that by increasing the number of attacks, the criminals will increase their chances of success; whilst the latter require more time and research, can be extremely sophisticated and often occur in multiple stages.Cyber-risks change not only every day but every hour as new strategies are developed by hackers and others to disrupt systems.It can therefore be seen how the maritime industry is particularly exposed, due to the high number of access points for a cyber-attack, the wide range of potential individuals involved, and the huge potential damage that could result.The risks to which the shipping industry is exposed can be split into two broad categories:■ Data breaches or intangible damage. These are often easily

quantifiable and protectable, but nonetheless damaging. An example is “spear phishing” emails requesting payment or goods to be sent to what appears to be a similar and/or legitimate destination – or pirates who board ships, already knowing where the most valuable cargo is by accessing the container and stowage information before boarding.

■ Physical damage causing physical damage and/or bodily injury. There is a suggestion that, for example, GPS or ECDIS can be hacked to change the ship’s position so that a vessel could be sailing down a channel avoiding a shallow area or underwater obstruction, but then runs aground when its crew are not aware of its actual – much more precarious – position, leading to physical damage or worse, personal injury.

Some examples of cyber-incidentsBut are all these risks genuine – or simply another scare story in an industry historically littered with prophecies of Armageddon

maximise the benefits that a full e-commerce platform can provide. One of the drivers behind the advancement of the incorporation of e-commerce within the shipping sector has been the development of “blockchain”.So what is blockchain and why is it having such an impact on maritime and commodities trade? Blockchain is in effect a secured, decentralised and encrypted public ledger. It is an online communication protocol where all parties to the transaction have access to the same information, and no single party can unilaterally change such information without the consent of all the other parties involved. Its application in the shipping industry could well revolutionise the way in which the entire industry operates. By bringing together blockchain technology and the increasing development and utilisation of “smart” contracts, i.e. agreements written in a computer code that can be executed online to digitalise the supply chain, the savings in cost and enhanced efficiency in time could lead to a complete reorganisation of the sector. Indeed, it may lead to the shipping industry being affected and changed forever by the first maritime “disruptors”.The scope of potential in the shipping sector is immense. We operate in an industry where the processes have always been traditional, slow, document-heavy and reluctant to change. But think about a maritime regime where everything from the process of issuing bills of lading, delivering letters of credit, entering into charterparties or selling a ship, to facilitation of international trade, development of new markets and streamlining of the provision of insurance solutions, can be fully digitalised? To date, operations in the maritime sector have necessitated the involvement of a number of parties, often middlemen, frequently resulting in an increased risk of error, additional cost, reduction in profit margin and increases in time-processing, which prolong the entire supply chain and can regularly result in not only financial loss but potentially the whole collapse of a commercial transaction.By intelligent utilisation of e-commerce solutions, a new era of international and verifiable trust could be created, eliminating the need for a large number of the “middlemen” in the industry and leading to considerable improvements both in terms of time, efficiency and cost. The World Economic Forum has said a 15 per cent enhancement in world trade could be achieved if we remove the friction of sharing information in the supply chain. That’s no surprise – the paper chase and associated costs of so many supply chains have been well documented in recent times.How could it help? The advantages of using blockchain include:■ reduced processing times;■ increased efficiency and reduced risk of errors;■ cyber-security, due to blockchain being completely encrypted

and therefore allowing the transfer of information which cannot be tampered with by third parties;

■ transparency in the transaction as all parties involved can see what is happening;

■ direct relation between the parties without the need to use intermediaries; and

■ cost-effectiveness of the entire transaction.Blockchain is by its nature cross-jurisdictional, which makes identification of the appropriate governing law essential. It is also essentially a system that seeks to remove central control and overregulation; however, it is clear that in order for the system effectively to become the main foundation for global economic world trade, steps must be taken to ensure adequate regulation, legal protection and ultimately, how any disputes will be resolved. It is, therefore, very important in any e-commerce operation to ensure that both exclusive governing law and jurisdiction clauses, as well as dispute-resolution provisions, are in place in order for the parties

devices can be obtained for as little as US$100, and the ability to spoof an AIS signal achievable with the use of a US$100 VHF set.It is estimated that there are currently over 250,000 cell towers in Russia which are equipped with GNSS jamming devices. This has huge potential significance for the maritime industry. In 2017, a trial carried out at Flamborough Head in the UK showed that the effect of such transmission systems was to create incorrect data on ECDIS, AIS and Radar. In other words, all systems were affected.There are considerable issues identified in relation to the security of AIS, not least as it operates without any authentication protocols or encryption, and it is relatively easy to impersonate targets (ships). Even the most basic of jammers can now have a radius of over 30 kilometres. In a report published in 2017, it was estimated that a five-day loss of GNSS would cost the UK in excess of £149 million.

Regulation and guidance

Current legal precedents do not cater for the technological developments available to the shipping industry because, as yet, they have not needed to.The industry is in need of more certainty, and current definitions and terminology are being reconsidered to determine how and where the changes in technology fit into them.Leading shipping organisations such as BIMCO and the IMO, have published guidelines, which are free to download, to help the industry minimise the risk of cyber-attacks on ships. The incorporation of these guidelines into shipping companies’ working practices will soon become compulsory: IMO Resolution MSC.428(98) demands that cyber-risks should be properly addressed in existing safety-management systems no later than the first annual verification of the company’s Document of Compliance after 1 January 2021. Each company will therefore have to implement cyber-risk management plans and procedures identifying the roles and responsibilities of all users ashore and on board the ships, and identifying the systems and data which, if disrupted, could cause risks to the vessel’s operations. The plans will also have to take into account the cyber-threat, assess the risk, reduce the risk and develop contingency plans. The difficulty remains, however, that legal, insurance and regulatory regimes are struggling to keep pace with the advancing developments in technology.From an insurance point of view, the International Group of P&I Clubs covers P&I liabilities arising out of a cyber-attack, so long as the attack in question does not constitute “terrorism” or another war risk defined – and excluded – in the Rules. Hull & Machinery and cargo policies either exclude all liabilities arising from a cyber-attack via the Institute Cyber Attack Exclusion Clause (CL380), or are silent as to cover. This means that the companies and people involved in managing insurance risk will have to look to bespoke and separate policies in order properly to manage cyber-risk. The insurance market will have to move to accommodate this demand, and is already developing a number of bespoke and innovative products for cyber-risks.Companies that can address cyber-risks at the highest level of management, and that are able to ensure that all personnel are properly trained and fully cyber-aware, by implementing forms of security that will be adequate to protect their businesses, are without doubt going to gain a significant competitive advantage.

E-Commerce – and Blockchain

In the maritime industry, e-commerce has huge potential and many businesses are already modifying their systems in order to

providers of P&I cover has already developed a bespoke policy for automated ships which is gaining regular attention from the maritime marketplace.Second, safety. While the introduction of automated ships may result in fewer casualties – if you believe the statistics that 80 per cent-plus of casualties are caused by people-related faults or actions – a big question is, how will such vessels operate alongside traditionally manned ships, where the propensity for human error remains prevalent? Furthermore, as we have identified above, wherever there is increased automation, there is also the increased risk of cyber-attack. Shipping is no different in this respect and measures will have to be implemented to mitigate that risk.Third, casualty investigation. There has been a great deal of talk on regulation and safety, but little on (a) the kind of evidence that might be available following a casualty involving an automated ship, or (b) how you go about getting it. After all, there will be no shipboard crew to interview following an incident on a fully automated vessel. Casualty-investigation methods will therefore necessarily change. We see that already happening in the current era, given the evidential probity of electronic data available from voyage data recorders and electronic charts, and how the courts generally tend to accord higher credibility to that evidence over any other. By working with shipping companies and their insurers to address these issues today, those providing support services to the industry are endeavouring to be ahead of the curve when they arise tomorrow.So what other issues might arise with automation? One of the most significant concerns that has been raised by many who oppose the development and introduction of automated vessels is the effect it could have on the international seafaring community. There is no doubt that the advent of the automated ship will change the life of the seafarer forever. However, there is no need to think that the reduction of personnel at sea will reduce or restrict the employment need and capacity within the industry. In fact, automation could well lead to enhanced opportunity. Certainly, there could be an immediate improvement in working conditions which, in turn, could lead to an increase in safety by a reduction in stress-related activities caused by being away from families in a confined space, operating long hours in isolated conditions. Properly regulated and with adequate training, remote operation of vessels could vastly reduce stress-related illness and the associated risk of error resulting in significant casualty. It would also create far greater opportunity for those who are physically impaired and currently unable to pursue a career at sea and undertaking maritime operational and navigational duties. The potential for eradicating discrimination, in terms of both sex and disability, can clearly be seen.As the future is clearly closer than we think, let’s give further thought to what the impact of autonomous ships would be on the shipping sector. We have identified below some further general considerations as follows:■ Automated vessels should be more efficient and cheaper to

run.■ There will be no need, or very little need, for crew as vessels

will mostly be unmanned. This could mean that the space normally used for accommodating the crew can instead be dedicated to cargo, thereby increasing a vessel’s capacity.

■ Unmanned ships could mean less chance of human error being committed; however, such errors could simply be moving onshore – but balance against that the improvement of working conditions, supervision and enhanced training which could result in a reduction in maritime casualties.

■ Automated vessels could become less attractive to pirates, who may find them more difficult to board, while the absence of crew on board greatly reduces the ability to obtain ransom payments. However, the risk of cyber-piracy attacks could increase.

to be clear on how to deal with situations where the platform fails, or for some reason the chain is broken.The developing nature of the environment and the creation of new and advanced systems and crypto-currencies every day, combined with an ever-changing international position in relation to the legality and financial certainty of crypto-currencies, mean that considerable work will have to be undertaken until we have a fully verified and acceptable e-commerce solution. We can anticipate that at some point in the relatively near future, guidance will be provided by way of international convention concerning and introducing regulation into the operation of blockchain and other e-commerce solutions.Notwithstanding the challenges, many high-level organisations in the maritime world are already adopting blockchain solutions in their business, customer regulation, insurance placing and commodities training. The realisation of the significant savings in cost are in themselves a justification for the continuing development and integration of such systems. This in turn means that there will be a demand for a new breed of maritime professional. A legal, finance or insurance background will not be enough if not coupled with advanced technical ability, knowledge and understanding of this new way of doing business.

Automation of Vessels

The prospect of automated ships sailing on our seas is no different to the inevitability of blockchain. The question is not if automated ships will hove into view on our horizon, but when.The highest expression of automation of vessels is the introduction of the fully autonomous ship. The “YARA BIRKELAND” is the first fully autonomous, zero-emissions ship that has been designed and should be launched in 2019 to sail along the Norwegian coast. She will be monitored from shore-based control centres.The technology required is therefore already available and is being cultivated yet further still. A number of ports around the world are already operating autonomous smaller vessels in port management. The only market barrier to their further introduction will be their expense, and whether owners/operators are prepared to spend the money for the initial hardware outlay.However, whilst automated ships will present considerable opportunities for the industry, they will also pose some challenges – three, in particular.First, regulation. In December 2017, the Danish Maritime Authority reported to the IMO on the regulatory barriers to the introduction of automated ships. The report is 141 pages long, but its conclusions are succinctly clear: a substantial body of regulation and legislation (both national and international) will need reviewing and revising to take account of automated ships – not least UNCLOS, the Collision Regulations (COLREGs), the ISM Code, STCW and a multitude of other conventions. One central and recurring theme is: how can an automated ship (if we assume it is in fact a “ship” within the traditional meaning) adhere to the current regulatory framework? The simple answer is, it can’t. What is needed therefore is a complete overhaul of that entire framework, and the insurance field that supports and relies on it. No easy task, especially when you consider that the maritime industry – for all its innovation and longevity – is not renowned for ensuring that regulation keeps pace with technology. Work is being undertaken by international bodies to make sure that regulations are updated to accommodate automated ships. That is obviously to be welcomed, but there is no escaping that it will inevitably be a long process, and there remains the possibility that automated ships will be in operation before the legislation has been modernised. That will, of course, also present issues for insurers. Having said that, at least one of the leading

The field is developing every moment of every day. In terms of cyber-risk, perhaps the most significant concern is what we do not currently know, and what is not currently being reported.The considerable speed with which the markets are adapting to such new technology is invigorating, and could well result in greater opportunity, enhanced efficiency and increased profitability. We need to ensure, however, that our legal, insurance and regulatory regimes catch up with these developments. One significant factor in the maritime field is how such innovations may impact on the traditional concept of seaworthiness. It was in 1926 that the case of F.C. Bradley & Sons -v- Federal Steam Navigation (1926) 24 L1.L.Rep. 446 provided us with the accepted definition of seaworthiness – the ship “must have that degree of fitness which an ordinary careful and prudent owner would require his vessel to have at the commencement of her voyage having regard to all the probable circumstances of it”. This followed on from the earlier decision in Kopitoff -v- Wilson (1876) 1 QBD 377 – that a vessel must be “fit to meet and undergo the perils of sea and other incidental risks to which of necessity she must be exposed in the course of a voyage”.It is therefore accepted as a matter of English law that a ship is seaworthy: “If she has that degree of fitness which the ordinary careful owner would require his vessel to have at the commencement of the voyage having regard to all the probable consequences of it. Would a prudent owner have required it should be made good before sending to sea had he known of it?” This requirement extends beyond physical fitness to: (i) sufficient, efficient and competent crew; and (ii) adequate and sufficient systems on board to address matters which may arise duirng the voyage by reference to the state of knowledge in the industry at the time.But what is the degree of seaworthiness required in relation to an automated vessel, and how does the concept of seaworthiness apply where a maritime casualty arises as a result of a cyber-attack or some defect in the cyber-protections or firewalls of the vessel in question?It is certainly the view of the author of this chapter that in the absence of being able to show positive steps taken in line with the implementation of cyber-risk management systems and protocols, an owner will face an uphill struggle in establishing seaworthiness.

■ Given the level of technology on board, maintenance costs could increase, although these could be set off against savings in crew wages.

■ It may be far easier to make autonomous vessels environmentally friendly.

■ There will be a whole new range of risks, many of which have yet to be identified, due to the digitalisation and technology that will govern these ships. A thorough risk assessment will therefore have to be carried out, and liability of manufacturers in a shipping context considered more fully.

■ Different skills will be required from seafarers, as they will need to have an in-depth knowledge of IT, technology and all the systems installed on board. However, greater diversity may well result.

■ Shipbuilding contracts will have to undergo great changes, especially in relation to the allocation of responsibility and builders’ exclusion-of-liability clauses, given that the vessels will mostly be controlled remotely by systems installed by the builders or other third parties.

■ Being fully dependent on the Internet could cause major issues if a vessel loses its connection during a major storm in the middle of the ocean, or if there is a terrorist attack on satellite systems, or a major dispute between governments whereby satellite access is restricted. One or two back-up plans will therefore need to be in place and available.

■ Given the quick pace of technology development, for how long will these types of ships be able to stay in service?

■ Finally, serious consideration will have to be given to cyber-risks. Having dealt with these above, it can be seen how fully automated vessels will be more exposed to cyber-attacks. Currently, the shipping industry is not ready to defend itself from minor attacks, therefore, a lot needs to be done before automated vessels can become “cyber-proof” and safely used.

Conclusion

It was Robert Kennedy who famously said, “we live in interesting times”. Never has that been more true than today, and especially in the field of maritime technology, automation of vessels, and adaptation of e-commerce solutions.

Hill Dickinson LLP is a leading and award-winning international commercial law firm with more than 840 people, including 175 partners and legal directors.

From offices in the UK, mainland Europe and Asia, the firm delivers advice and strategic guidance spanning the full legal spectrum. The firm acts as a trusted adviser to businesses, organisations and individuals across the globe and from a wide range of market sectors, advising on non-contentious advisory and transactional work through to all forms of commercial litigation and arbitration.

The firm’s clients include multinational companies, major corporations, UK plcs, insurance companies, UK and foreign banks and financial institutions, public sector organisations, private individuals and professional bodies.

As a full-service law firm, Hill Dickinson offers the full range of commercial legal services, from employment and property and construction to corporate, commercial and dispute resolution.

The firm has notable strength, experience and presence in a number of market sectors, including marine, transportation and logistics, retail, insurance, health, international trade, education, and banking and financial services.

Beatrice qualified as an English Solicitor in Hill Dickinson’s shipping team in September 2016 after having trained with the firm. Beatrice acts regularly on behalf of Protection and Indemnity (P&I) Clubs, Underwriters, Owners, Charterers and Managers on a very wide range of dry shipping matters. In the past year she has been on two 3-month secondments with two different International Group P&I Clubs where she was both assisting and handling P&I and freight, demurrage and defence (FD&D) matters. Specifically, Beatrice dealt with defending cargo claims on behalf of Owners/Members and pursuing cargo claim recovery under the Inter-Club Agreement. Both during her time at Hill Dickinson and the secondments, Beatrice has dealt with charterparty disputes including off-hire claims, laytime and demurrage, hull fouling, unsafe port, damage to hull and bunker disputes.

Julian Clark is the Global Head of Shipping for Hill Dickinson and has overall management responsibility for the shipping group both in London and internationally. He was called to the Bar of England and Wales in 1988 and has, since that time, been almost exclusively engaged in advising on maritime law matters and major incidents in the field. In 2011, having previously been a leading partner with another internationally recognised law firm, he launched his own boutique shipping law practice with two other colleagues, which soon established itself as a leader in shipping transport and trade. He has advised a wide range of Owners, Charterers, Operators and Traders in relation to a variety of matters ranging from piracy incidents in the Gulf of Aden to major casualties and shipbuilding disputes. He has also drafted a number of commercial documents, including the terms and conditions for leading insurance facilities. He is a mediator accredited by the Centre for Effective Dispute Resolution (CEDR) and a supporting member of the London Maritime Arbitrators Association (LMAA), Baltic Exchange and Association of Average Adjusters.

Beatrice Cameli Hill Dickinson LLPThe Broadgate Tower20 Primrose StreetLondon, EC2A 2EWUnited Kingdom

Tel: +44 20 7283 9033Email: beatrice.cameli@hilldickinson.comURL: www.hilldickinson.com

Julian ClarkHill Dickinson LLPThe Broadgate Tower20 Primrose StreetLondon, EC2A 2EWUnited Kingdom

Tel: +44 207 280 9363Email: julian.clark@hilldickinson.comURL: www.hilldickinson.com

Chapter 4

Legal and Regulatory Overview of Wet Cargo Shipping in Nigeria

Akabogu & Associates

Introduction

Shipping transport services are chiefly driven by the demand and supply of relevant cargoes. Wet cargo or liquid bulk shipping in Nigeria is therefore directly influenced by those wet cargoes typically associated with the country’s economy.In 2015, Nigeria’s exports were valued at $47.8bn. Crude oil topped the list as Nigeria’s chief export commodity, accounting for 77.2% of the total value; followed by petroleum gas, which accounted for 15.5%. Nigeria’s most recent import figures also show that refined petroleum, representing 15.2% of the total volume, is the most imported product in Nigeria; followed by wheat, which accounts for only 2.76% of the total.The above clearly indicates that the liquid bulk shipping trade in Nigeria is dominated by crude oil and petroleum products shipments respectively, as both categories of shipment are almost exclusively done by sea. The significant part of liquid bulk shipments in Nigeria are thus occasioned by:■ crude oil exports;■ import of petroleum products/petrochemicals; and■ lightering services.This article will, in its first part, explore in general the legal and regulatory issues attendant to shipping wet cargo in Nigeria, and later discuss regulations and legal issues which have particular bearing on crude oil and petroleum products transport by sea.

Regulation of Wet Cargo Shipping in Nigeria

The maritime industry in Nigeria is largely regulated by the Nigerian Maritime Administration and Safety Agency (“NIMASA”), the Nigerian Shippers’ Council (“NSC”) and, to a limited extent, the Nigerian Ports Authority (“NPA”).Pursuant to its enabling legislation, NIMASA is charged with the administration of maritime safety, maritime labour, seafarers’ standards and security, as well as the promotion of commercial shipping and cabotage activities, pollution prevention and control in the marine environment, and implementation of domesticated International Maritime Organization (“IMO”) and International Labour Organization (“ILO”) Conventions. The agency thus implements the key statutes around which merchant shipping in Nigeria is organised, viz.:■ Nigerian Maritime Administration and Safety Agency Act

2007.■ Merchant Shipping Act 2007.■ Coastal and Inland Shipping (Cabotage) Act 2003.

Important highlights of these statutes include flag and port state administration, marine environmental management and regulation of coastal shipping.

Flag and port state administration and control

NIMASA, through the Nigerian Ship Registration Office established by Section 28 (2) of the NIMASA Act 2007, maintains a Central Ship Registry as required by Section 16 (1) of the Merchant Shipping Act 2007 as well as a Special Register for Vessels and Ship-owning Companies Engaged in Cabotage established by Section 22 of the Coastal and Inland Shipping (Cabotage) Act 2003.Only Nigerian citizens, bodies corporate established under and subject to Nigerian laws, having their principal place of business in Nigeria, or such other persons as the Minister of Transport may prescribe by regulations, are qualified to register Nigerian ships. Acquisition of interest in ships by unqualified persons is prohibited, with defaulters liable upon conviction to forfeiture of their interest.The outlined Ship Registry services are a core part of NIMASA’s flag state administration duties, which is oversight of Nigerian-registered ships. As a result, it registers all kinds of vessels, including fixed/mobile platforms and oil rigs, as well as oil tankers. It also implements and enforces safety standards under domestic laws or international conventions ratified by Nigeria on ships within the Nigerian Ship Registry. Under the Memorandum of Understanding on Port State Control for the West and Central African Region (generally referred to as the “Abuja MoU”), Nigeria has a port state responsibility to carry out inspections on a minimum of 15% of vessels calling at its ports, many of which are tanker vessels.

Marine environmental management

Nigeria is a signatory to the International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978 (MARPOL 73/78). MARPOL is one of the most important international conventions dealing with conservation of the marine environment, and it subjects all ships flagged under the registries of its signatories to its requirements, regardless of where they sail. The convention, along with eight others, is applicable in Nigeria pursuant to Section 335 of the Merchant Shipping Act 2007. Other conventions not specifically listed, but which relate to pollution of the marine environment, are also made applicable.Nigeria also has in force a full suite of regulations dealing with marine environmental management. The regulations are drawn from provisions in various international conventions to which Nigeria is a party, but which had not previously been put into effect in the

Victor Onyegbado

Emeka Akabogu

Wet Cargo Shipping in NigeriaAkabogu & Associates

which are party to MARPOL the right to deny such oil tankers entry to ports or offshore terminals under their jurisdiction. If this is not taken into consideration, legal issues and liabilities may arise against such ships, charterers and committed cargo interests.

Coastal shipping of wet cargo

Due to logistical challenges and policy considerations, many large tankers are stationed offshore and accept smaller vessels to break-bulk and deliver to shore tanks. This has occasioned an active coastal shipping market for the delivery of mainly liquid bulk petroleum products. The Coastal and Inland Shipping (Cabotage) Act was enacted in 2003 to enhance indigenous participation in the maritime sector. The Act focuses on the development of indigenous tonnage and establishes a financing fund to bankroll domestic vessel acquisition.The law provides a relatively broad definition of the term ‘cabotage’, capturing the carriage of goods and services from one coastal point to another point in Nigeria, the carriage of goods and passengers in the exploration, exploitation or transportation of mineral or non-natural resources and the operation of a vessel or any other marine activity of a commercial nature – including towage, salvage and dredging – in Nigerian waters in accordance with NIMASA. The Cabotage Act 2003 restricts cabotage shipping to:■ vessels wholly owned by Nigerian citizens;■ vessels wholly manned by Nigerian citizens;■ vessels registered by Nigerian citizens; and■ vessels built by Nigerian shipbuilders.The Act also provides for a scheme of waivers and licences which may be granted by the Minister in appropriate circumstances. It empowers an officer of NIMASA who has reasonable grounds to believe that a vessel has contravened the Act, to stop and board the vessel, detain the vessel, its officers or both; and with a warrant, search the vessel and seize anything found that the NIMASA officer has reasonable grounds to believe is evidence of contravention of the Act.

Economic regulation

The Nigerian Shippers’ Council is statutorily mandated to protect the interests of shippers of all types of cargo and advise the government on freight rates, port charges and a range of other relevant roles. It has recently been confirmed as the economic regulator of the ports, with an added role of regulating tariffs and charges amongst regulated service providers including ports, terminals, shipping companies and agencies.

Legal and Regulatory Issues for Shipping Oil in Nigeria

As noted above, the bulk of Nigeria’s wet cargo shipments are occasioned by import and export of petroleum products and crude oil respectively. Expectedly, these trades are substantially regulated, with different departments of the government of Nigeria involved at different stages.

Regulation of crude oil transport

All oil and gas reserves in Nigeria are owned by its federal government, but mining licences and leases are granted to different oil companies for the exploration and production of crude oil. The oil can, however, only be exported through designated oil terminals

country. The regulations established a robust regulatory regime for the marine environment, with strong compliance responsibilities for those affected, particularly in the maritime sector. Key regulations that affect liquid bulk cargo include the Marine Environment (Sea Protection Levy) Regulations 2012 and the Liability and Compensation Regulations 2012.

Sea Protection Levy Regulations

The Marine Environment (Sea Protection Levy) Regulations impose a levy on all commercially operating vessels and oil installations in Nigerian waters above 100 gross tons. The levy is payable on an annual or per-call basis, depending on the nationality of the ship; while the rates payable depend on whether the ship is carrying oil in bulk as cargo, and its storage capacity. The basis of the levy is the profile of the affected vessels as potential polluters.

Liability and Compensation Regulations

Victims of oil pollution have traditionally found it difficult to bring successful claims, due to the technical liability limitations in favour of shipowners. With claim processes largely structured by the traditional law of tort, claimants have the onerous task of proving shipowner negligence. In addition, outright exclusions in favour of shipowners make the burden heavier on claimants.The Liability and Compensation Regulations give effect to the Civil Liability Convention, providing greater clarity on the rights and obligations which exist between shipowner and pollution victim. It imposes liability for oil pollution damage squarely on the registered owner of the ship from which the oil escapes or is discharged. This liability is strict in the sense that the claimant need demonstrate only that it has suffered damage as a result of the spill; there is no need to prove that the shipowner was at fault. This would seem to facilitate prompt, equitable compensation payments to victims of oil pollution damage. Together with the Merchant Shipping (Prevention of Oil Pollution) Regulations, liability coverage is now effectively extended over ships which discharge oil. Liability actions are now likely to be easier to bring and claim upon, in relation to oil pollution.

Phase-out of single-hull tankers in Nigeria

Under the IMO’s Revised Regulation 13G (now Regulation 20) of Annex 1 to MARPOL, flag administrations were required to phase out Category 2 and 3 single-hull tankers by 2015. In view of the difficulty in achieving wholesale fleet renewal, the IMO extended the deadline for certain categories of tanker not engaged in international trade. NIMASA took advantage of this window to push back the final phase-out date for single-hull oil tankers to 31 December 2020. According to the agency, this decision was intended to “sustain the development of the Nigerian maritime industry and enhance the gains of the Cabotage Laws and Local Content Act”.Despite the extension, there will be no new registration of single-hull tankers, whether newly built or second-hand. However, the certificates of registered and operating single-hull vessels will be renewable for two years at first instance and subsequently for another two years, compared to the existing practice of renewal within five years. In addition, valid classification and statutory certificates issued by the administration must be in force in favour of the tanker.From a risk assessment viewpoint, operators of single-hull tankers that wish to take advantage of the extension should ensure that such tankers are limited at all times within Nigerian territory. This is because the further provisions of Regulation 20 give port states

Import Permit

All companies duly registered under the Corporate Affairs Commission (“CAC”) as providers of goods and services in the downstream sector of the Nigerian oil and gas industry are eligible to apply for an Import Permit of Petroleum Products, subject to having access to appropriate storage facilities, which could be owned by or leased from third parties. An application for an Import Permit is made through the designated online portal.An Import Permit shall have a duration of 90 days from the date of issue. All imported Petroleum Products must meet the National Quality Standard specifications, as approved by the Department of Petroleum Resources (“DPR”). Each importer of petroleum products shall be required to submit returns on the system on the previous importation for which the permit was issued, and upload copies of all relevant invoices and shipping documents, before any subsequent application for an Import Permit is approved.

Vessel arrival notification

Clearance of vessels for discharge at receiving facilities shall be duly implemented upon the importer notifying the DPR at least seven days prior to the arrival of the vessel at a Nigerian port and providing the prescribed documents. A vessel laden with imported petroleum products shall only be allowed to discharge at the indicated jetty where: (i) there is evidence of an import permit for the product; (ii) the imported product has been fiscalised in the presence of a DPR official; (iii) a re-certification analysis of the product composite sample is conducted in the presence of a DPR official and the result certified on-spec; and (iv) documents received from the vessel are not in conflict with those uploaded earlier by the importer of the product, and a Certificate of Quantity has been issued.

Approved ports

By Section 6 (1) of the Petroleum Regulations 1967, no petroleum shall be imported into Nigeria at any port other than a prescribed port, unless the consent in writing of the Director of Customs and Excise has been first obtained, and subject to such conditions as he may specify. Any person desiring to import petroleum at a port other than a prescribed port is required to apply to the Director of Customs and Excise in writing, stating the quantity and kind of petroleum which he desires to import.By Section 8 of the Regulations, the master of such a ship carrying petroleum shall, before entering a prescribed port, make a declaration to the pilot/boarding officer as to the quantity and quality of petroleum carried by the ship.

Dispute Situations and Resolution

Sea transport of petroleum products and oil accounts for a third of global tanker trade and is usually formalised by contracts between shippers on the one hand, and carriers (ship-owners or charterers) on the other. These contracts, known as charterparties, are normally in standardised form and provide for the terms upon which cargoes (in this case, crude oil or refined petroleum products) are transported by ship between production sites, refineries and points of consumption.Subject to relevant statutory provisions where available, as well as to proven mercantile usages and customs, Nigerian law applies the general principles of common law and equity in the construction

from where ocean tankers evacuate the cargoes. Nigeria’s Oil Terminal Dues Act thus prohibits the installation and operation of oil terminals, except with the written approval of the Minister of Petroleum. The Act also provides for the levying and payment of terminal dues by vessels evacuating crude oil at terminals in Nigeria.The most serious concern of the Nigerian government in relation to the movement of crude oil in the last couple of years has been oil theft. In this regard, the Crude Oil (Transportation and Shipment) Regulations were designed with the purpose of ensuring a clear trail of all crude oil traversing the country. Except with prior authorisation, within the limits of operational practice or when loading from two or more terminals within Nigeria, no ship or tanker is allowed to carry dead freight. Dead freight evidently makes ‘topping’ easier, which facilitates the stealing of crude oil using the cover of lawful trade. ‘Topping’, which refers to the additional loading of crude oil in any available space on the ship after loading the nominated quantity at any designated terminal, is expressly prohibited and shall not be undertaken, demanded or received by any ship or tanker within or outside any loading terminal in Nigeria.The Regulations place a premium on verification of tank capacity of ships by the appropriate government authority. False declaration of capacity or alteration of documentary information relating to capacity is deemed as non-compliance. Ballast tanks are required to be used solely for carriage of ballast water, not crude oil, which should equally not be carried in any other tank or receptacle except those designated and designed for that purpose.Documentation is crucial at all times, and no ship is allowed to depart from a loading terminal without full documentation, particularly from the Nigerian Customs Service and other relevant agencies of government. This ensures that the trail of the cargo can be clearly seen and verified at all times. For the same reason, loading or transhipment must be on clear authorisation and should not be outside locations approved for that purpose.Other regulations are also important in relation to marine environmental protection in the course of crude oil carriage. The Merchant Shipping (Prevention of Oil Pollution) Regulations set out procedures and regulations to avoid pollution of the marine environment, and include prohibiting or regulating discharge of oil or oily mixtures into the sea, record-keeping for ship machinery and oil tanker cargo operations, amongst many others.Adequate insurance cover is required at all times, in line with the provisions of the Merchant Shipping (Liability and Compensation) Regulations, while an incident response framework is provided for under the Merchant Shipping (Oil Pollution Preparedness, Response and Cooperation Convention) Regulations. Nigeria’s Pre-shipment Inspection of Exports Act also provides to the effect that all exports from Nigeria (including crude oil exports) are to be subjected to inspection by pre-shipment inspection agents. Where crude oil is being transported within Nigeria, the relevant vessels must comply with the Coastal and Inland Shipping (Cabotage) Act provisions, in addition to similar rules under the Nigerian Content Management and Development Board Act.

Regulation of petroleum products importation

The Guidelines for the Importation of Petroleum Products into Nigeria 2005 are made pursuant to Paragraph 4(1) of the Fourth Schedule to the Petroleum Act CAP P10 L.F.N. 2004, and are intended to clearly define the regulatory requirements for the issuance of Petroleum Products Importation Permit and the administration of Vessel Arrival Notification and cargo discharge at jetties.

or the place where the bill of lading or other transport document was issued are in a contracting state. Thus, the Hamburg Rules cover both inward and outward shipments of cargo and apply where there is a bill of lading or other shipping document. Conversely, the Hague Rules apply only to bills of lading issued in any of the contracting states. As such, they apply only to outward movements of cargo from Nigeria. Whereas the Hague Rules are notoriously skewed in favour of the shipowner or carrier, the Hamburg Rules establish a more balanced liability regime that is fair to all parties concerned in a sea carriage transaction. As Nigeria is a party to neither the Hague-Visby Rules nor the Rotterdam Rules (which are yet to come into force), these have no force of law in Nigeria.Due to their relatively conflicting provisions, the continued co-existence of the Hague Rules and the Hamburg Rules has generated confusion and uncertainty among shippers, shipowners, carriers, cargo owners, underwriters and other key industry players who, without a definite yardstick for deciding which of these regimes applies to their transaction, cannot properly assess their rights, liabilities and obligations.This controversy was unwittingly permitted by the United Nations Convention on the Carriage of Goods by Sea (Ratification and Enforcement) Act 2005, which merely introduced the Hamburg Rules as a schedule to the legislation without expressly repealing and denouncing the Hague Rules, as required by Article 15 of the Hague Rules. Two recent first instance decisions of the Federal High Court seem to suggest that the Hague Rules are still applicable due to non-denouncement, as required by the tenor of the Hamburg Rules. Nonetheless, the controversy remains, as denunciation of the Hague Rules was not made a pre-condition for the application of the Hamburg Rules, nor are there any express consequences set out for non-denunciation.The more sustainable position could be found in the premise set out by the Supreme Court in Leventis Technical Limited v. Petrojessica Enterprises Limited (1999) 6 NWLR Pt 605, 45 where the court posited that the Hague Rules may only apply to inbound carriage through the clause paramount. The clause paramount, for its part, will only be of relevance where there is no statutory enactment in the country of destination which is compulsorily applicable to the transaction. In view of the subsequent enactment of the Hamburg Rules into law, the position could now be that the Hague Rules will not apply to bills of lading for carriage of petroleum products inbound to Nigeria.

Conclusion

As long as Nigeria remains a major producer of crude oil and importer of petroleum products, the market for shipping these cargoes will remain active, though the dynamics may change. The country is currently considering a policy which will see crude oil sold on cost and freight terms, which will have an impact on the current fleet size. Market-led considerations are also ongoing for development of standard charterparty terms to govern coastal tanker contracts. Disputes arising from charterparties and bills of lading remain a regular incident of carriage and the Nigerian legal landscape has adequate remedies to deal with these.

of contractual terms, and will therefore generally enforce them as stipulated by the parties. Some key points of note are relevant.

Admiralty jurisdiction

Nigeria’s constitution vests exclusive original jurisdiction in all admiralty matters on the Federal High Court. The court exercises first instance jurisdiction pursuant to the constitution and the Admiralty Jurisdiction Act in all causes and matters relating to a proprietary interest in a ship or any maritime claim. Particularly, the Federal High Court will have exclusive original jurisdiction in causes and matters relating to breach of maritime contracts or based on maritime torts connected with the carriage of oil or petroleum products by sea.

Foreign jurisdiction clauses

Section 20 of Nigeria’s Admiralty Jurisdiction Act has been interpreted by the Nigerian Supreme Court as being intolerant of foreign jurisdiction clauses in contracts of affreightment. The traditional view that a court may uphold a foreign jurisdiction clause in a contract of affreightment where the said choice of foreign law clause is “real, genuine, bona fide, legal, reasonable and not capricious and absurd” appears to have been discarded by the supreme court in Jfs Investment Ltd. v. Brawal Line Ltd. & Ors (2010) LPELR-1610 (SC) when it held, per Adekeye, J.S.C. (p. 39, paras A–F), that: “I cannot but take judicial notice by virtue of Section 74 of

the Evidence Act, Cap 112 Laws of the Federation of Nigeria 1990, that the Admiralty Jurisdiction Act 1991 has virtually removed the element of courts’ discretion in deciding whether or not to uphold a foreign jurisdictional clause. Section 20 of the Admiralty Jurisdiction Act 1991 thereof provides that - (1) Any agreement by any person or party to any cause, matter or action which seeks to oust the jurisdiction of the court shall be null and void if the place of performance, execution, delivery, act or default takes place in Nigeria, OR (2) Any of the parties reside in Nigeria or has resided in Nigeria OR (3) The payment is made or is to be made in Nigeria OR (4) Under any convention for the time being in force to which Nigeria is a Party OR (5) In the opinion of the court, the cause, matter or action should be adjudicated upon in Nigeria.”

Liability regimes

Ship and cargo owners with an interest in Nigeria may be confronted by a unique question in their quest for due diligence: in the event of damage or loss to cargo, which liability regime applies? The Hague Rules 1924 and the Hamburg Rules 1978 are concurrently in force in Nigeria. The Hague Rules are one of the statutes inherited from the time of British rule, and apply as the Carriage of Goods by Sea Act 2004. Conversely, the Hamburg Rules were domesticated in Nigeria as the United Nations Convention on the Carriage of Goods by Sea (Ratification and Enforcement) Act 2005.The Hamburg Rules apply to all carriage-by-sea contracts between two different states, provided that the ports of loading and discharge

Akabogu & Associates is a law practice offering full business law services across Nigeria. Our practice areas cover a range of strategic business sectors of the economy, including shipping, maritime, international trade, energy, natural resources and intellectual property, providing services for both large establishments and boutique firms. Established in 2006, the firm has distinguished itself not just for its mastery of its practice areas, but also for its display of personal commitment, speed and competence in providing creative client solutions. In its flagship practice area of Shipping and Maritime, it maintains robust engagement with the industry through its training platforms. It has regularly been ranked as a ‘Leading Firm’ in Europe, Middle East and Africa for the ‘Shipping and Transport’ category, and is retained by both government and private sector interests in key maritime disputes and initiatives.

Victor Onyegbado has vast experience with commercial transactions documentation and litigation; particularly those relating to marine cargo claims, carriage of goods by sea, international trade, marine insurance and subrogation.

Victor has advised government institutions, terminal operators, shipping companies and various cargo interests on issues relating maritime claims litigation, charterparties, contract negotiations, regulatory policy and modalities for doing business in Nigeria.

Emeka Akabogu is an expert in the field of maritime law and policy in Nigeria, and is the Senior Partner at the law firm Akabogu & Associates. His book, Maritime Cabotage in Nigeria, was the first published work on the subject in Nigeria, and is in addition to numerous published articles. In 2012 he drafted the regulations which constitute the current legal framework for marine environmental management in Nigeria. Emeka holds an LL.M. from University College London and a Magister Juris from the IMO International Maritime Law Institute Malta. He is a Fellow of the Chartered Institute of Shipping, and maintains memberships of the Nigerian Bar Association, Maritime Arbitrators Association of Nigeria, the Energy Institute, and the Chartered Institute of Arbitrators. He sits on the Board of Governors of the Centre for Petroleum Information and currently serves as the Honorary Secretary of the Nigerian Maritime Law Association.

Victor OnyegbadoAkabogu & Associates15B Olajide George StreetLekki Scheme 1, Lekki PeninsulaP. O. Box 53076Ikoyi, LagosNigeria

Tel: +234 1453 5940Email: victor@akabogulaw.comURL: www.akabogulaw.com

Emeka AkaboguAkabogu & Associates15B Olajide George StreetLekki Scheme 1, Lekki PeninsulaP. O. Box 53076Ikoyi, LagosNigeria

Tel: +234 1453 5940Email: emeka@akabogulaw.comURL: www.akabogulaw.com

Chapter 5

Introduction

Voltaire’s improbably optimistic Dr. Pangloss held that “all is for the best” and found equally implausible reasons to support his questionable logic. Few will give credence to his highly irrational thinking.Nonetheless, achieving the best should always be an objective. The shipping world raises many challenges of its own, not least in the context of providing compensation in the aftermath of a maritime incident. This article will review international cooperation to develop liability and compensation instruments, particularly in relation to oil spills. It will examine the structure of internationally agreed liability and compensation regimes to determine whether the system stands up to scrutiny and provides a response to the need for certainty and consistency to create the best of all possible worlds.As an international industry, it is important that shipowners are exposed to the same liabilities wherever they are trading. This is the position in many jurisdictions although there are important exceptions, particularly the USA. However, to the extent that States have accepted international treaty obligations imposing common underlying principles, rules, obligations and liabilities then, in theory, insurance, often provided by “Protection and Indemnity (P&I)” Clubs in the International Group of P&I Clubs, should cover the same eventualities wherever they may arise. This also discourages “forum shopping” where litigants try to bring their case in a favourable jurisdiction often remote from the cause of action.

Evolution of Liability Provisions

Liability provisions applicable to shipping have evolved over many years but particularly in the last half-century. Limitation in England can be traced back to the Responsibility of Shipowners Act 1733. This, however, was a somewhat blunt instrument because it limited shipowners’ exposure to the value of the vessel and freight and was of little benefit when a ship had been lost. A more realistic approach came with the Merchant Shipping Act 1854 which introduced a tonnage-related valuation.It was to be another seventy-five years before the first international limitation instrument was agreed, although support was not universal, with the USA maintaining its own procedures. The International Convention for the Unification of Certain Rules to the Limitation of Liabilities of Owners of Sea-Going Ships 1924 was drafted by the international private law organisation Comité Maritime International (CMI). Limitation was allowed for proved acts or defaults of a Master, crew, pilot or any other person in the service of the vessel. Significantly, the right to limit was lost if the owner was at fault.

It is worth noting that the question of personal fault had previously been decided in Lennard’s Carrying Co,i where ship and cargo had been lost following a fire. It was held by the House of Lords that failure on the part of the company’s “directing mind”, Mr. Lennard, meant that the company was unable to claim exclusion from liability for the resulting losses.The international regime was updated by the International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships 1957. However, while the provisions were applicable to charterers, managers and operators of a ship as well as the Master, crew and other servants of the owner, rights to limit continued to be denied where a claim resulted from the “actual fault or privity of the owner”. At a time when owning interests were often actively engaged in the day-to-day operation of their vessels, owners’ “fault or privity” offered considerable scope for challenging management actions in the aftermath of an incident giving rise to a claim. The 1957 Convention did not secure sufficient ratifications to come into force until May 1968.General limitation provisions were further reviewed a few years later, leading to the International Convention on Limitation of Liability for Maritime Claims (LLMC) 1976. Limitation rights were set out in a defined list including loss of life or personal injury and loss of or damage to cargo and other property, together with certain other claims, but with a new right for States to exclude wreck and cargo removal from limitation. Oil pollution damage was expressly excluded because, as explained below, this was separately covered under a new, specialist, self-standing regime.In a radical departure from past instruments, the problematic denial of limitation due to the “fault or privity of the owner” was replaced by a new test. Under LLMC 1976, the right to limitation was lost only if the loss resulted from the “personal act or omission” of the person (i.e. shipowner as defined in LLMC 1976) claiming limitation and was “committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result”. This removed the previous uncertainty and scope for challenge in earlier instruments. Limitation was now likely to be broken only in the most extreme cases arising from the deliberate fault or default of the directing mind. Such cases are extremely rare. The quid pro quo for almost unbreakable limitation was the introduction of high compensation levels.LLMC 1976 came into force in December 1986. Amendments were introduced through a 1996 Protocol (LLMC 1996) which, inter alia, raised compensation limits significantly. A further increase adopted in April 2012 took effect from April 2015.

Donald ChardBIMCO

International Liability and Compensation Conventions: Panacea or Ideal?

International Liability and Compensation ConventionsBIMCO

extending the geographic coverage to a Contracting State’s exclusive economic zone or equivalent area; and increased compensation in terms of the total to be made available together with a new minimum threshold level for smaller ships.One of the most significant changes was the test for denying owners’ right to limit liability. As already explained, CLC 1969 was predicated on the absence of owners’ “fault or privity”. The amended CLC introduced wording reflecting LLMC 1976 where the right was lost only if it was proved that pollution damage had resulted from owners’ “personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result”. The bar was set at a very high level with only the direct actions, fault or connivance of the most senior management or “hands on” directing mind likely to come within the criteria for loss of limitation. As a result, CLC 1992 establishes a trade-off between almost unbreakable limitation in return for strict liability and high levels of compensation.Parallel changes were made to the Fund Convention 1971. Compensation was similarly enhanced.The entry into force mechanism in the 1984 Protocols updating CLC and Fund Convention envisaged participation by the USA which had remained outside the original regime. However, the subsequent absence of US ratification and development of the US Oil Pollution Act 1990, meant that the Protocols would not come into effect. A further Diplomatic Conference was held in 1992 where revised implementation provisions facilitated entry into force in May 1996.The updated CLC 1992 provided threshold compensation, payable by the shipowner, of SDR 3 million, for all vessels up to 5,000 gross tons, and then increased by SDR 420 for each additional ton up to a maximum of SDR 59.7 million.iii Claims exceeding the shipowner maximum were compensated by payments made from the Fund Convention 1992 where the maximum amount payable (including first tier shipowner compensation) was raised to SDR 135 million, regardless of vessel size.

Adequacy of Compensation Limits

That, however, was only a prelude to the next challenge when, in December 1999, the tanker Erica foundered off the Brittany coast. The incident called into question the adequacy of the then compensation limits. The IMO Legal Committee moved quickly and, in October 2000, agreed a 50% increase in compensation to SDR 89.77 million and SDR 203 million respectively for CLC 1992 and the Fund Convention 1992.However, restrictions within the provisions of the two Conventions precluded any further increase before 2011. This did not satisfy some European States. The loss of the tanker Prestige off Cape Finisterre in November 2002 served only to exacerbate concerns. There was active talk about reopening the Conventions and suggestions for the creation of a regional European scheme to provide additional compensation.Proposals of this nature were unpalatable to the shipping industry as they would undermine the carefully constructed system that, while not perfect, had nevertheless worked reasonably well over some thirty years. It was also likely that this would be the thin end of the wedge as different regimes, already present in the USA, would emerge in Europe and then in other parts of the world. International uniformity would be lost. Shipowners would be expected to comply with a range of different requirements according to their trading pattern while, in the event of an oil-spill incident, procedural disputes and questions of applicable substantive law might create uncertainty and delay claimants’ compensation payments.

Oil Pollution Compensation

It is now necessary to step back in time to the point when the whole concept of shipowner liability for oil pollution came to the fore as a result of the Torrey Canyon incident in March 1967. The vessel, a then super-tanker, carrying some 120,000 tons of oil, grounded on the Seven Stones Reef between Land’s End and the Isles of Scilly. This was a new situation and, half a century later, we might question the British government’s attempts to control the resulting pollution. However, it soon became clear that existing provisions for limitation and compensation were no longer suitable to respond to and meet the very large claims arising from a major oil spill incident.New thinking was necessary. The International Maritime Organization (IMO) (known until 1982 as the Inter-Governmental Maritime Consultative Organization – IMCO) responded quickly, setting up a specialist Legal Committee to look at the issues.This resulted in the rapid development of a new two-tier instrument for compensating pollution damage from “persistent oil” in vessels carrying oil in bulk as cargo or bunkers. The first tier, the International Convention on Civil Liability for Oil Pollution Damage (CLC) 1969, imposed “no-fault” strict liability on shipowners. Owners of ships carrying more than 2,000 tons of oil in bulk as cargo were required to maintain compulsory insurance cover, normally provided through a member of the International Group of P&I Clubs. However, liability attached to all vessels, regardless of size, with compensation graduated up to a maximum monetary figure. This was originally expressed in gold francs but, by a Protocol in 1976, this was changed to the International Monetary Fund’s (IMF) “Special Drawing Right” (SDR).ii All claims would be channelled to the registered owner (possibly a bank or financial institution) which had the right to take recourse action against the vessel’s operator.The CLC 1969 had limited geographic coverage in that it applied to pollution damage only in the territory including the territorial sea of a Contracting State and to preventive measures taken to prevent or minimise such damage. However, it also perpetuated the shortcoming of the 1957 Convention in that the right to limit was lost if the incident occurred as a result of the actual fault or privity of the owner.While it was hoped that CLC 1969 would generally provide sufficient compensation to satisfy compensation claims, the ever-increasing size of tankers meant that shipowner liability could be exceeded. A novel approach was therefore taken with the development of a second tier, the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971 (Fund Convention), to share liability with cargo interests in the most serious incidents. It would be funded by a levy on oil imports in Contracting States to provide additional compensation up to a further over-arching maximum figure.As with all international conventions, complex entry into force provisions meant that CLC 1969 did not take effect until June 1975 and the Fund Convention 1971 until October 1978. However, in recognition of the public outcry if adequate compensation was not available in response to a further incident, the shipping and oil industries set up their own interim compensation schemes: the Tanker Owners Voluntary Agreement Concerning Liability for Oil Pollution (TOVALOP) and the parallel Contract Regarding a Supplement to Tanker Liability for Oil Pollution (CRISTAL). The schemes were designed to fill gaps in the international regime. They were terminated in 1997.Important modifications to CLC 1969 were agreed at a Diplomatic Conference in 1984 which included broadening the scope to cover bunker and other oil spills from unladen as well as laden tankers;

later resumed with shipowners pressing the need to maintain shared liability through a two-tier instrument.New text was drafted over a period of years. The International Convention on Liability and Compensation for Damage in connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS Convention) was adopted at a Diplomatic Conference in 1996. As with the oil pollution instruments, it applied in the territory, territorial sea and exclusive economic zone of Contracting States.The first tier defines hazardous and noxious substances. Strict liability is imposed on shipowners for loss of life and injury, as well as for property damage and contamination. Compensation and limitation levels are set out, with shipowners required to maintain compulsory insurance. Claimants may take direct action against the shipowner or insurer.In the event that shipowner liabilities are exceeded, additional compensation is available through a second tier funded by a levy on cargo importers. However, necessary compromises during the negotiation stage resulted in complex provisions for establishing and collecting payments due.In the years following adoption, it became clear from lack of support that, without changes, HNS 1996 would never come into effect in major trading nations. The IMO Legal Committee formed a Focus Group with a tightly defined mandate to develop legally-binding solutions. A package was devised and adopted at a Diplomatic Conference in April 2010.Despite all of the efforts taken, it is unfortunate that, some eight years later, HNS 2010 has been ratified by only three States: Canada; Norway; and Turkey. It remains a long way from international implementation. In the meantime, compensation for a chemical-related incident is likely to be determined in accordance with LLMC 1996.

Bunker Oil Pollution

There was a more positive experience with the next, and final, pollution liability regime. While cargo and bunker spills from tankers are subject to CLC 1992, no internationally agreed provisions existed for spills from non-tankers. However, bulk carriers and container ships often carry significant quantities of fuel, possibly in excess of the cargo capacity of a small tanker subject to the international regime.Many States already had domestic legislation imposing strict liability for bunker spills. In the majority of cases, shipowners’ P&I cover would respond in the event of a liability being established. However, unlike road transport, there is no mandatory requirement for shipowners to maintain third-party insurance other than in relation to international obligations under CLC 1992 and, in due course, the HNS Convention. Moreover, certificates issued for CLC apply only to tank vessels and can be used only for the purposes of confirming compliance with insurance to respond to oil pollution liabilities.The position is beginning to change as States in a number of jurisdictions (including EU Member States through the Insurance Directiveiv) move towards requiring a P&I Club certificate of entry or other evidence of insurance cover, normally up to the maximum limits set out in LLMC 1996, as a condition of port entry. However, there is no internationally agreed mechanism for establishing and confirming cover. As a result, governments have from time to time encountered difficulties in recovering the costs of cleaning up bunker spills from owners of ships without any or inadequate insurance.Work therefore began, through IMO, to develop a specialist instrument for bunker spills. This resulted in the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001, known as the “Bunkers Convention”. It shares some common

However, the position was resolved through a new optional third tier of compensation. The Protocol of 2003 to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992 (Supplementary Fund) provides additional payments of up to SDR 750 million when the first-tier shipowner limit and SDR 203 million in the second tier Fund Convention 1992 have been exhausted. The availability of additional payments is particularly attractive to high-cost economies with many of the Contracting States in European Union or OECD Member States.As of May 2018, there are 137 Contracting States to CLC 1992, 114 to the Fund Convention 1992 and 31 to the Supplementary Fund. The figures account, respectively, for 98%, 95% and 17.5% of world tonnage. This means that it is almost impossible for a seagoing tanker to trade in most parts of the world without the necessary CLC 1992 certification and insurance cover. Separate arrangements applicable in the USA are beyond the scope of this article.The third tier was developed on the basis that it would be funded by contributions from oil importers. However, in response to concerns about the equitable sharing of liability between shipowners and oil interests, the shipping industry agreed to voluntary, but legally binding, arrangements to increase their payments.Under the Small Tanker Oil Pollution Indemnification Agreement (STOPIA), the CLC 1992 threshold payment of SDR 4.5 million (after the 50% increase in October 2000) for vessels up to 5,000 gross tons has been raised to SDR 20 million, equivalent to a ship of 29,548 gross tons, and applies in respect of ships entered in a member of the International Group of P&I Clubs. A second scheme, the Tanker Oil Pollution Indemnification Agreement (TOPIA), provides for shipowners to share 50% of the cost of Supplementary Fund payments.STOPIA has been invoked. However, as the Supplementary Fund has not yet been called upon, no payments have been made through TOPIA.In general, the oil pollution compensation regime has worked reasonably well over the years. It is not, however, without controversy. While CLC 1992 (as with CLC 1969) provides that no claim for pollution damage may be made against the shipowner “otherwise than in accordance with this Convention”, some high-profile incidents have nevertheless seen national courts trying to circumvent or find ways to extend liabilities beyond those set out in the Conventions. Governments in Contracting States are likely to reject criticism by referring to the independence of their judicial systems. Nevertheless, governments develop international conventions and so perhaps this is a question of how the treaties they have accepted are incorporated into their national law.

Hazardous and Noxious Substances

The CLC 1992 and Fund Convention 1992 address the polluting effects of oil spills in the sea and on shore. They do not respond to the hazardous or noxious effects of oil or, indeed, any other chemicals. However, with so many chemicals and substances traded and transported on a daily basis, it was agreed that a specialist instrument should be developed so that a regime would be in place when, rather than if, an incident occurred.While it was thought that the principles in the oil pollution instruments could be replicated for hazardous and noxious substances, work proved more difficult than expected. Draft articles prepared by the IMO Legal Committee in 1983 were rejected at a Diplomatic Conference in 1984. The project was initially abandoned. However, in order to discourage States from taking unilateral or regional action, work was

Endnotes

i. Lennard’s Carrying Co v. Asiatic Petroleum Co Ltd (1915) All E.R. Rep. 280.

ii. The value of the SDR is based on a weighted basket of international currencies. Its value is calculated by IMF on a daily basis (other than holidays).

iii. Exchange rate: May 1996 SDR 1 = USD 1.44104; May 2018 SDR 1 = USD 1.41858.

iv. Directive 2009/20/EC of the European Parliament and of the Council of 23 April 2009 on the Insurance of Shipowners for Maritime Claims (“Insurance Directive”).

elements with CLC 1992 (and the HNS Convention) in relation to mandatory insurance and claimant rights to take direct action against insurers. However, there are important differences as this is a single-tier instrument, with shipowners and their insurers responsible for any compensation payable.The Bunkers Convention applies to bunker oil pollution in a Contracting State’s territory, territorial sea or exclusive economic zone. Strict liability is imposed on the shipowner. However, such liability may be limited by reference to an applicable national or international regime, with a non-binding recommendation that such limit should be by reference to a Contracting State’s ratification of LLMC 1996. The requirement for maintaining compulsory insurance applies to all seagoing vessels greater than 1,000 gross tons, thus representing a very significant proportion of the world fleet. Nevertheless, liability also attaches to smaller ships, although many can be expected to maintain P&I cover.The Bunkers Convention entered into force in November 2008. It now has 88 Contracting States, representing 92.5% of world tonnage.

Conclusion

The conclusion to be drawn from this analysis is that considerable progress has been made in the development of oil pollution compensation from tankers under CLC 1992, and from all other vessels under the more recent Bunkers Convention. The HNS Convention still has some way to go to secure acceptance.In answer to the opening question, despite some inconsistencies in the application of the internationally agreed liability and compensation instruments, arrangements structured on worldwide uniformity are more effective and efficient than a system of national or regional regimes. So, while we might have yet to achieve the best of all worlds, this is the best one we have.

BIMCO is the world’s largest international shipping association, with more than 2,200 members globally. We provide a wide range of services to our global membership – which includes shipowners, operators, managers, brokers and agents.

BIMCO is also recognised worldwide for the clarity, consistency and certainty of its standard maritime contracts.

Our aim is to produce flexible commercial agreements that are fair to both parties. We work with industry experts to produce modern contracts tailored to specific trades and activities. Our world-recognised contracts are widely used and this familiarity provides greater certainty of the likely commercial outcome – helping members manage contractual risk.

(Information courtesy of David Souden: All in the Same Boat: The Story of BIMCO.)

Donald Chard is a Chartered Shipbroker and Fellow of the Chartered Institute of Arbitrators. After more than 38 years at the UK Chamber of Shipping, where he was Head of Legal & Documentary, he is now a practising maritime arbitrator and Consultant with BIMCO’s Contracts and Clauses Department.

Donald ChardBIMCOBagsværdvej 1612880 BagsværdDenmark

Tel: +45 44 36 68 00Email: mailbox@bimco.orgURL: www.bimco.org

Chapter 6

Drafting a New Baltic Code

This April, the Baltic Exchange announced that it will be introducing a modernised code of conduct for shipowners, charterers and shipbrokers using the physical shipping and freight derivatives markets. The move follows a detailed review of the current arrangements led by law firm Norton Rose Fulbright with oversight by the Baltic Exchange Council and the Baltic Membership Council.The Baltic Exchange is a membership organisation with a long history stretching back to the 18th century. Its members may compete in the shipping markets, but the code of conduct encapsulated in the motto “our word our bond” has long ensured the smooth functioning of the global bulk shipping markets. A primitive version of the Baltic Code was first introduced in 1823, when a set of rules were put together and an admissions procedure was devised, signifying the beginning of the modern Baltic market.Today the Baltic Code underpins the activity of 640 companies active in the dry bulk and tanker markets. Behind the original development of the Code was the need to demonstrate a certain level of integrity in order to become a Baltic Exchange broker. The original Code was established as a means to combat reckless gambling in the market and to provide some form of regulation; it was put together by a committee of senior coffee house regulars. Today, although the basic principle of the Code is the same, it has grown to become a standard for the shipping industry establishing required standards with regard to ethics and market practice.Times and business practices continue to evolve and the New Baltic Code has been drafted to bring together a set of principles and business practices which will be applicable not only to Baltic Exchange members, but also the wider market. There is a greater focus on fairness & competition, anti-bribery & corruption and benchmarking-related issues than before.The backdrop to these changes is the heightened political and regulatory scrutiny that has been placed on the commodity markets since the 2007–2009 global financial crisis. By introducing this new code of conduct, the Baltic Exchange wants to preserve confidence in and the integrity of the physical freight and freight derivatives markets, eliminate poor practices and raise standards across the entire market, as well as increase the attractiveness of doing business with Baltic Exchange members.The New Baltic Code will be binding on members of the Baltic Exchange and members will be expected to promote compliance amongst all Market Participants. Members of the Baltic Exchange will be expected to refrain from doing business with counterparties who deliberately refuse to adhere to the principles and good practice standards set out in the New Baltic Code.

The New Baltic Code is based on the following principles:

Principle 1

Integrity of Markets Market Participants shall act to uphold the integrity of the physical freight and freight derivative markets and avoid any action or omission that may adversely affect these markets or bring the Baltic Exchange and its membership into disrepute.

Principle 2

Fairness and Competition Market Participants shall treat their customers fairly, compete fairly and avoid anti-competitive agreements and practices.

Principle 3

Ethical Business Practice Market Participants shall do business in an ethical manner, eschew corrupt practices and comply at all times with applicable laws on money laundering, sanctions and tax evasion.

Principle 4

Good Market Conduct Market Participants shall comply with applicable laws in respect of their activities in the freight and freight derivative markets, maintain authorisations and permissions to undertake regulated activities and devote due skill, oversight and resources to these activities.

Principle 5

Accurate and Credible Benchmarks Members contributing data to the Baltic Exchange benchmarks shall comply at all times with applicable law and the Baltic Exchange Guide to Market Benchmarks. Market Participants using these products shall comply with applicable laws and terms and conditions under which the Baltic Exchange provides these products and at all times respect the rights of the Baltic Exchange in respect of these products.

The New Baltic Code contains detailed examples of good and bad practices and includes new sections covering competitive activity and ‘know your counterparty’ procedures.The New Baltic Code is currently being reviewed by the Baltic Exchange Council and will be published later this year.

New Escrow Service for Vessel Sales

The Baltic Exchange has launched an Escrow Service for its members to hold deposits for ship sale transactions. Baltic Exchange members can now take advantage of the Exchange’s trusted position in the marketplace when undertaking the sale or purchase of a vessel.

The Baltic Exchange Mark Jackson

Drafting a New Baltic Code

Drafting a New Baltic CodeThe Baltic Exchange

The paid-for service is available for use in transactions where the buyer of the vessel is a Baltic Exchange member. The service is likely to be extended to disputes-related payments.The Escrow Service is run by the Baltic Exchange’s Asia office in Singapore and will be subject to the Singapore Exchange’s (“SGX”) detailed compliance and money laundering procedures. OCBC Bank will be providing the joint deposit account.Headed up by the Baltic Exchange’s Head of Asia-Pacific, Chris Jones, a sale & purchase broker with over 40 years of experience, the service will initially be offered from Singapore with a view to further expansion to other Asian shipping centres.Having the Baltic Exchange provide this service solves the problem as to where the deposit should be held in a vessel transaction. Buyer and seller alike can be certain that the Baltic Exchange will apply its high standards of compliance as well as have a full understanding of the complexities of any maritime transaction.This service has been designed to support the many sale & purchase brokers who are Baltic members and are currently expected to provide this service to clients. It will allow them to undertake the highest level of due diligence and compliance checks, reduce the administrative burden of organising a client escrow account and allow them to focus on adding value to the transaction.The service costs US$ 5,000 per side.

The Baltic Exchange is the world’s only independent source of maritime market information for the trading and settlement of physical and derivative contracts. Its international community of over 640 members encompasses the majority of world shipping interests and commits to a code of business conduct overseen by the Baltic.

Baltic Exchange members are responsible for a large proportion of all dry cargo and tanker fixtures, as well as the sale and purchase of merchant vessels.

In November 2016, the Baltic Exchange was acquired by the Singapore Exchange (“SGX”), bringing together complementary strengths of Singapore and London, two of the world’s most important maritime centres.

Mark Jackson was appointed the Chief Executive Officer of the Baltic Exchange in January 2017. He had previously been a director of the Baltic Exchange and served as its Chairman from 2009 to 2012. The London-headquartered Baltic Exchange is an international provider of benchmark rates for the bulk shipping industry and its 650 shipowning, chartering and shipbroking company members adhere to a code of conduct. It was acquired by the Singapore Exchange (“SGX”) in 2016 and Mark is focused on building its London presence and broadening its Asia footprint.

He was previously a director of dry bulk shipowner and operator A.M. Nomikos & Son (UK) Ltd and the Chief Commercial Officer for the Athens-based A.M. Nomikos Group. Mark has over 35 years of shipping industry experience and started his shipping career in 1981 in Sydney, Australia. After 18 years working as a shipbroker in Sydney, Hong Kong, New York and London, he joined A.M. Nomikos (UK) in 1998.

Mark JacksonThe Baltic ExchangeSt Mary AxeLondon EC3A 8BHUnited Kingdom

Tel: +44 20 7283 9300Email: ceo@balticexchange.comURL: www.balticexchange.com

Chapter 7

1 Marine Casualty

1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:

(i) CollisionThe following international conventions are enforceable in Angola: ■ 1910 International Convention for the Unification of Certain

Rules of Law Related to Collision Between Vessels;■ 1952 International Convention for the Unification of Certain

Rules concerning Civil Jurisdiction in Matters of Collision; ■ 1952 International Convention for the Unification of Certain

Rules relating to Penal Jurisdiction in Matters of Collision or other Incidents of Navigation; and

■ 1972 International Regulations for Preventing Collisions at Sea (“COLREGS”), as amended in 1981.

The above conventions are supplemented by domestic regulation, notably Article 73 et seq. of Law No. 27/12 of 28 August 2012 (the “Merchant Navy Law”) and Article 664 et seq. of the Commercial Code.(ii) PollutionThe following international conventions and relevant protocols have been adopted by Angola: ■ 1969 International Convention Relating to Intervention on the

High Seas in Cases of Oil Pollution Casualties, as amended in 1973 and 1991;

■ 1973 International Convention for the Prevention of Pollution from Vessels (“MARPOL 73/78”) and Annexes I/II, III, IV and V;

■ 1990 International Convention on Oil Pollution Preparedness, Response and Cooperation (“OPRC 90”);

■ 1992 Protocol to Amend the 1969 International Convention on Civil Liability for Oil Pollution Damage (“CLC 1969”);

■ 1992 Protocol to Amend the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (“FUND”);

■ 1996 International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea; and

■ 1996 Protocol to Amend the 1972 Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, which regulates environmental protection.

At a domestic level, one must consider the relevant provisions of the Merchant Navy Law, the Environmental Law (Law No. 5/98 of 19 June 1998) and its ancillary regulations and related statutes.(iii) Salvage / general averageSalvage is governed by the 1910 Salvage Convention and, where applicable, the provisions named in the Merchant Navy Law (Article 81 et seq.) and in the Commercial Code (Article 676 et seq.).General average is governed by the provisions of the Commercial Code (Article 634 et seq.).(iv) Wreck removalAngola is not a signatory of the Nairobi International Convention on the Removal of Wrecks, 2007. The removal of wrecks must be dealt with in light of the domestic law, namely the Merchant Navy Law, the Environmental Law and ancillary statutes and regulations.(v) Limitation of liabilityAngola is not a signatory of the Convention on Limitation of Liability for Maritime Claims. Conversely, both the 1924 International Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Vessels and the 1957 International Convention relating to the Limitation of the Liability of Owners of Seagoing Vessels are applicable. Furthermore, it is important to note that domestic law provides some special rules in respect of the limitation and sharing of liability (e.g., where collision was caused due to fault or wilful misconduct of the crew, damages will be computed and shared between owners pro rata to the severity of each crew party’s fault, and that if it is not possible to determine which vessel caused the accident, all intervening vessels shall be jointly liable for damages and losses arising therefrom).(vi) The limitation fundThe limitation fund can be established in any way admitted in the law and is dependent on the filing of a proper application before the relevant court. The application must identify/list:■ the occurrence and damages;■ the amount of the limitation fund;■ how the fund will be established;■ the amount of the reserve; and■ the known creditors and the amount of their claims.The application must be filed along with the vessel’s documents supporting the calculation of the amount of the fund (e.g., a tonnage certificate).

José Miguel Oliveira

João Afonso Fialho

Vieira de Almeida | RLA – Sociedade de Advogados, RL

Angola

AngolaVieira de Almeida | RLA – Sociedade de Advogados, RL

3 Passenger Claims

3.1 What are the key provisions applicable to the resolution of maritime passenger claims?

Angola is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea. Generally, carriage of passengers is governed by the Angolan Commercial and Civil Codes and the Consumer Law, in addition to the individual terms of the contract of carriage. Carrier’s liability is mostly fault-based. In the event of delays, unexpected changes of route, damages or loss of carriage, passengers are entitled to claim compensation for losses and damage caused by an action attributed to the carrier, regardless of its wilful misconduct.

4 Arrest and Security

4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure?

Angola is a party to the 1952 Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Vessels (“1952 Convention”). Under the 1952 Convention, any person alleging that it holds a maritime claim is entitled to seek the arrest of a ship. A “maritime claim” is deemed to be a claim arising out of one or more of the situations named under Article 1.1 of the 1952 Convention.Outside the scope of the 1952 Convention, i.e., for the purposes of obtaining security for an unlisted maritime claim (e.g., arrest for a ship sale claim, unpaid insurance premiums, protection and indemnity (“P&I”) dues, amongst others) or to seek the arrest of a vessel sailing under the flag of a non-contracting state, the claimant must make use of the provisions of the Angolan Code of Civil Procedure (“CPC”). In this case, and aside from the jurisdiction issue that needs to be properly assessed, in addition to providing evidence on the likelihood of its right/credit, the claimant shall also produce evidence that there is a risk that the debtor/arrestor may remove or conceal the ship (security for the claim) or that the ship may depreciate in such a way that, at the time that the final judgment is handed down in the main proceedings, the ship is no longer available or has substantially decreased in value.Before ordering the arrest, the arrestee is granted the opportunity to oppose/challenge the arrest application. Please note, however, that if the arrest application is properly filed and duly documented, the court may order the detention of the vessel before summoning the arrestee or granting the arrestee the chance to oppose the arrest application. The arrestee has 10 days to oppose the arrest application/order.With the arrest in place, the claimant is required to file the initial claim for the main proceedings, of which the injunction will form an integral part, within 30 days as of the arrest order. During the proceedings, the parties are free to settle by agreement and withdraw the claim. If the main claim should be filed with a foreign court, then the judge dealing with the arrest application must set out the period within which the claimant must commence proceedings on the merits in the appropriate jurisdiction. The defendant is entitled to post a security before the relevant court in the amount of the claim brought by the claimant, and seek the release of the vessel pending foreclosure and auction.

1.2 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?

The Port and Maritime Institute of Angola (“IMPA”), in its role as the Maritime Authority, is the governmental body in charge of investigating and responding to any maritime casualty. In performing its duties, the IMPA is assisted by the Harbourmaster with jurisdiction over the area where the casualty took place. In case of (eventual) environmental damage, environment authorities may also be called to act, notably the Ministry of Environment.

2 Cargo Claims

2.1 What are the international conventions and national laws relevant to marine cargo claims?

The 1924 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, also known as the Hague Rules, applies. Under the Hague Rules, the carrier is liable vis-à-vis the consignee in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods. Contracts of carriage are therefore governed by the terms of the Hague Rules and the 1888 Commercial Code (Article 538 et seq.), in the absence of detailed provisions set out in the relevant contract.It is important to note that if the shipment (i.e., loading and place of destination) takes place between two countries party to the Hague Rules, these rules shall apply. However, if the country of destination of the goods is not a signatory to the Hague Rules, then the applicable law would be determined by Angolan courts in accordance with the lex rei sitae principle.

2.2 What are the key principles applicable to cargo claims brought against the carrier?

As a general principle, any party to a contract of carriage who holds an interest over the cargo and can demonstrate that it has suffered losses or damages arising from the carrier’s actions and/or omissions is entitled to sue for losses or damages.The rights to sue under a contract of carriage assist (1) the shipper, and (2) the rightful holder of the bill of lading. In this respect, it is noteworthy that when in the presence of a: (i) straight bill of lading, the right to bring a claim remains with the named consignee; (ii) order bill of lading, only the latest endorsee is eligible to sue; and (iii) bill of lading to bearer, it is up to the rightful holder at a given moment to sue.Rights under a contract of carriage may be validly transferred to third parties either by way of assignment of contractual position or subrogation of rights (which is typically the case when insurers indemnify cargo interests and then seek reimbursement from the carrier), as long as the relevant rules provided in the Civil Code are met.

2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?

In light of Article 3.5 of the Hague Rules, the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies regarding the information (marks, number, quantity and weight) on the cargo to be transported.

6 Procedure

6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.

The Angolan judicial system foresees three categories of courts: (i) the Supreme Court, which is the higher body in the hierarchy of the Angolan courts; (ii) the Courts of Appeal; and (iii) the District Courts. Courts of Appeal have jurisdiction to review and revise the District Court’s contested decisions. Likewise, the Supreme Court has a corresponding power as regards contested decisions rendered by the Courts of Appeal. District Courts have jurisdiction over the areas in which they are established and can be divided and organised by expertise under the so-called Rooms of Expertise. Existing since 1997, the Room of Expertise for Maritime Issues has jurisdiction over any maritime dispute submitted to its jurisdiction, including, to name a few, disputes on shipbuilding and repair contracts, purchase and sale agreements, charterparties and bills of lading, precautionary measures against ships and their cargo, etc.In general, Angolan courts will find themselves competent to rule on claims where the parties in dispute and the claim itself have a close connection/link to Angola.With regard to legal procedures before national courts, these can be generally described as follows:■ Proceedings commence with the filing of an initial written

complaint before the court. In addition to listing the facts and arguments sustaining the claim, the claimant is required to list its witnesses and request the other evidence proceedings, such as inspections or surveys.

■ Service is made by the clerks, in person. Shipping agents represent owners’/disponent owners’/managers’ interests and can receive documentation on their behalf.

■ Generally, the defendant has 30 days to challenge and oppose the claim. If it fails to present its defence, the facts presented by the claimant are deemed proven (exceptions apply).

■ With the opposition lodged, the judge will summon the parties and will try to resolve the dispute amicably or, that not being possible, prepare the final hearing.

■ At the final hearing, the witness will be examined and cross-examined by the lawyers representing each party, and the judge may intervene whenever it is deemed necessary. At the end, lawyers are required to issue their final arguments verbally.

■ The judge will then prepare and issue the judgment which, depending on the amount of the claim, can entail an appeal.

As to the duration of maritime proceedings, as with any other legal proceedings in Angola, this is highly unpredictable. In our experience, excluding arrests and any other interim measures, it should not be expected to take less than one to two years, as it depends on several variables, such as the court’s current caseload.As to arbitration, the primary domestic source of law is Law No. 16/03 of 25 July 2003 (the Voluntary Arbitration Law or “VAL”). The VAL governs both domestic and international arbitration. According to the VAL, arbitration will be of an international nature when international trade interests are at stake, in particular when: the parties to the arbitration agreement have business domiciles in different countries at the time of the agreement’s execution;

4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel?

A claim arising from a bunker supply may be considered as a maritime claim under Article 1.k of the 1952 Convention.

4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what options are available?

Assets (e.g., bunkers) belonging to the arrestee may be subject to arrest, provided that it is possible to establish ownership in respect thereof. In addition, the carrier is entitled to exercise a possessory lien over cargo. In this respect, please be advised that pursuant to Angolan law, a lien is only enforceable by operation of the law and not merely by contract. By way of illustration, Article 755 of the Civil Code provides that any debts resulting from shipping services entitle the carrier/creditor to retain goods in its possession until the full discharge of those debts.

4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.

Typically, cash deposits (at the court’s order) and bank guarantees are the most effective forms of security. Letters of undertaking (“LoUs”) are acceptable in very limited situations and their acceptance is always dependent on the other party’s agreement.

5 Evidence

5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime claims including any available procedures for the preservation of physical evidence, examination of witnesses or pre-action disclosure?

Whenever there is a serious risk of loss, concealment or dissipation of property or documents, as well as when it becomes impossible or almost impossible to obtain testimony or certain evidence by way of inspection, parties are free to start an action and file a motion requiring it to be enlisted by the court or taken prior to the hearing. The relevant motion can be lodged whenever deemed suitable, the applicant always being required to provide due grounds for its request.

5.2 What are the general disclosure obligations in court proceedings?

As a general rule, it is up to the parties to establish the object of their claim/proceedings and the judge cannot go beyond the limits of the claim as put forward by the parties. In addition, parties have the burden of presenting the facts of their interest and produce evidence in respect thereof. The court will take into account the evidence produced/requested by the parties, but it is not limited to same. In fact, the court is also allowed to request and compel the parties to disclose all evidence deemed necessary to the discovery of the truth and/or to the best resolution of the dispute.

merits/grounds of the judgment, but a simple re-examination of the relevant judgment and additional judicial procedure requirements. The process must begin with the filing by the interested party of an application to that effect with the Angolan Supreme Court. In order for the foreign decision to be recognised by the Supreme Court, the following set of requirements must be met:■ There are no doubts that the judgment is authentic and its

content understandable.■ It must constitute a final decision (not subject to appeal) in

the country in which it was rendered.■ The decision must have been rendered by the relevant court

according to the Angolan conflict-of-law rules.■ There is no case pending before or decided by an Angolan

court, except if it was the foreign court which prevented the jurisdiction of the Angolan court.

■ The defendant was served proper notice of the claim in accordance with the law of the country in which the judgment was rendered, except in cases where, under Angolan law, there is no need to notify the defendant, or in cases where the judgment is passed against the defendant because there was no opposition.

■ The judgment is not contrary to the public policy principles of the Angolan state.

■ The decision rendered against the Angolan citizen/company does not conflict with Angolan private law, in cases where this law could be applicable according to the Angolan conflict-of-law rules.

After the application is filed, the court must serve notice of same on the defendant. Once notice is served, the defendant may oppose the exequatur if any of the above requirements are not met.If the defendant opposes the exequatur, the applicant may reply to the defendant’s arguments. Afterwards, the case follows various procedural steps until the decision is made on whether to grant the exequatur. The losing party may still appeal against the court’s decision.

7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.

Angola has recently acceded to the 1958 New York Convention, by means of Resolution 38/16 of 12 August 2016. Angolan courts are now required to give effect prima facie to an arbitration agreement and award rendered in another signatory country to the New York Convention. Where the arbitral award was not granted by another contracting state, to be enforceable it must have previously been reviewed and confirmed by Angola’s Supreme Court (see question 7.1 above).

8 Updates and Developments

8.1 Describe any other issues not considered above that may be worthy of note, together with any current trends or likely future developments that may be of interest.

Since its independence in 1975, Angola has been steadily revising its laws and regulations, at the same time as ratifying and adhering to a number of international treaties and conventions. In this respect, it is worth mentioning that a number of pivotal conventions on maritime and shipping-related matters applicable in the country date from the time when Angola was still a Portuguese overseas territory (e.g., the 1952 Arrest Convention). In fact, although after

the place of performance of a substantial part of the obligations resulting from the legal relationship from which the dispute arises is situated outside the countries where companies have their business domiciles; or the parties have expressly agreed that the scope of the arbitration agreement is connected with more than one state.The general rule under the VAL is that parties are free to submit their disputes to arbitration, with the exception of disputes that fall under state courts’ exclusive jurisdiction and disputes that relate to inalienable or non-negotiable rights. As such, disputes relating to the following issues, inter alia, may be submitted to arbitration: commercial and corporate law; maritime and shipping matters; securities transactions; and intra-company disputes.The arbitration agreement may consist of either an arbitration clause or a submission agreement. The arbitration clause concerns potential future disputes arising from a given contractual or extra-contractual relationship, whereas the submission agreement arises from existing disputes, whether or not they have already been submitted to a state court. The VAL treats both types of arbitration agreement on an equal footing.Subject to any special law requiring a more solemn form, the arbitration agreements must be made in writing. An arbitration agreement is considered to be in writing if documented either in a written instrument signed by the parties or in correspondence exchanged between them. The VAL allows arbitration agreements to be incorporated in a contractual document that is not signed by both parties simply by reference to general terms and conditions on another contract.In addition to the VAL, Law No. 12/16 of 12 August 2016 sets forth the rules applicable to the establishment and organisation of mediation and conciliation procedures, as alternative dispute mechanisms. With the enactment of this statute, disputes in civil, commercial (including maritime), employment, family and criminal matters can now be submitted to mediation, provided that they concern waivable rights.

6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.

Angola’s legal framework on shipping and maritime matters is fairly complete and follows the international industry standards (please refer to question 8.1 below). Nevertheless, despite the efforts of the Angolan Government and the achievements reached in the past decade, the country needs to continue developing its infrastructure (courts, registries, notaries, public administration, etc.) and support the training and qualification of its citizens. Although proceedings may drag over long periods of time (years), Angola benefits nowadays from a very capable community of judges, lawyers and other legal professionals.

7 Foreign Judgments and Awards

7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.

Article 1094 of the CPC sets out that any judgment awarded by a foreign court is, as a rule, subject to review and confirmation by the Supreme Court in order to be valid and enforceable locally (i.e., to obtain the “exequatur”).The review and confirmation of foreign decisions under the Angolan CPC is mostly formal and should not involve a review on the

Decree No. 54/14 of 28 February 2014, which approved the rules applicable to merchants wishing to be engaged in the provision of cabotage and/or international transportation of goods and passengers (this statute limits the provision of cabotage to Angolan citizens).In the last couple of years a new set of maritime legislation has been passed by the Angolan Government, most of which is directed towards matters of safety and transparency in the carrying out of maritime activities, including new regulations on seafarers and maritime personnel (Presidential Decree No. 78/16 of 14 April 2016), maximum safety capacity of vessels and ships (Presidential Decree No. 79/16 of 14 April 2016), search and rescue at sea (Presidential Decree No. 89/16 of 21 April 2016), and prevention of terrorism associated with activities at sea (Law No. 19/17 of 25 August 2017).Angola has also recently adhered to the Basel Convention on the Transboundary Movement of Hazardous Wastes and their Disposal, and to the African Maritime Transport Charter of the African Union, which reveals Angola’s drive to elevate the national maritime sector to international standards.

AcknowledgmentThe authors would like to thank Ângela Viana and Marcelo Mendes Mateus for their assistance in preparing this chapter. Ângela (axv@vda.pt) is a senior associate at VdA and dual-qualified to practise in Angola and Portugal, and Marcelo (mmm@rlaadvogados.com) is an associate at RLA – Sociedade de Advogados, RL (the exclusive Angolan member of VdA Legal Partners).

its independence Angola has not specifically adhered to the treaties/conventions to which Portugal was already a party, as formally required under the Vienna Convention on Succession of Treaties, it is commonly accepted that the treaties ratified by Portugal and extended to Angola over time still apply in light of Articles 58 and 59 of the Angolan Constitution, approved immediately after the country’s independence, which provided for the survival of any (Portuguese) laws and regulations in force at the time of independence, as long as these did not conflict with the letter and the spirit of the Constitution.Over the past few years, a number of key statutes have been approved, the most relevant of which being the Merchant Navy Law. The Merchant Navy Law is a landmark achievement in terms of shipping and maritime legislation, as this is the first statute that seeks to regulate all maritime and port activities in a consistent manner, governing matters related to navigational, technical and security rules, registration duties and procedures for national and foreign vessels, licensing and other requirements applicable to marine and port-related activities, to name a few.In addition, in view of its impact on the local industry, it is worth noting, in particular, some of the most important statutes on maritime matters that have been passed by the Angolan Government in recent years (a clear sign of the attention that the Government is paying to the sector), notably: (i) Presidential Decree No. 50/14 of 27 February 2014, which approved the regulations applicable to the provision of shipping agency services; (ii) Presidential Decree No. 51/14, also of 27 February 2014, which approved the regulations applicable to the carrying out of ship-management services; and (iii) Presidential

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Angola – Cabo Verde – Chad – Congo – Democratic Republic of the Congo – Equatorial Guinea – Gabon – Guinea-Bissau – Mozambique Portugal – São Tomé and Príncipe – Timor-Leste

José Miguel Oliveira joined VdA in 2015. He is a managing associate of VdA’s Oil & Gas practice. Before joining the firm, he worked for six years at Miranda Correia Amendoeira. In 2008, he was seconded to the Corporate and Commercial Law Department at Eversheds International LLP’s London office. From 2002 to 2008 he worked at Barrocas Sarmento Neves.

Over the years he has amassed extensive experience within the international shipping industry, particularly across African jurisdictions, where he has been particularly active in assisting all sorts of industry players, from owners, charterers, P&I Clubs, shipbrokers, ship managers, ship agents, freight forwarders, port operators and stevedores, to commodities traders on all types of wet and dry shipping matters. In addition, he provides regular advice on regulatory matters to oil companies and service providers to the offshore oil & gas industry, notably in respect of the use and employment of rigs, FPSOs, support and multipurpose vessels. He also holds a deep knowledge of the bunkering industry, having assisted major players in the setting up of their local structures, securing licences and deals (cargo and bunkering contracts).

José is dual-qualified (Portugal and Angola) and his regular presence in Angola and Mozambique allows him to have an in-depth understanding of the local and neighbouring industries and the respective legal environments.

João Afonso Fialho joined VdA in 2015. He is head partner of VdA’s Oil & Gas practice.

With more than 20 years of practice in the transport sector, his experience in shipping includes contracts in international transport, providing advice, in particular, to owners, charterers, P&I Clubs and port operators, as well as commodities traders and various industry brokers. João advises on most legal matters relating to the shipping industry, including the bunkering sector, as well as assistance and salvage at sea, ship arrest, customs and maritime litigation.

João also has an extensive track record with construction contracts and ship acquisition, charterparties, bills of lading, ship finance, mortgages and insurance.

He has particular expertise in shipping activities associated with the oil & gas sector, including wreck removal and environmentally sensitive issues.

José Miguel OliveiraVieira de AlmeidaRua Dom Luís I, 281200-151 LisbonPortugal

Tel: +351 21 311 3400Fax: +351 21 311 3406Email: jmo@vda.ptURL: www.vda.pt

João Afonso FialhoVieira de AlmeidaRua Dom Luís I, 281200-151 LisbonPortugal

Tel: +351 21 311 3400Fax: +351 21 311 3406Email: jaf@vda.pt URL: www.vda.pt

Chapter 8

1 Marine Casualty

(i) CollisionDamage caused by collision is actionable in Australia as a general maritime claim. Liability is determined according to the general principles of negligence. An Australian court will apportion liability between colliding vessels according to their degree of fault.The International Regulations for Preventing Collisions at Sea 1972 (COLREGs) are generally given effect in Australia and a ship’s breach of the COLREGs would be highly persuasive in determining liability for negligence.(ii) PollutionAustralia is a signatory to a number of international conventions on marine pollution. These conventions are given effect, in varying forms and degrees, in domestic legislation.The International Convention for the Prevention of Pollution from Ships 1973 (MARPOL Convention) is given effect in Australia by the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), which creates a range of offences (including strict liability offences) for breach of the MARPOL Convention.Select provisions of the International Convention on Civil Liability for Oil Pollution Damage 1992 (Civil Liability Convention) are given effect in Australia by the Protection of the Sea (Civil Liability) Act 1981 (Cth). The Civil Liability Convention gives rise to a presumption of strict liability of an owner for pollution damage caused by oil cargo which has escaped or been discharged from their vessel.The International Convention on the Establishment of an International Fund for Oil Pollution Damage 1992 (Fund Convention) is given effect in Australia by the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), and operates to compensate victims in circumstances where an owner’s liability is insufficient, including by reason of limitation, to compensate the entirety of the loss caused by a spill.Select provisions of the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (Bunker Oil Convention) are given effect by the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), and operate to compensate victims in circumstances where an owner’s liability is insufficient, including by reason of limitation, to compensate the entirety of the loss caused by a spill.

(iii) Salvage / general averageSalvageIn Australia, a claim in respect of salvage is a general maritime claim in admiralty. A salvor has a common law possessory lien and a maritime lien on the salved property. A salvor also has a right of action in personam against the owners of the salved property.Australia has adopted certain articles of the International Convention on Salvage 1989. A person who renders a service that successfully saves or helps to save maritime property (being a vessel, shipwreck, freight or cargo) from danger, is entitled to a “salvage reward” assessed by the court and up to the value of the property or interest in the property salved.General averageIn Australia, a claim in respect of general average is a general maritime claim in admiralty. Parties to shipping contracts in Australia are free to adopt the York-Antwerp Rules.(iv) Wreck removalThe Navigation Act 2012 (Cth) (Navigation Act) grants the Australian Maritime Safety Authority (AMSA) broad powers in respect of wrecks. AMSA’s powers extend to wrecks of Australian-registered vessels wherever located, and wrecks of foreign vessels located in the territorial sea of Australia.A master or owner of a wreck must notify AMSA of the vessel’s details, location and nature and quantity of cargo and oil on board the vessel. AMSA may require the owner of a wreck to remove or mark it within a certain period, and may itself mark, remove, sink, or destroy the wreck and recover from the owner of the wreck any expenses incurred by AMSA in doing so.(v) Limitation of liabilityThe Convention on Limitation of Liability for Maritime Claims 1976, as amended by the 1996 Protocol and the further amendments of 2012 (Limitation Convention) has the force of law in Australia by operation of the Limitation of Liability for Maritime Claims Act 1989 (Cth) (Limitation Act).A shipowner, charterer, manager, operator or salvor of a sea-going vessel may be entitled to limit liability with respect to certain maritime claims but not with respect to:(a) claims concerning the raising, removal, destruction or the

rendering harmless of a ship that is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such a vessel; and

(b) claims concerning the removal, destruction or the rendering harmless of the cargo of the vessel.

In 2012, the International Maritime Organization (IMO) announced new limits which entered into force on 8 June 2015 under a ‘tacit

Nic van der Reyden

Hazel Brewer

Australia

AustraliaHFW

A marine cargo claim can be brought by any of the following:(a) by a lawful holder of a BOL;(b) in case of a Sea Waybill, by the person to whom delivery of

the goods is to be made by the carrier in accordance with the contract; and

(c) in case of a ship’s delivery order, by the person to whom delivery of the goods is to be made in accordance with the order.

COGSA provides that Australian law applies compulsorily to outbound shipments, such that any jurisdiction or arbitration clause contained in a sea carriage document seeking to oust Australian law or jurisdiction is deemed invalid. Similarly, clauses purporting to oust the jurisdiction of Australian courts on inbound voyages will also be invalid; however, Australian law will not necessarily apply compulsorily.A voyage charterparty does not constitute a sea carriage document for the purposes of COGSA. Accordingly, parties to a voyage charterparty may be able to rely on foreign law and jurisdiction clauses for international shipments originating in Australia (refer to question 8.1 below).The time limit to bring a cargo claim under COGSA is one year from delivery of cargo or from the date when it should have been delivered. The same one-year time limit applies to actions brought in tort by a party to the contract of carriage. This period may be extended by agreement.Under COGSA, unless the nature and value of the goods have been declared by the shipper before shipment and inserted into the sea-carriage document, the carrier’s liability will be limited to 666.67 units of account per package or unit; or two units of account per kilogram of gross weight of the goods lost or damaged, whichever is higher.

The Australian modified version of the Hague-Visby Rules provides:■ Article 3 rule 5: the shipper shall indemnify the carrier against

all loss, damage and expenses arising from inaccuracies given at the time of shipment as to the marks, number quantity and weight of cargo.

■ Article 4 rule 6: the shipper shall be liable for all damages and expenses arising directly or indirectly from the shipment of dangerous goods where the carrier has not consented with knowledge of the nature and character of the goods.

3 Passenger Claims

Australia is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974.A shipowner is obliged to report to AMSA any incident that involves the death or serious injury of a person, including a passenger, and it is an offence to fail to do so. Passenger claims for loss of life or personal injury are subject to a limitation of liability in the amount of 175,000 units of account multiplied by the number of passengers the ship’s certificate authorises it to carry.

acceptance procedure’. These increased limits apply in Australia. To illustrate the significance of the substantial limitation increase, examples of previous and new limits for property claims are set out in the table below:

Bulk carriers and their gross tonnage

Approximate limits for property claim under 1996 Protocol (in US$)

Approximate current limits for property claim under new limits (in US$)

Handysize of 1,000 1,450,000 2,187,929

Panamax of 35,000 19,850,750 29,974,636

Capesize of 160,000 61,150,000 92,330,633

It is expected that the current limits will be revisited in 2020, with at least a further three years to elapse before any new limits may come into force.(vi) The limitation fundThe Federal Court of Australia has held that the constitution of a Limitation Fund under the Limitation Act must be by cash deposit into court (Barde SA v Abb Power Systems [1995] FCA 1602).

The Marine Safety (Domestic) Commercial Vessel National Law Act 2012 (Cth) (National Law Act) implements an agreement by the Commonwealth, State and Territory governments to introduce a single national law to regulate the safety of domestic commercial vessels.Under the National Law Act, AMSA is invested with powers of investigation (including entry, search, seizure and detention) as the single national regulator, but is permitted to delegate certain functions to, among others, existing State maritime safety agencies.The Transport Safety Investigation Act 2003 (Cth) invests a separate body, the Australian Transport Safety Bureau (ATSB), with marine investigatory powers in relation to marine navigation conducted in the course of trade or commerce with other countries or among the States. The ATSB has wide powers to compel production of documents and interview witnesses.

2 Cargo Claims

In Australia, marine cargo liability is governed by the Carriage of Goods by Sea Act 1991 (Cth) (COGSA), which incorporates a modified version of the Hague-Visby Rules.Every State also has its respective version of the ‘sea-carriage documents’ legislation, which governs the rights under a sea-carriage document, such as a Bill of Lading (BOL), and is relevant in establishing title to sue.

A claimant does not need to be the owner of the cargo in order to bring a marine cargo claim in Australia.

AustraliaHFW

Yes, if the bunker supplier asserts that the owner of the vessel to whom the bunkers were supplied is the party liable to pay for the bunkers and that party is the owner of the vessel being arrested. Bunkers on board a ship cannot be arrested independently of the vessel.

Whilst not strictly security, a claimant may be able to obtain a Freezing Order (Mareva Injunction) which operates to preserve assets in the jurisdiction by restraining a party from removing the assets in order to defeat a court judgment.

A vessel will be released from arrest if the vessel owner pays into court an amount equivalent to the value of the claim or the value of the vessel, whichever is less. Alternatively, security such as a bank guarantee or letter of indemnity from an international group P&I Club should normally be acceptable.

5 Evidence

Anton Piller orders allow a court to permit a party to access and preserve physical and documentary evidence. Such applications may be made at any time, and for urgent applications, before proceedings are commenced. An application for the preservation of evidence can be made ex parte in cases of extreme urgency where there is a real chance of the dissipation or destruction of the evidence without court intervention.Pre-action disclosure may be available in limited circumstances to determine whether to commence proceedings against a party giving disclosure; or the identity of a potential defendant.Once proceedings are commenced, a party can seek leave to issue subpoenas to third parties, requiring them to produce documents relevant to specific issues.There is no property in a witness. If a witness refuses to co-operate, the only mechanism for compelling co-operation is to issue a subpoena requiring the witness to give evidence at trial.

All parties to proceedings are under a continuing obligation to disclose all documents in their possession, power, custody or control which are relevant to matters in issue in the proceedings, subject to privilege.

Claims for death or personal injury sustained as a consequence of a defect in a ship or its equipment, or arising out of an act or omission of the shipowner (or any person for whose actions the shipowner or charterer is vicariously liable) are general maritime claims for the purposes of federal admiralty jurisdiction. Alternatively, claims for loss of life or personal injury may be brought in Australian State courts.

Australia is an ‘arrest-friendly’ jurisdiction, where ships can be arrested quickly and efficiently. Whilst Australia is not a signatory to the international conventions on ship arrest, the Admiralty Act 1988 (Cth) (Admiralty Act) largely gives effect to the regime of the Brussels Convention. The Admiralty Act permits the arrest of a ship in three categories of claim:(a) Maritime liens, which include: liens for salvage; damage

done by a ship; master’s and crew’s wages; and master’s disbursements.

(b) Proprietary maritime claims, which include: claims concerning possession of, title to and mortgages over ships; as well as existing judgments given against a ship (including by foreign courts).

(c) General maritime claims, which include: claims in respect of materials or services supplied to a vessel for its operation or maintenance; damage done by the vessel; personal injury; loss or damage to goods carried on the vessel; salvage; general average; towage; pilotage; harbour charges; insurance premiums; wages; and more.

Proceedings commenced on maritime liens or proprietary maritime claims can only be commenced as an action in rem against the vessel to which the lien/proprietary maritime claim relates.Proceedings commenced in relation to a general maritime claim can be commenced as an action in rem against either:(a) a vessel to which the claim relates, provided that the person

who would be liable for the claim:(i) was the owner or charterer or in possession or control of

the vessel at the time the claim came into existence; and(ii) remains the owner or demise charterer of the vessel at the

time proceedings are commenced; or(b) a surrogate (sistership) vessel, provided that the person who

would be liable for the claim:(i) was the owner or charterer or in possession or control of

the vessel to which the claim relates at the time the claim came into existence; and

(ii) is the current owner of the surrogate vessel at the time proceedings are commenced.

A party seeking to arrest a vessel must commence substantive in rem proceedings against the vessel itself (not its owner) by filing an Admiralty Writ in the Federal Court of Australia.Commonly, an arrest application is filed at the same time as the Admiralty Writ and must be supported by an Affidavit setting out the particulars of the claim. If the Registrar is satisfied, the warrant will often be issued within hours of filing the application. The warrant is then forwarded to the Federal Court’s Admiralty Marshal who carries out the arrest by serving the warrant on the vessel and taking custody of such vessel.

AustraliaHFW

While there is no provision for maritime-specific arbitration under Australian law, parties may agree to resolve their disputes pursuant to the arbitration rules and procedures of the Australian Maritime and Transport Arbitration Commission (AMTAC). Those rules are intended to supplement the UNCITRAL Model Law.There is also legislative provision for domestic arbitration in Australia; however, due to the large number of foreign participants in the Australian shipping industry, there is unlikely to be any significant amount of domestic maritime arbitration. Mediation is frequently used as a means of alternative dispute resolution in Australia, including in shipping cases, and court case management procedures often require parties to attempt mediation prior to the final hearing of a dispute.

Positives■ Specialist knowledge by way of a dedicated panel of Federal

Court Judges that deal with admiralty and maritime matters.■ Cases involving the arrest of vessels are dealt with quickly

and efficiently.■ Judges’ case management ensures that proceedings are

closely monitored by way of directions hearings, ensuring the litigation remains on track and that there are no unnecessary delays.

■ Right of Appeal. Negatives■ Different rules and legislation may apply in different States

and Territories.■ Litigation costs generally.

Australia has reciprocal arrangements for the recognition of judgments from superior courts in 34 countries and specified inferior courts in five countries. These arrangements are given effect by the Foreign Judgments Act 1991 (Cth) (Foreign Judgments Act).A judgment creditor may apply to an Australian court (ordinarily the Supreme Court of the State or Territory where the judgment is to be enforced) within six years of the date of a foreign judgment to have that judgment registered under the Foreign Judgments Act. Once the judgment is registered, it can be enforced as if it were a judgment made by an Australian court.If the judgment is given by a court which falls outside of the Foreign Judgments Act, it cannot be enforced in Australia directly. However, the judgment creditor can commence proceedings in an Australian court for a liquidated sum relying on the foreign judgment.

Australia is a signatory to the New York Convention, which is given effect in Australia pursuant to the IAA. A foreign award to which the New York Convention applies can be enforced as if it

Australian courts take a practical approach to the scope of what must be disclosed. It is now fairly common for a court to order parties to agree upon the categories of documents to be disclosed.

6 Procedure

i) National CourtsMaritime litigation in Australia is commonly conducted in the Federal Court of Australia, which exercises admiralty jurisdiction pursuant to the Admiralty Act.■ Federal Court proceedings are commenced by filing an

originating application, with a ‘genuine steps’ statement (which sets out steps taken to resolve the dispute).

■ The court will set a return date for the first directions hearing. The applicant must serve a copy of the originating application on the respondent at least five days before the return date.

■ The respondent must file a defence within 28 days of service of the originating application.

■ Parties then exchange evidence by providing each other with discoverable documents relevant to the issues which are the subject of the proceedings. This process can take several months.

■ The Federal Court Rules 2011 (Cth) (Federal Court Rules) 5.04(3) item 20, provide that early in the proceedings, the parties should address the Court as to whether any or all evidence in chief is to be given orally (perhaps with outlines of evidence, at least on non-critical issues) or by affidavit evidence or both. Evidence is commonly filed in court by way of affidavit. However, outlines of evidence and the giving of oral evidence are becoming common practice.

■ It usually takes between 12 and 18 months from commencement of proceedings to the final hearing.

■ The successful party is usually entitled to recover their costs on a party/party basis, which is around 50% to 60% of a party’s costs.

■ Assisted Dispute Resolution (ADR), such as mediation or arbitration, is not compulsory; however, the courts will consider whether the parties may be assisted by a referral to ADR to resolve some or all of the issues in dispute. The Federal Court of Australia Act 1976 (Cth) and the Federal Court Rules provide the basis for referrals of matters by the court to ADR.

■ The Federal Court has extensive supervisory jurisdiction under the International Arbitration Act 1974 (Cth) (IAA). Each registry of the Federal Court has an arbitration co-ordinating Judge who is generally responsible for the management of matters under the IAA. Admiralty matters are generally referred to the relevant Admiralty Convening Judge in each Registry.

ii) Arbitration; and iii) mediation / alternative dispute resolution

Maritime arbitration in Australia is usually conducted pursuant to the applicable State’s domestic arbitration act (where both parties are Australian and the matter involves issues connected with Australia), or under the IAA, which regulates commercial arbitration in Australia between parties with places of business in different contracting States. The IAA gives effect to the most recent version of the UNCITRAL Model Law on International Commercial Arbitration.

AustraliaHFW

Recently under the current regime, the Fair Work Ombudsman commenced proceedings against Transpetrol, a Norwegian vessel owner in Fair Work Ombudsman v Transpetrol TM As (Registration Number 884 423 082) [2017] FCA 311. It was alleged Transpetrol underpaid foreign crew members between 2013 and 2015, while the MV “Turmoil” was engaged in coastal trading within the meaning of the Coastal Trading Act, as applied by Division 3, Part 1-3 of the Fair Work Regulations 2009 (Cth) (Fair Work Regulations) and the provisions under the Fair Work Act 2009 (Cth) (Fair Work Act).Rares J held that Transpetrol breached section 45 of the Fair Work Act in failing to pay the crew members their entitlements. Without admitting liability, Transpetrol agreed to pay the crew just over A$250,000 and was liable to pay a pecuniary penalty under section 546 of the Fair Work Act. Under the current regime, a relevant ship must sail at least two voyages under a temporary licence before the employer ship’s crew will become subject to the operation of the Coastal Trading Act. In this case, the vessel had completed two initial voyages under the same temporary licence within the preceding 12 months of 10 voyages in question and extended the operation of the Coastal Trading Act on each of the 10 voyages.Change to visa requirements for offtank tankers at Australian offshore facilities Migration legislation applicable to vessels supporting offshore resource activities, such as pipelay vessels, is now being applied to crew on offtake tankers. All crew on board vessels loading at floating production storage and offloading facilities (FPSOs) and other offshore facilities are now required to hold a temporary working visa prior to the vessel berthing at the offshore facility.The change only affects vessels loading at offshore oil terminals. It will affect the ability to fix vessels to load cargos at offshore facilities at short notice, given the time frames to issue temporary working visas.The changes do not affect vessels calling at Australian mainland ports, whose crew will still be required to hold Maritime Crew Visas.General average – Offshore Marine Services Alliance Pty Ltd v Leighton Contractors Pty Ltd [2017] FCA 333The Federal Court had to consider a novel claim recently, in which it held that liability to contribute to general average loss only attaches to cargo owners and those contractually liable to contribute, as opposed to those who merely bear some contractual risk. By way of background, ‘general average’ refers to the obligation upon parties to a marine voyage to contribute to loss arising from an extraordinary sacrifice or expenditure, made to preserve property in danger during the voyage.Various cargo was loaded onto a barge, for a voyage to Barrow Island, Western Australia, for use in construction and drilling works. Offshore Marine Services Alliance Pty Ltd (Offshore Marine) was the owner and operator of the barge. It had a contract with Chevron Australia Pty Ltd (Chevron) to transport cargo to Barrow Island.Two days into the voyage, the barge grounded. There was imminent danger the barge would break up and sink, and therefore the cargo was in immediate peril. Offshore Marine incurred significant costs to rescue the barge and cargo.Offshore Marine claimed general average from Leighton Contractors Pty Ltd (Leighton) and Thiess Pty Ltd (Thiess), in proportion to the value of each party’s cargo. However, Leighton and Thiess denied liability on the basis that they were not the owners of their respective consignments. Offshore Marine contended that Leighton and Thiess were liable and relied upon the terms of its contract with Chevron, which provided that Leighton and Thiess were responsible for the care, custody, control and safekeeping of the cargo until it was accepted by Chevron. In other words, Offshore Marine argued that Leighton and Thiess should be liable to contribute in general average, if they were ‘on risk’ during the voyage.

were a judgment of an Australian court, unless there is a reason not to enforce the award (e.g. the subject matter of the dispute could not have been referred to arbitration in Australia or enforcing the award would be contrary to public policy). In particular, an Australian court may refuse to enforce a foreign arbitral award if the award itself, or the underlying agreement, would be invalid under Australian law, notwithstanding that it is valid under the law governing the substantive dispute. The party must apply to a court for enforcement of the award.

BiosecurityThe International Ballast Water Convention (IBWC) entered into force on 8 September 2017, the provisions of which are enacted in Australia under the Biosecurity Amendment (Ballast Water and Other Measures) Act 2017 (Ballast Water Act). Ballast water is taken on board by vessels to maintain stability on a voyage, but can spread invasive aquatic species that could damage marine environments, affect biodiversity and devastate fishing industries. The purpose of the convention is to require ships to manage their ballast water and to remove, render harmless or avoid the uptake or discharge of aquatic organisms and pathogens within ballast water and sediments.The Ballast Water Act regulates both Australian and foreign vessels. However, offences under the Ballast Water Act will apply to Australian vessels regardless of whether or not they are in Australian waters. The Ballast Water Act will only apply to foreign vessels when they are in Australian waters.Accordingly, to comply with the Ballast Water Act, Australian vessels must have a ballast water management plan and certificate (unless granted an exemption) whether in or outside Australian seas. Foreign vessels require such a plan and certificate only if they are in Australian seas. The applicable penalty for non-compliance is 200 penalty units.There are also various reporting requirements for vessels disposing of sediment in Australian territorial seas for purposes relating to safety, accident or pollution. Sediment must also be disposed of to a sediment reception facility. Failure to comply is a strict liability offence.Powers are also granted to biosecurity officers to secure a vessel, conduct inspections, take samples and make directions.Coastal trading / cabotageThe Government introduced the Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017 into Parliament on 13 September 2017. It seeks to amend the Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth) (Coastal Trading Act). Key changes proposed include:(a) the removal of the five-voyage minimum requirement to

apply for a temporary licence; and(b) amendments to the definition of ‘coastal trading’ to include

ships engaged in dry-docking or engaged in voyages between ports and other defined places in Australian waters such as offshore installations.

At the time of writing, the Bill has been referred to a Committee with the Senate for review.

AustraliaHFW

AMSA has exercised its power to ban vessels (for up to 12 months) that repeatedly arrive at Australian ports with serious structural or operational deficiencies resulting in detentions, and has prosecuted ships for polluting Australian waters. Vessel owners need to ensure their vessels remain in compliance with all relevant regulations to avoid delays and other cost implications.

AcknowledgmentThe authors wish to thank Kirsten James and Evangeline Yeo for their contributions to this chapter.

McKerracher held that Leighton and Thiess were not liable to pay general average and emphasised that liability for general average only attaches to an owner of cargo or a party that is liable to pay general average under a contract (such as a BOL). An underlying reason for this decision was that if general average liability was to extend to parties merely ‘on risk’, it would be difficult to determine the proportion of each party’s liability to contribute.Enforcement of vessel safetyAustralia has a rigorous system of port state control. Figures currently available from AMSA indicate that in 2017, 3,128 foreign ships were inspected, 7,194.40 deficiencies were found and 165 foreign ships were detained (around 5.3% of all inspected vessels).

HFW is widely recognised as the world’s leading provider of legal services to the maritime and supply chain sectors.

The partners in HFW Australia’s Shipping team collectively have in excess of 100 years’ experience servicing the maritime and logistics sectors, and our capability here is augmented by HFW’s global team, which provides unsurpassed depth of experience with more than 200 lawyers worldwide specialising in maritime, transport and trade law issues. We are able to call upon a network of expert lawyers to assist in other jurisdictions, providing a seamless one-stop service to our clients.

The clients we represent include: shipowners and operators of all classes of ships; logistics companies; mining, energy and agribusiness companies; commodities traders; port and terminal operators; banks and financiers; P&I Clubs; and other sector insurers.

We have a strong understanding of the key commercial issues in the sector, and the capacity to deliver effective, solutions-focused advice.

Nic specialises in shipping litigation and dispute resolution, acting for shipowners, charterers, resource companies and P&I Clubs. His work involves the full range of charterparty, COA, Bill of Lading and ship building disputes. He also has particular experience in relation to P&I matters, logistics, marine insurance, regulatory matters including compliance with the IMSBC Code, SOLAS, investigating casualties and pollution incidents, and ship sale and purchase transactions.

Nic is recognised in legal directories, including Chambers Asia-Pacific (ranked), The Legal 500 (recommended) and Doyles Guide (leading lawyers), and is described by clients as “a very good communicator who is able to explain the more technical concepts in a way a layman can understand” (Chambers Australia, 2017). He is also described as having “extremely good industry knowledge” and is rated for his “excellent client focus and support” (The Legal 500 Asia Pacific, 2017).

Nic is qualified to practise in Australia, England & Wales and South Africa.

Hazel specialises in shipping, offshore, marine insurance and international trade matters.

Hazel advises extensively on a broad range of contracts and issues arising under charterparties, contracts of affreightment, bills of lading, transhipment contracts, pilotage, towage, and carriage issues relating to bulk and containerised commodities including iron ore, copper and nickel concentrates, as well as bulk liquid and gas cargoes.

Her offshore oil and gas practice includes negotiating and advising on contracts, as well as handling contentious matters arising under contracts for drilling units; seismic, geotech, accommodation and other offshore services vessels.

She also advises on regulatory issues (AMSA/NOPSEMA) and on pollution and environmental issues.

Hazel acts in dispute resolution, litigation and domestic and international mediations and arbitrations including ICC, LMAA, SIAC and the Resolution Institute.

She brings a commercial and pragmatic approach to managing contracts, negotiations and disputes effectively for her clients.

Nic van der ReydenHFWLevel 3A, 1 Bligh StreetSydney NSW 2000Australia

Tel: +61 2 9320 4600Email: nic.vanderreyden@hfw.comURL: www.hfw.com

Hazel BrewerHFWLevel 15, Brookfield Place – Tower 2123 Saint Georges TerracePerth WA 6000Australia

Tel: +61 8 9422 4700Email: hazel.brewer@hfw.comURL: www.hfw.com

Chapter 9

1 Marine Casualty

(i) CollisionThe Bahamas is party to the International Regulations for Preventing Collisions at Sea 1972 (“COLREGS”) which were implemented by the Merchant Shipping Act, 1976 (“MSA”) and apply to all Bahamian ships and other ships while in The Bahamas. An owner or master of a ship is guilty of an offence if it operates a ship in breach of the COLREGS.(ii) Pollution■ The Merchant Shipping (Oil Pollution) Act, 1978 implements

the International Convention for the Prevention of Pollution from Ships, 1973 as amended by the Protocols of 1978 and 1995 (“MARPOL”), and provides for criminal liability for the discharge of oil from a vessel in Bahamian waters and by Bahamian registered ships anywhere in the world.

■ The Bahamas is also party to the International Convention On Civil Liability For Oil Pollution Damage, 1992 (“Liability Convention”) and the International Convention on the Establishment of an International Fund for Compensation Fund for Oil Pollution Damage, 1992 (“Fund Convention”) which were also implemented by the Merchant Shipping (Oil Pollution) Act and have the force of law. Any ship carrying, in bulk, cargo of more than 2,000 tons of persistent hydrocarbon mineral oil is required to have in force insurance cover or other security satisfying the requirements of Article VII of the Liability Convention. The failure to carry such insurance results in criminal liability for the master and owner.

■ The Bahamas has also acceded to the International Convention relating to Intervention on the High Seas in cases of Oil Pollution Casualties, 1969 and to the International Convention on Civil Liability for Bunker Oil Pollution Damage (“Bunkers Convention”).

(iii) Salvage / general averageThe key provisions relating to wrecks and salvage are governed by Part VI of the MSA. The Minister with responsibility for maritime affairs may appoint a receiver of wreck whose duty is to preserve the wreck. By section 279(1)(a) MSA, a lien securing a claim for salvage, wreck removal and contribution in general average takes priority over all other maritime liens which have attached to a ship prior to the time when the operations giving rise to the said liens were

performed. Claims for salvage or contribution in general average are not subject to limitation.(iv) Wreck removalThe Bahamas acceded to the Nairobi International Convention on the Removal of Wrecks. It is a requirement to remove or have removed any wrecks in The Bahamas territorial sea and exclusive economic zone.Any person in possession of any wreck in The Bahamas must deliver the wreck to the wreck receiver. Failure to deliver the wreck is an offence and liable to a fine on summary conviction not exceeding twice the value of the wreck and forfeiture of any claim or right to salvage.Any ship with a gross tonnage of over 300 tons shall not leave or enter a port in The Bahamas and a Bahamian ship shall not leave or enter a port of any state unless it has wreck removal insurance cover or other financial security to cover their liability for costs involved in the location, marking and removal of wrecks. A claim for wreck removal constitutes a maritime lien.(v) Limitation of liabilityThe Bahamas ratified the Convention on Limitation of Liability for Maritime Claims, 1976 (“Limitation Convention”) and the Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974 and 1976 Protocol, which were implemented by the Merchant Shipping (Maritime Claims Limitation of Liability) Act, 1989 (“Limitation Act”).Claims in respect of death, personal injury, loss of or damage to property occurring on board or in direct connection with the operation of a ship are subject to limitation.(vi) The limitation fundPursuant to the Limitation Act, a limitation fund consisting of cash deposited into court or a guarantee may be established by any person alleged to be liable in respect of legal proceedings instituted in respect of claims subject to limitation.

Pursuant to Part VI of the MSA, the owner or master of the ship is required to report to the Bahamas Maritime Authority, by the fastest means available, any accident occasioning loss of life or any serious injury to any person or damage affecting the seaworthiness of a Bahamian ship. The Minister responsible for maritime affairs has the power to cause a preliminary inquiry to be held or a formal investigation to be conducted by the Wreck Commissioner with

Michelle Pindling-SandsGraham Thompson

Bahamas

BahamasGraham Thompson

or its equivalence in another currency if the nature or value of such goods has not been declared by the shipper in the Bill of Lading before shipment. While this declaration in the Bill of Lading is prima facie evidence, it is however not binding or conclusive on the carrier. Further, a carrier or ship will not be held liable where the nature or value of the goods has been knowingly misstated by the shipper in the Bill of Lading. The carrier will be compensated for all losses caused by the shipper as a result.Section 207 of the MSA waives all liability against the carrier or ship in cases of misdeclaration or failure to properly mark dangerous cargo. In these instances, the cargo may be either thrown overboard with neither the master nor the owner of the ship subjected to any civil or criminal liability, or forfeited or disposed of by court order.Further, in the common-law principles of breach of contract or tort, the shipper will be under strict liability if it ships goods without giving notice to the carrier of the character of the goods; specifically, goods which are liable to delay or cause damage to the vessel or other cargo shipped on it. Consequently, the shipper may be liable for all the losses resulting from any delays or damages in the shipment of goods, whether the shipper knew or did not know, as the Bill of Lading holder relied on statements in the Bill of Lading that turned out to be untrue.

3 Passenger Claims

The Bahamas is a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (1974 and 1976 Protocols) and the Limitation Convention, both of which were implemented by the Limitation Act referred to in question 1.1 above. The liability for passenger claims, including incidents causing personal injury, death, loss of or damage to luggage is limited. Any action for damages arising out of personal injury or death of a passenger, or for the loss of or damage to luggage, shall be time-barred after a period of two years.The Athens Convention applies to passengers whether or not there is a contract of carriage and mandates that passenger ships have financial security for the purpose of satisfying any liability in respect of death or personal injury.

The Supreme Court Act, 1981 (“SCA”) governs the procedure to arrest a ship under Bahamian law. Section 8 sets out a number of claims that may be brought against a ship, including but not limited to claims in respect of: a mortgage of a charge or share in a ship; injury or loss of life; damage to goods; damage done by a ship; salvage; wreck removal; contribution in general average; and other maritime liens.The action to arrest a ship is commenced by a writ of summons after inspection of the caveat book to ascertain whether the owner of the ship has entered a caveat against the arrest of the ship. In the event that no such caveat has been entered, the legal representative of the owner must be contacted to advise him of the claim and to secure his undertaking that an appearance would be entered and that an

respect to any casualty consisting of loss of life or damage done to or by a Bahamian ship or a ship in Bahamian waters. The Wreck Commissioner, upon holding a formal investigation, has the power to cancel or suspend any certificate or licence issued to any master, mate or engineer, who has the right to appeal to the Supreme Court any such suspension or cancellation. Where an inquiry or formal investigation has been held and either new evidence comes to light or there is suspicion that a miscarriage of justice may have occurred, the Minister has the power to order a rehearing of the case. The Minister also has the power to re-issue any certificate or licence or reduce any suspension time.

2 Cargo Claims

The MSA and the Carriage of Goods by Sea Act, 1926 (“COGSA”) govern marine cargo claims. The Bahamas, subject to certain modification, has implemented in local legislation content from the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (“Hague Rules”).The Bahamas is also a party to the International Convention Relating to the Arrest of Seagoing Ships, 1952, Brussels (“Brussels Convention”) where, among other things, loss of or damage to goods, including baggage, constitutes a maritime claim which may give rise to the arrest of a ship.

Under the COGSA, the Hague Rules have mandatory effect in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in The Bahamas to any other port whether in or outside The Bahamas, therefore, unless the Bill of Lading stipulates otherwise, the Hague Rules apply.Section 251 of the MSA, subject to certain exceptions, provides for the division of liability such that if by the fault of two or two more vessels, damage or loss is caused to one or more of those vessels or their cargo or freight or to any property on board, the liability to make good the damage or loss shall be in proportion to the degree in which each vessel was at fault. If it is not possible to ascertain degrees of fault, then the liability will be apportioned equally.Section 258 of the MSA imposes a time limit for bringing actions under the MSA such that proceedings must be commenced within one year after the commission of the offence or after the cause of action arises, as the case may be.

A carrier may establish claims against a shipper relating to misdeclaration of cargo according to the Hague Rules (as contained in the Schedule of the COGSA). Under Article 3 the shipper is obligated to indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies regarding the marks/labelling, number, quantity and weight as furnished by him on the cargo to be transported.Article 4 (5) of the Hague Rules limits the liability of a carrier or ship. A carrier or ship will only become liable for the loss of or damage to goods exceeding a specified sum per package or unit,

The parties to an action are under a strict duty to disclose all non-privileged documents in their possession relating to the action, including all documents intended to be relied upon at trial. The court has the discretion to direct the timeframe within which documents must be disclosed during Case Management. The duty of disclosure is ongoing and failure to disclose all relevant documents will provide grounds for the opposing party to make an application for specific discovery.

6 Procedure

National courtsThe Bahamian judicial system consists of the Magistrates’ Courts, the Supreme Court and the Court of Appeal. The final appeal is the Judicial Committee of the Privy Council in London, England. The Judicial Committee of the Privy Council serves as the ultimate Court of Appeal in all matters where appeal is permissible.A Magistrate has jurisdiction to investigate all charges of indictable offences, try all summary offences and to hear and determine any civil case with a limit on the value of the property in dispute or the sum not exceeding BS$5,000.00, unless a statute provides jurisdiction in relation to a higher amount, as is the case in a number of regulatory statutes.Under Section 110 of the MSA, claims instituted on behalf of a seaman for the recovery of wages are first heard by a Magistrate, except where it is for the recovery of wages, and: (a) the owner of the ship is insolvent; (b) the ship is under arrest or is sold by the authority of the

Supreme Court; (c) a Magistrate’s Court refers the claim to the Supreme Court; or (d) neither the owner nor the master resides in or within 20 miles

of the place where the seaman or apprentice is discharged or put ashore.

Section 8 of the SCA confers jurisdiction for admiralty matters on the Supreme Court. Proceedings with respect to commercial claims are commenced in the Supreme Court by virtue of a Writ of Summons wherein the nature of the claim is outlined. Preliminary issues may be dealt with by virtue of interlocutory applications. The timeline from filing of the Writ of Summons to completion of trial, and obtaining a written ruling, would be approximately 12 to 18 months.ArbitrationArbitrations locally are governed by the Arbitration Act, 2009 implemented in accordance internationally with the New York Convention on Arbitration. Parties may agree on timelines and arbitration procedures or choose to adopt the timelines and arbitration procedures prescribed under institutional rules.Mediation / alternative dispute resolutionThere has been a recent surge in support for the usage of mediation and other forms of alternative dispute resolution at every stage of proceedings, resulting in significant growth in the number of attorneys

acceptable bond or guarantee from a bank or financial institution would be put in place. If no caveat has been entered, a summons is filed in the Supreme Court Registry, together with a praecipe for a Warrant of Arrest and an affidavit in support filed in the Supreme Court. An application is then made to the Supreme Court for the issuance of a Warrant of Arrest. Upon an undertaking being given to the court to pay the expenses of the Admiralty Marshal, the court will issue the warrant of arrest to be executed by the Admiralty Marshal on the vessel and master. The ship will remain in the custody of the Admiralty Marshal, subject to the owner obtaining a release from the court.An action in rem may also be brought in The Bahamas against a sister ship, where the person liable on the claim was the owner or charterer of the ship when the cause of action arose and the person liable was the beneficial owner of or demise charterer of the other ship when the action was brought.

Yes. Section 8 of the SCA confers jurisdiction on the Admiralty Court to hear and determine any claim for goods or materials supplied to a ship for its operation or maintenance.

Section 277 of the MSA sets out the claims that can be secured by maritime liens which are then enforceable against a vessel by arrest. Maritime liens include: unpaid seamen wages and other sums due; unpaid port, canal, other waterway dues and any other outstanding fees payable; loss of life and personal injury claims against the shipowner; tort claims against the owner (demise or other charterer, manager or operator of the ship); and claims for salvage, wreck removal and contribution in general average.

A bond or guarantee from a bank or financial institution would be acceptable forms of security for the release of a vessel.

5 Evidence

Documentary evidence in admiralty proceedings can be preserved by the usual applications available under civil litigation procedure (discovery, interim injunctions, witness statements, and affidavits) which are available to an applicant as part of a pre-action protocol or during the course of litigation. Admiralty matters also have the benefit of relief which is only available in admiralty matters for the preservation of goods, such as a Warrant of Arrest. The procedure for the litigation of admiralty claims in The Bahamas is set out in Order 67 of the Rules of the Supreme Court, 1978.

■ the judgment was not obtained by fraud;■ the enforcement of the judgment would not be contrary to the

public policy of The Bahamas;■ the correct procedures under the laws of The Bahamas are

duly complied with;■ the judgment is not inconsistent with a prior Bahamian

judgment in respect of the same matter; and■ enforcement proceedings are instituted within six years after

the date of the judgment.The judgment creditor may apply within 12 months of the judgment date, and it is at the discretion of the Bahamian court whether to register and enforce such judgment. These judgments include arbitrational awards which were enforceable in the jurisdiction in which they were made. The application is made ex parte and notice of the application is not made to the judgment debtor until the order granting registration is made. The judgment debtor may challenge the registration of the foreign judgment. If the challenge fails, the foreign judgment is then registered as a recognisable and enforceable judgment in The Bahamas.For those countries which fall outside the scope of the Reciprocal Enforcement of Judgments Act, a common-law action would have to be commenced in order to enforce the judgment.

The Bahamas is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and, pursuant to the Arbitration (Foreign Arbitral Awards) Act, 2009, the courts of The Bahamas will recognise as valid and enforce an arbitral award.

As arbitration is a common method of dispute resolution in shipping cases, the present government has indicated that it is set to table the International Commercial Arbitration Bill, 2018 which will facilitate commercial dispute resolution hearings in The Bahamas by incorporating the United Nations model law known as UNCITRAL into its provisions.

that are being trained as certified mediators. An ADR Group has been established, dedicated to training and providing for all forms of dispute resolution.

Bahamian jurisprudence is based on English common law. Decisions of English appellate courts (especially the Supreme Court of the United Kingdom and the Court of Appeal of England and Wales), although technically not binding in The Bahamas, are and have always been given great deference and respect by Bahamian courts. The same applies to decisions of other common-law based Commonwealth jurisdictions. English and other Commonwealth country decisions are routinely followed by Bahamian courts as a matter of tradition and practice in the absence of any Bahamian judicial authority to the contrary.Unfortunately, the Supreme Court, on its civil side, only has two judges sitting in New Providence and one sitting in Grand Bahama, resulting in significant delays for trial dates and interim applications. However, due to the nature of admiralty law, and the accruing expenses of the Admiralty Marshall, security and wharfage, once a Warrant of Arrest is issued, the issuing judge tends to make every effort to set aside time in the calendar to accommodate the matter.

The Bahamas Reciprocal Enforcement of Judgments Act, 1924 (“Reciprocal Enforcement of Judgments Act”) allows for a judgment obtained in a superior court outside of The Bahamas to be registered or otherwise given recognition by the Supreme Court of The Bahamas. For countries that are party to this arrangement, a Bahamian court will recognise and enforce any final and conclusive judgment provided that:■ such courts did not contravene the rules of natural justice of

The Bahamas;■ the foreign court had proper jurisdiction over the parties

subject to such judgment;■ the judgment is for a debt or definite sum of money other than

a sum payable in respect of taxes or charges of a like nature or in respect of a fine or penalty;

■ such courts did not contravene the rules of natural justice of The Bahamas;

Established in New Providence in 1950, and serving a client base that is both domestic and international, the top-ranked Graham Thompson Attorneys is a highly regarded Bahamian law firm with expertise in: admiralty & maritime; banking and financial; corporate & commercial; employment & labour; immigration & naturalisation; insurance; litigation & dispute resolution; private client, trusts and estates; and real estate & development law.

Founded by Peter Graham CMG and Bernard Thompson, the firm has played a leading role in shaping both the political and legal landscapes of The Bahamas. Public service and leadership in public service remains a distinguished tradition of the firm. The Graham Thompson family includes former attorneys general, cabinet ministers, justices and other leading roles including chairmanships of public boards, councils and special commissions.

Graham Thompson operates four offices: Nassau and Lyford Cay in New Providence; Freeport, Grand Bahama; and Providenciales, the Turks and Caicos Islands.

Michelle Pindling-Sands, a Partner, heads up the Firm’s Maritime Practice Group, advising primarily major international financial institutions on complex structured financing transactions, but her broad knowledge of Bahamian corporate structures aligns well with her large practice of advising on commercial financing transactions generally, and includes registering ships, drafting ship mortgages, and preparing Bahamian all-asset security and share pledges, providing enforceability opinions in connection therewith. Michelle has recently acted as lead Bahamian counsel for a US$550 million note offering to refinance existing debt for a market leader in the luxury cruise industry secured by Bahamian law-governed all-asset debentures and share securities.

Michelle Pindling-SandsGraham ThompsonSassoon HouseShirley St. & Victoria AvenueP.O. Box N-272Nassau, New ProvidenceThe Bahamas

Tel: +1 242 322 4130Email: mps@gtclw.comURL: www.grahamthompson.com

Chapter 10

André Kegels

Belgium

Kegels & Co

1 Marine Casualty

i) Collision The location of the incident, the type of vessels and the persons involved determine the applicable rules. A collision between sea-going vessels on the high seas will be subject to different rules from a collision between barges or sea-going vessels on internal waterways. Specific rules which derogate from the COLREGS apply on rivers and canals. This is often disregarded by foreign legal practioners.The following conventions and regulations are applicable in Belgium:■ The International Convention for the Unification of certain

rules of Law with respect to Collision between vessels, Brussels, 23rd September 1910 (“The 1910 Collision Convention”).

■ The International Convention on certain rules concerning Civil Jurisdiction in Matters of Collision, Brussels, 11th May 1952 (“The 1952 Brussels Civil Jurisdiction Convention”).

■ The International Convention for the unification of certain rules relating to Penal Jurisdiction in Matters of Collision, Brussels, 10th May 1952 (“The 1952 Brussels Penal Jurisdiction Convention”).

■ The International Regulations for Preventing Collisions at Sea, 1972 as amended from time to time (“The COLREGS”).

■ The International Convention for the Safety of Life at Sea, 1974 as amended (“SOLAS”) and its annexes.

■ EU Regulation 864/2007, 11th July 2007 (“Rome II”).■ Various local navigation regulations regarding the territorial

sea, the ports, the rivers and canals (“The Local Navigation Regulations”).

The above list is not complete but contains the most essential provisions. Once it comes to determining liability, other provisions may be relevant. As an example, please refer to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, the International Safety Management Code, the International Ship and Port Facility Security Code, etc.Also, if refuge is needed as per the EU Directive 2002/59 (as amended), various legal provisions empowering authorities to take all necessary measures, inclusive of indicating a place of refuge, are applicable. The cooperation between Federal, Regional and

local authorities, with each of them having separate legislative powers and the resulting ever-changing legislation, is solved by the existence of the Maritime Salvage and Coordination Centre (“The MRCC”), which manages the incident for all authorities concerned.ii) Pollution■ The International Convention Relating to Intervention on the

High Seas in Cases of Oil Pollution Casualties, 29th November 1969 and Protocol to the Convention, 2nd November 1973 (“The Intervention Convention”).

■ The International Convention for the Prevention of Pollution of the Sea by Oil, 12th May 1954 as amended (“OILPOL”).

■ The International Convention for the Prevention of Pollution from Ships, 2nd November 1973 and Protocol to the Convention, 17th February 1978 (“MARPOL 73/78”).

■ The 1982 United Nations Convention on the Law of the Sea, 10th December 1982 (“The Montego Bay Convention” or “UNCLAS”).

■ The 1992 Protocol to the International Convention on Civil Liability for Oil Pollution Damage, 27th November 1992, as amended in 2000 (“The CLC 1992”).

■ The 1992 Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 27th November 1992, as amended in 2000 (“The 1992 Fund Convention”).

■ The International Convention on Civil Liability for Bunker Oil Pollution Damage, London, 3rd March 2001 (“The 2001 Bunker Oil Convention”).

■ The 2003 Protocol Establishing a Supplementary Fund (“The 2003 Supplementary Fund”).

■ EU Directive 2005/35, O.J. L255/11, 30th September 2005 as amended, has been implemented into Belgian law by various Acts.

■ The Belgian Statute of 20th January 1999 on the Protection of the Marine Environment in the Sea-areas under Belgian Jurisdiction, as amended (“The Marine Protection Act”). This Statute implements various International Treaties and EU Directives. It holds criminal liability provisions, reverses the Burden of Proof and authorises authorities to intervene in case of incidents threatening the (marine or other) environment. Substantial fines and possible incarceration are provided for.

■ The Belgian Statute of 6th April 1995 for the Avoidance of Pollution by Vessels, as amended (“The Discharging of Polluting Substances Act”). This Statute also implements various International Treaties and EU Directives. It holds criminal liability provisions, reverses the Burden of Proof and authorises authorities to arrest vessels which are not in compliance. Substantial fines and possible incarceration are also provided for.

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■ against the LLMC 1996 property fund set up by that party (if possible);

■ against a separate Wreck Removal Limitation Fund to be set up by that party (if possible); or

■ if no limitation for wreck removal whatsoever can be invoked by the liable party other than the owner of a sea-going vessel.

(v) Limitation of liabilityApplicable regimeLimitation of liability in Belgium has been ruled since 1st December 1989 by the London Convention regime. For sea-going vessels, the following legislation is applicable:1. The Convention on Limitation of Liability for Maritime Claims,

dated 19th November 1976 (“The LLMC Convention”).2. The Protocol of 1996 dated 2nd May 1996 (“The 1996

Protocol”).3. The 2015 Leg 5(99) IMO resolution raising the amounts

(“The Imo Resolution”).4. The Belgian Code of Commerce (Book II – Maritime Code –

Title II, Chapter I, art. 46 and following of the Maritime Code).For non-sea-going vessels, a specific limitation regime is applicable.Limitation of liability can be invoked in Belgium without setting up a limitation. This is useful in circumstances where there is only one claim arising out of an incident.At the level of jurisdiction and opposability of the Limitation Fund, the Brussels Convention on Jurisdiction regime should also be considered. This regime is determined by the 1968 Treaty on Jurisdiction, the Lugano Conventions and EU Regulation 1215/2012. ProceedingsA Limitation Fund is set up in two stages. Both stages can be dealt with within a few days.First, a person who is (potentially) liable requests authorisation from the Court to set up a fund and indicates the amount of security to be issued. Unless a cash payment is proposed, the identity of the guarantor must be acceptable to the Court. The Court Order determines the period within which the amounts must be paid or secured. A fund administrator is appointed.Secondly, and as soon as the amount of the fund has been paid, the Fund administrator will draft a report and present it to the Court, which will then, in a second decision, find that a fund was constituted.A distinction needs to be made between the regime for sea-going vessels and interior barges.(vi) LLMC Limitation Fund for sea-going vesselsThe LLMC will apply but Belgium has issued reservations as per art. 18 LLMC. One cannot limit liability for sea-going vessels in Belgium under the LLMC regime for: ■ Claims in respect of the raising, removal, destruction or

the rendering harmless of a ship which is sunk, wrecked, stranded, or abandoned, including anything that is or has been on board of such ship.

■ Claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship.

Limitation for these claims may be possible under other legal provisions such as the Belgian wreck removal legislation referred to above.(vii) Belgian overall Limitation Fund for interior bargesFor non-sea-going vessels, one Limitation Fund can be set up for all claims arising out of an incident. This fund therefore also covers pollution and wreck removal liabilities.

■ Various legal instruments, by the Federal State and the Regions, each within their authority in the implementation of Directive 2009/98 EC on Waste (“The Waste Directive”).

■ The International Convention for the Control and Management of Ships’ Ballast Water and Sediments 2004 (“The Ballast Water Management Convention”), which entered into force in Belgium on 8th September 2017.

The above list is by no means exhaustive. Only the most relevant laws, treaties and conventions have been listed. One should also remember that international legislation, whether originating from the International Maritime Organization (“IMO”) or the European Union, obliges Belgium to enact these provisions regularly. Usually the Belgian authorities do so by amending the above local legislation. iii) Salvage / general average ■ The 1989 London Salvage Convention has been fully enacted

“as is” in Belgium.■ If the contract provides for specific G/A rules, they may be

applied. If not, the Belgian Maritime Code provides for G/A rules, which are similar to an older version of the York/Antwerp Rules.

iv) Wreck removal The 2007 Nairobi Convention on wreck removal has been applicable since 17th April 2017. The effect will be limited, however, as Belgium has its own wreck removal legislation. Under that legislation, it is the duty of the owner (a definition which includes the owner, charterer (be it a time charterer or a voyage charterer) or operator) to remove the wreck and its contents when demanded by the authorities to do so. Case law as to the relationship between the obligation to remove the wreck and the right to limit liability has been developing in recent years.Sea-going vesselsThe owner, charterer (be it a time charterer or a voyage charterer) or operator of a previously sea-going vessel can set up a Fund for Wreck Removal. This fund is separate from the LLMC Overall Limitation Fund. In January 2017, the Supreme Court ruled that once a wreck removal fund is set up for a sea-going vessel the authorities are no longer entitled to demand the owner, charterer or operator to remove the wreck at the owner’s expense. Interior bargesThe owner, charterer (be it a time charterer or a voyage charterer) or operator of an interior barge can benefit from the Belgian Overall Limitation Fund. The Overall Limitation Fund for barges is set up with principles similar to the LLMC but with lower thresholds, and with the possibility to set up limitations within that one fund, not only for oil pollution and wreck removal, but also for all other claims as per art. 2 LLMC. A Court of Appeal ruled that, at an interlocutory stage and provisionally only, the existence of an overall limitation set up for a sunken barge does not stop the authorities from ordering the owner to remove the wreck. This decision was not annulled by the Supreme Court. The non-annulment of that Court of Appeal decision may well have been due to the specificities of the particular case and, consequently, not be standing law. This view is strengthened by a later decision of the same Supreme Court ruling, in a case on the merits, that the owner of a barge is entitled to limit liability for wreck removal. An allegedly liable party who is the owner of a vessel can also set up a wreck removal fund. But this fund is, in principle, only for claims of the authorities. What about recovery or recourse claims for wreck removal by the owner of the wreck against another responsible person? It may depend on the exact cause of action as to how a claim against a liable party other than the owner is to be brought:

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Maritime Code. This is an amendment to the Hague-Visby regime which only applies on all carriage “from” a convention state. But beware: this mandatory application applies in favour of the third-party bearer of the Bill of Lading only (see further).The application of art. 91 of the Belgian Maritime Code is not mandatory on carriage which is:■ not from a Hague-Visby state or not to a Belgian port; or ■ by way of a non-negotiable document (such as a sea waybill). If Belgian law applies on such carriage (by virtue of contract (for example, an applicable clause in the Bill of Lading or by application of Rules of International Private Law)) the Hague or Hague-Visby Convention applies, if given force of law or enacted in the country of loading.For the sake of completeness, we should refer briefly to the carriage of goods over the interior waterways, where different legal provisions apply; and in international carriage, International Conventions such as the Budapest Convention on the Contract for the Carriage of Goods by Inland Waterway (“The CMNI”) apply. The CMNI contains provisions regarding liabilities as well as exonerations and limitations thereof.

(i) Who to sueA cargo claim can be brought not only against the carrier under the Bill of Lading but also against the owner of the vessel even if the owner is not the contractual carrier. The owner is considered liable in rem for losses or damages to the cargo. The owner’s liability, which is in rem, is to be determined as if he were the contractual carrier. The claim can also be brought against both the carrier and the owner, who are jointly liable towards the cargo claimants for loss and damage.(ii) Title to sueIn principle, only the holder of the Bill of Lading has title to sue. If the Bill of Lading is held by an agent for an undisclosed principal, which is the standard situation in Belgium whenever a freight forwarder presents the Bill of Lading to the carrier, it is only the agent who has title to sue. (iii) The relationship between the holder of the Bill of Lading

and the carrierIn some countries, the receiver under a Bill of Lading acquires the rights of the shipper. In other countries, the receiver’s rights and obligations are derived from the title issued by the carrier only, i.e. the Bill of Lading and its Terms of Carriage without any rights under the initial contract of affreightment having transferred to the receiver. The Belgian Supreme Court (Cour de Cassation) has, on many occasions, confirmed that the third-party holder of a Bill of Lading does not acquire the rights from the shipper. The holder derives his rights against the carrier independently and directly out of the Bill of Lading. The holder accedes to the Bill of Lading under the terms set out therein only. Consequently:■ As between the Carrier and the shipper, charterer or the one

who concluded the Contract of Carriage, such Contract of Carriage will apply. This may be as per the Terms of Carriage in the Bill of Lading, but if the Charter party provides conflicting terms, these Charter party terms will prevail. The protection given by the Hague-Visby rules does not apply in principle.

■ As between the Carrier and the receiver who is a third-party holder of the Bill of Lading, the Bill of Lading terms only will

A distinction is to be made between Informative Authorities, Administrative Authorities, the Public Prosecutor and Judicial Authorities, and the Court Surveyors appointed at the request of a party having an interest.■ The investigative authorities (“FOSO”/“OFEAN”) have the

task of collecting evidence in order to advise how to avoid a similar incident in the future. EU Directive 2009/18, O.J, 28th May 2009, obliges Member States to set up such a body.

FOSO has authority for marine casualties and incidents whenever at least one of the following criteria is met:■ A Belgian flagged vessel was involved, irrespective of the

location of the casualty.■ The casualty occurred within the Belgian territorial sea

or Belgian internal waters, irrespective of the flag of the ship.

■ A substantial Belgian interest was involved, irrespective of the location of the casualty or the flag of the ship.

FOSO can investigate such cases, including the hearing of witnesses, without anyone being able to hamper their efforts. FOSO can detain ships and any objects involved in an incident. It may also destroy objects for public health and safety reasons. Removing any object involved in an incident without the permission of FOSO is prohibited. Findings of FOSO are for a different purpose from that of the findings of others. A recent incident in Belgian waters had FOSO and a Court Surveyor analyse the same facts. A comparison of FOSO findings with those of the Court Surveyor indicated that the Court Surveyors had carried out a more in-depth investigation.

■ The Administrative Authorities can, within their jurisdiction, decide what happens in case of maritime incidents. They can investigate, impose securities (P&I letters or bank guarantees), direct the vessel in one way or another, prohibit passage, impose conditions on passage, etc. Findings by their investigators are presumed correct unless the contrary is proven. These findings may be used to initiate criminal proceedings.

■ The Public Prosecutor and the Judicial Authorities can, within their Jurisdiction, undertake any kind of action inclusive of incarceration in respect of persons presumed to have committed a crime. Here also the location of the alleged crime and its consequences on the Belgian territory are of importance to determine the authority.

■ The Court Surveyor is appointed by the Court at the request of a party having an interest in determining specific facts. He/she is not appointed by a party but by the Court and his/her mission is to inform the Court as to the facts. Every step taken is to be defended and all parties to the Court surveying proceedings must be invited. The Court Surveyor remains under the order and control of the Court who appointed him/her.

2 Cargo Claims

Belgium adhered to the Hague-Visby rules with the SDR protocol. The rules are incorporated in art. 91 of the Belgian Maritime Code.The application of art. 91 of the Belgian Maritime Code is mandatory for all carriage under a negotiated Bill of Lading from and to a Belgian port. Note the addition of “and to” in the Belgian

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fault, neglect or act of the shipper, his agents or his servants is to be proven by the one who suffered damages.If the goods are uncharacteristically dangerous without the carrier being made aware of such fact, the shipper is liable under art. 4.6 of the Hague-Visby rules. Such liability may well be objective. Goods subject to sanctionsA distinction is to be made between sanctions that were imposed prior to sailing and those imposed after sailing. If the sanctions preceded the sailing, the contract is annulled. If they are imposed after the sailing, the vessel with the cargo is obliged to return the freight and payment will be due for a one-way trip. The Contract of Carriage may provide for a different regime.

3 Passenger Claims

Passenger rights are determined by the normal rules of contract. Passengers also benefit from the protection instituted by EU Regulations and the Athens Convention, as amended by the 2002 Protocol. Some Belgian legislation is also relevant. The following apply:■ The Maritime Code (arts. 165 to 178).■ The Athens Convention relating to the Carriage of Passengers

and their Luggage by Sea, 1974 (“The Athens Convention” or PAL 1974).

■ The 2002 Protocol to PAL 1974 (“The PAL Protocol 2002”) as from 23rd April 2014 (but see application by virtue of Regulation (EU) No 392/2009).

■ Regulation (EU) No 392/2009, 23rd April 2009, on the liability of carriers of passengers by sea in the event of accidents. Note that this Regulation reinforces the PAL Protocol 2002, which was already applicable. Also Belgian legislation (Act of 13th January 2012 and Royal Decree of 13th June 2012) incorporating the Regulation.

■ Regulation (EU) No 1177/2010, 24th November 2010, concerning rights when travelling by sea and inland waterways, amending Regulation (EC) 2006/2004. Also Belgian legislation (Act of 22nd June 2016) incorporating the Regulation.

■ The Belgian Statute Law on Travel Contracts, B.S., 1st April 1994, as amended (“The Travel Contracts Act”).

(i) Arrest of a sea-going vesselBelgium adhered to the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-going Vessels, 10th

May 1952 (“The 1952 Arrest Convention”).One may arrest a sea-going vessel for maritime claims only. These are the claims as listed in art. 1.1 of the 1952 Arrest Convention.In such a maritime claim, the arrest may concern:■ any ship owned by the debtor of the claim; and■ the vessel in respect of which the maritime claim arose, even

if the debtor of the claim is not the owner of the arrested vessel (example: arrest of a vessel for claims against a charterer of

apply. Here there is an important correction: the terms are not opposable to the third-party holder if they conflict with art. 91 of the Belgian Maritime Code (Hague-Visby rules). Art. 91 of the Belgian Maritime Code (Hague-Visby rules) then applies mandatorily if a negotiable Bill of Lading is issued to cover the transport of goods from or to a Belgian port.

(iv) The Terms of Carriage (Bill of Lading terms)A choice-of-law clause contained in the Bill of Lading does not alter the mandatory application of art. 91 of the Belgian Maritime Code (Hague-Visby rules). Those rules are applicable irrespective of the Law chosen in the Bill of Lading.A foreign jurisdiction or arbitration clause is in conflict with the protection given by art. 91 of the Belgian Maritime Code (Hague-Visby rules) and can therefore not be opposed to the third-party holder of the Bill of Lading unless it is established that the foreign Court/Tribunal would give the same protection as a Belgian Court. A demise or Identity of Carrier clause equals an exoneration of liability by the carrier, is therefore contrary to the Belgian Maritime Code (Hague-Visby rules) and cannot be opposed by the third-party holder of the Bill of Lading. It can be opposed to the shipper or charterer. An “unknown or similar” clause is valid only if it is a special clause and under the conditions set out in art. 3 of the Hague-Visby rules. (v) Incorporation of Charter party provisions into the Bill of

Lading Incorporation towards third-party holder of the Bill of LadingReferral to a Charter party in the Bill of Lading results in incorporation of those terms insofar as the terms are:■ not in conflict with art. 91 of the Maritime Code (Hague-

Visby rules) or other rules of a protective nature; and■ in favour of the third-party holder of the Bill of Lading.In applying those principles, the Antwerp Court of Appeal accepted in May 2017 that a carrier is bound by a referral in the Bill of Lading to an identifiable Charter party. Now that the Charter party referred to provided in a permanent seaworthiness warranty the carrier lost its due diligence defence under the Hague-Visby rules. Clauses in the Charter party which were contrary to the Hague-Visby rules (such as the arbitration clause) could be disregarded by the cargo interests.Incorporation towards the holder of the Bill of Lading who is not a third partyReferral to a Charter party in the Bill of Lading results in incorporation of those terms insofar as the terms are not in conflict with rules of a protective nature.A Court of Appeal ruled in 2018 that when the shipper and receiver are the same person, he is not a third-party holder of the Bill of Lading, and therefore the Bill of Lading terms incorporating the Charter party inclusive of its Arbitration clause are opposable to the receiver who presented the Bill of Lading to the Carrier for delivery of the goods.(vi) Claims in tortCargo claims against a shipowner who did not issue the Bill of Lading are dealt with as per the above principles based upon the in rem liability of the shipowner.

Uncharacteristically dangerous cargoThe shipper has the obligation to deliver the goods contractually agreed and must take all precautions to avoid the goods damaging the vessel or other goods, or harming the interests of another party. The shipper is liable for all consequences of misdeclaring goods. A

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(iv) Sister ships, associated ships, piercing of the corporate veilSister ships are those where all the shares in the vessel (not all of the shares in the corporations which own separate vessels) belong to the same physical or legal person. Sister ships can be arrested if they belong to the debtor of the claim.There is no such thing under Belgian law as a right to arrest just on the basis of beneficial ownership. In order to arrest the assets of one for claims against another, one must either pierce the corporate veil, prove collusion or establish fraud. In order to come to such a finding Belgian case-law applies factors which are similar to the ‘alter-ego’ relationship findings in US case-law.

ArrestAn authorisation to arrest a vessel must be obtained from an Arrest Judge. This is a specialised Judge within the Court of First Instance.An ex parte request indicating the parties, the facts and the claim is presented to the Judge, together with the evidence. The arrestor must allege a maritime claim. If an arrest authorisation is obtained, the order is to be served by a Court bailiff to the master of the vessel and to the debtor of the claim.The most time-consuming part of an arrest is the analysis of the file and the preparing of the arrest papers. Obtaining the order itself and having it served usually only takes a few hours.Release from arrestOnce arrested, the vessel can only be released by agreement between the parties or by Court order. A Court order ordering release usually means that the case was brought in Court again, all parties to the conflict were heard and the Judge ordered the release.Arrest proceedings do not initiate the case on the merits itself. Separate proceedings in Belgium or elsewhere must be initiated to that effect.SecurityAn agreement is reached usually when adequate security is given. The security is to be given by a first-class bank within the jurisdiction, unless parties agree on an alternative. The security is to guarantee the claim. If the vessel is arrested for a claim against someone other than the owner, it is that claim which must be secured. An owner cannot release his vessel from an arrest by having a bank issue a guarantee securing claims against the owner when the claim is against the charterer. The bank guarantee is to secure claims against the charterer.

5 Evidence

Any party having an interest can ask the President of the Commercial Court to appoint a Court Surveyor with a mission to determine the causes and circumstances of the incident and determine the extent

that vessel). In September 2016, the Belgian Supreme Court decided that if such arrest includes deliveries such as bunkers made to the vessel, the order must have been placed by the owner, the charterer or by someone else but attributable to the owner or the charterer.

(ii) Arrest of other assetsThere may be a possibility to arrest other assets such as bunkers on board the vessel or funds in the hands of third parties such as the ports-agent of the debtor. These arrest possibilities exist even if one does not have a maritime claim as per art. 1.1 of the 1952 Arrest Convention.

In September 2016, the Belgian Supreme Court decided that if an arrest includes deliveries such as bunkers made to the vessel the order must have been placed by the owner, the charterer or by someone else but attributable to the owner or the charterer. Case law since then seems to generally accept that, with deliveries (such as bunkers) to a vessel, there is an apparent authority from the owner or the charterer so that, unless the supplier explicitly indicates not to consider the owner or the charterer as the debtor, the order is attributable to such owner or charterer.

(i) Claims relating to a vessel: arrest of the “guilty” sea-going vessel

In a maritime claim, the arrest may concern:■ any ship owned by the debtor of the claim; and■ the vessel in respect of which the maritime claim arose, even

if the debtor of the claim is not the owner of the arrested vessel (for example, arrest of a vessel for maritime claims against a time or voyage charterer of that vessel).

A sea-going vessel is considered to be the guarantee for all maritime claims related to it, irrespective of the identity of the debtor of the claim. If the debtor of the maritime claim is a person other than the owner, the vessel can still be arrested. In other words, even if the owner is not the debtor and is not bound personally, his vessel serves as a guarantee for maritime claims in this respect.(ii) Arrest of other assetsThere may be possibilities to arrest other assets such as bunkers on board the vessel or funds in the hands of third parties such as the ports-agent of the debtor or of a bank. These arrest possibilities exist even if one does not have a maritime claim as per art. 1.1 of the 1952 Arrest Convention.(iii) Lien on cargoWhen receiving goods, it is sufficient to believe that the party presenting the goods is the owner thereof or is entitled to conclude contracts in respect of such goods which may give rise to a lien.Owners of cargo carried by sea will have difficulty avoiding a lien because carriers in general tend to believe that the party which delivers the goods for carriage is entitled to conclude contracts in respect of such goods, even if such party is not the owner of the goods in question. This principle does not alter the rights of holders of Bills of Lading. If a party is a holder of a freight prepaid Bill of Lading, a lien on the cargo is in principle not possible.

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appoints the Court Surveyors provides that the final Survey report must be filed within a few months of the appointment.Proceedings on the merits begin or proceed once all of the evidence is available. It takes about 10 months between start-up and decision if there are only two parties to the proceedings. One should add two months per additional party.Interlocutory proceedings in transport and maritime matters usually do not take as long. Depending on the specific circumstances, a judgment is obtained within a few hours of issuing the writ when no real defence or an unreasonable defence is put up, to a few weeks in heavily contested claims. (ii) Proceedings: the CourtsTransport and maritime matters are brought before a maritime and transport chamber of the Commercial Court. Such Court consists of one full-time professional Judge and two lay Judges who in their professional life usually work within a field of shipping, transport or marine insurance. At Appeal level there is a specialised Maritime Chamber with the Court of Appeal.All arrest matters are brought before the Arrest Judge. For urgent arrest matters, out-of-Court office hours are available.(iii) Proceedings: the stagesWrits are served by a Court bailiff. The writ will indicate the parties to the proceedings, the essential facts, the reasons for liability, the date on which to appear, the Court before which to appear and the claim (usually in that order).If the defendant does not appear on the date indicated in the writ, a default judgment may be obtained by the claimant at the hearing.If the defendant appears, the Court will invite the parties to give their idea of the time schedule and, within a few weeks, issue an order holding specific dates for exchange of written submissions and a date for a hearing. Quite often, parties mutually agree on a schedule and the Court will then confirm such schedule.(iv) Proceedings: the costsThe losing party pays the legal costs of the proceedings, with the exception of the lawyers’ fees, which remain for the account of the party who instructed the lawyer.The legal costs of the proceedings are in essence the cost of the writ and service thereof, of the Court Surveyor, the Court and a symbolic Indemnification for Proceedings (“IfP”) calculated on the basis of the amount claimed. This IfP varies from €82.50 for low amounts claimed in easy matters to €33,000 for complicated proceedings in claims of over €1,000,000. This IfP can be considered as a part of the lawyers’ costs.A tax of 3% on the costs is due by the losing defendant (no tax is due on damages under €12,500).(v) Proceedings: the interestsInterest is set by law on a yearly basis where the calculation is based on the average Euribor of the preceding year + 2%. For the year 2018, it is 2%.(vi) ArbitrationThere is very little arbitration in maritime incidents. Most arbitration is in marine insurance. Arbitration is usually on an ad hoc basis.(vii) MediationOther than counsels trying to come to a settlement, mediation is not commonly used in purely Belgian maritime disputes. In multi-jurisdictional disputes where the same facts give rise to disputes in various jurisdictions and tribunals, there is a tendency to mediate.

of the damages. In case of cargo claims or utmost necessity, this can be requested by way of an ex parte application. The most time-consuming part of the application is the analysis of the file and the preparation of the application. Obtaining the order itself and having it served usually only takes a few hours. Even if there is an exclusive foreign Arbitration or Jurisdiction clause, the Belgian Courts have authority to appoint a Court Surveyor, including under the 1958 New York Convention (Arbitration) regime or the Brussels I bis regime (Regulation No 1215/2012) on condition that the Court Survey is to be executed at least partially in Belgium. Two Court decisions of 2015 clearly confirm this.The Court Survey is a defended action. This means that any party having a conflicting interest must be invited at any step of the Court Survey if one wants the Survey to be opposable to that party. An invited party is entitled to bring his own private surveyors and legal counsel. The Court Surveyor usually proceeds immediately with the necessary fact-finding. In maritime incidents the experience is that the first investigative steps are taken by the appointed Court Surveyor within a few hours of being appointed. This is an advantage for those who wish to be aware of the facts as soon as possible. A Court Survey is a defended action and all parties will obtain the same factual information at the same time. The Court Surveyor is appointed by the Court and remains under the Court’s control. The Court Surveyor’s duty is to the Court and thus not to any of the parties to the incident. This results in an objective “fact-finding report” which constitutes a factual basis for a Belgian or foreign Court.

Belgian law does not have a general obligation to disclose all available evidence within Court proceedings. Every party must prove its case on the basis of the evidence it presents. If another party can prove that it is likely that someone holds relevant evidence, it may ask the Judge to order the submitting of such evidence. In order to obtain such an order from the Court, one must establish that the evidence exists, that the party who is asked to surrender the evidence has it in its possession, and that the evidence is relevant to the case.

6 Procedure

(i) Proceedings: timingA distinction needs to be made between fact-finding proceedings and proceedings on the merits.Fact-finding proceedings depend to a large extent on the complexity of the case. A collision matter resulting in a wreck removal by a specialised salvor which takes over a year will take longer than straightforward cargo damage due to leaking hatch covers. Due to the fact that Court surveying proceedings are a defended action parties are perfectly well aware of the evidence being collected by the Court Surveyor. Nowadays, the Court Order that initially

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■ The Belgian Judicial Code.■ The Belgian Code on International Private Law.A foreign decision is recognised without the need to initiate proceedings. If the decision needs to be enforced, an ex parte application to the Court asking for the decision to be declared enforceable in Belgium needs to be filed.

■ The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“The 1958 New York Convention”).

■ The Belgian Judicial Code.■ The European Convention on International Commercial

Arbitration, Geneva, 21st April 1961 (“The Geneva Arbitration Convention”).

If an award is to be enforced, an ex parte application to the Court asking for the award to be declared enforceable in Belgium needs to be filed.

The reader should be aware that a new Belgian Maritime Code has been drafted. It is now going through the usual process prior to being presented to Parliament. At present, is being reviewed by the Supreme Administrative Court (“Raad van State”). Once enacted, such Code may have profound consequences on the answers given above.

Pros:■ a mature maritime market holding a cluster of expertise

including:■ a maritime Bar with over 200 years of experience

(established in 1810);■ various specialised maritime lower Courts exclusively

dealing with shipping and transport matters (maritime chambers within the Courts of commerce);

■ a specialised maritime and transport Chamber before the Court of Appeal;

■ highly specialised marine surveyors, working exclusively for the Courts and appointed to give an independent report on facts in a defended action; and

■ language flexibility of the majority of maritime parties where a minimum of three languages (up to five) are spoken, enabling swift and cheap usage of evidence in Court in their original language;

■ swift Court procedures (about one year) for normal marine work. This has changed substantially in recent years;

■ extended case law on almost any point of shipping law, enabling reasonable predictions for those who are in the know; and

■ lawyers’ fees are low in comparison to most other jurisdictions.

Cons:■ the losing party should be aware that a 3% tax will be due on

the amount of damages they owe; and■ lawyers’ fees are not recoverable by the winning party. An

IfP is due (see question 6.1, part (iv)).

■ The Brussels Convention on Jurisdiction regime should be considered. This regime is determined by the 1968 Treaty on Jurisdiction, the Lugano Conventions and EU Regulation 1215/2012 (Brussels I bis).

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The Belgium-based Kegels & Co law firm handles commercial law matters and particularly matters related to the maritime, transport and logistics industries, international trade and related customs, as well as banking and insurance matters.

Its lawyers practise in the Belgian Courts or in arbitration proceedings in Dutch, French and English. German is also used for communication.

The members of the firm lecture on many occasions at national and international conferences and at various universities and law schools in Belgium and abroad on subjects related to their areas of practice and specialisation.

Its members are also associated with various international organisations including the International Bar Association (“The IBA”), the Comité Maritime International (“The CMI”), the International Association for the Philosophy of Law and Social Philosophy (“The IVR”) and others. Younger members of the firm are typically associated with the International Association of Young Lawyers (“The AIJA”) and the Young CMI.

Various members of the firm write on a regular basis on the aspects of the law in which they are specialised.

André Kegels read law at Leuven Law School. After his training at the Brussels Bar, he worked in the UK with an English law firm and some marine insurers. In the late 1980s he joined the Antwerp Bar where he has been practising maritime, transport and trade law ever since. Since 1997 he has been the head of Kegels & Co, a niche maritime and ITC law firm which has its roots in centuries of this type of legal work.

Among his publications, the Dutch “Law on Salvage” and “European principles regarding Maritime Law” are commonly referred to by Courts and scholars. His English and French publications concern all aspects of maritime and transport law. He is also a regular speaker at international conferences and is a guest lecturer at universities, mainly on the topic of ship arrest law.

For further information, readers are invited to search the web, where they will find many publications by different members of the firm.

André KegelsKegels & Co Mechelsesteenweg 1962018 AntwerpBelgium

Tel: +32 3 257 1771Fax: +32 3 257 1474Email: andre.kegels@kegels-co.beURL: www.kegels-co.com

Chapter 11

1 Marine Casualty

(i) CollisionBrazil has adopted the International Convention for the Unification of Certain Rules of Law with Respect to Collision Between Vessels and Protocol of Signature, Brussels, of 23 September 1910 (the 1910 Collision Convention), through the enactment of the Brazilian Decree n. 10.773/1914. The Convention on the International Regulations for Preventing Collisions at Sea of 1972 (“COLREG 72” or “RIPEAM” as it is known in Brazil) has also been adopted through the enactment of the Brazilian Decree n. 80.068/1977. Brazilian Commercial Code provides for damages caused by a vessel collision in its Title XI, from Articles 749 to Article 752. In this sense, Article 749 establishes liability for damage caused to a ship and her cargo resulting from a collision if such collision results from failure to comply with the port regulations, malpractice, or negligence of the master or the crew. The damages shall be estimated by arbitrators.It is worth mentioning that the Brazilian Civil Code also provides for liability and for obligation to repair/indemnify, although its provisions are generic in scope and not as specific as the Commercial Code provisions mentioned above.(ii) PollutionRegarding internal rules on pollution, the provisions follow the principles established in the Brazilian Federal Constitution and the main ones to be mentioned are provided by: Law n. 6.938/1981, which provides for the National Environmental Policy, structured in guiding principles for the inspection, preservation, improvement and recovery of environmental quality, and institutes the National System of the Environment; Law n. 9605/1998 and its Decree n. 3.179/1999, which provide for Environmental Crimes and for criminal and administrative sanctions derived from conduct that damages the environment; and Law n. 9.966/2000, known as the “Oil Law”, alongside Decree n. 4.136/2002, which establish the basic principles to be followed in the movement of oil and other harmful substances in organised ports, port facilities, platforms and ships sailing in waters under national jurisdiction. In addition, it

provides measures on the control, prevention and control of pollution by oil, adding to the legal system the regulations of MARPOL 73/78 and CLC. Decree n. 195/98 is a recent version of Decree n. 265 of July 31, 1972, which regulates the Port Captaincies, a military agent whose purpose is to contribute to the safety of navigation, safeguarding human life at sea and preventing water pollution. Law n. 12.305/2010 provides for the national solid waste policy.As for international conventions, the International Convention on Civil Liability for Oil Pollution Damage, Brussels, 1969 (“CLC/69”) was ratified by Brazil and internally approved through the enactment of the Decrees n. 74/1976, 79.437/1977 and 83.540/1979; and the International Convention for the Prevention of Pollution from Ships, known as MARPOL 73/78, was created in 1973 as amended by the Protocol of 1978 and entered into force on 1983. Brazil has also ratified and internalised in its legal system: the UNCLOS – United Nations Convention on the Law of the Sea, which was promulgated by Decree n. 1.530/1995; the OPCR – International Convention on Oil Pollution Preparedness, Response and Co-operation, which was enacted by Decree n. 2.870/1988; and the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, 1972 (“LC-72”), although Brazil has not ratified its 1996 Protocol.(iii) Salvage / general averageBrazil is a signatory party and has ratified the International Convention on Salvage from IMO, of 1989, which was enacted by the Brazilian Legislative Decree n. 263/2009.As for national regulations, Brazilian Law n. 7.203/84 applies in this regard.(iv) Wreck removalWreck removal in Brazil is governed by Brazilian Law n. 7.542/1986. This law provides for, among other stipulations, the liability of the person responsible for the asset for the compensation of removal costs if totally or partially made by the Brazilian Maritime Authority, as well as on the joint liability of the risk insurer of the wreck removal. Unremoved wreck assets are incorporated into the Federal Government domain after 5 (five) years of the loss, as there is a legal presumption of ownership waiver.(v) Limitation of liabilityBrazil is a signatory party to the Convention on Limitation of Liability for Maritime Claims of 1976, but it should be mentioned that the Brazilian Civil Code provides that the indemnity shall be measured by the extent of damage.(vi) The limitation fundA limitation fund has not been established in Brazil.

LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS

Brazil

Patricia dos Anjos

Alessander Lopes Pinto

BrazilLP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS

the cargo carrier for loss of cargo, as well as for lack or decrease of content or damages to the cargo, is 1 (one) year from the date of completion of the unloading of the respective cargo.Although the majority of Court decisions stand for the 1 (one)-year time limit mentioned above, it is worth mentioning that there are Court decisions in cargo claims either accepting the application of the time limit of 3 (three) years established in the Brazilian Civil Code or the time limit of 5 (five) years established at the Brazilian Consumer Code.

The shippers shall be liable for any damages which may result if, without the carrier’s knowledge and consent, they introduce goods on the ship, whose exit or entry is prohibited in Brazil, and any other illegal act they carry out at the time of loading or unloading, as per provisions of Article 599 of the Commercial Code.Article 745 of Civil Code establishes that in the event of inaccurate information or false description of the cargo, the carrier shall be indemnified for the loss suffered, and the respective lawsuit shall be filed within a period of 120 (one hundred and twenty) days, counting from that act, under penalty of peremption.

3 Passenger Claims

Maritime passenger claims in Brazil are mainly regulated by the provisions established by the Civil Code and the Consumer Code, as Brazil has not ratified international conventions on the carriage of passengers.The passenger ticket is considered evidence of the transport contract. As for the passengers travelling free of charge, such as visitors and/or clandestine migrants, the carrier’s liability may be extended on a non-contractual basis.

A party seeking to obtain security for a maritime claim against a vessel owner may arrest its vessel. An arrest is a typical precautionary measure, preventive and provisional, which seeks to eliminate the danger of legal damage capable of jeopardising the foreclosure of a credit. After the filing of an arrest request, if all requirements established mainly in the Commercial Code and Code of Civil Procedure are met, there will be a Court order to arrest the vessel, and notice will be given to the defendant on this matter. There will also be a notice issued to the respective Port Captaincy where the vessel is located informing about the arrest, thus preventing that the vessel sail away from Brazilian jurisdictional waters.If this vessel owner is a Brazilian company or person, established in Brazil, a pledge of its bank account may also be applicable, or a pledge over the pecuniary results from the operation of a vessel.

The Brazilian Maritime Authority through its captaincies, stations and agencies, has powers of investigation/casualty response in the event of a collision, grounding or other major casualty. Depending on the extension of the event, the federal police may be involved in an investigation.In addition, in the event of environmental pollution resulting from a collision, grounding or other casualty, the Environmental Authorities will be involved in the situation.

2 Cargo Claims

Brazil is not a signatory party to the main international conventions that provide for the liability of carriers, such as the Hague Rules, the Hague-Visby Rules, the Hamburg Rules or the Convention on Limitation of Liability for Maritime Claims, 1976.The Brazilian Civil Code provides that carrier’s liability will be limited to the value of the cargo and Decree-law n. 116/1967 also provides for liabilities in the cargo transport at Brazilian ports. The limitation clause or exclusion of liability clause is established in the Bill of Lading (“BL”), but such clauses are cautiously analysed by Courts as the BL is mainly deemed by Brazilian Courts as an instrument that was not the subject of free negotiations between the parties. Contractual fraud by the carrier, the vessel seaworthiness and her adequacy, and proper transport of the cargo are topics addressed by Courts should those clauses be considered regular, but Court decisions vary according to the specific case, even though there is the precedent n. 161 from the Supreme Federal Court (“STF”) which states that in a transport contract this is ineffective in the non-indemnifying clause.

It is possible to file a cargo claim based either on contractual or extra-contractual liabilities for cargo damages and loss as, according to the Brazil Civil Code provisions, there is an obligation to repair (civil redress) the damages caused to someone. It must be mentioned that there are some exculpatory hypothesis exceptions to this rule. According to Decree-law n. 116/67, which provides for the operations inherent in the transportation of goods by water in Brazilian ports, delimiting liabilities and dealing with loss and damages, a cargo survey at its unloading is a mandatory evidence to a claim for cargo damage. This disposition is also ratified by the Code of Civil Procedure, where this Decree-law is not applicable. It should be mentioned that the Brazilian Courts consider that the liability of the carrier that results from a contract relates to the duty to transport the cargo from a point to another, without loss or any damages.The Commercial Code provides for the obligations concerning the seaworthiness of the ship and her compatibility to be able to carry a cargo.According to Brazilian law, specifically Article 8 of Decree n. 116/67, the limitation period for cargo claims to be brought against

6 Procedure

In Brazil, maritime claims are litigated in the Civil Courts and governed by the procedural rules introduced with the enactment of the Code of Civil Procedure.Although there is a Maritime Court in Brazil, whose jurisdiction covers the entire national territory, it is an autonomous organ of the Ministry of the Navy, and its attributions are related to judging accidents and facts of maritime, fluvial and lake navigation, as well as registry functions. As for Arbitration, there are specialised arbitration bodies within Brazil, including in the maritime context. Arbitration in Brazil is ruled by Law n. 9.307/1996 and it establishes a time limit of six months from the date of the establishment of the arbitration for an arbitration decision to be rendered, if nothing to the contrary has been agreed by the parties. Arbitration is instituted once the arbitrator(s) accepts the appointment. Arbitration shall follow the procedure established by the parties to the arbitration agreement, which may refer to the rules of an institutional arbitration body or specialised entity, and the parties may also delegate to the arbitrator himself or to the arbitral tribunal the procedure.Mediation is not common in Brazil yet, but its incidence is increasing, including in the maritime context.

As per Brazilian law provisions, a Brazilian or foreign plaintiff who resides outside Brazil or who ceases to reside in the country during the course of the proceedings shall provide sufficient security for the payment of the costs and attorney’s fees of the opposing party in the lawsuits, if the plaintiff does not have real property in Brazil that assures them payment. There are some exceptions to this rule; for example, when there is an exemption provided for in an international agreement or treaty of which Brazil is a party, or in the counterclaim.

Brazil has not ratified international conventions regarding enforcement of foreign judgments, with the exception of the Las Leñas Protocol, through the enactment of the Decree n. 6.891/2009.The foreign judicial decision will not be effective in Brazil if it is not ratified by the Superior Court of Justice (“STJ”). The procedure for the ratification of a foreign judgment follows the Internal Rules of the STJ and the ratification must be requested by a lawyer by a petition addressed to the president appellate judge of the STJ. If this request contains all the procedural documents and there is no dispute from third parties, there will be a decision, approving or not the foreign judgment. If approved, the lawyer must proceed with its enforcement/execution.

As per Brazilian law and the International Convention for the Unification of Certain Rules on vessels’ immunity, Brussels, 1926, bunkers supplied to a vessel can be the object of a maritime claim. If all requirements are met, the party holding the credit / maritime lien shall be entitled to arrest the vessel (arrest in rem).

A security sought from a party other than the vessel owner (or demise charterer) for a maritime claim, as mentioned above, may be an arrest against the vessel. Lien over cargo may be applicable when there is a default in the freight payment to the carrier or due to the payment of declared general average expenses, as per Article 7º of Decree-Law n. 116/1967.

Usually, several forms of security are acceptable to be submitted in maritime claims in Brazil: letter of undertaking issued by P&I club; bank guarantees; cash deposit; and insurance companies’ guarantees.

5 Evidence

According to the provisions of the Brazilian Civil Procedure Code, an interested party may request a judicial decision in order to preserve or obtain access to evidence during or before a claim is brought to the Court. In this last case, an autonomous suit shall be filed according to Articles 381 to 383 of the Civil Procedure Code provided that: (i) there is a fear that it will become impossible or very difficult to verify certain facts pending the lawsuit; (ii) the evidence to be produced is capable of facilitating settlement or other appropriate means of solution of conflict by the parties themselves; and (iii) prior knowledge of the facts may justify or avoid the filing of a suit.

Although the Code of Civil Procedure provides in its Article 378 that the collaboration of the parties to clarify the truth is a duty, it is up to the plaintiff to prove the constitutive facts of his/her right and it is up to the defendant to prove the facts impeding, modifying and extinguishing the right of the plaintiff. In some specific situations there may be a reversal of the burden of proof in a legal, conventional or judicial manner.

There is a bill – PL 1572/2011– to establish a new Commercial Code in Brazil. As mentioned above, maritime law is one of the provisions of this Code. This bill is currently under assessment by the Brazilian National Congress.

As for recognition and enforcement of foreign arbitration awards, a similar procedure to the foreign judgment procedure mentioned above is established, as the ratification of such award must be provided by the STJ.

LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS is a Firm that combines experience and dynamism, focusing on the specialisation of each of its partners, associates and professionals in their areas of expertise, with direct contact between the main partners and the Firm’s clients.

The Firm stands out in the legal scene with outstanding performance in the shipping and offshore oil and gas areas, and significant expertise in shipping, regulatory, litigation and corporate matters.

The firm acts for Brazilian and foreign ship-owners, charterers, the offshore oil and gas industry, port terminals and shipyards. Labour claims related to seafarers are also an important area of the firm, including immigration services related to work permits and visas for crewmembers of foreign vessels and oil platforms operating in Brazil.

The constant search for quality through the highest standard of excellence in the legal assistance and services offered, makes LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS a unique and personalised law firm.

Patricia dos Anjos is an Associate Lawyer at LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS, with experience of working at and with shipping companies, oil companies, shipyards, port terminals, among other entities. Patricia has provided legal assistance to national and international companies with regard to maritime, marine, administrative/regulatory, commercial and contractual law.

Patricia is a member of the Brazilian Maritime Law Association (ABDM), as well as the Women’s International Shipping & Trading Association (WISTA).

Patricia dos AnjosLP LAW | LOPES PINTO ADVOGADOS ASSOCIADOSRua México, nº 168, 3rd floorCentro, CEP: 20031 143Rio de Janeiro, RJBrazil

Tel: +55 21 2532 7202Email: patricia.anjos@lplaw.com.brURL: www.lplaw.com.br

Alessander Lopes Pinto is a Senior Partner at LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS, specialised in Business Law and Maritime Law with a postgraduate qualification from the University of Southampton. He represents several worldwide ship-owners and foreign companies with business in Brazil, having wide experience in setting up joint ventures and the establishment of foreign entities in Brazil. Alessander is an offshore and cabotage navigation local regulations expert, working on charter parties, arbitrage, vessel arrest and practice at the Admiralty Court. A former Attorney at the National Waterway Transportation Agency (ANTAQ), Alessander is member of the Brazilian Maritime Law Association and former vice-president for Brazil of the Ibero-American Maritime Law Institute (IIDM) (2016–2018).

Alessander Lopes PintoLP LAW | LOPES PINTO ADVOGADOS ASSOCIADOSRua México, nº 168, 3rd floorCentro, CEP: 20031 143Rio de Janeiro, RJBrazil

Tel: +55 21 2532 7202Email: alessander@lplaw.com.brURL: www.lplaw.com.br

Chapter 12

1 Marine Casualty

(i) CollisionCanada has enacted collision regulations (the Collision Regulations, C.R.C., c. 1416) under the Canada Shipping Act, 2001, S.C. 2001, c. 26 (the “Canada Shipping Act”). These regulations implement the so-called “COLREGS”, i.e. the International Regulations for Preventing Collisions at Sea, 1972. There are certain Canadian modifications. In addition, Canada has enacted supplementary regulations particular to specific bodies of inland water, such as the Burlington Canal Regulations, SOR/89-222 and the St Clair & Detroit River Navigation Safety Regulations, SOR/84-335. Breach of the Collision Regulations or other similar regulations would likely give rise to liability on the part of the offending ship.In Canada, mariners have a general obligation to render assistance at sea, pursuant to various international conventions such as the SOLAS Convention and the United Nations Convention on Law of the Sea. In addition, sections 131 and 132 of the Canada Shipping Act provide that masters of vessels in Canadian waters must render such assistance as they are able. Section 148 of the Canada Shipping Act specifically provides that in the event of a collision, the master in charge of each vessel is under an obligation to render such assistance as may be necessary to the other vessel to save them from any danger caused by the collision, and to stay by the other vessel until its master has determined that no further assistance is required. Failure to comply with these provisions could result in a fine of up to $1 million or imprisonment for up to 18 months. Collisions must also be reported to the Canadian Transportation Safety Board, pursuant to the Transportation Safety Board Regulations, SOR/2014-37, and also to the Chief of Marine Casualty Investigations at the Department of Transport, pursuant to the Shipping Casualties Reporting Regulations, SOR/85-514.In Canada, Part II of the Marine Liability Act, S.C. 2001, c. 6 (the “Marine Liability Act”) provides for the apportionment of liability for damages caused by two or more persons or ships. Such liability is generally apportioned according to the degree to which they are respectively at fault or negligent. If the court cannot determine different degrees of fault or neglect, their liability is deemed to be equal. Claims for contribution and indemnity by one party against another are permitted.

(ii) PollutionCanada is signatory to several international conventions dealing with pollution:■ The International Convention for the Prevention of Pollution

from Ships – Annexes I–III (“MARPOL”).■ The International Convention on Civil Liability for Oil

Pollution Damage, 1992, as amended by the Resolution of 2000 (the “Civil Liability Convention”).

■ The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 as amended by the Resolution of 2000 (the “Fund Convention”).

■ The Protocol of 2003 to the Fund Convention as amended by the Resolution of 2000 (“Supplementary Fund Protocol”).

■ The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (“Bunker Convention”).

■ The United Nations Convention on the Law of the Sea.■ The International Convention on the Control of Harmful

Anti-fouling Systems on Ships, 2001.■ The International Convention for the Control and

Management of Ships’ Ballast Water and Sediments, 2004.Canada has enacted federal legislation and regulations giving effect to the above conventions, and imposing penalties, sanctions and reporting requirements. Some of the important legislation includes the Canada Shipping Act; the Arctic Waters Pollution Prevention Act, R.S.C. 1985, c. A-12; the Canadian Environmental Protection Act, 1999, S.C. 1999, c. 33; the Transportation of Dangerous Goods Act, S.C. 1994, c. 34; and the Fisheries Act, R.S.C. 1995, c. F-14. Important regulations include the Vessel Pollution and Dangerous Chemicals Regulations, SOR/2012-69; the Cargo, Fumigation and Tackle Regulations, SOR/2007-128; the Ballast Water Control and Management Regulations, SOR/2011-237; and the Response Organizations and Oil Handling Facilities Regulations, SOR/95-405.(iii) Salvage / general averageSection 142(1) of the Canada Shipping Act implements the International Convention on Salvage, 1989 into Canadian law. Canada reserves the right not to apply its provisions when the property involved is maritime cultural property of prehistoric, archaeologic or historic interest and is situated on the seabed. Under section 22(2)(j) of the Federal Courts Act, R.S.C. 1985, c. F-7 (the “Federal Courts Act”), the Federal Court has jurisdiction over salvage actions in Canada.With respect to general average, section 65 of Canada’s Marine Insurance Act, S.C. 1993, c. 22, provides for general average claims, and also that claimants can claim directly from maritime insurers.

James MansonFernandes Hearn LLP

Canada

CanadaFernandes Hearn LLP

charged with investigating marine occurrences such as collisions, groundings and other such events. The Canadian Transportation Accident Investigation and Safety Board Act, S.C. 1989, c. 3 and the Transportation Safety Board Regulations, SOR/2014-37 give the CTSB broad powers in the course of an investigation to compel interviews, gather/seize documents, examine a ship, etc. The CTSB can issue summonses and apply to a justice of the peace for a warrant to compel compliance.Other authorities, such as police, Transport Canada Inspectors, Fisheries Canada Officers, etc. may also have jurisdiction depending on the situation.

2 Cargo Claims

As mentioned above, Canada has enacted the Hague-Visby Rules pursuant to section 43 of the Marine Liability Act. The Hague-Visby Rules apply as set out in Article X of those rules. In addition, section 43(2) of the Marine Liability Act provides that the Hague-Visby Rules also apply to contracts for the carriage of goods by water from one place to another in Canada, either directly or by way of a place outside Canada, unless there is no bill of lading and the contract stipulates that the Hague-Visby Rules do not apply.Section 46 of the Marine Liability Act also provides that a claimant may commence proceedings in Canada notwithstanding the existence of a jurisdiction or arbitration clause in the contract for carriage; however, such a proceeding may still be stayed on forum non conveniens grounds.Section 22(2)(f) of the Federal Courts Act gives the Federal Court jurisdiction over marine cargo claims.

The key principles are as set out in the Hague-Visby Rules. First, under Article III, a carrier is bound, before and at the beginning of a voyage, to exercise due diligence to make the ship seaworthy; properly equip, man and supply the ship; and make the holds and other such parts of the ship fit and safe for the reception, carriage and preservation of cargo. A carrier is bound to properly and carefully load, handle, stow, carry, keep, care for and discharge the cargo. A carrier must also issue a bill of lading on demand of the shipper.In addition to its obligations, under Article IV a carrier is vested with certain rights and immunities. First, neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness, unless caused by want of due diligence on the carrier’s part. Second, a carrier enjoys the benefit of certain “carrier’s defences” as set out at Article IV(2), relating to such things as fire, acts of war, acts of God, defective packing, inherent vice, etc.If none of the “carrier’s defences” apply, then the carrier will usually be prima facie liable for loss of damage to cargo. However, the limits set out in the Hague-Visby Rules will then apply to assist the carrier (subject to the supplemental limitation provisions referred to above).

Under Article III(5) of the Hague-Visby Rules, the shipper is deemed to guarantee the accuracy of the description of the cargo, and the

Under section 22(2)(q) of the Federal Courts Act, the Federal Court has jurisdiction over general average actions in Canada.(iv) Wreck removalPart VII of the Canada Shipping Act deals with wrecks and wreck removal in Canada. Under these provisions, a person finding a wreck or bringing a wreck into Canada must report the wreck to a “receiver of wreck”, who will then attempt to determine the wreck’s owner, and otherwise deal with the wreck, including its destruction or disposition. The person who reported the wreck is entitled to a salvage award, which could be the wreck itself, or all or part of the proceeds of disposition.Section 15(1) of the Navigation Protection Act, R.S.C. 1985, c. N-22, also provides that if a vessel casualty becomes a wreck, then the person in charge of the vessel must mark the wreck. The Federal government may also direct the removal and sale of the wreck and recover its expenses with respect to the wreck from the proceeds of sale. Canada has reserved the right not to extend the limitation provisions of the Convention on Limitation of Liability for Maritime Claims, 1976 (“LLMC”) to wreck removals, although currently such provisions are in force. (v) Limitation of liabilityThe LLMC has been implemented in Canada pursuant to section 26 of the Marine Liability Act. In addition, Canada has enacted further limits of liability in respect of ships of less than 300 gross tonnage. Those limits are also found in sections 28 and 29 of the Marine Liability Act:(a) with respect to passengers (whether or not under a contract

of carriage), the greater of 2 million SDRs or 175,000 SDRs multiplied by the number of persons the ship is authorised to carry or does carry;

(b) in all other cases, $1 million in respect of claims for loss of life or personal injury; and

(c) in all other cases, $500,000 in respect of any other claims.Section 30 of the Marine Liability Act also provides that the maximum liability of an owner or a dock, canal or port for loss caused to a ship, or its cargo or other property on board, is the greater of $2 million or the amount calculated by multiplying $1,000 by the number of tons of the gross tonnage of the largest ship that is at the time of the loss, or had been within a period of five years before that time, within the area of the dock, canal or port over which the owner had control or management.Canada has also implemented the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, as amended by the Protocol of 1990 (the “Athens Convention”); the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, concluded at Brussels on August 25, 1924, in the Protocol concluded at Brussels on February 23, 1968, and in the additional Protocol concluded at Brussels on December 21, 1979 (the “Hague-Visby Rules”); and the International Convention on Civil Liability for Oil Pollution Damage which provide additional limitations on liability with respect to passenger and luggage claims, cargo claims, and claims involving oil pollution.(vi) The limitation fundSection 32 of the Marine Liability Act provides that the Federal Court has exclusive jurisdiction in Canada with respect to any matter relating to the constitution and distribution of a limitation fund under Articles 11 to 13 of the LLMC.

The Canadian Transportation Safety Board (“CTSB”) is the body

In respect of arrested cargo, the Federal Courts Rules provide that arrested property may released in exchange for certain forms of bail, including: (a) a bank guaranty; (b) a bond from a surety company licensed to do business in Canada or furnish security bonds in the part of Canada where the bond is executed; or (c) a bail bond.The Federal Courts Rules also provide that the parties can agree on another form of bail. This often happens; in such cases, the parties usually agree on a letter of undertaking from a P&I Club.Otherwise, litigants are generally not able to obtain security from other parties in Canada. It is possible to seek a Mareva injunction, which has the effect of freezing a party’s assets where the plaintiff can establish a serious risk of the defendant removing or dissipating its assets from Canada – however, such injunctions are rarely granted.

The Federal Courts Rules provide that an arrested vessel may released in exchange for certain forms of bail, including: (a) a bank guaranty; (b) a bond from a surety company licensed to do business in Canada or furnish security bonds in the part of Canada where the bond is executed; or (c) a bail bond. The Federal Courts Rules also provide that the parties can agree on another form of bail. This often happens; in such cases, the parties usually agree on a letter of undertaking from a P&I Club.

5 Evidence

Once an action has been commenced, a party can move to preserve evidence, inspect property or examine non-parties under oath. Such a motion would be brought in the normal course, on the basis of affidavit evidence. Such requests are governed by the rules of court in a given jurisdiction, and any tests or factors that have been developed by the relevant jurisprudence.The Federal Court does consider pre-action motions; however, such motions are rare. In truly urgent cases, it is possible for a litigant to apply to the Court on an ex parte basis for an interim injunction, seeking what is known as an “Anton Piller” order. Such an order provides for the execution of a warrant and seizure of evidence from an opposing party. Normally, the party requesting such extraordinary relief would give an undertaking to pay the target litigant damages resulting from the improper use of this mechanism. It would similarly be theoretically possible for a litigant to move, either pre-action or immediately upon commencement of an action, for an order compelling certain witnesses to be examined under oath. It would be quite rare, however, for the Court to make such orders. In the same vein, usually a litigant is only obligated to produce one witness to be examined for discovery.

shipper must indemnify the carrier for all loss, damage and expense arising from inaccuracies in such particulars. Thus, a carrier would be entitled to bring an action against the shipper in the Federal Court. In cases where the shipper is not located in Canada, it may be possible to arrest the cargo itself, although it would seem that this would only be possible if at the time the cause of action arose, the cargo was still the property of the shipper and not the consignee.

3 Passenger Claims

As mentioned above, the Athens Convention has been implemented into Canadian law by virtue of section 37 of the Marine Liability Act. The Athens Convention applies whether or not there is a contract of carriage in existence between the carrier and a passenger.However, the Athens Convention does not apply to “adventure tourism activities”, as defined in section 37.1(1) of the Marine Liability Act. In such cases, the common law of Canada would apply; liability could accordingly be limited or excluded by contract.

A party seeking to obtain security in respect of a maritime claim against a vessel owner will normally arrest the vessel in the Federal Court. Arrest procedures are fairly straightforward and cost-effective. Moreover, usually it is enough to simply “threaten” to arrest a vessel, whereupon the owner will provide an acceptable alternative form of security (usually a letter of undertaking from a P&I Club).The arrest procedure itself is done on a fairly expedited basis. All that is required is to file a Statement of Claim in the Federal Court, thereby commencing the action, along with a document known as an “Affidavit to Lead Warrant”, which contains a sworn statement concerning the nature of the action, the basis for invoking the Court’s jurisdiction and other details as set out in the Federal Courts Rules, SOR/98-106 (the “Federal Courts Rules”). These documents are presented to the Federal Court Registry, whereupon a warrant is issued immediately – there is no need for a hearing before a judge.Note that other than in the case of a valid maritime lien, it is only possible to arrest a vessel in rem if the owner of the vessel is also liable for the claim in personam.

Yes; in such cases the bunker supplier may have a maritime claim against the vessel and its owner pursuant to section 22(2)(n) of the Federal Courts Act. Such a claim, however, would be extinguished if the vessel changes hands after the cause of action arises but before the proceeding is commenced. On the other hand, the bunker supplier who provides bunkers to a foreign vessel might have a valid maritime lien against the foreign vessel pursuant to section 139(2) of the Marine Liability Act. If so, such a lien would enjoy priority over other unsecured marine claims that may exist, and the claimant could arrest the vessel whether or not the owner was liable in personam.

Usually it takes much less time, but significantly more money, to arbitrate a matter privately in Canada than it would take to litigate the matter in the courts.Mediation is also highly encouraged in Canada. In maritime matters, the Federal Court offers free judicial resolution conference services, where a case management judge or prothonotary will provide mediation services to the parties. Other jurisdictions in Canada require litigants to participate in a mandatory mediation session before they can proceed to trial.

Compared with other jurisdictions, vessel arrests in Canada are quite straightforward and cost-efficient. Usually, as long as the relevant information is provided to counsel at the outset for inclusion in the Affidavit to Lead Warrant, a vessel can be arrested on the same day, or even less. That said, the court system in Canada is often plagued by systemic delays, due to a lack of judicial resources. Delays in the Federal Court are not as pronounced as those in the provincial superior courts. Either way, litigants should be aware that in Canada it often takes years to deal with a court proceeding from beginning to end.Foreign litigants should also be aware that in all of the common law jurisdictions in Canada, the losing party is usually made to pay a significant portion of the winning party’s legal costs and disbursements. This is often a disincentive to litigants from advancing spurious claims.One feature in the Federal Court worth noting is the Court’s ability to offer free dispute-resolution services. This feature, when properly used, can be of great benefit to litigants.

Absent public policy or natural justice concerns, Canadian courts will generally recognise and enforce foreign judgments. With respect to maritime judgments, a litigant holding a foreign judgment may commence an action on the judgment in any of the provincial superior courts or the Federal Court. Alternatively, where reciprocal enforcement of judgments legislation is in place, the litigant can simply apply to have the judgment registered in accordance with that legislation.Canada is a party to the Convention between Canada and the United Kingdom of Great Britain and Northern Ireland Providing for the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters. There are also reciprocal arrangements for the enforcement of judgments between most Canadian common law provinces and a few other states such as parts of Australia, some of the United States, etc.Foreign judgments made under the Civil Liability Convention, the Fund Convention, the Supplementary Fund Protocol and the Bunker Convention may be registered in the Federal Court pursuant to section 82 of the Marine Liability Act. Enforcement mechanisms are governed by statutes and rules of court particular to each Canadian jurisdiction – they include methods by which judgment creditors may examine judgment debtors to determine the extent and whereabouts of their assets, commence garnishment procedures, obtain writs of seizure and sale, etc.

Generally speaking, all superior courts in Canada, including the Federal Court, impose broad disclosure obligations on litigants in court actions. Litigants in the Federal Court are obligated to disclose, to the best of their ability, all documents in their possession, power or control that are relevant to the issues raised in the action. The word “document” is broadly construed to include photographs, recordings, electronic information, etc.Litigants must list all such documents in a document called an “affidavit of documents” and swear or solemnly affirm that they have made appropriate searches and have disclosed all relevant documents. These documents are then produced to the other litigants in advance of oral examinations for discovery.In addition, litigants must list all documents over which a recognised form of privilege is asserted over a document. Litigants must also list all documents that once were in their possession, power or control, but are no longer.The documentary disclosure process is ongoing; a litigant who discovers additional relevant documents must prepare a supplementary affidavit of documents and disclose any such documents.Similar mechanisms and procedures exist in the superior courts of each of Canada’s provinces.

6 Procedure

Maritime claims are generally litigated in the Federal Court. Provincial superior courts also have jurisdiction to hear admiralty cases; however, generally speaking, Federal Court judges have more experience in such matters. Procedures in the Federal Court are similar to other judicial proceedings throughout the common law jurisdictions. A proceeding is commenced by issuing a Statement of Claim and serving it on the defendant, who will then serve and file a Statement of Defence. Documentary discovery then follows; each party will serve its Affidavit of Documents. Each party then produces a witness who will attend to give testimony under oath about the facts and issues raised in the pleadings, and answer questions about the documentary productions. Once the discovery process is complete, the parties will then list the matter for trial. Often, the Court will require the parties to participate in a settlement conference or formal mediation process before trial. Usually, the litigation process in Canada is quite lengthy due to significant backlogs and lack of judicial resources; an action could take several years to get to trial.Appeals from trial in the Federal Court are heard by the Federal Court of Appeal; further appeals (with leave) to the Supreme Court of Canada are possible, but leave is rarely granted.Arbitration is possible in Canada and is encouraged by the courts. Litigants may have arbitral awards enforced in Canadian courts. The Association of Maritime Arbitrators of Canada and the Vancouver Maritime Arbitrators Association are recognised arbitration entities in Canada.

Fernandes Hearn LLP is a boutique law firm based in Toronto, Canada. Comprised of 12 lawyers, the firm provides specialised legal services throughout Canada to domestic and international clients, primarily in the transportation and maritime law spheres.

The firm’s lawyers have a unique “best of the Canadian legal market” familiarity with the maritime, rail and intermodal transportation and logistics regulatory regimes, and offer a broad spectrum of services, including regulatory, commercial, transactional, and litigation.

The firm recognises that clients wish to engage with entrepreneurial, knowledgeable and successful legal advisors, and build meaningful relationships with trusted advisors. Fernandes Hearn LLP can help clients achieve that goal by offering representation by a team of lawyers who are regarded by their peers and key players within the transportation industry as being at the very top of their game.

James Manson joined Fernandes Hearn LLP in 2014. He has represented clients in Canada, the United States and Europe in the superior courts in jurisdictions across Canada, including the Federal Court.

James’s practice is devoted to civil and commercial litigation, focusing on all aspects of transportation law, including maritime law.

Originally from Winnipeg, Manitoba, James has lived and worked in several cities throughout Canada and around the world. He attended law school at Queen’s University, where he was placed on the Dean’s Honour List. He also obtained a Bachelor of Arts from McGill University, majoring in political science and Mandarin language studies, and a Bachelor of Music (Performance) from the University of Manitoba.

James is conversant in both French and Mandarin.

James is a member of several industry associations, including the Canadian Maritime Law Association, the Maritime Law Association of the United States, and the Canadian Board of Marine Underwriters.

James MansonFernandes Hearn LLP Suite 700, 155 University AvenueToronto, Ontario, M5H 3B7Canada

Tel: +1 416 203 9820Email: jmanson@fernandeshearn.comURL: www.fernandeshearn.com

The legislation, if adopted, will also bring the Nairobi International Convention on the Removal of Wrecks, 2007 into force under Canadian law.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 has been implemented in Canada pursuant to the United Nations Foreign Arbitral Awards Convention Act, R.S.C. 1985, c. 16 (2nd Supp.), and by similar legislation in each province.Once recognised, arbitral awards may be enforced according to the provisions and procedures in place in each of the Canadian jurisdictions.

Along with many other nations, Canada has not yet adopted the proposed Rotterdam Rules.In 2017, the Canadian government introduced the Wrecked, Abandoned or Hazardous Vessels Act. This legislation has not yet been enacted. The legislation, if it becomes law, will require shipowners to deal proactively with wrecked, abandoned or hazardous vessels in Canadian waters. It will prohibit vessel abandonment, increase owner responsibility and liability for hazardous vessels and wrecks, including costs for clean-up and removal, and enable the Government of Canada to take action on hazardous vessels before they become more costly.

Chapter 13

1 Marine Casualty

(i) CollisionLiability for a collision is determined by the following rules:■ Fortuitous or doubtful collision: if a collision between two

or more ships occurs owing to circumstances beyond their control or to an unavoidable accident, or if there are doubts about the originating cause of the accident, the damages are individually borne by each victim.

■ Collision attributable to unilateral fault or negligence: if the collision is the result of wilful intent or fault of the captain, pilot or members of the crew of a vessel, all the damages are borne by the vessel’s owner.

■ “Both to blame” collision: if the collision could be blamed on, or is the fault of two or more vessels, the total amount of damages is borne by the owners of each vessel in proportion to the blame assigned by the court which hears the first action for loss and damages.

■ Collision and towage: as a general rule, both the tug and the tow are liable to third parties for their own neglect in towing pursuant to the towage provisions set forth under the Code of Commerce. However, in the case of a collision with another vessel not involved in the manoeuvre, the following rules apply: (i) if the control of the towage was being handled by the tug, the convoy will be considered a single unit of transport for the purposes of third-party liability; or (ii) if the control of the manoeuvre was being handled by the tow, this vessel (i.e. the tow) is liable.

■ Liability relating to death or injuries resulting from a collision: the responsible parties are jointly liable for the payment of indemnities to third parties for death or injuries resulting from the collision, notwithstanding the right of each one to file a claim against the other for any payment made in excess of the share or proportion of blame. Regarding damage to cargo, there is no joint liability between the vessels at fault and each owner must pay the damages related to the cargo damaged in its own vessel in accordance with what is established by law or under the respective charterparties or carriage of goods by sea contracts. If, by application of this rule or due to direct actions from the owners of the cargo transported in the other vessel(s) that collided, an owner or carrier pays a bigger proportion than the percentage of blame assigned to its vessel, it then has the right to claim an indemnity against the owner of the other vessel(s) for the excess paid.

■ Value of enquiries and investigations performed by the Chilean Maritime Authority: in determining the civil liability of the parties involved in a collision, the facts established as decisive causes in the final resolution pronounced in the administrative summary enquiry initiated by the Chilean Maritime Authority are held to be true unless there is evidence to the contrary. In all other cases, the final resolution pronounced in the administrative summary enquiry will be considered in the civil proceedings as an expert’s opinion.

■ Subsequent sinking: if, after being involved in a collision, a vessel sinks during the course of its navigation to the port or place of destination, its loss is deemed a consequence of the collision, unless there is evidence to the contrary.

■ Chile is a State Party to the Convention on the International Regulations for Preventing Collisions at Sea 1972 (COLREGS).

(ii) PollutionSince February 2001, the most important legal development in Chilean maritime law was the ratification of the 1992 Protocol to the International Convention of Civil Liability for Oil Pollution Damage (CLC 1969). As a result, for marine pollution incidents that have occurred on or after July 16, 2003, the 1992 Protocol (CLC 1992) applies. For any contamination other than “oil”, as defined in the CLC 1992, that is being “carried in bulk as cargo”, Chile applies the provisions contained in the Law of Navigation (Decree Law N° 2222). These provisions are essentially comprised of the original text of the CLC 1969 with some amendments.On March 25, 2015, Chile incorporated the amendments to the 1992 Protocol adopted in October 2000, thereby increasing the limitation amounts. (iii) Salvage / general averageThe Chilean regulation of salvage services is inspired by the 1981 Montreal Conference Draft, which later became the Convention on Salvage 1989.With regard to general average, normally the same is regulated by the parties’ agreement in the respective contract. However, for those rare occasions when the norms contained in Book III of the Code of Commerce apply, the same incorporates the alphabetical rules of the York-Antwerp Rules 1974.(iv) Wreck removalIf a wreck occurs within Chilean territorial waters and it results in a danger or hindrance to navigation, fishing activities, preservation of the environment or other shore-based activities, the Maritime Authority will order the proprietor, owner or vessel operator to take appropriate measures for the purpose of commencing, at his cost, the immediate signalling, removal or extraction of the remains, until conclusion, within the time limit fixed for this purpose by the Maritime Authority. If the proprietor, owner or operator does not commence or conclude

Tomasello & Weitz Leslie Tomasello Weitz

ChileTomasello & Weitz

fines and/or suspensions. Naturally, the result of such an enquiry will have an impact on civil liability arising from the same casualty. In determining the civil liability of the parties involved in a collision, the facts established as decisive causes of it in the final resolution pronounced in the administrative summary enquiry commenced by the Chilean Maritime Authority will be held to be true unless there is evidence to the contrary.In all other cases, the final resolution pronounced in the administrative summary enquiry will be considered in the civil proceeding as an expert’s opinion.

2 Cargo Claims

Chile is a State Party to the 1978 Hamburg Rules. In fact, Chile incorporated them into the Code of Commerce even before they came into force internationally on November 1, 1992. However, regard must be given to the fact that the Chilean enactment of the Rules is not identical to the international text of the same.

Under Article 984 of the Code of Commerce (equivalent to Article 5 of the Hamburg Rules), the carrier will be considered liable for loss resulting from loss of or damage to the goods, as well as from delay in delivery, if the occurrence which caused the loss, damage or delay took place when goods were in his charge as defined in Article 982 of the Code of Commerce (equivalent to Article 4 of the Hamburg Rules), unless the carrier proves that he, his servants or agents took all measures that could reasonably be required to avoid the occurrence and its consequences (equivalent to Article 5 of the Hamburg Rules).The burden of proof of “all the measures reasonably required to avoid the occurrence and its consequences” lies on the carrier and would be the same as Article 4.2 (q) of the Hague Rules. Among the measures reasonably required are those of making the vessel seaworthy and of properly and carefully loading, stowing, carrying, keeping, caring for and discharging the goods carried. The duty to make the vessel seaworthy lies on the carrier throughout the voyage. Finally, the carrier not only has to prove that he acted as a reasonable carrier but also has to identify the occurrence that caused the loss, damage or delay.

The shipper is liable for loss sustained by the carrier or the actual carrier, or for damage sustained by the ship, if such loss or damage was caused by the fault or neglect of the shipper, his servants or agents. As a general rule, the shipper, his servants or agents have a “several” liability for loss or damage arising from their fault or neglect. This liability is unlimited. In the case of dangerous goods, Article 1013 of the Code of Commerce (equivalent to Article 13 of the Hamburg Rules) declares that the shipper must mark or label dangerous goods as such. In addition, the shipper must inform the carrier of the dangerous nature of the goods and, if necessary, the precautions to be taken. If the shipper fails to do so and the carrier or actual carrier does not otherwise have knowledge of their dangerous

the work within the prescribed time limit, the wreck shall be deemed to have been abandoned and the proprietors, owners or operator shall be liable to a fine of up to 2,000 gold pesos per net registered tonne of the vessel, or up to a maximum of 50,000 gold pesos in other cases. The Maritime Authority will also be empowered to proceed with the removal and to dispose of or sell the vessel, her cargo and remains, by means of a public or private tender. If the wreck does not become a danger or hindrance for the above-mentioned activities, the time limit for the removal would be of one year. The removal shall be carried out under the terms which the Maritime Authority may point out. Upon expiry of the aforementioned time limit, the vessel shall be considered as abandoned and shall then pass to the dominion of the State. As of February 2018, vessels which are sinking, drifting and/or in an unseaworthy condition may also be considered abandoned. The same may occur in case of vessels with no crew or with an unregulated crew.(v) Limitation of liabilityAlthough Chile has neither ratified nor acceded to any of the international limitation conventions, the Chilean Code of Commerce has taken its provisions from both the 1957 Brussels Convention and the 1976 London Convention. The Chilean system essentially follows the 1957 Convention but, as far as the amount of limitation is concerned, it follows the 1976 Convention. Chile has not incorporated the Protocol of 1996 to the 1976 London Convention.(vi) The limitation fundIn (v) above, we have indicated that the Chilean system follows the 1976 Limitation Convention regarding the amount of limitation. Regarding tonnage limitation, the vessel owner (or other persons entitled to limit liability) does not necessarily have to set up a limitation fund. However, when a decision is made to do so, the request has to be presented before the Tribunal indicated in Article 1211 of the Code of Commerce. The petition will have to comply with a number of requirements set out in Articles 1210 to 1219 of the Code of Commerce. Chiefly among them, the petition will have to provide details of the incident, the amount of the limitation fund and the amount of money or other guarantee to set up the fund. Normally, limitation funds are set up on the basis of Letters of Undertaking issued by the corresponding Protection and Indemnity (P&I) Club in which the vessel involved in the incident is entered. The petition has to include a list of creditors. The main effect of the limitation fund is that any person having a claim against the fund is barred from exercising any rights against other assets of the party seeking to limit, and if any ship or other property of the party seeking to limit has already been arrested, it must be released. In the event of pollution, the corresponding limitation fund will need to be set up according to the CLC 1992 or the Law of Navigation (which, as indicated above, essentially comprises the original text of the CLC 1969 with some amendments) separately, that is to say, in addition to any tonnage limitation fund that may be set up. One of the main differences between the tonnage limitation fund described above and any eventual pollution limitation fund, is that the person entitled to limit liability resulting from pollution has to set up the fund no later than when answering the first lawsuit.

In the event of a casualty, the Chilean Maritime Authority will appoint a Maritime Prosecutor who will conduct an administrative summary enquiry (locally referred to as the “ISA”), which will aim to establish the cause of the casualty as well as the responsible parties. This enquiry determines the administrative liabilities which may be involved, and may result in sanctions which are normally

Normally the only condition to lift the arrest of a vessel is to present the exact guarantee (nature and amount) requested in the petition to arrest. These guarantees will be a Bank Guarantee or equivalent. LOUs can be presented, and are accepted by the Tribunals, if they have been agreed with the arresting party to be an acceptable guarantee. The presentation of an LOU as an alternative guarantee without the arresting party’s consent will normally result in the court submitting the situation to the arresting party, who will have three working days to consider their decision.

5 Evidence

Article 1208 of the Code of Commerce establishes a fact-finding inspection procedure, which may be requested to the duty Civil Court with jurisdiction over the place where the inspection will take place. This procedure allows the interested party to request an inspection or survey to take place before the commencement of the proceedings. This request will be granted when the facts are likely to disappear and may involve the vessel, her cargo or other fact likely to disappear. In addition, Article 1209 of the Code of Commerce establishes an evidentiary prejudicial measure, which allows the interested parties, when they agree to do so, to carry out evidentiary measures requested in court or prejudicial measures in an out-of-court stage, provided that the attorneys of the interested parties are in attendance.

Generally speaking, this matter is governed by the norms contained in the Code of Civil Procedure. When a court issues an order to exhibit documentation, the party against which that order has been granted must attend to it. Failure or refusal to exhibit the documentation requested not only makes that party lose its right to produce such documents later on in the trial, but also grants the Judge the power to order the arrest of the person not complying with the order. According to Article 1206 of the Code of Commerce, the arbitrator has the power to accept, when a party has requested it, any other means of evidence along with the general ones accepted by the Code of Civil Procedure. He may also, at any time, summon the parties in order to recognise documentation or argue any objections that they have made.

6 Procedure

According to Article 1203 of the Code of Commerce, all maritime matters are subject to compulsory arbitration in the first instance.

nature, Article 1013 of the Code of Commerce details the different consequences that such failure will generate for the shipper. In short, the shipper will be liable to the carrier or any actual carrier for the loss resulting from the shipment of such goods and they may at any time be unloaded, destroyed or rendered innocuous, as the circumstances may require, without payment of compensation.

3 Passenger Claims

The Chilean regulation regarding passenger claims arises from the Athens Convention 1974 including only its Protocol of 1976. However, regard must be given to the fact that Chile is not a State Party to this Convention. Nevertheless, its provisions were incorporated into the Chilean Code of Commerce.

The list of privileged credits (i.e. credits which enjoy a special status and may be deemed to be statutory liens) is contained in Articles 844 to 846 of the Code of Commerce. The creditor or titleholder of a listed privileged credit may request the duty Civil Court of the port where the vessel presently is or is expected to arrive, to place the vessel under arrest.Chile has neither ratified nor acceded to any of the International Conventions regulating the arrest of ships. However, according to the “travaux préparatoires” of Book III of the Code of Commerce, the drafting committee took into consideration the International Conventions of 1926 and 1967 on maritime liens and mortgages. In any event, the grounds for arrest are found in Book III of the Code of Commerce.In addition to ship arrest, under the Code of Civil Procedure it is possible to obtain a court ruling ordering the retention of goods. The retention (in this case, of a vessel) requires (if requested as a prejudicial measure) counter-security from the petitioning party as well as evidence for the petition to be granted. In addition, only a vessel under the ownership of the debtor may be retained.

Yes, a bunker supplier may arrest a vessel for a claim relating to bunkers supplied by them to that vessel invoking privileged credits listed in Article 846 Nos. 2 and 4.

Ship arrest is an in rem precautionary measure. Normally, it is exercised as a prejudicial precautionary measure. As a result, a ship may be arrested in order to exercise a privileged credit irrespective of the debtor.

The situation regarding the recognition and enforcement of arbitration awards is largely the same as that described in question 7.1; however, regard must be given to the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention). When the foreign award has been issued in a State Party to this Convention, its provisions will apply together with the norms of Law N° 19,971 (“Ley sobre Arbitraje Commercial Internacional”), which complements the norms of the New York Convention. Chile is also a State Party to the “Convención Interamericana sobre Arbitraje Comercial e Internacional”.

No particular trends or developments are anticipated.

The arbitrator’s decision will be subject to appeal, which will be decided by the higher ordinary courts in Chile – that is to say, the Courts of Appeal and the Supreme Court – in the event of cassation recourses. The parties may submit their disputes to mediation, which is not compulsory.

While the procedure before the arbitrator will be subject to the ordinary rules applicable to ordinary proceedings under the Chilean Code of Civil Procedure, the parties may, by common agreement, modify these rules.

According to the relevant provisions of the Chilean Code of Civil Procedure, the recognition and enforcement of foreign judgments require the obtainment of an exequatur from the Supreme Court of Chile. The exequatur is a formal authorisation that has to be granted by the Supreme Court of Chile before any foreign judgment can be enforced in Chile. If there is no special treaty with the country where the judgment was handed down – in which case the enforcement will be regulated by it – the recognition and enforcement of foreign judgments is governed by the principle of reciprocity. The normal procedure may be summarised as follows: (a) The judgment has to be legalised and translated by the official

translator of the Minister of Foreign Affairs. Afterwards, the translated and legalised copy of the judgment has to be filed before the Supreme Court either by the party concerned or by an attorney with sufficient faculties (Power of Attorney). Alternatively to the legalisation of the document, the same may be apostilled.

(b) The court will notify the party against whom the judgment will be enforced who, in turn, will have 15 working days to express his or her views.

(c) Then, the Court Prosecutor will express his opinion. Furthermore, a period of proof could be opened if the court requires it.

(d) Finally, if the exequatur is granted, the enforcement will be entrusted to the Tribunal which would have decided the case if the dispute had been tried in Chile.

Tomasello & Weitz is one of the most prestigious maritime law firms in Chile. Its origins trace back to 1967 when Leslie Tomasello Hart and Gloria Weitz Bravo began their professional practice.

In its present form, Tomasello & Weitz is a firm that, in addition to its significant experience in the field of shipping, is able to advise its clients on a wide range of legal, commercial, financial and real estate matters.

Seven lawyers and their complete supporting personnel comprise the firm. With offices in Santiago, Valparaíso and Puerto Montt, Tomasello & Weitz has structured a network of lawyers in order to provide legal assistance in the main ports of Chile.

Qualifications and professional background:

■ LL.B. (Universidad de Valparaíso) obtained on May 2, 1994.

■ LL.M. (University of Southampton) obtained on May 28, 1996.

■ Postgraduate course in Economy and Finance for Lawyers from the Universidad de Chile (2005).

■ Professor of Maritime Law with the Law Faculty of the Universidad de Valparaíso from 1997 until the present.

■ Editor of the Anuario de Derecho Comercial y Marítimo de la Facultad de Derecho y Ciencias Sociales de la Universidad de Valparaíso.

■ Languages: Spanish; English.

■ Specialises in Maritime Law, International Trade and Corporate matters.

Leslie Tomasello WeitzTomasello & WeitzNueva Tajamar 555Office 201Las CondesSantiagoChile

Tel: +56 2 2361 1070Email: ltomasellow@tomasello.clURL: www.tomasello.cl

Chapter 14

1 Marine Casualty

(i) CollisionThe key provisions include: a) Chapter VIII of the Maritime Code of the People’s Republic of China (“PRC”), which stipulates how to distribute liabilities to parties in different situations; and b) Provisions of the Supreme People’s Court on Several Issues Concerning Trial of Ship Collision Disputes.(ii) PollutionChina is a contracting country to the International Convention on Civil Liability for Oil Pollution Damage (“CLC”), 1969 and 1992. The key provisions include: a) provisions of CLC 1969 and 1992; and b) provisions of the Supreme People’s Court on Several Issues Concerning Trial of Dispute Cases over Compensation for Ship-sourced Oil Pollution.(iii) Salvage / general averageThe key provisions include Chapters IX and X of the Maritime Code of PRC.(iv) Wreck removalThe key provisions include: a) Article 207 (4) and the second paragraph in that Article of the PRC Maritime Code; b) Article 9 of the Provisions by the PRC Supreme Court on Several Issues Concerning Trial of Dispute Cases over Ship Collisions; c) Article 17 of the Several Provisions of the Supreme People’s Court Concerning Trial on Dispute Cases Related to Limitation of Compensation Liability for Maritime Claims; and d) Article 20 of the Provisions of the Supreme People’s Court on Several Issues Concerning Trial of Dispute Cases over Compensation for Ship-sourced Oil Pollution.(v) Limitation of liabilityThe key provisions include: a) Chapter XI of the Maritime Code of PRC; and b) Several Provisions of the Supreme People’s Court Concerning Trial on Dispute Cases Related to Limitation of Compensation Liability for Maritime Claims.(vi) The limitation fundThe key provisions include: a) Chapter XI of the Maritime Code of PRC; b) Several Provisions of the Supreme People’s Court Concerning Trial on Dispute Cases Related to Limitation of

Compensation Liability for Maritime Claims; and c) Chapter IX of Maritime Procedure Law of PRC.

The Maritime Safety Administration (“MSA”) is the authority that is responsible for the investigation of maritime accidents which happen in Chinese waters. Its powers of investigation include:a) questioning the persons concerned;b) demanding the persons under investigation to provide written

material and a testimonial form;c) demanding the parties involved to provide logbooks, engine

room logs, wheel-bell records, radio operation logs, course records, charts, data of the vessel, functions of the navigation equipment and instruments and other necessary original papers and materials;

d) examining certificates of the vessels, installations and the relevant equipment and certificates of the personnel, and verifying seaworthiness of the vessels and technical conditions of the installations before the accident;

e) examining the damage to the vessels, installations and goods and ascertaining casualties of personnel; and

f) surveying the scene of the accident and collecting relevant material evidence. During the investigation, the harbour superintendence administration may use recording, photographing and video equipment, and may resort to other means of investigation permitted by law.

The MSA shall, according to the investigations of maritime traffic accidents, compile the Report on Findings Concerning Maritime Accidents, in which the causes of accidents shall be ascertained and the responsibility of the persons concerned shall be determined.

2 Cargo Claims

The laws relevant to marine cargo claims in China mainly include: (1) the Maritime Code of PRC; and (2) the Maritime Procedure Law of PRC. Neither the Hague-Visby Rules nor the Hamburg Rules are applicable in China, but most of the Hague-Visby rules and some of the Hamburg Rules are absorbed into the Maritime Code of PRC.

Frank Fulong Huang

Shouzhi An

Guantao Law Firm

ChinaGuantao Law Firm

The carrier may establish claims against shipper in the following circumstances under Chinese law:(1) The shipper shall have the cargo properly packed and shall

guarantee the accuracy of the description, mark, number of packages or pieces, weight or quantity of the cargo at the time of shipment. The shipper shall indemnify the carrier against any loss resulting from inadequacy of packing or inaccuracies in the abovementioned information.

(2) The shipper shall perform all necessary procedures at the port, customs, quarantine, inspection or other competent authorities with respect to the shipment of the cargo, and shall furnish to the carrier all relevant documents concerning the procedures the shipper has gone through. The shipper shall be liable for any damage to the carrier resulting from the inadequacy or inaccuracy or delay in delivery of such documents.

(3) At the time of shipment of dangerous cargo, the shipper shall, in compliance with the regulations governing the carriage of such goods, have them properly packed, distinctly marked and labelled and notify the carrier in writing of their proper description, nature and the precautions to be taken. In case the shipper fails to notify the carrier or notifies him inaccurately, the carrier may have such goods landed, destroyed or rendered innocuous when and where circumstances so require, without compensation. The shipper shall be liable to the carrier for any loss, damage or expense resulting from such shipment.

3 Passenger Claims

The key provisions are stipulated in Chapter V of the Maritime Code of PRC, especially including: (1) Article 114 of the Maritime Code of PRC, which stipulates

that during the period of carriage of the passengers and their luggage, the carrier shall be liable for the death of or personal injury to passengers or the loss of or damage to their luggage resulting from accidents caused by the fault of the carrier or his servant or agent committed within the scope of his employment or agency. The claimant shall bear the burden of proof regarding the fault of the carrier or his servant or agent, with the exception, however, of the circumstances specified as follows:a) If the death of or personal injury to the passengers or loss

of or damage to the passengers’ cabin luggage occurred as a result of shipwreck, collision, stranding, explosion, fire or the defect of the ship, it shall be presumed that the carrier or his servant or agent has committed a fault, unless proof to the contrary has been given by the carrier or his servant or agent.

b) As to any loss of or damage to the luggage other than the passengers’ cabin luggage, unless the carrier or his servant or agent proves to the contrary, it shall be presumed that the carrier or his servant or agent has committed a fault, no matter how the loss or damage was caused.

(2) Article 111 of the Maritime Code of PRC, which stipulates that the period of carriage of passengers by sea commences from the time of embarkation of the passengers and terminates at the time of their disembarkation, including the period during which the passengers are transported by water from land to the ship or vice versa, if such cost of transport is included in the fare. However, the period of carriage does not

(1) The key principle applicable to cargo claims brought against the carrier is to prove that the cargo’s losses and damages occurred in the period during which the carrier was in charge of the cargo (“the period of carrier’s responsibility”). According to the Maritime Code of PRC, the carrier shall be liable for the loss of or damage to the cargo during such period. For cargo carried in containers, such period starts from the time the carrier has taken over the cargo at the port of loading, until the cargo has been delivered at the port of discharge. For non-containerised cargo, such period starts from the time of loading the cargo onto the ship, until the time the cargo is discharged therefrom.

(2) The carrier can be discharged from their liability if they can prove that the loss of or damage to cargo during the period of carrier’s responsibility arose from any of the following causes:a) fault of the Master, crew members, pilot or servant of the

carrier in the navigation or management of the ship;b) fire, unless caused by the actual fault of the carrier;c) force majeure and perils, dangers and accidents of the sea

or other navigable waters;d) war or armed conflict;e) act of the government or competent authorities, quarantine

restrictions or seizure under legal process;f) strikes, stoppages or restraint of labour;g) saving or attempting to save life or property at sea;h) act of the shipper, owner of the goods or their agents;i) nature or inherent vice of the goods;j) inadequacy of packing or insufficiency or illegibility of

marks;k) latent defect of the ship not discoverable by due diligence;

orl) any other causes arising without the fault of the carrier or

his servant or agent. The carrier who is entitled to exoneration from the liability

for compensation as provided for in the preceding paragraph shall, with the exception of the causes given in sub-paragraph (b), bear the burden of proof.

(3) The carrier shall deliver the cargo at the designated discharging port within the time expressly agreed upon. Otherwise, the carrier shall be liable for the loss of or damage to the cargo caused by delay in delivery due to the fault of the carrier.

(4) The carrier is obligated to deliver the cargo against the production of the original bill of lading. Where a carrier causes any loss to the holder of an original bill of lading for delivery of goods without the original bill of lading, the holder of the original bill of lading may require the carrier to bear the liability for breach of contract or bear the tort liability.

(5) The limitation period for claims against the carrier with regard to the carriage of cargo by sea is one year, counting from the day on which the cargo was delivered or should have been delivered by the carrier; within the limitation period or after the expiration thereof, if the person allegedly liable has brought a claim of recourse against a third person, that claim is time-barred at the expiration of 90 days, counting from the day on which the person claiming for the recourse settled the claim, or was served with a copy of the process by the court handling the claim against him.

(6) The Maritime Court at the place of departure, destination or transhipment of transportation or at the place of domicile of the defendant has jurisdiction over cargo claims brought against the carrier based on the carriage of goods by sea.

and if the applicant applies for the arrest of vessel in the process of judicial proceedings or arbitration procedures, the time limit for the arrest of vessel shall not be restricted to 30 days.

d) If the owner provides security as requested by the applicant, the Maritime Count shall make a ruling to release the vessel. If the owner has not provided security at the expiration of arrest of vessel and it is inappropriate to further arrest the vessel, the applicant may, after filing a suit or applying for arbitration, request the Maritime Court to sell the vessel by auction.

Yes, such an arrest is possible.

The applicant can also obtain security through applying for preservation of the party’s other properties before court, including but not limited to preservation of the real estate, monies in a bank account, stocks, vehicles and so on. Besides, the applicant can still apply for a maritime injunction before court, to compel the party to provide security.

Security can be accepted in the form of cash, real estate, or a letter of undertaking issued by a bank or insurance company in China.

5 Evidence

The claimant can file an application with the Maritime Court for the collection and conservation of evidence. Such application can be filed prior to or during the action/arbitration. Prior to the action/arbitration, such application shall be filed with the Maritime Court of the place where the evidence subject to conservation is located.

According to the Civil Procedure Law of PRC, evidence shall be presented in court and cross-examined by the parties. The court shall determine the evidence to be provided by a party and the time limit for provision of evidence. After the time limit for provision of evidence expires, the court will schedule a hearing for both parties to exchange and cross-examine evidence.

include the time when the passengers are at a marine terminal or station or on a quay or in or on any other port installations. The period of carriage for the cabin luggage of the passengers shall be the same as the period of carriage for passengers by sea. The period of carriage for luggage other than cabin luggage commences from the time when the carrier or his servant or agent receives it into his charge and terminates at the time when the carrier or his servant or agent redelivers it to the passengers.

(3) Article 115 of the Maritime Code of PRC, which stipulates that if it is proved by the carrier that the death of or personal injury to the passenger or the loss of or damage to his luggage was caused by the fault of the passenger himself or the faults of the carrier and the passenger combined, the carrier’s liability may be exonerated or appropriately mitigated. If it is proved by the carrier that the death of or personal injury to the passenger or the loss of or damage to the passenger’s luggage was intentionally caused by the passenger himself, or the death or personal injury was due to his health condition, the carrier shall not be liable therefor.

(4) Article 117 of the Maritime Code of PRC, which stipulates that the limitation of liability of the carrier under each carriage of passengers by sea shall be governed by the following:a) For death of or personal injury to the passenger: not

exceeding 46,666 Special Drawing Rights (“SDR”).b) For loss of or damage to the passengers’ cabin luggage:

not exceeding 833 SDR.c) For loss of or damage to the passengers’ vehicles including

the luggage carried therein: not exceeding 3,333 SDR.d) For loss of or damage to luggage other than those described

in subparagraphs b) and c) above: not exceeding 1,200 SDR.

(1) The party who seeks to obtain a security from a vessel owner may choose to apply for arrest of the vessel concerned, or arrest of other vessels owned, at the time of arrest, by the vessel owners, bareboat charterers, time charterers or voyage charterers who are liable for the maritime claim, except for claims related to ownership or possession of a vessel.

(2) The applicable procedure for the arrest of vessels mainly includes:a) An application for arrest of vessels shall be filed with the

Maritime Court in writing. The application shall clearly set forth the claims, reasons, vessels and the amount requested for security, and shall be supported by relevant evidence.

b) If the Maritime Court accepts an application for the arrest of vessels, it will order the applicant to provide counter-security. If the applicant refuses to provide such counter-security, the application shall be denied.

c) The Maritime Court shall make a ruling within 48 hours after the acceptance of the application, which will be enforced forthwith. The time limit for the arrest of vessel shall be 30 days. During the time limit, the applicant shall file a lawsuit before the court or apply for arbitration pursuant to arbitration agreement. Otherwise, the Maritime Court will release the vessel. If the applicant files a lawsuit, or applies for arbitration within 30 days,

approval of the president of the court. If the appeal is against a ruling, the second instance court shall issue a final ruling for such appeal within 30 days after the appeal is put on record. Similarly, the period for the court to try a foreign-related appeal case shall also not be limited by the aforesaid period, which is subject to the court’s discretion.

d) A party who applies for constitution of a limitation fund for maritime claims before institution of an action shall file the application with the Maritime Court at the place of the accident, the place of performance of the contract or the place of ship arrest. The Maritime Court, having entertained an application for constitution of a limitation fund for maritime claims, shall notify all the interested persons known within seven days, and issue an announcement in the newspapers or other news media.

An interested person who objects to the application filed by the applicant for constitution of a limitation fund for maritime claims shall file the objection in writing with the Maritime Court within seven days after the receipt of the notice, or within 30 days after the date of the announcement if no such notice is received.

The Maritime Court, having received the written objection from the interested person, shall examine the objection and make an order within 15 days. The application of the applicant shall be rejected by order if the objection is well founded; the application for constitution of a limitation fund for maritime claims shall be allowed by order if the objection is groundless.

Any party who is dissatisfied with such an order may appeal within seven days after receipt thereof. The People’s Court of second instance shall make an order within 15 days after receipt of the appeal.

e) Regarding the procedure for registration and satisfaction of claims, after the announcement of an order by a Maritime Court for the forced auction of a ship, the creditors shall apply for registration of their claims pertaining to the ship to be auctioned within the time limit of the announcement. Creditors who fail to register their claims on the expiry of the time limit of the announcement shall be deemed to have waived their rights to be satisfied from the proceeds of the auction.

f) A person who applies for interpellation of maritime liens shall submit to the Maritime Court a written application. The Maritime Court, having received the application and the relevant documents, shall examine the application and make an order within seven days to allow or disallow the application. A transferee who is dissatisfied with such an order may apply for review not more than once. The Maritime Court shall, after an order to allow an application becomes effective, issue an announcement in newspapers or other news media urging the maritime lien holders to assert their rights within the period of the interpellation. The period for interpellation of maritime liens is 60 days.

(2) Where the parties have reached an arbitration agreement in the contracts or after a dispute has arisen, they shall refer the disputes to an arbitral institution for arbitration. The arbitral award is final and binding upon both parties. Neither party may bring a lawsuit before a court or make a request to any other organisation for revision of the award.

When a party applies for preservation of property, evidence, maritime injunction, or constitution of the limitation fund, they can file the application with the arbitration commission. The arbitration commission will then submit the party’s application to the Maritime Court or other People’s Court with jurisdiction over the matter pursuant to the laws. The court will review the party’s application and make a decision according to the procedure and time limit as stated in (1) above.

6 Procedure

(1) In the courts of China, there are generally six typical procedures applicable to maritime claims: preservation of maritime claims; maritime injunction; trial procedure; procedure for the constitution of a limitation fund for maritime claims; procedure for the registration and satisfaction of claims; and procedure for interpellation of maritime liens.a) Regarding the preservation of maritime claims, the

typical preservation is the arrest of vessels or the cargo carried by vessels. The Maritime Court, having accepted an application, shall make an order within 48 hours. Where the order is to adopt measures for preservation of a maritime claim, it shall be executed forthwith; where the conditions for preservation of the maritime claim are not met, the application shall be rejected by order. Any party who is dissatisfied with such an order may, within five days after receipt thereof, apply for a review not more than once. The Maritime Court shall give the result of the review within five days after receipt of the application therefor. Execution of the order shall not be suspended during the period of the review.

b) Regarding the maritime injunction, the Maritime Court, having accepted an application, shall make an order within 48 hours. Where the order is to grant a maritime injunction, it shall be executed forthwith; where the conditions for a maritime injunction are not met, the application shall be rejected by order. Any party who is dissatisfied with such an order may apply for review not more than once within five days after receipt thereof. The Maritime Court shall give the result of the review within five days after receipt of the application therefor. Execution of the order shall not be suspended during the period of the review.

c) Regarding the trial procedure, the system of “final after two trials” applies. The first instance is tried by the Maritime Court, and the second instance is tried by the Higher People’s Court of the province where the Maritime Court is located. After two trials, the judgment/ruling issued by the Higher People’s Court of the province will be final and binding on parties.

The first instance court shall complete the trial of a case under formal procedure within six months after the case is put on record. If an extension of the period is necessary under special circumstances, the period may be extended for six months with the approval of the president of the court; any further extension shall be subject to the approval of the superior of the court. In particular, collision cases and general average cases shall be tried and concluded by a Maritime Court within one year after the case is placed on file. Where an extension of the period is necessary under special circumstances, such an extension shall be subject to approval of the president of the court. But if a case is foreign-related, the period for the court to try such case shall not be limited by the aforesaid period, which is subject to the court’s discretion.

The second instance court shall complete the trial of an appeal case against a judgment within three months after the appeal is put on record. Any extension of the aforesaid period under special circumstances shall be subject to the

China is a contracting country to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). The court shall process the application in accordance with New York Convention or under the principle of reciprocity.According to the New York Convention, recognition and enforcement of the award may be refused when the following situations arise:a) The parties to the agreement referred to in Article II were,

under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.

b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.

c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.

d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place.

e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

f) The subject matter of the difference is not capable of settlement by arbitration under the law of that country.

g) The recognition or enforcement of the award would be contrary to the public policy of that country.

With the Belt and Road Initiative being promoted and conducted continuously, China is devoted to establishing the International Maritime Judicial Centre. Under such circumstances, China is strengthening the training of maritime lawyers, arbitrators and judges, and improving the maritime judicial environment in a variety of ways. Meanwhile, China is also engaged in enacting or amending the maritime laws, to establish a better maritime legal system and to be geared towards international maritime laws. We believe that in the near future, either the Maritime Courts or arbitration will become a main channel for resolving international maritime disputes and will be well regarded by domestic and foreign parties.

In China, the China Maritime Arbitration Commission (“CMAC”) is a permanent arbitration institution, taking cognisance of domestic and international cases involving maritime disputes. According to the CMAC’s arbitration rules in effect, the arbitral tribunal shall render an arbitral award within six months from the date on which the arbitral tribunal is formed. Upon the request of the arbitral tribunal, the President of the Arbitration Court may extend the time period if he/she considers it truly necessary and the reasons for the extension truly justified. Any suspension period shall be excluded when calculating the time period.

(3) Mediation is under the principle of free will of the parties. It is usually conducted by the judge or arbitrator when the case is being tried by the court or arbitration tribunal. There is no explicit timescale applicable to the mediation, which is subject to the parties’ free will.

In China, there are 10 Maritime Courts. All disputes in relation to maritime claims are under the exclusive jurisdiction of Maritime Courts. As the judges in Maritime Courts are all specialised in the trial of maritime claims, the efficiency and professionalism they exhibit are very impressive.In addition, Maritime Courts are at the level of intermediate courts. Where a party is dissatisfied with a judgment rendered by a Maritime Court, the appeal will be tried by the People’s Higher Court of the province, which is second only to the Supreme People’s Court. Thus, it is also very impressive for maritime claims to be tried by high-level courts.

In China, a court’s examination of an application or request for recognition and enforcement of an effective judgment or ruling of a foreign court is based on an international treaty concluded or acceded to by the People’s Republic of China or under the principle of reciprocity. According to the relevant international treaty or the principle of reciprocity, if the court deems that the judgment or ruling does not violate the basic principles of the laws of the People’s Republic of China and the sovereignty, security and public interest of the People’s Republic of China, it shall issue a ruling to recognise the legal force of the judgment or ruling and issue an order for enforcement as needed to enforce the judgment or ruling. If the judgment or ruling violates the basic principles of the laws of the People’s Republic of China or the sovereignty, security or public interest of the People’s Republic of China, the court shall not grant recognition and enforcement.

Guantao Law Firm, founded in February 1994 and based in Beijing, is one of the pioneer law firms in China. Guantao has become a leading PRC law firm with a team of over 140 partners and 500 lawyers. Guantao’s practices include capital markets, general corporate, M&A, banking and finance, real estate and construction, maritime and admiralty, insurance and other relevant areas. Guantao advises clients from a wide range of industries. Guantao has received high rankings in Chambers Asia, The Legal 500 Asia Pacific, IFLR1000, Asian Legal Business and other international legal rating agencies in recent years for its expertise in the capital markets, corporate/M&A, restructuring and insolvency, projects infrastructure and energy, banking and finance, and international trade. Guantao has established a strategic alliance with the UK-based international law firm Ashurst LLP. Through its strong relationship with Ashurst, Guantao aims to continue delivering service excellence and sharing resources and information for the benefit of its domestic and international clients.

Frank Fulong Huang is a dispute resolution partner of Guantao Law Firm. He concentrates his practice in all areas of dispute resolution, with a particular focus on shipping, insurance, international trade, guarantee, investment and shareholder disputes. Mr. Huang was selected as a “China Leading International Lawyer” and sent to London by the All China Lawyers Association (ACLA) in 2016 to undertake the International Commercial Arbitration training programme in the Law School of BBP University. Mr. Huang is currently vice-director of the International and HK, Macau & Taiwan Working Committee and a commission member of the Shipping & Logistic Law Committee of the Shenzhen Lawyers Association, and a commission member of the Insurance Law Committee of the Guangdong Lawyers Association.

Shouzhi An is an executive partner of Guantao Law Firm Xiamen Office. He specialises in shipping, international trade and investment, and energy. Dr. An has been dedicated to legal professional services for over 12 years, offering legal advice to numerous clients in China and overseas, and making presentations in China, Europe and the United States. Dr. An is currently an arbitrator in both the Hong Kong International Arbitration Centre and the Xiamen Arbitration Commission; he is also an adjunct professor of Navigation College, Jimei University. Due to his excellent achievements, Dr. An was awarded by Asia Law & Practice in 2012 and 2013 as the Leading Lawyer in the Asia-Pacific Region in Shipping & Maritime.

Frank Fulong HuangGuantao Law FirmAF, 30/F, Noble CentreNo.1006, 3rd Fuzhong RoadFutian DistrictShenzhen, 518026China

Tel: +86 755 2598 0933Email: huangfl@guantao.comURL: www.guantao.com

Shouzhi AnGuantao Law Firm23/F, Seven Star Building, No. 178Qi Xing West RoadSiming DistrictXiamen 361012China

Tel: +86 592 506 8887Email: anshouzhi@guantao.comURL: www.guantao.com

Chapter 15

1 Marine Casualty

(i) CollisionColombia is not a party to the 1910 Convention on the Unification of Certain Rules of Law with Respect to Collision Between Vessels. However, the 1972 Convention on the International Regulation for Preventing Collisions at Sea (COLREG 72) is in force at the domestic level. It is worth noting that the Colombian Commercial Code (CC) has also incorporated some provisions regarding collisions (articles 1531 to 1539) differentiating between: i) those caused due to circumstances beyond control (i.e. so-called force majeure events); ii) those occurring as a consequence of a negligent act of one of the ships involved; and iii) those in which there is a both-to-blame collision.(ii) PollutionBoth the 1992 Convention on Civil Liability for Oil Pollution Damage (CLC 92) and the 1992 Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (FUND 92) are in force in the country. Decree 1875 of 1979 also has a definition of marine pollution, and demands insurance policies whenever a vessel is involved in exploration, exploitation or transport of hydrocarbons or other polluting substances. On the other hand, it must be highlighted that regarding offshore activities, there are also some recent important provisions (from the preventive perspective) contained in Resolution 674 of 2012 of DIMAR (the Colombian National Maritime Authority). Those provisions aim to request, among others, the adoption of security measures and risk mitigation plans.(iii) Salvage / general averageThe 1989 Salvage Convention is not in force in Colombia. However, there are some specific provisions addressing this topic at the domestic level in the CC, namely articles 1545 et seq.(iv) Wreck removalAs per article 5 of Resolution 071 of 1997, a ship owner, a ship’s agent and/or the vessel’s captain have the obligation to duly signal and ultimately remove a shipwreck. If they do not act accordingly, the removal can be ordered (as per Resolution 071 of 1997) by the Superintendencia de Puertos y Transportes (National Port and

Transport Superintendency), and costs of said operation may be recoverable against those originally requested by the law to do so.(v) Limitation of liabilityColombia is neither a party to the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC) nor to the 1996 Protocol. However, article 1481 of the CC states that there are some specific claims (thereby described) in respect of which the ship owner may limit his liability up to the value of his vessel, her accessories and the freight involved.(vi) The limitation fundThere is no additional request for the constitution of a limitation fund.

As per articles 25 et seq. of Decree 2324 of 1984, the respective Harbour Master of the relevant area in which a maritime casualty has occurred (i.e. wrecks, groundings, collisions, marine pollution incidents, among others, as described in article 26 of Decree 2324 of 1984) is supposed to initiate investigation procedures. Although the Harbour Master is not, strictly speaking, a judge in Colombia, said procedure is supposed to determine the liability of the persons/ships involved in the maritime casualty (article 48 of Decree 2324). They will also decide whether the conduct of the parties involved could have constituted a violation of local merchant shipping regulations (that could be also sanctioned with, among others, a fine as per articles 48 and 80 of Decree 2324). The decision of the Harbour Master on the merits could be subject to appeal before DIMAR.

2 Cargo Claims

Colombia has not properly ratified any of the conventions in force at the international level regarding cargo claims (namely, the Hague Rules, the Hague-Visby Rules and the Hamburg Rules). Neither has the country yet ratified the Rotterdam Rules. However, there are some local provisions contained in the CC (articles 1578–1665) aiming to reproduce the Hague-Visby Rules to a certain extent and with some important differences (see the answer to question 2.2 below).

FRANCO & ABOGADOS ASOCIADOS Javier Franco

Colombia

ColombiaFRANCO & ABOGADOS ASOCIADOS

On the other hand, article 72 of Decree 2324 of 1984 states that (once an investigation has been initiated in cases of maritime casualties) a Harbour Master may request security to be provided by the ship(s) involved in the incident to serve different purposes; namely, to cover eventual fines, damages, and proceedings expenses.

As per article 1(12) of Decision 487 of 2000, bunkers are specifically considered a “maritime claim” under the instrument. Thus, a supplier who has a claim for unpaid bunkers could arrest a vessel in Colombia based upon said provision.

As per article 41 of Decision 487 of 2000, in general terms, an arrest should only proceed to obtain security for a maritime claim (i.e. whenever said maritime claim is supposed to be a “maritime credit” as defined by the Decision) against a vessel owner or a demise charterer (unless there is a privileged credit as described in article 22 of Decision 487). Other types of credit or credits against different persons should follow the traditional rules of domestic procedure to obtain security (which may vary depending on the nature and characteristics of the specific claim).On the other hand, as per article 1624 of the CC, sea carriers are granted a right of lien over cargo (or the possibility to ask a judge to order the cargo to be put in a warehouse) in cases where freight and other charges caused by the delay of payment are not yet paid (and until those charges are effectively paid).

As per article 45 of Decision 487, parties can initially agree on the sort of security to be provided (i.e. a letter of undertaking, if it is accepted by the parties involved). However, if no agreement is finally reached between the parties, then the Tribunal will determine the nature and amount of the security. Although it could be debatable, the likelihood is that, in general terms, either a proper bank guarantee or insurance policy (that meet certain requirements) would be acceptable in the majority of cases (due to a reference made in article 40 of Decision 487 to the application of domestic law). Different rules may apply depending upon whether the arrest has already been served/made effective.

5 Evidence

In cases of maritime casualties, the Harbour Master of the respective area will initiate procedures within the following day (or so, in practice) of the occurrence (as ordered by article 35 of Decree 2324 of 1984). As per his opening procedure order (article 36 of Decree

As per article 1609 of the CC, the carrier will have similar defences to those contained in article 4, rule 2 of the Hague-Visby Rules. In fact, local legislators aim to adopt the Hague-Visby scheme by making an adaptation of it to the local legal usage. It could be highlighted that, under the domestic provisions (article 1644 of the CC), if there were no declared value of the cargo, the limit of liability would be the value which the cargo had at the port of origin. However, the Colombian Supreme Court (Decision of 8 September 2011, L. J. William Namén) ruled in a relatively recent decision – and in a clear departure from what would happen internationally under the Rules – that under the domestic provisions, the carrier could freely agree to limit his liability in a different manner, i.e. up to a sum agreed between the parties (even below the one resulting from applying the local provision, as long as it does not constitute a so-called derisory limitation).

According to article 1615 of the CC, the shipper guarantees the accuracy of the information regarding marks, number, quantity, quality, condition and weight of the cargo as he so declares to the carrier at the moment of shipment. Additionally, as per article 1619 of the CC, whenever the shipper – knowingly – has made an inexact declaration in relation to the nature or value of the cargo, the carrier will be exempted from all liability as a consequence. In any case, as per article 1623 of the CC, the shipper is only accountable for damages suffered by the carrier or the vessel whenever said damages arise out of his own fault (or that of his agents).

3 Passenger Claims

Colombia is neither a party to the 1974 Athens Convention on the Carriage of Passengers and their Luggage by Sea, nor to the 2002 Protocol. However, there are some local provisions in articles 1585 to 1596 of the CC.

As in many other jurisdictions, the usual method to obtain security for a maritime claim against a vessel owner is through a ship arrest. According to Decision 487 of 2000 of the Andean Community (a regional international instrument of superior hierarchy inspired by the 1999 International Convention on the Arrests of Ships), a ship may be arrested in Colombia whenever there is a “maritime credit”. Article 1 of Decision 487 expressly states what could constitute said type of credit for the purposes of the Statute. In Colombia, an arrest of a vessel under Decision 487 is to be carried out exclusively by a civil judge. According to article 40 of Decision 487, the domestic local procedure law is to be applicable to the arrest petition.

moment he knows of the occurrence. He will then issue an opening procedure order, requesting captain(s) and other crew members of the vessel(s) involved to declare within the hearing to be held in the following days. As per article 72 of Decree 2324, the Harbour Master may also require security to be provided as explained above (see the answer to question 4.1).Once the first hearing has started, parties may request evidence to be brought to the investigation. An expert (or a Captain’s Tribunal) will be appointed by the Harbour Master to assist him by submitting a report regarding technical or operational matters. After completion of the hearings, parties are requested to submit their closing arguments, and once this stage is finished, the Harbour Master will decide on the merits. His decision may be subject to appeal before DIMAR.On the other hand, civil judges will regularly deal with contractual matters (such as cargo claims) whenever Colombian law is to be applicable to such issues according to the nature and/or characteristics of the particular claim. They will also deal with arrest petitions under Decision 487 of 2000 as explained above (see the answer to question 4.1). Thus, regular Colombian law on procedure would be applicable to those types of claims (please see the answers to questions 5.1 and 4.1).Whenever the parties have entered into an agreement regarding the application of an ADR mechanism, i.e. arbitration (or if they so decide at the relevant time) then, insofar as the Tribunal is to have its seat in Colombia (which is not a very usual situation for this type of claim within our jurisdiction), the rules contained in Law 1563 of 2012 (National and International Arbitration Statute) should apply.

Colombia is not a traditional maritime nation. As explained, Harbour Masters deal with maritime casualties occurring in Colombian waters while civil judges deal mainly with contractual matters and arrest procedures. Despite this, it must be said that Colombia still lacks a proper maritime jurisdiction to deal with maritime issues in general.

Recognition of foreign judgments in Colombia is dealt with in articles 693 et seq. of the Colombian Code of Civil Procedure (CPC). According to these regulations, the so-called exequatur petition is to be submitted to the Colombian Supreme Court of Justice (article 695 of the CPC) unless there is an international treaty requiring otherwise. The affected party should be cited to participate within proceedings. The petition should contain the request of evidence as deemed appropriate. The claim’s admission Court order will be notified to the affected party and to the State attorney for civil matters, and they will each have five days to request evidence. Once the evidence is provided, both parties will have five days to present their respective closing arguments. After that, the Court will decide the exequatur request. If enforcement is required, then the competent judge will be determined according to the general local rules of procedural law on the matter.

2324 of 1984), he will ex officio request evidence to be brought to the investigation. In fact, as per article 36 of Decree 2324 of 1984, the Harbour Master will require the captain(s) (and usually other crew members of the vessel(s) involved in the incident) to declare within the hearings (to be held in the following days). He will usually appoint a maritime expert (or a Captain’s Tribunal, as per article 28 of Decree 2324, depending on the nature and complexity of the situation) to have expert advice/report on operational and/or technical matters.Once the first hearing has started, parties to the investigation may request the Harbour Master to secure evidence and/or to request other persons to provide documents/materials that could be important for the investigation (article 37.5 of Decree 2324 of 1984). Parties may also submit documents and other evidence which they consider to be important and may require the Harbour Master to call third persons to declare (or to be granted the condition of a party) within the investigation.On the other hand, contractual situations (i.e. cargo claims) are usually dealt with by regular civil judges (unless an arbitration agreement or other sort of ADR mechanism was put in place by the parties). Thus, the general Colombian procedure will be prima facie applicable to them. It is worth noting that, as per article 590.c of the Colombian General Procedure Code, nothing precludes a judge from taking any precautionary measure he deems appropriate whenever it could be found that “[…] it is reasonable for the protection of the right in question, to prevent his infringement or to prevent its consequences, to prevent damages, to put a stop to those caused or to ensure the effectiveness of the claim”. This is the so-called “innominate” precautionary measure. It is worth noting that said provision is also supposed to be available to Harbour Masters in investigations carried out in cases of maritime casualties, due to a reference made by Decree 2324 to domestic general procedure law.

Please refer to the answer to question 5.1. It must be said that in Colombia, there is no specific disclosure duty imposed on the parties (and there is no specific discovery procedure, as known in Anglo-Saxon jurisdictions). However, in procedures before regular judges (i.e. cargo claims cases), parties may usually request anticipated statements and/or interrogatories, and/or a documental exhibition to be carried out (i.e. before a proper trial has initiated) if needed. In any case, parties should conduct procedures in good faith, and both the judge and the Harbour Master will have the powers to request evidence ex officio.

6 Procedure

In cases of maritime accidents, the procedure will be the one described in Decree 2324 of 1984. Accordingly, the Harbour Master of the respective area will initiate investigation procedures (ex officio or due to the notice submitted to him) within a day or so from the

Colombian territory. The said regime is supposed to be an incentive for those areas to be developed in the country and to channel foreign investment in order to further develop said offshore activities in our jurisdiction.On the other hand, regarding multimodal carriage of goods, it is worth nothing that in a relatively recent decision of the Colombian Supreme Court (Mapfre Seguros Generales de Colombia S.A. v. Air Carrier Zona Franca S.A., 3 September 2015), the Court took the view that Decisions 331/393 of the Andean Community (namely, a regional scheme on the subject) are to be applicable to a contract according to which either the place of origin or delivery is located in a Member Country (although, at the same time, it could be said that the Court leaves the door open for the eventual application of the UNCTAD/ICC Rules if an agreement to that effect is in place).

Colombia is a party to both the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards and the Inter-American Convention on International Commercial Arbitration. The local procedure for the recognition of foreign awards in Colombia (which follows the guidelines of the New York Convention) is described in articles 111 et seq. of Law 1563 of 2012 (National and International Arbitration Statute). According to these regulations, a petition for recognition is to be submitted to the Colombian Supreme Court of Justice. The award must be submitted in original or copy, and if not in Spanish, a proper translation should be carried out.Awards granted in international arbitration proceedings carried out in Colombia are considered national awards, and thus they will not require further recognition (unless the annulment action has been waived).If the Tribunal has its seat in a different jurisdiction, then the procedure for recognition is the one described in article 115 of Law 1563. The procedure can be summarised as follows: a petition should be filed, accompanied by the requested documents (those described in article 111). If the documentation is completed, the petition will be admitted, and parties will have 10 days to comment on the admission. Once this period has elapsed, the judicial body will have an additional 20 days to decide on the recognition of the award.If further enforcement of the award (once it has been recognised) is required, the competent judge will be determined according to the general local rules of procedural law governing the matter.

As per Decree 2682 of 2014, the Colombian government has allowed the possibility to declare offshore free zones in maritime territory. Accordingly, those zones will have special tax treatment, allowing the participants (i.e. the so-called “industrial users”) to have tax benefits that will not regularly apply to those activities in

FRANCO & ABOGADOS ASOCIADOS is a law firm whose headquarters are located in the city of Bogotá (Colombia). We focus our attention on the needs that may arise in the areas of Commercial Law, International Commercial Law, Transport Law, Maritime Law, Mining/Energy Law, Insurance Law, Customs Law and Logistics.

We are a team of legal experts with the highest levels of academic training, both in Colombia and abroad; our qualified expertise includes extensive experience in advising local and foreign companies in areas in which the firm deploys its operation.

FRANCO & ABOGADOS ASOCIADOS makes available a complete service portfolio to its customers, aiming to provide them with comprehensive support, both in terms of counselling and litigation, of the highest quality and reliability.

Javier Franco is an Attorney-at-Law who graduated from Externado University with a postgraduate degree in Maritime Law and an LL.M. (with distinction) in International Commercial and Maritime Law from Swansea University, UK.

He is a member of the standing young committee of the Comité Maritime International (CMI), a member of the board of the Colombian Association of Maritime Law (ACOLDEMAR) and a member of the Colombian branch of the Iberoamerican Institute of Maritime Law (IIDM).

He has relevant experience in local and international law firms, dealing with issues in the field of Commercial Law, Transportation Law, Shipping Law, Contract Law, Logistics, Insurance and Port matters. He is the author of many different articles, as well as a book entitled Legal aspects of logistics and logistics contracts. He has been admitted to the list of arbitrators (“B” List) of the Bogotá Chamber of Commerce in the fields of Transport and Commercial Law.

Currently, he is a partner of FRANCO & ABOGADOS ASOCIADOS, and he is also acting as a lecturer at Externado University in Bogotá, Colombia.

Javier FrancoFRANCO & ABOGADOS ASOCIADOSCalle 75 No. 13–51 Of. 408Edificio CorintoBogotáColombia

Tel: +57 1703 5633Email: jfranco@francoabogados.com.coURL: www.francoabogados.com.co

Chapter 16

1 Marine Casualty

(i) CollisionCosta Rica is a party to the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels, signed in Brussels on May 10, 1952, with the reservation that “[t]he Government of the Republic of Costa Rica, when acceding to this Convention, reserves the right that a civil action due to the collision between vessels sailing in high seas or between vessels and internal navigation vessels in high seas, may only be filed before a Court of Justice where the habitual residence of the defendant is located or of the State under whose flag the ship sails, consequently, the Republic of Costa Rica does not recognise clauses b) and c) of paragraph 1 of article 1 as mandatory”.The Convention on Criminal Competition in Collision or Accident Navigation, Act N° 1799, to which Costa Rica is party, also states rules related to ship collisions. Costa Rica reserves the right to not recognise articles 1 and 2 of the Convention. For this reason, and according to article 46 of the Civil Procedure Code (CPC), if a ship collision occurs in Costa Rica’s national waters, it may be ruled by the local Costa Rican courts, because for claims that are grounded in facts or events occuring in Costa Rica, local judges have jurisdiction to hear these proceedings.Due to a lack of knowledge, experience and specialised legislation, Costa Rica is not considered a place which parties may choose to solve a ship collision. However, the Costa Rican authorities have the jurisdiction to be informed of and investigate the casualty, if applicable.(ii) PollutionIn terms of pollution, Costa Rica has signed various Conventions related to the prevention or liability of enviromental damages caused to the sea and surrounding areas; for example, the International Convention on Civil Liability for Oil Pollution Damage and its Protocols from 1976 and 1984, ratified by Act N° 7627.Costa Rica has also signed the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, ratifed by Act N° 5566. This Convention contributes to the international control and prevention of marine pollution by prohibiting the dumping of certain hazardous materials.

Under the environmental principle that whoever commits environmental damage must repair it, any environmental damage caused could generate responsibility for the participating parties. In addition, in environmental matters there is a joint and several obligation to respond to the damages caused, as stipulated in article 101 of the Organic Law of the Environment, Act N° 7554.Environmental legislation states possible fines to person(s) that pollute the environment, including contamination of the sea, for example: (a) The Water Act, Act N° 276, article 162 establishes a penalty of prison from three months to one year or a fine, that is currently outdated, to the person who pollutes; and (b) Law for the Prevention and Integral Management of Wastes, Act N° 8839 establishes a penalty of prison of two to 15 years for the person who illegaly disposes of dangerous waste.Costa Rica is not part of the International Convention for the Prevention of Marine Pollution from Ships as modified by its Protocol (MARPOL 73/78). The Constitutional Court determined in 1999 that the country was, at the time, not capable of executing the obligations established in the Convention, because there were not enough resources to protect and guard against marine pollution from ships.(iii) Salvage / general averageCosta Rica has not signed any international Conventions related to the regulation of salvage or general average. On the other hand, local legislation, specifically the Commercial Code of 1853, establishes that a general average will be understood as any extraordinary and eventual expense that occurs during the voyage of the ship for the conservation of this, its cargo or both.All parties interested in the ship and the cargo must contribute to the payment of the expenses incurred during the average breakdown (article 877 of the Code of Commerce).According to local regulations, the Master must consult the shippers, which in case of a negative response, may execute under his own responsibility in case of emergency. It is important to state that the Code of Commerce of 1853 is outdated, nonetheless the rules are in force.Article 876 of the said Code establishes some of the risks that may be considered as common and classified as general average, for instance: (1) the effects or money that are delivered through composition to rescue the ship and its cargo that would have fallen into the hands of enemies or pirates; and (2) things that are thrown into the sea to lighten the ship, whether they belong to the cargo or to the ship and its crew, and to the damage resulting from this operation to those that are conserved in the ship.The risks established in article 883, in the event that, if the ship is lost despite having sacrificed part of the cargo, the obligation to contribute to the general average will cease and the damages will be

María Fernanda Redondo Rojas

Tomás Nassar Pérez

NASSAR ABOGADOS

Costa Rica

Costa RicaNASSAR ABOGADOS

institution designated by the Government to control the operation managed by Sociedad Portuaria de Caldera.On the Atlantic side, JAPDEVA is the institution designated by the Government to operate local ports; however, APM Terminal is currently building the most important container terminal of the Central American region, which is scheduled to start operations in February 2019. All the authorities designated by the Government may participate in a preliminary investigation on a case-by-case basis.Another institution that may participate is the Judicial Investigation Police (OIJ) in case any tort, act or omission injured or affected another person. Police will investigate any possible crime and liability caused as a result of the casualty.In case of marine pollution, the Environmental and Energy Ministry (MINAE) will also initiate an administrative investigation.

2 Cargo Claims

Cargo claims in Costa Rica are regulated by the Commercial Code, Civil Code, Chapter III of the Commercial Code of 1853 and the CPC.Costa Rica has not signed any international Conventions related to the rules for cargo transportation, such as the Hague-Visby Rules or Hamburg Rules. However, most bills of lading – used to legitimise cargo transport from and into Costa Rica – include a Hague-Visby Rules clause.According to article 332 of the Code of Commerce, the declarations contained in the bill of lading have the force of law between the parties and, consequently, as proof of the contract.

According to the Code of Commerce, Act N° 3284, if the carrier does not comply with the obligations established in articles 335 and 334.c, that cargo owner is entitled to claim for any loss or damage.The general rule applicable establishes the obligation for any person (whether natural or corporate) to repair the damage caused to another.The terms and conditions of the transport agreement are formalised by means of a charterparty or a bill of lading. Even if there is a jurisdiction clause determined in the bill of lading, from a Costa Rican perspective, article 46 of the CPC contains a list of certain matters that shall be ruled by the Costa Rican local courts. One of these matters is the jurisdiction on claims that are grounded in facts or events that occurred in Costa Rica.When assessing the possibility of filing a lawsuit in Costa Rica, the claimant has the obligation to notice of claim demanded by article 347 of the Costa Rican Code of Commerce, within eight days after the event occurs.

The shipper has the obligation to declare cargo in the transport agreement accurately, with a description of goods, weight, quantity, signs and packaging, as established in article 329 of the Code of Commerce.

estimated as simple faults. If after the ship has been saved, due to the risk caused by the average fault, it perishes due to another accident, the obligation to contribute to compensation for the damages caused during the average breakdown will persist.(iv) Wreck removalCosta Rica has not signed any international Conventions related to shipwrecks, such as the Nairobi International Convention on the Removal of Wrecks of 2007.According to local law, if a shipwreck occurs by fault or intent of the Master or pilot, shipowners or shippers have the right to request an indemnity due to the liability of the Master.The Caribbean Port Operations Decree N° 0, issued by the Port Authority JAPDEVA and the Pacific Port Operation Decree N° 3888 issued by the Port Authority INCOP, established in article 18 and article 33 respectively, that shipowners, legal representatives or agents, have the obligation to remove any of their ships that due to accident, sinking, or damage, impede free navigation in jurisdictional waters of Costa Rica. In the case that the removal of the obstacle is not carried out within the period established by the Port Authority, said operation will be executed or controlled by them, leaving the owners, operators or agents of the ship obliged to cancel the costs generated by said action.Any payment for delays in the berthing of other ships, which in Port Authority judgment are due to the cases previously mentioned, will also be borne by the owners, operators or agents of the ship that caused the delay.(v) Limitation of liabilityCosta Rican law does not contemplate any limitation liability, which leaves the determination of the damage and liability to the discretion of the Civil and Commercial Court.In Costa Rica, the repair of damage caused during the maritime activity shall be determined according to the ordinary law applicable to commercial cases.In cases of environmental pollution caused by hydrocarbons, the limit of liability will be according to the International Convention on Civil Liability Born of Damage Due to Pollution by Hydrocarbons and its Protocols of 1976 and 1984, to which Costa Rica is a party.Costa Rica has not signed any international Conventions related to the rules for cargo transportation, such as the Hague-Visby Rules or the Hamburg Rules. However, most bills of lading – used to legitimise cargo transport from and into Costa Rica – include Hague-Visby Rules clauses. For this reason, in case of any maritime claim, shipowners could allege the limitation established in the Hague-Visby Rules.(vi) The limitation fundAlthough local legislation does not regulate limitation funds, it is standard practice for vessel owners to constitute this type of funds to limit the shipowner’s liability.Costa Rica is not a signatory to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971.

In case of any maritime casualty, such as collision or grounding within Costa Rica’s territory, various authorities shall participate in the investigation, such as the Maritime Port Division of the Ministry of Transportation, to which the Harbour Captaincies belong.The port operator may participate as well. In Costa Rica there are two main ports. On the Pacific side, the Authority INCOP is the

It is possible to request the arrest of any ship without exception of the flag. According to article 551 of the Code of Commerce, foreign ships held in the ports of the Republic cannot be stopped or seized for debts that have not been incurred in the Costa Rican territory.

It is possible for a bunker supplier to arrest a vessel for a claim related to the supply of that vessel in particular. Article 550 of the Commercial Code of 1853 establishes that a ship can only be arrested due to debts acquired by its shipowner for that particular transport and not for other types of debt. Local law allows the payment of bail in order to release a ship. It is important to consider that the Commercial Code of 1853 is made up of many outdated regulations.

The shipowner and the Master have the lien over cargoes in order to secure freight, according to article 336.g of the Commercial Code. If the bill of lading was agreed under prepaid freight, the carrier cannot retain the cargo associated with the specific bill of lading, even if there are other debts.

Civil procedure allows different types of guarantee to be rendered, such as bank warranties and credit letters, among others. However, a P&I letter of undertaking is not commonly used; its acceptance will be subject to the parties’ acceptance and court’s approval. The warranties permitted are not limited to a specific list. In our experience, P&I LOUs are not generally acceptable.

5 Evidence

There are no maritime courts to solve maritime disputes in Costa Rica. If a lawsuit is filed, it should be resolved in an ordinary civil proceeding at a Judicial Civil Court. Evidence related to any maritime complaint shall be executed according to the CPC. The CPC, Act N° 7130 establishes the means of access to evidence, such as: (a) questioning of the parties and witnesses; (b) documents and reports; (c) expert evidence; (d) judicial recognition; (e) scientific methods; and (f) presumptions. The New Civil Procedure Code (NCPC), which will enter into force in October 2018, includes as evidence “anything that is not prohibited”.In order to preserve any evidence that may be compromised, article 49 of the CPC regulates pre-trial evidence, which is accepted only under special circumstances, such as risk of losing the evidence or losing of efficacy.

As a signatory of the SOLAS Convention, Costa Rican shippers are obliged to comply with the verified gross mass (VGM) of packed containers prior to loading on board ships. This obligation, which went into force worldwide on July 1, 2016, was also enforceable under local law after the issuance of the VGM Decree N° 39904-MOPT-MICITT.If the shipper does not comply with the regulation related to the correct declaration of goods and dangerous goods, the carrier has the right to claim against him for any loss or damage caused by its misdeclaration. When dangerous goods are shipped, the shipper is liable not only towards the carrier but also towards cargo owners shipped on board.The Master is also entitled to unload cargo on board, if it has not been declared accordingly.

3 Passenger Claims

The applicable law when a maritime passenger’s claim occurs is the Civil Code and Customers Law, Act N° 7972, in case of any claim related to the purchase agreement.If a death or physical injury occurs to a passenger within the Costa Rican territory, the rules established in the Criminal Code and Criminal Procedures Code may be applicable as well, because an investigation will be initiated to determine any responsibility.Another aspect is that Costa Rica has not signed the Athens Convention of 1974, related to the Carriage of Passengers and their luggage; for this reason, in case of any claim, local legislation will be applicable.

According to local legislation, it is possible to file a judicial petition to request the arrest of a ship, as a preventive or precautionary attachment. Additionally, Costa Rica, as a signatory of the International Convention Relating to the Arrest of Sea-Going Ships, Act N° 1798, reserved the application of article 2 and 3 of said Convention. Another option available is to request a ship arrest according to the Commercial Code of 1853. These rules establish in article 548 that while the obligations of the shipowner continue, the ship may be arrested by its creditors with a valid title, at any port, and a judicial sale will be applicable as well. The obligations are considered as maritime liens, and are the following according to article 542 of the Commercial Code of 1853:1) Debts to the tax authorities, if any towards the ship.2) Court cost. 3) Pilotage, towage.4) Wages of Masters, Officers and crew. 5) Construction, repair or equipment of any ship. 6) Goods or materials whenever supplied to a ship for its

operation or maintenance. 7) Compensation related to the carriage of goods in any ship,

whether or not by charterparty.

Law, the party who intends to file a complaint through an arbitration process must inform the other party of this in writing. The communication must also contain a copy of the agreement to submit any dispute to arbitration, a copy of the main agreement, an arbitrator’s proposal, and notice of the proposed arbitrator.

2. Appointment of arbitrators. The RAC Law states that an arbitration procedure may be in law or in equity. According to article 20 of the RAC Law, to appoint the arbitrator, the tribunal shall be composed exclusively of lawyers, in case of arbitration in law, or by any person, regardless of the profession, in case of an equity arbitration. The arbitrator in equity shall be appointed, according to the best knowledge and belief.

3. Acceptance of arbitration tribunal. 4. Filing of the claim. 5. Admission/refusal of the claim.6. Answer to the claim. 7. Preliminary hearing.8. Examination of evidence.9. Filing of closing arguments.10. Arbitration award. During the procedure, all kinds of evidence may be provided, such as testimonial evidence, examination by the parties, expert evidence, among others. In our experience, the length of an arbitration procedure is generally between six months and one year.(iii) Mediation/alternative dispute resolutionThe RAC Law establishes alternative dispute resolution other than arbitration, such as mediation and conciliation. These are proceedings known and recognised for their expedited resolution.

Pros:a) The judicial system is fully independent of the Government. Cons: a) Maritime legislation is outdated; Costa Rica has not signed

most of the main Conventions that regulate the maritime activity.

b) Maritime disputes are not commonly heard in national courts. There is a lack of legislation, knowledge and expertise of the judges in maritime claims.

c) Administrative authorities do not have the experience and budget to attend to cases of pollution within national waters.

d) Proceedings take a significant length of time due to the quantity of files. With the entry into force of the NCPC, it is expected that the time for resolution will be considerably reduced, mainly because the principal characteristic of the new process will be that it is conducted verbally.

In Costa Rica, the CPC establishes a special procedure to request the execution of a foreign judgment within the Costa Rican territory.

Pre-trial evidence will be incorporated into the proceedings once it is established.

Parties are obliged to file the evidence during the accurate proceeding stage. It could be at the filing of the lawsuit, upon the reply, or as pre-trial evidence. Evidence will be admitted only if it is directly related to the facts and request for relief, as long as it is controversial. During the hearing, evidence will be admitted or denied by the judges. The court will also review if there is new evidence offered by the parties, or if it is necessary to request new evidence, in which case the judge is entitled to request. The rules for admission and evaluation of evidence are burdened by formalities. The rules for disclosure impose a limited obligation, which is that the party demanding disclosure bears the burden.

6 Procedure

There are no specific maritime courts to solve maritime disputes in Costa Rica. (i) National courtsIf a lawsuit is filed, it should be resolved in an ordinary civil proceeding at a Judicial Civil Court. The Judicial Proceeding in Costa Rica is as follows:1. Filing of the lawsuit, according to article 290 of the CPC and

article 35.1 of the NCPC. The NCPC will be applied starting from October 9, 2018.

2. In case the lawsuit has any defect, the plaintiff has a limited period of time to amend it. If the plaintiff does not amend it in time, the court will reject the admonition of the lawsuit for failure to meet all filing requirements.

3. The defendant has the right to answer the lawsuit, to accept or deny the allegation contained in the lawsuit, as well as procedure defences, such as statute of limitation, lack of capacity, among others. The defendant has the right to file a counterclaim.

4. Preliminary hearing: used for conciliation, admission of evidence, among others.

5. Hearing to receive the proposed and admitted evidence.6. Hearing of closing arguments.7. Judgment. According to the NCPC, the deliberation of the

court will be secret. The court will have a period of two to five business days to deliver the ruling.

Currently, this type of proceedings may take four to eight years. However, with the NCPC it is expected that this term will be reduced. (ii) ArbitrationAccording to the Alternative Dispute Resolution Law N° 7727 (RAC Law), arbitration is a recognised means for resolving disputes without having to attend a Judicial Court. The key provisions of the arbitration procedure are the following: 1. Communication to the other party of the intention to start an

arbitration proceeding. According to article 43 of the RAC

3. The First Chamber will review the evidence and will recognise the foreign judgment. The chamber will notify the corresponding court to execute the resolution.

The recognition of foreign awards and judgments in Costa Rica is subject to the compliance of all the formalities our law states. The lack of formalities is one of the main issues that plaintiffs face when requesting the exequatur in Costa Rica.

The same rules and procedure indicated in question 7.1 apply to the enforcement of arbitration awards.

There is a proposal to create a Navigation Act, which is under project N° 18512. The aim of the project is to regulate various maritime areas, such as ship registry, extend the obligations and faculties of the Maritime Authority and imposition of fines, among others. Different parties within the maritime sector such as fishermen, port authorities, ship and cruise agents’ associations, among others, have opposed the project due to important defects that it has. The lack of knowledge of our legislators has caused serious defects in the project of law, which may affect maritime activity in Costa Rica. Furthermore, since 2015, there is a project of law to ratify the International Convention on Maritime Search and Rescue (SAR Convention), which means that, once it has been approved and entered into force, Costa Rica will assume the obligations and rights established in the SAR Convention; however, at the time of writing, the project is not in the main list of projects for Congress.

Article 705 of the CPC defines that an exequatur will proceed for foreign judgments and arbitration awards. The exequatur has the purpose of recognising the legal force of judgments or arbitration awards issued abroad, which has a res judicata effect. A foreign judgment or foreign arbitration award only acquires efficancy through a judicial recognition. In order to execute an exequatur, some formalities must be complied with at the petition stage. The foreign judgment becomes a procedure title.The court authorised to resolve and grant the exequatur is the First Chamber (Sala Primera), according to article 54.7 of the Judicial System Act N° 9.The following requirements must be complied with:a) According to the Bustamante Code and the CPC, to

homologate a foreign judgment or foreign aribitation award, the document must be validated by the Consul of Costa Rica and the Foreign Affairs Ministry in the issuance country, with its corresponding translation into Spanish.

b) The defendant must have been notified according to the local legislation of the foreign country.

c) The claim requested is not of the exclusive knowledge of the Costa Rican courts.

d) There is no ongoing process in Costa Rica, nor a executory judgment issued by a Costa Rican court, related to the same matter.

e) Judgments or arbitration awards are enforceable in the country of origin or issuance.

f) Not contrary to public order. To request an exequatur, the procedure will be as follows: 1. The party will file the petition at the First Chamber. The

petition must contain the main information, for example regarding the parties and the claim, an indication of the foreign court or foreign arbitration tribunal that issued the judgment to be homologated, and the means of notification, according to article 705 of the CPC. Original and apostille documents shall be filed with the petition.

2. Once the First Chamber reviews and admits the filings, the party will have the possibility to oppose, offer evidence and refer the foreign judgment to homologation at a public hearing.

Associate

Education: Juris Doctor, with honours, University of Costa Rica; Master’s in Business and Maritime Law, Universidad Pontificia Comillas and Instituto Marítimo Español, Madrid, Spain; Candidate to specialist degree on International Trade and Customs Administration, University of Costa Rica; Candidate to Diploma on Insurance Law, University of Costa Rica.

Practice Areas: Aviation, Customs, Labour and Maritime.

Experience:

María’s expertise includes foreign trade, logistics and customs, advising shipping companies, cargo airlines and other companies in the field. She worked at the Export Department at the Mediterranean Shipping Company in Spain, while studying for her Master’s degree.

Languages: Spanish, English and Italian.

Memberships: Costa Rican Bar Association; Ibero-American Maritime Law Institute (IIDM).

María Fernanda Redondo RojasNASSAR ABOGADOSOficentro Torres del CampoEdificio 1, 2º pisoBarrio TournónSan JoséCosta Rica

Tel: +506 2257 2929Email: mredondo@nassarabogados.comURL: www.nassarabogados.com

NASSAR ABOGADOS is a full-service and results-oriented law firm, with internationally recognised strategic experience in a large variety of areas of law. With more than 35 years of experience, the firm holds a longstanding tradition of excellence in the provision of service and legal advice designed according to first-class quality standards.

Over a decade ago, NASSAR ABOGADOS expanded its Costa Rican operation to Central America, providing clients with a regionally standardised service that has become an ally to their business in the region. Our clients recognise our professionals’ knowledge, experience, sophistication and understanding of their business, as well as the attorneys’ proactive and creative skills in addressing our clients’ matters.

NASSAR ABOGADOS has consolidated its position as a key player in the market of legal services in the region, being frequently nominated within the top Central American firms.

Senior Partner

Education: Juris Doctor and Notary Public, Universidad de Costa Rica.

Practice Areas: Aviation, Commercial and Corporate, Litigation, Maritime.

Experience:

Tomás is the Senior and Founding Partner of the Law Firm NASSAR ABOGADOS Centroamérica. He is recognised as a highly skilled negotiator and litigator, and is also well known for his depth of understanding of the business environment and ability to structure highly complex deals. He is constantly invited by private companies and industry organisations to sit on the board of directors and advisory committees.

Tomás is a Professor of Commercial Law at the School of Law of the Universidad de Costa Rica, and Professor of Maritime Law and Aviation Law at the Law School of the University of La Salle.

He has represented Costa Rica in international negotiations and meetings regarding air and sea transport such as GATT, ICAO, OAS, COCATRAM and COCESNA. He is a consultant on several projects in international transport.

He is the President of the Costa Rican Association of Maritime Law; Vice-President and President of the Ibero-American Institute of Maritime Law; Secretary, Vice-President and President of the Association of International Airlines in Costa Rica (ALA). He is a member of the Board and Vice-President of the National Chamber of Tourism (CANATUR). He is also a legal adviser to the National Chamber of Ship Owners and Steamship Agents (NAVE), the Costa Rican Association of International Freight Agencies (ACACIA) and the Costa Rican Chamber of Food Industry (CACIA), among others.

Tomás is also ranked by Chambers & Partners.

Languages: Spanish and English.

Memberships: Costa Rican Bar Association, American Bar Association, L2B Aviation Group and ADVOC Latin America.

Tomás Nassar PérezNASSAR ABOGADOSOficentro Torres del CampoEdificio 1, 2º pisoBarrio TournónSan JoséCosta Rica

Tel: +506 2257 2929Email: tnassar@nassarabogados.comURL: www.nassarabogados.com

Chapter 17

1 Marine Casualty

(i) CollisionCroatia is party to:■ the Collision Convention, 1910;■ the Collision Civil Jurisdiction Convention, 1952; and■ the Arrest Convention, 1952.In terms of internal legislation, collisions at sea are regulated in the Croatian Maritime Code, 2004, as amended (Articles 748 to 759).(ii) PollutionCroatia is party to:■ the UN Law of the Sea Convention, 1982;■ the International Convention, 1969, and the 1973 Protocol;■ the International Convention for the Prevention of Pollution

from Ships (MARPOL), 1973/1978, and the MARPOL Protocol, 1997;

■ the Safety of Life at Sea Convention (SOLAS), 1974;■ the Dumping Convention, 1972;■ the International Convention on Oil Pollution Preparedness,

Response and Co-operation (OPRC), 1990;■ the Barcelona Convention, 1995, with various Protocols;■ the International Convention on Civil Liability for Oil

Pollution Damage (CLC Convention), 1992; ■ the Fund Convention, 1992, and the 2003 Protocol; and■ the Bunker Convention, 2001.In terms of internal legislation, various aspects of marine pollution are regulated by a great number of legislative acts, from the Environment Protection Act, 2007, and the Maritime Code, through to a number of governmental and/or ministerial regulations and other documents.Amongst various national provisions that incorporate and give effect to the international rules, mention must be made of the Intervention Plan for Sudden Pollution of the Sea. This contingency plan contains systematic and detailed rules on intervention measures, procedures, relevant subjects and their respective tasks, and is aimed at the minimisation of pollution damage in the case of sudden pollution on a major scale.

(iii) Salvage / general averageCroatia is party to the International Convention on Salvage, 1989.In terms of internal legislation, salvage at sea is regulated in the Maritime Code (mainly in Articles 760 to 788). General average is regulated in Articles 789 to 807 of the Maritime Code.(iv) Wreck removalCroatia is not party to the Nairobi Wreck Removal Convention, 2007.In terms of internal legislation, wreck removal is regulated in the Maritime Code (mainly in Articles 840.A to 840.Z).(v) Limitation of liabilityCroatia is party to the Limitation Convention, 1976, and the 1996 Protocol.In terms of internal legislation, general limitation of liability is regulated in the Maritime Code (Articles 386 to 427). There are several sets of provisions in the Maritime Code dealing with special limitation regimes, such as the ones applying to cargo claims, passenger claims, pollution by cargo or oil carried in bulk, as well as liability of operators of nuclear ships. Those provisions mainly reflect the respective international conventions dealing with those topics.(vi) The limitation fundThe limitation fund may be set up either by depositing cash at the court account or providing other sureties (e.g. a bank guarantee or a liability insurer’s letter of undertaking), as long as it is freely disposable and transferable in favour of the claimants.

The Croatian Rules on Maritime Accident Investigation contain provisions in line with Directive 2009/18/ec of the European Parliament and of the Council of 23 April 2009 establishing the fundamental principles governing the investigation of accidents in the maritime transport sector, and amending Council Directive 1999/35/ec and Directive 2002/59/ec of the European Parliament and of the Council.The Rules distinguish between safety investigation (aimed at identifying the cause of accident in order to promote maritime safety and environmental protection) and administrative investigation (aimed at identifying the liable persons in order to create a basis for a criminal and/or misdemeanour procedure). While the safety investigation is carried out by an independent investigation agency, the administrative investigation is carried out by the maritime

Gordan StankovićVUKIĆ & PARTNERS

Croatia

VUKIĆ & PARTNERS Croatia

carrier is brought in tort, the carrier’s liability will be subject to the same rules (exculpations and limitations) as if the claim is brought in contract.

In case of dangerous cargo, the shipper has the duty to notify the carrier as to the nature of the hazard involved and the protection measures to be taken.If the cargo is not in regular trade and requires special stowage arrangements, the shipper is under a duty to provide the carrier with cargo manipulation instructions.The shipper shall be liable to the carrier for damages suffered as a consequence of: (a) giving inaccurate or incomplete information on the nature and quantity of the cargo and/or markings; (b) the nature and/or condition of the cargo of which the carrier should not and could not have been aware; and/or (c) loading illicit or prohibited or contraband cargo, provided that at the time of loading the carrier was not aware of such nature of the cargo.

3 Passenger Claims

Croatia is party to the Athens Convention, 1974, as well as the Protocols of 1976, 1990, and 2002.In terms of internal legislation, passenger claims are regulated in the Maritime Code (mainly in Articles 598 to 633, and 673), and follow the provisions of the Athens Convention, as amended by the Protocol of 2002.

(i) Arrest of shipsCroatia is a party to the 1952 Arrest Convention. In terms of internal legislation, ship arrest is regulated in the Maritime Code (mainly in Articles 951 to 965), which will apply in cases falling outside the scope of application of the Arrest Convention. In all aspects which are not specifically covered by the Arrest Convention or the Maritime Code, the general rules regarding interim injunctions contained in the Forced Execution Act should apply.The claims subject to arrest have been divided into two main categories:(a) claims secured by a maritime lien or a ship mortgage (Article

953/2 of the MC); and(b) other maritime claims, including mainly all the claims listed

in Article 1 of the 1952 Arrest Convention, with the addition of agency commissions or agency fees owed in connection with the ship.

A ship may be arrested: (a) if, at the time the arrest is requested, it is owned by the

applicant’s personal debtor (as to which see infra); or

administration personnel (i.e. officials employed at the Ministry and/or harbour masters’ offices). Both entities have wide investigation powers (access to various sources of information, power to take witness statements, engage experts, etc.). In addition, the inspectors carrying out the administrative investigation have the power to detain all the vessels involved in the casualty until all relevant information required for the investigation is gathered.

2 Cargo Claims

Croatia is party to the Hague Rules, 1924, as well as the Visby Rules, 1968, and the 1979 SDR Protocol.In terms of internal legislation, marine cargo claims are regulated in the Maritime Code (mainly in Articles 537 to 540, 547 to 574, and 673). Those provisions follow the Hague-Visby Rules.

The title to sue belongs to a lawful holder of a bill of lading, or a party subrogated into the rights of such lawful holder of a bill of lading.According to the Maritime Code, the term “carrier” includes the shipowner, ship operator or a person who enters into a contract with the charterer. This does not mean that all of them will always be considered as carriers, but only that any of them may be so considered, depending on the circumstances. If a charterer has, in the capacity of carrier, entered into a contract of carriage with a third person, the liability towards the third person will lie not only with the charterer (as the contractual carrier) but also with the owner / ship operator. Although there is no case law on this issue, the authors believe that a demise clause would not be considered valid by the Croatian courts.In order to bind a bona fide third-party bill of lading holder, the charter party provisions should be expressly referred to in the bill of lading. A general reference to a charter party will only bind such third-party B/L holder insofar as the terms of the charter party are not more restrictive than the terms regularly used in that particular type of carriage. A charter party arbitration clause shall bind a bill of lading holder only if the bill of lading makes an express reference to it. “Quality/quantity unknown” or similar clauses in the bill of lading will be valid if the carrier actually did not have a reasonable possibility to verify the accuracy of the information to which the clause relates.In principle, the carrier’s liability for the loss of or damage to the cargo is based on the so-called presumed negligence, save for the damages caused by “excepted perils” (where the carrier’s liability is based on the proven negligence), fire (where the carrier’s liability is based on the proven personal negligence) and nautical fault (where the carrier’s liability is excepted).The carrier is entitled to limit its liability according to a package/kilo criterion, with the limits of SDE 666,67 per package and 2,00 special drawing rights (SDR) per kilo.The time limitation period for cargo claims is one year.A claim in tort will be allowed against the carrier if the claim does not arise out of a contract between the claimant and the carrier, and if the claim relates to damages suffered by the claimant as a result of the carrier’s unlawful acts or omissions. Even if a claim against the

The arrest of bunkers is theoretically possible, although in practice it is extremely rare and rather difficult to obtain. The arresting party will, inter alia, have to prove that the bunkers are owned by the party against whom the arrest is sought.The Maritime Code provides for maritime liens on cargo. The claims giving rise to a lien on cargo are those relating to: ■ legal costs associated with the storage and/or judicial sale of

the cargo;■ salvage and general average; and■ contract of carriage.

The security may be provided by way of depositing cash or other assets with the court, or by way of submitting other sureties (bank guarantee, liability insurer’s letter of undertaking), as long as it is freely disposable and transferable in favour of the claimant. Cash deposits and bank guarantees issued by Croatian banks are usually accepted by the courts irrespective of the arresting party’s opinion. With regard to protection and indemnity (P&I) letters of undertaking, the court will seek approval from the arresting party.

5 Evidence

If there is a risk that any piece of evidence will be impossible or very difficult to obtain at a later stage, an interested party may apply for the so-called securing of evidence. This can be sought before or after commencement of the litigation procedure.

In the points of claim and the points of defence, but in any event not later than at the preliminary hearing, the parties should produce/propose all evidence supporting their positions. After that, they may submit new evidence only if they can prove that they were unable to produce such evidence earlier.

6 Procedure

Shipping matters fall within the jurisdiction of the commercial

(b) if it is burdened with a maritime lien or a ship mortgage or a corresponding foreign charge securing the claim in question.

The term “personal debtor” denotes a person liable for the underlying claim, and who was, at the time the claim was created, in the capacity of owner, operator, charterer or demise charterer of the ship in connection with which the claim arose.The concept of sister-ship arrest applies. The claimant may arrest not only the particular ship (i.e. the ship in connection with which the claim arose), but also any other ship under the same ownership. Nevertheless, no ship other than the particular ship in respect of which the claim arose may be arrested in respect of claims regarding the ownership of, or lien and/or mortgage on, a ship.Arrest may be sought at any point before or during the (pre-judgment) trial and/or forced execution proceedings. The arresting party must show on a prima facie basis:(a) a valid claim; and(b) the danger that, in the absence of the arrest, the person in

control of the ship (respondent) will prevent or significantly hamper the enforcement of the claim in question by disposing of the ship or dissipating its assets.

The element of danger need not be shown if the applicant shows that the damage caused by the arrest will be insignificant. If the claim in question would have to be discharged abroad, the existence of danger is presumed.The court will decide on the arrest motion based on the documents submitted therewith; only on very rare occasions will the court summon a hearing before an arrest decree is issued.The arrest decree contains an order that the ship must not leave its current position, and an order to a local harbour master’s office to seize the vessel’s documents (certificate of registry, crew list and safety certificates). If needed, the court will order that the ship be watched.The arrest will remain in force until the completion of the proceedings on the merits and until the commencement of execution by way of forced sale of the vessel. If the arrest is issued before the commencement of proceedings on the merits, the applicant will have a duty to commence such proceedings and notify the court thereof within 15 days of the arrest. Failing such action by the applicant, the respondent may seek that the arrest be lifted.If the arrest has been granted for the purpose of securing a monetary claim, the arrest may be lifted upon provision of adequate security in an amount sufficient to cover the principal claim, together with interest and legal costs.(ii) Attachment or freezing of other assetsAccording to the general rules on civil procedure (contained in the Forced Execution Act), claimants may seek various interlocutory measures aimed at securing future satisfaction of their claims. An open-ended list of those measures includes: prohibition on the respondent to sell or dispose of its assets; prohibition on the respondent’s debtor to voluntarily fulfil its obligation to the respondent; and prohibition on the respondent’s bank to perform any payments from the respondent’s account.The requirements and procedure are similar to those in the ship arrest procedure.

Yes, provided general requirements discussed under question 4.1 above are satisfied. Claims based on bunkers supplied to vessels are on the list of maritime claims both in the 1952 Arrest Convention and in the Croatian Maritime Code.

one of the parties is a foreign entity, the parties may agree to the jurisdiction of a foreign or a domestic arbitration. If both parties are domestic entities, they may only agree to the jurisdiction of a domestic arbitration.Generally, there is no requirement to attempt mediation/ADR before commencing court procedure (except in some specific cases, which do not involve maritime matters). Nevertheless, the rules on civil procedure encourage the parties in a number of ways to refer their court disputes to ADR mechanisms.The Permanent Arbitration Court of the Croatian Chamber of Economy (SIS HGK) is the only arbitral institution in Croatia. It has an established tradition and reputation. Its list of arbitrators includes some of Croatia’s leading maritime law experts.With Croatia’s entry into the EU, some of the procedural issues discussed above (such as international jurisdiction, service of proceedings and taking of evidence) are directly regulated by the appropriate EU rules.

As a consequence of joining the EU, Croatia has done a lot in order to brush up its legal system, and make it fair and efficient. Although the Croatian courts hear a substantial number of maritime cases, the judges sometimes seem to lack the expertise and understanding of the intricacies surrounding shipping business. Court cases still last too long. The most recent amendments to the rules of civil procedure may change this.On the other hand, some of the practising lawyers have vast experience and expertise in maritime matters, and the same applies for many of the arbitrators on the list of the Permanent Arbitration Court at the Croatian Chamber of Economy. There are a great number of skilled expert witnesses with a thorough understanding of issues in their respective fields.

In order for a foreign judgment to be enforced in Croatia, it must first be recognised by the Croatian court. With Croatia’s entry into the EU, cases falling within the scope of the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Brussels I”) are regulated directly by the said Regulation.In terms of internal legislation, the recognition procedure is governed by the provisions of the Croatian Conflicts of Laws Act. Once recognised, the judgment will be subject to the same rules of enforcement as an ordinary judgment issued by the Croatian court. As a matter of principle, recognition is subject to a number of negative criteria.Recognition need not be carried out separately, but may be sought as part of the enforcement proceedings. This will be recommended in the present case.The procedure is of a contradictory nature, i.e. the respondent must be given the opportunity to defend its interests, at least in an appeal against the order on recognition/enforcement. Some judges summon a hearing in the recognition proceedings, and some do not. An

courts, as specialised courts. There are only three commercial courts with jurisdiction over shipping matters (Rijeka, Split, and Zagreb). The High Commercial Court of Croatia acts as the court of appeal. A third-stage appeal to the Supreme Court of Croatia is permitted on questions of law and, sometimes, questions of procedure. In extreme cases, if the court procedure has resulted in a breach of some constitutional principle, a further remedy may be sought from the Constitutional Court.For the purpose of defining jurisdiction, shipping matters are those that involve ships and navigation or the application of the maritime law, or those that involve disputes between a crew member and a shipowner or ship operator or manager.The Croatian courts have jurisdiction in personam, jurisdiction in rem being alien to Croatian law. The procedure before the commercial courts differs to a certain extent from the procedure before the ordinary courts: given that commercial litigation is generally carried out by professionals, the procedure before the commercial courts is subject to more stringent rules aimed at expediting the process.Jurisdiction and arbitration clauses are generally recognised in Croatia, provided that they are not contrary to the provisions of Croatian law setting up exclusive jurisdiction of the Croatian courts. Anti-suit injunctions are alien to Croatian law. Nevertheless, a party to the Croatian court proceedings may request interruption of those proceedings if a case between the same parties on the same subject matter was previously commenced in another country, provided that the case is not subject to exclusive jurisdiction of the Croatian courts, and provided that there is reciprocity.The proceedings are commenced by lodging of points of claim with the court. If the court needs to serve the proceedings out of jurisdiction, it will do so by way of diplomatic channels, after it has ordered the plaintiff to have the proceedings translated into the language of the country of destination. The service procedure involves the Ministry of Justice as well as the Ministry of Foreign Affairs, and is usually very time-consuming.The civil procedure (covering maritime disputes) has two main stages: the preliminary procedure and the main hearing. The preliminary procedure sometimes involves a preparatory hearing. In principle, the preparatory hearing and the main hearing are each held on one occasion only. The court should issue a judgment within 45 days of completion of the main hearing. The parties are free to lodge an appeal against the first-instance judgment. In commercial matters (including maritime cases), the appeal should be lodged within eight days.The overall duration of the court proceedings depends on a number of circumstances (whether the proceedings need to be served abroad, whether the parties are keen to have the proceedings completed soon, what is the court’s workload, and whether an appeal will be lodged). So far, the usual duration of commercial cases (including appeal procedure) is about seven years. From time to time, the rules on civil procedure are upgraded so as to facilitate the swift resolution of disputes. The latest set of amendments was introduced in April 2013. The results have yet to be seen.Where a monetary claim is the subject of the procedure, an award in favour of the plaintiff will generally include the default interest. The interest rate is usually in the range of 15% p.a.Procedural costs are usually recoverable from the losing party to the extent to which the winning party has succeeded in the case. The rules on civil procedure command a restrictive approach in determining the amount of costs. In certain cases in which the plaintiff is a foreign entity, the defendant may seek security for costs.In cases which are not within the exclusive jurisdiction of a Croatian court, the parties are free to refer their disputes to arbitration. If

The Republic of Croatia is expected to introduce new amendments to its Maritime Code soon. The amendments will be quite broad, encompassing most of the chapters within the Code.

appeal against the recognition order may be lodged within 15 days. If the recognition is made as part of the enforcement proceedings, then the appeal period will be eight days.

Croatia is party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the “New York Convention” or the “NYC”).According to the NYC, each Contracting State shall recognise arbitral awards issued in another Contracting State and enforce them in accordance with the criteria set out in the NYC.The criteria set out in the NYC for the recognition and enforcement of foreign arbitral awards are formulated in the negative context, i.e. by way of providing a list of events in which recognition and enforcement may be refused. The recognition and enforcement will only be refused if there are some substantive deficiencies either with regard to the arbitration agreement or with regard to the arbitration proceedings (including the arbitral award).In terms of internal legislation, recognition and enforcement of arbitral awards are regulated in the Arbitration Act (mainly in Articles 38 to 40, and 47 to 49), which mainly follows the provisions of the NYC.

VUKIĆ & PARTNERS is Croatia’s largest law firm outside Zagreb, and is amongst the five largest in Croatia.

Much of the firm’s work is focused on commercial litigation, corporate law and maritime and transport law. Other practice areas include foreign investments, M&A and finance advice work, real estate law, construction law, intellectual property, civil law, criminal law and labour law.

The members of the firm have been recruited from amongst distinguished law students. Three of the firm’s members are on the List of Arbitrators with the Permanent Court of Arbitration of the Croatian Chamber of Commerce.

Vukić & Partners is the first Croatian law firm with an ISO 9001:2000 certificate of quality. On numerous occasions, it has been named as the Maritime Law Firm of the Year in Croatia by various international researchers.

Prof.dr.sc. Gordan Stanković studied law at the University of Rijeka Faculty of Law. He obtained LL.M. degrees from the law faculties of Split, Croatia and Southampton, UK, and a Ph.D. degree from the law faculty of Split. He was a Fulbright visiting scholar at the Tulane Law School in New Orleans, Louisiana, US. He is the author of Limitation of Liability for Maritime Claims, and Maritime Liens and Mortgages, co-author of the chapter on Croatia in Kluwer’s International Encyclopaedia of Laws – Transport Law, and a co-editor of Maritime Environmental Law: A Handbook of Selected Laws and Regulations. He has been involved in the drafting of the Croatian Maritime Code as a member of the working group on registration of ships, liens and mortgages, as well as the working group on ship arrest. In 2011, he was named by Corporate INTL as the shipping lawyer of the year in Croatia.

Gordan StankovićVUKIĆ & PARTNERSNikole Tesle 951 000 RijekaCroatia

Tel: +385 51 211 600Fax: +385 51 336 884Email: gordan.stankovic@vukic-lawfirm.hrURL: www.vukic-lawfirm.hr

Chapter 18

1 Marine Casualty

(i) CollisionDenmark is a party to the 1910 Collision Convention (Convention for the Unification of Certain Rules of Law with respect to Collision between Vessels) and this is enacted into chapter 8 of the Danish Merchant Shipping Act (DMSA), also at times referred to as the Danish Maritime Code.Accordingly, the principles of distribution of liability between colliding vessels in that convention apply. If one vessel is wholly at fault, this will be fully liable to all damages to the other vessel, its cargo and for injuries to persons on board that vessel.If both vessels are partially at fault, blame will be apportioned between them and, in a departure from ordinary Danish law, they are only liable to vessels and cargo to the extent they are so found liable. Both vessels are jointly and severally liable for personal injury, however. If it is clear that both vessels are at fault but blame cannot be apportioned, each vessel will bear 50 per cent of the losses. In recent years, blame has been apportioned in quarters, thirds and halves. Should there be no information to establish whether the vessels are at fault, or should the court find that the collision occurred as a result of a fortuity, the vessels will not be liable.These principles apply equally to collisions involving more than two vessels and to near-miss situations. The rules on collision apply to ships as well as mobile offshore units when under tow, but not to fixed installations such as piers, pipelines or fixed offshore installations. The basis of liability is fault/culpability, although breach of public law regulations such as the Danish Enactment of the Collision Regulations, regulations to further safety at sea or the facts of the case such as breakdown of machinery may have an impact on the likelihood that a vessel will be found liable.The single liability principle applies between the vessels.(ii) PollutionDenmark has ratified and enacted the 1992 International Convention on Civil Liability for Oil Pollution Damage (CLC) as well as the 1992 International Convention on the Establishment of an International Fund for Compensation of Oil Pollution Damage (Fund Convention) and The 2003 Supplementary Fund (Fund). This entails that liability is strict and channelled to the registered

shipowner in case of pollution by mineral oils as defined in the CLC and subject to the limitation of liability in that convention. If the pollution is caused by gross negligence or with intent, then the limits do not apply. As with the convention, it applies only to vessels carrying oil in bulk (tankers).In addition, Denmark is a party to the 2003 International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunker Convention). It follows that a registered shipowner is also strictly liable for loss or damage caused by discharge of bunkers.Denmark is a party to the 1973 Convention on Prevention of Pollution of Ships as amended by the 1978 and 1997 Protocols (MARPOL 73/78). Denmark is a party to the 1996 International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea as amended by the 2010 Protocol (HNS Protocol). The Danish enactment of the convention has been prepared and awaits accession to the protocol by the EU. Until then, a shipowner or operator is strictly liable for damage to the environment caused by events other than the escape of oil in bulk or bunker oil.Finally, EU rules on waste including Directive 2008/98 (Waste Directive) may have an impact on the legal position of parties other than registered owners under the above conventions, or ship operators under Danish law.(iii) Salvage / general averageDenmark is a party to the 1989 International Convention on Salvage. It follows that salvage is based on the “no cure, no pay” principle; however, with special compensation for unsuccessful salvage where the efforts of the salvor have been to the benefit of the environment (“environmental salvage”). Salvage requires the presence of danger, assistance to a vessel or navigable construction or asset and mobile or permanent offshore installations which are not engaged in exploration or production of oil and minerals.The criteria for setting the size of the award are those found in the convention.Since the DMSA on salvage is not mandatory except the rules concerning “environmental salvage”, Lloyd’s Open Form (LOF) contracts are commonplace, and those or other salvage contracts will be respected to the extent they are not unreasonable and made under the influence of danger. Owners of salved assets, including vessel and cargo, are liable to pay salvage, and the salvor may exercise a maritime lien on the asset until it has been paid or security, including for interest and costs, has been provided. The International Salvage Union (ISU) standard forms and similar forms are common.The 1974 York-Antwerp Rules as amended 1990 (YAR) have been incorporated into the DMSA and apply to the extent no other rules, including other versions of the YAR, have been agreed between the

Mads PoulsenJensen Neugebauer

Denmark

Jensen Neugebauer Denmark

2 Cargo Claims

Denmark is a party to the International Convention for Unification of Certain Rules of Law Relating to Bills of Lading 1924 with its Visby Protocol and SDR Protocol (Hague-Visby Rules). In addition, however, Denmark has enacted certain elements of the Hamburg Rules into the DMSA to the extent these are not repugnant to the Hague-Visby Rules. Denmark has signed the Rotterdam Rules which, however, have not yet been ratified.

Being a Hague-Visby state, a carrier subject to Danish law is responsible for loss or damage to the goods occurring during the period of responsibility if notification of loss or damage has occurred within three days of delivery, unless the carrier can show that its liability is not involved. The “Hague-Visby catalogue” of exemptions of liability does not apply. The carrier must instead show that the loss or damage was not caused by fault or neglect by it or any person for whom it is responsible.In addition, the period of responsibility extends to the entire time the carrier has the goods in its custody, rather than from tackle-to-tackle. This period may extend to road, rail or air carriage before or after the ocean carriage in question. In addition, there are specific provisions on deck carriage and carriage of live animals, which derogate from the Hague-Visby Rules. The fire and error in navigation exceptions to liability apply.A contractual and performing carrier are jointly and severally liable to the cargo interest.Liability may be limited to SDR 2 per kg or SDR 667 per package, whichever is the higher, unless the damage resulted from an act or omission of the carrier caused with intent to cause damage, or recklessly and with knowledge that such damage would probably occur.The DMSA rules apply to both bills of lading and sea waybills. Charterparties may be incorporated into bills of lading and, if successfully incorporated, they will govern the contractual relationship between cargo interest and carriers; however, the DMSA will prevail where the charterparty conflicts with it.The DMSA applies on a mandatory basis and the Danish courts will take jurisdiction on a mandatory basis in case of carriage to and from Denmark and, in appropriate circumstances, including pre-carriage or carriage after discharge into Denmark by another mode of transport. These provisions will, however, yield to the Brussels Regulation and a valid choice of law between parties within the EU/EEA.A choice of law in a charterparty and reference to the charterparty in a bill of lading is insufficient; the reference in the bill of lading must include a specific reference to the jurisdiction clause as well.Suit time is one year.

Dangerous cargo must be declared and the cargo interest must advise of the fact that the goods are dangerous and precautions to be taken.Failure to do so may mean that the shipper is strictly liable to the carrier (and performing carrier) for damage and loss arising out

parties. Owners of assets subject to general average contribution are not personally liable for the contribution; however, they may be required to assume such liability in exchange for the assets being delivered. The standard GA bond and guarantee forms issued by average adjusters are common and accepted.(iv) Wreck removalDenmark is a party to the 2007 Nairobi International Convention on the Removal of Wrecks (Wreck Removal Convention) and so the Danish authorities can order a wreck to be removed by the shipowner, or that work be carried out on the wreck to ensure sufficient depth for safe passage above the wreck.Should the shipowner fail to do so, the authorities may carry out the work necessary to remove the wreck or ensure safe passage at the expense of the shipowner. However, the latter is permitted to limit liability in accordance with the Wreck Removal Convention.(v) Limitation of liabilityDenmark is a party to the Convention on Limitation of Liability for Maritime Claims 19 November 1976 and its 1996 Protocol. The parties entitled to limit liability are the owners of the ship, including parties who equip, crew and operate the ship for their own account. This includes users, charterers, managers and parties providing services in direct connection with salvage operations (the imputed tonnage being 2,000 tons). The ambit of parties included may be wider than in other jurisdictions, and may include freight forwarders. Those for whom the shipowner is responsible and the shipowner’s insurers may also limit liability. The limits are set out in the protocol and there are special limits set for vessels less than 300 tons. In addition, the DMSA allows for an increase of the limits as per article 8 of the 1996 Protocol. Limits may be breached where the damage is caused with intent to cause such loss or damage, or recklessly with the knowledge that such damage would probably occur.It is thought that the EU directives regarding waste, particularly their rules on “polluter pays”, may have an impact on the above.(vi) The limitation fundIt is not a condition for invoking the right to limit liability that a fund be established. A fund may, however, be established in the Maritime and Commercial High Court if legal proceedings have been commenced in Denmark; that is, a claim form has been issued or the vessel has been arrested in Denmark.The fund is established upon application to the court, which will require payment of funds into the court in cash, by first class Danish bank guarantee or, in appropriate circumstances, a guarantee provided by an insurer.

Marine accidents will be investigated at the discretion of the Danish Maritime Accident Investigation Board (DMAIB), which investigates more serious marine incidents, particularly involving injury, large casualties or casualties which could have caused serious loss or injury. The DMAIB fully investigates such incidents in Danish and Greenlandic waters, though investigations regarding foreign ships may be agreed and left with the authorities of the flag state.The purpose of the DMAIB investigation is to ascertain the events and reasons for the accident in order to prevent similar accidents in the future, but not to establish liability. Nevertheless, the report of the DMAIB will often have persuasive effect and may be the only/best account of the events leading to the casualty.

enforcement is to levy execution on the debtor’s property, including a vessel. Execution will ultimately entail the forced sale of the asset.

Bunker suppliers can arrest vessels for claims for delivery of bunkers where the owner is liable for the delivery. Danish law does not recognise delivery of bunkers as a statutory lien and, accordingly, arrest of a vessel for supply of bunkers to a charterer is not possible.Bunker suppliers may, however, arrest in accordance with the aforementioned procedure for arrest under the Danish Administration of Justice Act. The target of such arrest could be the arrest of any asset owned by the debtor, including bunkers on board a vessel.

Arrest of a vessel without the owner being liable for the underlying claim is normally only possible if the claim is secured by a lien.The statutory maritime liens recognised by Danish law are: 1) wages and other sums due to the Master and crew in respect of their employment; 2) port canal and other waterway dues and pilotage dues; 3) claims for personal injury in direct connection with the operation of the ship; 4) claims for damage to property in direct connection with the operation of the ship if the claim is not based on contract or salvage; 5) wreck removal; and 6) contributions in general average.The following claims give rise to a lien on cargo: 1) claims for salvage and contribution in general average; 2) claims relating to the carrier or Master having made agreements, taken measures or made payments on behalf of the cargo owner; 3) claims by a cargo owner for reimbursement for goods sold for the benefit of other cargo owners; and 4) claims of the carrier pursuant to the contract of carriage including freight, provided that these claims are valid against the party requesting delivery.A shipowner may establish a contractual lien on freight and sub-freight. The act of perfection is notification of this assignment to the charterer or sub-charterer.A shipyard has a non-statutory right of retention in the vessel built or repaired for payment of its remuneration, provided the vessel is in its possession or under its control.

An arresting party must expect to provide security for damages and inconvenience of an arrest should this turn out to be unlawful. The security is decided by the Enforcement Court and is usually set at five days’ hire of the particular vessel. The security accepted is usually cash deposit or a first class Danish bank guarantee.A vessel owner will usually be required to provide security to avoid arrest or for the release of an arrested vessel without the underlying claim being resolved. The amount of security is a matter for the discretion of the Enforcement Court but 130–140 per cent of the total claim is normally sufficient. The forms of security normally accepted by the courts are cash deposits, first class Danish bank guarantees and LOUs from Clubs and first class insurers.

of the carriage of the dangerous cargo. In addition, the carrier is permitted to unload, render innocuous or destroy the goods as necessary, without compensation to the cargo interest.Where non-dangerous goods are concerned, the shipper is liable for loss or damage arising out of the shipper’s fault or negligence, including misdeclaration.

3 Passenger Claims

Denmark is a party to the 2002 Protocol to the 1974 Athens Convention relating to the carriage of passengers and their luggage by sea.In addition, EC Regulation 392/2009 on the liability of carriers of passengers by sea in the event of accidents, incorporating the Athens Convention into EU law, is applicable in Denmark.These rules cover intra-Danish carriage as well.

Denmark is a party to the 1952 International Convention Relating to the Arrest of Seagoing Ships. Accordingly, arrest of vessels may be made for the claims set out in that convention.Arrest may be made of the vessel in respect of which the maritime claim lies and sister ships, that is the vessel owned by the same shipowner. Sister-ship arrest is not available regarding disputes concerning property rights to a ship, possession, use or revenues of the ship or mortgages in a ship. Arrest of associated ships is not possible.As a general rule, the owner of a vessel must be liable for a claim for arrest to be possible. The exception is where the claim is secured by a lien (see below).To arrest a vessel, the arresting party must submit an application for arrest with the Enforcement Court. The arresting party must show that there is a maritime claim, but does not need to raise a presumption that the claim will succeed on its merits. In addition to the application, the arresting party must provide counter-security in case the claim is wrongful. The counter-security usually amounts to five days’ hire of the arrested vessel.Within one week of the arrest, the arresting party must commence confirmatory proceedings to decide whether the arrest was legal or wrongful. These proceedings will often be stayed if the underlying claim is subject to jurisdiction elsewhere. Should the court conclude that the arrest was wrongful – that is illegal, not that it fails on the merits – the arrest will be lifted and the arresting party will be strictly liable for the damages and losses incurred by the vessel owner.Assets other than vessels may be arrested for non-maritime claims according to the Danish Administration of Justice Act. Such arrest may be made if it is not yet possible to execute a judgment and the arresting party can show that, if the arrest is not permitted, the possibility of obtaining payment will be severely reduced. This option is normally unattractive where vessel arrest is possible, as the Enforcement Court’s requirement as to security is higher than five days’ hire.Once a claimant has acquired judgment or has another enforceable instrument, arrest is not possible. Instead, the avenue for

6 Procedure

Proceedings are commenced by delivering a claim form which includes particulars of claim to the court. The court is seized once this has been received. The court fee is – roughly – 1.2 per cent of the claim amount, however, maximised at DKK 75,000. A court fee in the same amount is payable when the matter is set down for trial. The court fees are fully recoverable for a claimant who wins. Once the defendant has filed its defence, the court will normally convene a telephone case-management conference and set out the further steps including expert reports, reply, rejoinder or any other issues. Most maritime cases are heard by the Maritime and Commercial High Court. In the alternative, they must commence in the Danish court of first instance. Appeal from both courts is ordinarily to the High Court of Appeal, though in certain specific circumstances, appeal from the Maritime and Commercial High Court to the Supreme Court is possible. Appeal to the Supreme Court will otherwise require leave to appeal.All appeals entail a full hearing of the case on both facts and law unless the appeal is expressly limited to certain aspects. The time for hearing a Danish court case in the first instance is approximately 18 months, assuming everything runs smoothly.Arbitration proceedings are usually commenced by submitting a request for arbitration to the relevant body and paying the registration fee, if any. Subsequent proceedings will often follow the above pattern subject to the parties’ agreement otherwise.The Danish Arbitration Act is based upon the 1985 UNCITRAL Model Law.A winning party may be awarded costs which are normally awarded according to a scale of tariffs, the value of a claim and the degree of success. Whilst a winning party will usually recover some costs, the cost award will not reflect the full costs to be expected in Danish proceedings.Interlocutory steps such as injunctions are available in appropriate circumstances; however, anti-suit injunctions are neither known nor recognised by the Danish courts.

Danish court proceedings and arbitration are flexible and informal. No power of attorney is required to commence proceedings and evidence is not required to be notarised. The Maritime and Commercial High Court accepts documentation in English and translations do not generally have to be authorised. The costs of Danish court proceedings are manageable when likened to comparable jurisdictions, and judgments are handed down reasonably fast. The Maritime and Commercial High Court is competent throughout the country and has great expertise in maritime matters.Trials are usually conducted in a reasonably short space of time and judgment handed down within four to six weeks of the hearing.

5 Evidence

In case of a serious marine incident, the DMAIB will usually collate evidence, interview the crew and issue a report. The report is public, but the documentation so obtained will not be available to the public or interested parties afterwards. Shipowners may therefore wish to ensure that documentation presented to the DMAIB is provided only in copy, or that a copy is retained for their own purposes.Under the DMSA, in certain instances a party with an individual interest in the accident may request that a maritime enquiry be held in court. If the court allows it, any person involved in or with knowledge of the event can be required to give evidence as a witness before the court, and documentation can be presented. The enquiry will not result in any finding of the court as to liability or other legal issues, but is purely a fact-finding mission.In other cases, the Danish courts may be requested to appoint a court expert to deliver an expert opinion, to hear a witness before trial if there is good reason to do so or, in limited circumstances, to order that evidence, in the form of documents, be presented to the court.Whilst an expert opinion is virtually always allowed, the other steps are at the discretion of the court. None of these steps involve a finding of the court, and the party requesting the steps must bear the costs of the procedure. However, under more recent Danish law, the party which may be deemed to have “lost”, once a joint expert report is rendered, may be required by the court to pay the cost of other parties to that procedure.Expert opinions obtained by a party unilaterally are usually allowed by the court if they have been obtained prior to the commencement of proceedings. After proceedings have commenced, unilateral reports are permitted where the parties agree to each obtain their own opinion, whereas the court will otherwise normally require the parties to agree a joint expert.The rules regarding expert reports after the commencement of trial are in a state of change, and it remains to be seen whether unilateral reports will be common going forward. It is considered, however, that a joint expert report will have greater evidential value than unilateral reports in any event.

Danish law does not, as a point of departure, operate with disclosure. Each party will decide what documents to present to the court. Under the Danish Administration of Justice Act, however, a party may request a court order for the opponent and, in certain circumstances, a third party to deliver up evidence such as documents (including electronic documents), recordings, etc. The party requesting such disclosure must, however, show what is to be proven by the request and why the documents are (only) in the possession of the opposing or third party in question. The scope for “fishing expeditions” is therefore relatively narrow. The consequence of not adhering to a court order for disclosure is that the court may make adverse inferences at its discretion.

Jensen Neugebauer is a firm specialising in insurance, which is an ever-present part of any maritime dispute. Accordingly, marine insurance, and the claims that give rise to claims under such insurance, form an important part of the firm’s practice.

Jensen Neugebauer advises both marine insurers as well as shipping companies, non-vessel-operating common carriers, freight forwarders and other parties involved in maritime contracts and disputes, both in such disputes and in avoiding dispute through risk management and drafting.

The firm’s philosophy is to deliver the right solution to each client, who may have very different needs, and to do so using experienced staff, yet at a manageable cost. Workable, commercial solutions are therefore at the forefront of our efforts where this is called for, whilst dispute resolution in all its forms is applied as and where necessary.

Mads was born in 1971, graduated in 1998 from the University of Copenhagen, and obtained an LL.M. in Maritime Law from the University of Southampton in 1999.

Subsequently he was employed in English law firms as well as in roles connected to the English insurance industry and Lloyd’s.

Mads qualified as a Danish advokat (advocate) in 2004, obtaining rights of audience before the Danish High Court of Appeal in 2005 and before the Danish Supreme Court in 2010. He is particularly active in advocacy as well as in advising clients on maritime law and marine insurance, including cargo claims/defence, collisions, salvage, general average, ship arrest, freight, demurrage and defence, charterparties, freight forwarders, CMR/road carriage, air and rail carriage.

Mads edits the Danish Insurance and Tort Law Reports concerning maritime and transport cases, and has taught International Transport Law as an external lecturer at the University of Copenhagen.

Mads PoulsenJensen NeugebauerFrederiksgade 21, 31256 Copenhagen KDenmark

Tel: +45 33 34 80 10 +45 53 70 80 10 Email: map@jnlaw.dkURL: www.jnlaw.dk

Recent developments of Danish procedural law are the relaxation of rules concerning court-appointed experts and – should it come – Danish accession to the Hague Convention on the Choice of Courts. Denmark is also preparing for the enactment of the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 (HNS Convention) and Rotterdam Rules, should these come into force.

Although Denmark generally has a reservation in its EU participation on legal affairs, through a bilateral agreement, Regulation 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters applies in Denmark. Similarly, Denmark is a party to the Lugano Convention.As a consequence, judgments handed down by courts in either the EU or the EEA are recognised and enforceable in Denmark.Denmark is not, however, a party to Regulation 805/2004 on the European Enforcement of Uncontested Claims.No other judgments are recognised and enforceable in Denmark, although Denmark is preparing to enact the Hague Convention of 30 June 2005 on Choice of Court Agreements. This may therefore apply if the convention comes into force.

Denmark is a party to the 1958 New York Convention of the Recognition and Enforcement of Foreign Arbitration Awards. Foreign arbitration awards of most other countries are therefore recognised and enforceable in Denmark.

Chapter 19

1 Marine Casualty

(i) CollisionCasualties are well enumerated in the Code of Commerce. In the case of a collision, the Code of Commerce clearly states that the damaged vessel may not proceed against the other vessel. In a collision where the responsibilities cannot be established, damages will be equally assumed by the vessels which have caused and suffered damages, whose estimation will be performed by experts. However, in this type of accident and specifically in a collision, one of the main causes is non-compliance with the regulations of the International Convention for the Safety of Life at Sea (SOLAS), which are also requirements for vessels in Dominican territorial waters; the Navy is responsible for their implementation, control and monitoring.With respect to other casualties such as grounding and others of greater magnitude, they are not clearly regulated or defined in the Code of Commerce, thus limiting them and only classifying them in casualty lists as particular or general average.In situations of collision and shipwreck, as well as other major accidents that prevent the ship from sailing or where the damage is applied to at least three-quarters of the ship (CTL), these situations are considered as causes of abandonment to insurers.(ii) PollutionIn the specific case of pollution, the country has modern national legislation expressed in Law No. 64-00 and in other sectorial regulations under its laws. However, it is mainly Law No. 64-00 that sets forth administrative powers, civil and criminal responsibilities, among other relevant aspects. This leaves the Courts to impose penalties for the violation of the Law on environmental issues. These responsibilities include the marine environment.Environmental regulations are complemented by the Constitution of the Republic, the same Law No. 64-00, Criminal Code, Criminal Procedure Code, Civil Code and other environmental laws and International Conventions and treaties to which the Dominican Republic is a party.(iii) Salvage / general averageSalvage is also provided in the Code of Commerce, but in a very profuse way and without a clear definition of it, or its treatment, as the Code is limited; it considers salvage only within general

breakdowns. There are no relationships established between salvage contract parties (i.e. salvors and owners) or circumstances under which assistance is considered as one or the other. Thus, any salvage act at sea is regulated by contracts which the salvors and owners may enter into (like the standard Lloyd’s Open Form contract (LOF)), by the internationally accepted practice or by an administrative act of the competent authority, which is the Navy, in accordance with the authority granted by Law No. 3003 on Police Ports and Coasts of 10 July 1951.In general terms, there is no specific regulation stipulating the usage of a specific salvage contract, so it would be at the discretion of the salvor and owner or insurers, as the case may be, or even the local authority. This means that if an LOF rules the salvage operation, then regulations other than those established in the Dominican Republic and London Salvage Convention of 1989 criteria, including a Special Compensation Protection and Indemnity Clause (SCOPIC), can apply.Other general averages and their treatment as such are clearly defined in Article 400 of the Code of Commerce. This Code does not make reference to the option of whether they can be adjusted in accordance with generally accepted international rules or not; it only states very simply that the goods – which will be priced in the place of cargo – the freight and half of the vessel shall contribute in proportion to the value. The interesting point is that it is not established that the general average should not be compulsorily adjusted or liquidated under Dominican law. However, if the matter is referred to Dominican law, the rule set forth in Article 408 states that there shall be no claim for general average if the value thereof does not exceed one per cent of the total value of the ship and goods, excluding the value of freight.(iv) Wreck removalThe main legal regulation regarding wreck removal is Law No. 3003 of 1951, On Port and Coastal Police. This Act, in its Articles 66 and 67, includes the treatment to be given to the wreck, including certain procedures and measures. Article 66 defines the obligations of the owners and captains to report to the Harbour Master if the vessel is abandoned and not wrecked, and to ensure the delivery of all documents regarding the ship.Article 67 of said Law establishes, among other items, that the removal of vessels in Dominican waters may be carried out by their owners with previous permission from the Harbour Master; he will monitor the operation and determine the conditions that must be in place when these may affect navigable routes. The time allowed to perform the removal may be extended, or the Harbour Master can also run or administratively order the removal or demolition of the wreck with prior notice to the Consul of the country under which the flag of the shipwrecked vessel was registered.

Luis Lucas Rodríguez PérezQ.E.D INTERLEX CONSULTING SRL

Dominican Republic

Dominican RepublicQ.E.D INTERLEX CONSULTING SRL

The authority is the Navy (Armada) through the Harbour Master (Comandancia de Puertos), which has full power to handle any marine casualty within the territorial waters of the Dominican Republic; such powers include all the recommendations and measures they consider necessary and reasonable.

2 Cargo Claims

From a national perspective, cargo claims in the Dominican Republic are regulated by the Commercial Code, the Civil Procedure Code and the Civil Code as national laws. In terms of international law, the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (Hague Rules) apply. Claims are judged by the Commercial Court or Civil Court, essentially according to the nature of the case.

The basic principles in the exercise of claims against the carrier are the first carrier’s liability under the Hague Rules, and the grounds established by the Code of Commerce, among others, are the following:a) the loading costs are the shipper’s, as are the discharge costs

and the costs for reloading the other goods to be transported; and

b) the Master Captain cannot retain the goods aboard his ship for lack of payment of freight, but, at the time of discharging, may demand that the goods are deposited with a third party until the freight is fully paid.

The Civil Code also regulates the obligation of any person (whether natural or juridical) to repair the damage done to another, either by the person, persons under their charge or their property.

The carrier may, under any circumstances, initiate a claim for damages against the shipper for misdeclaration having verified the same, and it is recommended that the Master issues his protest within 24 hours of knowing such misdeclaration. The Master is also entitled to unload the goods on board the ship if they have not been reported or if they have been required to pay higher freight costs in place for that kind of merchandise.One issue to comment on is the lien, in the sense that retention of cargo is regulated by the lien. This means that any lien on cargo shall be there on commercial grounds but not under Dominican Republic law. This commercial action could be considered unlawful if the cargo interests so request to the Court.

A wrecked vessel can be topped in sale by an administrative procedure followed by the Harbour Master. Eventually, and in the case of dispute over ownership of the shipwrecked vessel, the Harbour Master will seek immediate authorisation from a judge for removal or demolition. Although not specified, it can be interpreted that this action occurs when somehow the navigation safety or the environment may be affected.As shown, this regulation refers only to the physical abandonment of the shipwrecked vessel without reference to the abandonment to insurers, which is regulated by the Code of Commerce in Articles 369 to 396.The regulation regarding wreck removal makes it a condition not to use a specific contract; therefore, it would be at the discretion of the owner and the insurers or the local authority regarding the underwriting of some of the international agreements on removal of wrecks.(v) Limitation of liabilityThe Dominican Republic’s law does not contemplate any limitation of liability, leaving its determination to the discretion of the Civil and Commercial Court with competency to hear the case in question; such determination is based on three core principles commonly accepted by most of the laws: (i) repair of the damage; (ii) repair of the moral damage; and (iii) lucrum cessan, perhaps most importantly of all for the purpose of determining the maximum range of responsibility. Civil liability is clearly contained in Articles 1382, 1383 and 1384 of the Civil Code.That is, the limit of liability that is often established or identified in the case of maritime accidents is not regulated by Dominican law and is governed only by the principles already stated.Of course, on claims for damage to cargo, the limit is set by the Hague Rules, to which the Dominican Republic is a party.In cases of environmental pollution specifically, there is no limit of liability determined for the polluter, although it should be noted that Law No. 64-00 on the Environment establishes liability without prejudice to the penalties provided by law; anyone who causes harm to the environment or natural resources will have responsibility for damage that may result, in accordance with this Act and the relevant statutory provisions. It shall also repair the damage materially, at its expense, if this is possible, and pay compensation according to law.The reparation of the damage is to restore the situation prior to the event, where possible, on the compensation of the damage and the damage caused to the environment or natural resources, communities or individuals.To determine the magnitude or the amount of damage incurred, the Court will consider the reports prepared by the technicians and inspectors and formal reports evacuated from the Ministry of Environment and Natural Resources and other state environmental agencies, without prejudice to the evidence and surveys that the trial judge himself required, ex officio or upon request.In addition to administrative and civil responsibility, criminal responsibility is also supervised by Law No. 64 and is subject to random sanction; this regulates the levels of fines applicable to those responsible for lesser damages. It should be understood that the levels of fines should not be confused with limits of liability as they are distinct concepts.(vi) The limitation fundThe limitation funds follow the same concept of liability. However, in some specific cases, the seizure of assets for example, the Civil Procedure Code states in Article 557, 2nd Paragraph that in no event should the unavailability caused by the retentive seizure exceed twice the value of the debt incurred.

It is possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel, since the nature of the credit is the same as recognised by the law for other similar credits over a vessel; however, due to the usual lack of knowledge and experience in the practice of maritime law on the part of judges, the case must be strongly supported and reasoned in order for the judge to be convinced to grant the arrest.

It should be noted that, in this case, and taking into consideration the fact that cargo is not subject to special treatment as ships are, there are two options applicable, both regulated in the Civil Procedure Code.The first is an ex parte action under the legal basis of Article 557 (amended by Law No. 1471 of 1947), which provides that any creditor may, by virtue of title, and under private authentic signature, seize retentively what is held by a third party and the sums and effects belonging to the debtor, or oppose the delivery of these items to their address. In any case, the unavailability caused by the embargo shall exceed twice the value of the debt by which the embargo is originated. Another issue to consider is the fact that it does not establish a defined deadline for resolution of this ex parte action.The second option is to follow the common procedure for seizure of conservatory goods by a resolution of the Court.

Article 215 of the Commercial Code provides that the arrest of a ship can be prevented by providing bail; however, the security to lodge is not clearly stated, and it remains at the discretion of the Court to accept even a Bank Guarantee, a Letter of Undertaking from a P&I, or any other kind of security. It is always understood that such guarantee documents should not contain unreasonable terms and conditions that leave the claimant defenceless, or in some way prejudice and/or reduce the rights of the claimant.

5 Evidence

All steps to preserve or to obtain evidence should be made inside and during the civil procedure; therefore, there is no specific procedure allowing an interested party to take any steps or action to preserve evidence.

3 Passenger Claims

The provisions are the Civil Code and the Code of Civil Procedure, based on the same principles as stated for civil claims. The vessel or other assets under the property of the owner (or demise charterer) can be seized, but only under a civil claim.

There are two options for the arrest of ships, one of a conservatory character and the other of an executable character. Both are protected in the Code of Commerce, Law No. 603 on Naval Mortgages and Act No. 222-92. Law No. 603 on Mortgages protects the right of seizure of the ship and sets a mortgage lien that may be exercised.The procedure for exercising the lien is contained in the Civil Procedure Code as amended by Act No. 845 of 1978, although the Code of Commerce also provides certain basic procedural rules to be followed.The Code of Commerce defines the degree of privilege of the loans that fall on a ship and the reasons that justify them as being required or extinct. However, the Code is silent on defining the types of credits considered maritime liens, which omission is overcome with the aforementioned Convention.From the reading of Article 199 of the Code of Commerce, it is inferred that a vessel may be seized on an “action in personam” by a non-marine claim and an “action in rem” for a maritime claim privileged or established in that law.Its Article 215 sets a limit on lien contrary to the usual legal practice in many countries, and establishes that a ship ready to sail cannot be arrested unless legal action is based on debts incurred for the voyage that it is about to make, unless the debtor posts a bond. The Code of Commerce states that a ship is ready to sail when (and only when) the Captain is in possession of the departure documentation.The limitation set forth in Article 215 is extended to other circumstances by Law No. 222-92, which states that for ships in port being loaded with local goods in transit or contracted cargo, the Dominican Port Authority shall, as a prerequisite, require that the claimant provide at its expense the funds needed for the transfer and transport of cargo to another ship in order that it may continue without delay to its destination and the international maritime trade is not therefore interrupted. That is to say, the judge’s action is subject to an administrative act as a sine qua non prerequisite.A judge will grant conservatory arrest when, in addition to the same requirement that all the formalities have been complied with in the demand for payment, there is urgency and an imminent danger that the goods can somehow disappear and the debtor’s insolvency may occur. The minimum time that it can take for a conservatory arrest of a ship from the request to the judge until it is granted, as long as the process formalities have been completed and all titles and documents prove and justify the existence of a credit, may vary between 30 and 45 days. There may be other circumstances in which the period is reduced.

Cons:1. Maritime legislation is outdated with respect to current trends

and international treaties and Conventions on the subject.2. The lack of knowledge, practice and expertise of the judges

in maritime matters. 3. Apart from legal action against an arrest which, as mentioned

previously, is granted by a judge by means of a resolution, there is a widely used method, without being a Court resolution; it has the same effects and is none other than the “opposition”, which is established by being written ex parte and is notified by an act of bailiff to the presumed debtor and other authorities and persons or entities related to the subject matter. Our view is that this document does not have any legal force or validity although, in reality, it has effect because, in many cases, people who should make a decision to use it will inhibit in detriment of the rights of the presumed debtor; such opposition works like an ex parte retention right.

4. Processes are too long and slow, and sometimes the judge does not have a definite deadline to sentence, specifically on conservatory ship arrests, although the Court may decide a shorter timescale at its sole discretion under Articles 417 and 418 of the Civil Procedure Code, respectively.

The recognition of foreign judgments is protected under the Civil Code and the Civil Procedure Code as amended by Law No. 834-78 which, very briefly, states under Article 122 that a judgment of a foreign Court and acts received by the officers are enforceable in the territory of the Republic in the manner and in the cases provided by law.In this regard, the Code of Private International Law of 1928 also applies, which is known as the Code of Bustamante and to which the Dominican Republic is a party. As basic principles, the following rules must be observed: it has jurisdiction to hear the case and judge according to the rules of this Code; the judge or Court decides that the parties are to be summoned in person or through a legal representative for the judgment; the judgment does not contravene public order or public law of the country in which it was executed, which is enforceable in the state in which it was rendered and authoritatively translated by an official interpreter in order for it to be executed, if there is more than one language used; the document meets the requirements to be considered authentic in the state where appropriate; and the judge or Court must do what is required in state law to satisfy the judgment.The process begins when suing is filed in the Court for obtaining execution (exequatur), and the Court will verify the relevant requirements and start the process in accordance with the provisions of the Civil Procedure Code until the final sentence.

The recognition and enforcement of foreign arbitral awards is governed by Law No. 489-08 on Commercial Arbitration, which expresses appreciation of the execution of foreign awards in the Dominican Republic; such procedure follows the applicable law,

Disclosure obligations in Courts are also ruled on in civil proceedings; the disclosure can be made in two different stages: one at the same time as filing the claim; or as requested by the Court, depending on the stage of the proceedings.

6 Procedure

In civil and arbitration processes, the typical procedure begins with when filing the claim.i. This procedure in Civil or Commercial Courts could

take 14 months (approximately) plus another 14 months (approximately) if there is an appeal. However, in the Commercial Courts, in cases requiring speed, the presiding judge may allow the summons to be made even on a day-to-day basis and on an hourly basis, if movable effects are embargoed; this may also occur if the complainant constitutes a sort of guarantor or justifies their argument. The resolution of the President shall be enforceable, notwithstanding opposition or appeal. (Article 417 of the Civil Procedure Code.)

ii. In maritime cases, when any party is not domiciled, as in matters relating to rigging mouth provisions, baggage, careening, and repair of ships ready for their departure, and other urgent matters and provisional citations made on a daily or hourly basis, the procedure can be carried out without prior notification, and the case will be susceptible to resolution executable immediately. (Article 418 of the Civil Procedure Code.)

The arbitration procedure in the Dominican Republic is ruled by Law No. 489-08 enacted on 7 October 2008. All arbitration procedures, except those that may be agreed ad hoc by the parties involved, are settled by the Centre for Alternative Dispute Resolution (Centro de Resolución Alternativa de Controversias – CRC) under the umbrella of the Chamber of Commerce and Production of Santo Domingo. The average time for the granting of an award is about five to six months.

Pros: 1. The Dominican Republic is a State of Law.2. The judicial system is fully independent of the Government. 3. For the first time in the Dominican Republic, a Master’s

Degree course in Maritime Law has been initiated in order to improve the knowledge of maritime law knowledge among law practitioners and other people connected to the shipping sector.

4. The relative increase of interest on the part of some Government bodies connected to the maritime sector in placing the country in the international industry, as should have been the case for a long time.

The firm is essentially a consulting firm that was incorporated in Dominican Republic in 2012; however, its team enjoys vast professional experience in the services provided. Its goal is to render a wide range of specialised and tailor-made services according to the needs of the clients, mainly of a legal nature as well as commercial, essentially in the field of the maritime industry in general, insurance and international commerce, without dismissing other fields of law, trade and business. The firm is an effective member of: ALEXIA (an international network of maritime lawyers); the Instituto Iberoamericano de Derecho Marítimo – IIDM (Iberoamerican Institute of Maritime Law); and Global Law Experts.

The staff members comprise four lawyers, plus another two external associated lawyers and seven associated experts in different areas of the marine industry. One of the lawyers is currently based in the USA.

The firm has a wide network of other service providers, which support its work along with correspondents in other countries as a useful complement to an efficient services package for the benefit of the clients’ interests.

Education: Law Degree, University of Havana. Mr. Rodríguez’s studies focused on Maritime, Port, Commercial Law and International Finance. He graduated in Mediation of Commercial Disputes at the Cuban Court of Commercial Arbitration and the Centre for Conflict Education and Research, Carleton University, Ottawa, Canada. He completed his studies on the Training and Familiarization Course for ISPS Code, Panama Maritime Training Services Inc. He was a trainee Solicitor at the distinguished Richards Butler Law Firm (now Reed Smith), London.

Position: Founding and Senior Partner of the firm Q.E.D INTERLEX CONSULTING SRL and Of Counsel to the international law firm Russin Vecchi & Heredia Bonetti (www.rvhb.com).

Member of the Instituto Iberoamericano de Derecho Marítimo – IIDM (Ibeoramerican Institute of Maritime Law).

Areas of Practice: Maritime Law (including, and not limited to, charterparties, admiralty, ship finance, marine insurance, marine salvage, marine construction and dredging, and port terminals). He also deals with international commerce, litigation and ADR.

Professional Expertise: Practising Lawyer since 1983. Professor and speaker on Maritime Law at various institutions. Has attended as a delegate several national and international seminars, including those of the International Salvage Union.

Luis Lucas Rodríguez PérezQ.E.D INTERLEX CONSULTING SRLGustavo Mejía Ricart, No. 126Condominio Smeter, Suite 301-BPiantini, C.P. 10127Santo Domingo, D.N.Dominican Republic

Tel: +1 809 531 8913Mob: +1 809 605 9010Email: lucas@interlexcons.comURL: www.interlexcons.com

Commerce, although there are, without a doubt, certain aspects of the non-abolished regulations that will be amended.To date, no clear moment is foreseen when this will finally be passed and the expected law enacted.

treaties, agreements or Conventions in force in the country; also, in that order, the Dominican state undertakes to recognise the authority of judgments and arbitration while granting its implementation in accordance with the rules of procedure.Furthermore, Resolution No. 178-01 of the National Congress approved the accession of the Dominican Republic to the New York Convention of 1958.According to Law No. 490-08, it may refuse to recognise the award for various reasons, which briefly include the following: disability of a party; invalidity of the award under (or by virtue of) the law, to which the parties have adhered, of the country that issued the award; failure of due process; or that the award rests with controversy, not the arbitration agreement, or exceeds the terms of the arbitration agreement. According to the law of the Dominican Republic, the object of the dispute is not capable of settlement by arbitration, and the recognition or enforcement of the award would be contrary to the public policy of the Dominican Republic.The execution of a foreign award will be brought before and resolved by the competent Courts of Justice and, among other requirements, one must submit the original award and the arbitration agreement or the contract that contains it.

A project of law proposing that the Dominican Maritime Administration bring the law of the Dominican Republic into line with the new international regulations and trends has been submitted to the relevant committee of the National Congress. This project of law essentially focuses on protecting the activities of the Dominican Maritime Administration, ports, infringements and administrative sanctions in the area of national shipping, port seafarers, vessel registration and other aspects of national interest. The project being considered by the National Congress does not replace many other laws in maritime matters including the Code of

Chapter 20

1 Marine Casualty

(i) CollisionFrance is a party to the Convention for the Unification of Certain Rules of Law with Respect to Collisions between Vessels dated 23rd September 1910 (1910 Collision Convention), which entered into force in France on 1st March 1913. Most of its provisions were incorporated in French law – now articles L.5131-1 to L.5131-7 of the Code of Transport.As a general principle, the 1910 Collision Convention applies when all the vessels involved sail under the flag of contracting parties.It is applied in combination with the two International Conventions on Civil Jurisdiction in Matters of Collision and on Penal Jurisdiction in Matters of Collision dated 10th May 1952.France also applies the International Regulations for Preventing Collisions at Sea 1972 (COLREGs), which entered into force on 15th July 1977. The COLREGs are used to assess the behaviour of the parties involved in a collision. These are supplemented, where applicable, by relevant local regulations (relating to traffic in ports, inland navigation, yachting, etc.).Collisions can also give rise to criminal liability under articles L.5242-4 and L.5263-1 of the Code of Transport, together with article 223-1 of the Penal Code.(ii) PollutionCivil liabilityThe International Convention on Civil Liability for Oil Pollution Damage dated 29th November 1969 (CLC), as amended by the 1992 Protocol and the 1992 Fund Convention Protocol, applies in France.The CLC governs the liability of shipowners for oil pollution damage. It lays down the principle of strict liability and creates a system of compulsory liability insurance. The shipowner is liable for damages even if no fault is established.The main objectives of the Fund Convention are to:■ Establish an International Oil Pollution Compensation Fund

to provide compensation for pollution damage to the extent that the protection afforded by the Civil Liability Convention is inadequate.

■ Give relief to owners of oil tankers with respect to the additional financial burden imposed on them by the Civil Liability Convention.

The Bunker Pollution Convention was signed in 2001 and entered into force on 21st November 2008 (Bunker Convention). This Convention is based on the CLC and applies to damage caused by spills of bunker oil carried as fuel in ships’ tanks. French law also contains specific provisions on the liability of shipowners for oil pollution damage (articles L.5122-25 to L.5122-30 of the Code of Transport) that expressly refer to the CLC.The French Environment Law also introduced a “polluter pays” principle which notably applies in case of environmental damages caused by ships (articles L.160-1 et seq. of the Environment Code).Criminal liabilityCriminal liability is governed by the following provisions:■ International Convention for the Prevention of Pollution from

Ships (MARPOL 73/78).■ International Convention for the Safety of Life at Sea

(SOLAS 1974).■ EU Directive 2008/99/EC.■ EU Directive 2005/35/EC, as amended by EU Directive

2009/123/EC. ■ French Code of Transport and Environmental Code.Any discharge of oil or oil mixtures, whether voluntary or involuntary, can lead to criminal liability. The master of the vessel, the owner or operator of the vessel and/or any person who has a power of control or management in the operation of the vessel is deemed to be responsible.(iii) Salvage / general averageSalvageThe International Convention on Salvage dated 28th April 1989 came into force in France on 20th December 2002.The 1989 Convention has been incorporated into the Code of Transport (articles L.5132-1 to L.5132-11).Salvage does not have to be agreed in writing. When a salvage contract is signed (in practice, through a standard form such as Lloyd’s Open Form or the French Formule Villeneau), it is still deemed to be somehow of a legal nature, since a number of obligations are set by law.There are situations where non-contractual salvage can or must be obtained. When a vessel is in serious peril and another vessel is rescuing it, the need for salvage is obvious and the parties do not even discuss contractual terms.

LERINS & BCW Rémi Racine

Laurent GarrabosFrance

FranceLERINS & BCW

(i) CROSSRegional Operational Monitoring and Rescue Centres (CROSS) are public authorities located on the French coast (six centres along the French coast, excluding overseas territories) in charge of salvage and surveillance of ships in French territorial waters and the French Exclusive Economic Zone (EEZ). CROSS are under the authority of the Ministry of Ecology through the Directorate for Maritime Affairs and the Maritime Prefect. CROSS are part of the international network of Maritime Rescue Coordination Centres instituted by the Convention of Hamburg (1979).The main missions of CROSS are the following:■ Search and rescue at sea: CROSS carry out a continuous radio

and telephone watch to answer incoming emergency alerts and supervise and coordinate search and rescue operations at sea, including the handling of major maritime accidents.

■ Traffic monitoring: mainly focused on the English Channel.■ Pollution watch: collecting information on pollution at sea.

CROSS analyse data and transmit it to the French authorities.(ii) BEAmerThe French Marine Casualties Investigation Board (BEAmer) was created in 1997 to investigate marine casualties and prevent similar accidents occurring in the future. BEAmer is a national board managed by the General Inspector for Maritime Affairs.The action of the BEAmer is governed by international, European and national rules and notably:■ International law: the Code for the Investigation of Marine

Casualties and Accidents laid out in Resolution MSC 255 (84) on 16th May 2008 and introduced by decree n°2010-1577 dated 16th December 2010.

■ European law: EU Directive 2009/18/EC dated 23rd April 2009 establishing the fundamental principles governing the investigation of accidents in the maritime transport sector; and EU Regulation n°1286/2011 adopting a common methodology for investigating marine casualties and incidents.

■ French law: Code of Transport, especially articles L.1621-1 to L.1622-2 and R.1621-1 to R.1621-38 relating to technical investigations after marine casualties and terrestrial accidents or incidents.

BEAmer investigations apply:■ to French-registered vessels wherever the casualty occurs; ■ to vessels flying the flags of other states when the marine

casualty or incident occurs in French territorial waters; or■ when the casualty, regardless of where it happened, has led to

the death or serious injury of French nationals, or has caused or threatened to cause serious harm to the French territory, the environment, and installations or structures over which France has jurisdiction.

The aim of its investigations is to collect and analyse relevant information, to determine the circumstances and possible causes and, if appropriate, to make recommendations to improve maritime safety and pollution prevention.

2 Cargo Claims

France is a signatory to the International Convention for the

Salvage can even be imposed on an endangered vessel if the refusal of assistance is unreasonable. The salvage regime shall then fully apply, including the right to compensation.Where it is appropriate to apply the salvage regime, it is strictly exclusive of any other legal provisions or tort liability.The salvage contract or the agreed salvage indemnity can always be set aside or revised in court, in consideration of the service actually rendered (article L.5132-6 of the Code of Transport).General averageArticles L.5133-1 to L.5133-19 of the Code of Transport, together with the decree of 19th January 1968, govern general average claims.However, this regime is entirely optional, so that the parties are at liberty to put aside national rules in favour of the York-Antwerp Rules (YAR) or any other contractual provisions.In practice, most, if not all, contracts of carriage refer to the YAR.(iv) Wreck removalThe Nairobi International Convention on the Removal of Wrecks entered into force on 14th April 2015. It was published by French decree n°2016-615 dated 18th May 2016.Under this Convention, shipowners are financially responsible for the removal of hazardous wrecks, making insurance, or some other form of financial security, compulsory. The Convention allows a state party to remove a wreck which constitutes a hazard to navigation or the environment and to take direct action against insurers.Articles L.5142-1 et seq. of the Code of Transport also provide for specific rules in relation to the ownership, sale and disposal of wrecks.(v) Limitation of liabilityThe international regime for the limitation of liability of shipowners is set by the Convention on Limitation of Liability for Maritime Claims dated 19th November 1976 (LLMC), as amended by the 1996 Protocol which came into force in France on 23rd July 2007 (Protocol).This regime applies to contractual as well as tort liability of shipowners.The provisions of the LLMC have been incorporated into French law (articles L.5121-3 to L.5121-11 of the Code of Transport).As for the calculation of such a limitation, article L.5121-5 refers to the provisions of the LLMC, as amended.Article L.5121-2 of the Code of Transport provides that shipowners, charterers, disponent owners, managing owners, masters of the vessel, crew members and other maritime or land agents have the right to limit liability.It differs from the LLMC in that there is no notion under French law of in rem action, and therefore no liability of the vessel, and it does not incorporate provisions for the limitation of liability of the salvor and the insurers.The limitation can be broken when it is proved that loss was caused by the personal act or omission of a party entitled to limit, ‘committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result’ (article 4 of the LLMC and article L.5121-3 of the Code of Transport).(vi) The limitation fundThe principles that govern the limitation fund are also defined by the LLMC. Article 11.2 of the LLMC provides that any person entitled to limit may set up a limitation fund either by depositing the sum, or by producing a bank or protection and indemnity (P&I) guarantee.Article L.5121-6 of the Code of Transport also provides that the responsible entity may set up a fund, without any admission of liability, in order to secure the payment of the limitations of liability that might be applicable.

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The carrier can claim damages against the shipper for any loss resulting from an inaccuracy concerning the description of the goods on the bill of lading (article 4.5 of the Hague-Visby Rules / article L.5422-4 of the Code of Transport).

3 Passenger Claims

The carriage of passengers by sea is governed under French law by EU Regulation n°392/2009 of 23rd April 2009 on the liability of carriers of passengers by sea in the event of accidents. This Regulation incorporates the provisions of the 1974 Athens Convention as amended by the 2002 Protocol on the carriage of passengers and their luggage by sea as well as the guidelines from the International Maritime Organization.This Regulation applies to all ships flying the flag of an EU Member State, travelling to or from a European port, or under a European contract of carriage (i.e. a contract between the carrier and its passengers defining rights, duties and liabilities).The carrier is strictly liable in case of death of or personal injury to a passenger caused by a shipping incident, unless the incident is the result of an act of war, hostilities, civil war, insurrection or force majeure or was wholly caused by an act or omission done by a third party with the intent to cause the incident.The carrier is also liable in case of loss of or damage to luggage other than cabin luggage unless the incident which caused the loss occurred without the fault or neglect of the carrier.

The International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships dated 10th May 1952 entered into force in France on 25th November 1957 (1952 Arrest Convention). The International Convention on the Arrest of Ships, adopted by the International Maritime Organization (IMO) in 1999 to replace the above-mentioned Convention, has not entered into force yet – and was not signed by France.This international regime is supplemented by French law (articles L.5114-20 to L.5114-22 of the Code of Transport) which applies to the arrest of ships which do not fly the flag of a contracting state, and to claims by a French claimant regarding a French ship in a French port.Under the 1952 Arrest Convention, alleged maritime claims allowing for the arrest of a ship are exhaustively listed (article 1). Under French law, it is possible to arrest a ship, whatever kind of title/relationship the claim is based upon. The principal requirement is that one holds a good prima facie claim against the owner of the ship. If the ship does not fly the flag of a contracting state, she may be arrested either pursuant to the provisions of the French law or pursuant to the 1952 Arrest Convention (article 8.2).

Unification of Certain Rules of Law relating to Bills of Lading of Brussels dated 25th August 1924 as modified by the 1968 and 1979 Protocols (Hague-Visby Rules).France has ratified neither the Hamburg nor the Rotterdam Rules.French courts have always considered that the Hague-Visby Rules apply to all types of bills of lading (including straight bills of lading) and to all types of documents materialising a contract of carriage of goods by sea (sea waybills, etc.).French courts apply the Hague-Visby Rules to the carriage of goods between two different states when a bill of lading is issued in France or the vessel leaves from a French port (article 10).The Hague-Visby Rules also apply when France is the country of destination and the bill of lading was issued in, or the vessel departed from, a country that is a signatory to the Hague Rules only.When France is the country of destination, but the country where the bill of lading was issued or the vessel departed from is not a signatory to any cargo convention, then the applicable law will be determined by French courts in accordance with the criteria set forth by the Rome Convention or Rome I.Domestic carriage of goods is governed by articles L.5121-1 et seq., articles L.5422-1 et seq. and article L.5423-1 of the Code of Transport.

The carrier is strictly liable for any damage which occurs during the voyage, i.e.:■ From the beginning of the loading up to the end of the

discharging operations, under the Hague-Visby Rules.■ From the taking-over of the goods up to their delivery (both

from a legal and physical standpoint) under French law.The parties to the contract of carriage are entitled to sue the carrier for any proven loss or damage arising out of the carrier’s default.In the absence of a bill of lading, such parties are those to the contract of carriage per se, i.e., the shipper and the consignee.In the event a bill of lading was issued, the rightful bearer thereof is, as a matter of principle, the only person entitled to sue for breach of contract.However, it has long been established that the actual consignee (notified) of the cargo is also entitled to commence proceedings against the carrier, provided he can demonstrate by any means that he is indeed the final consignee. As for the shipper, who is also a party to the contract of carriage, case law has gradually granted him a right to sue the carrier. It is now certain that the shipper is entitled to sue, provided that he can demonstrate that he suffered a loss or damage in relation to the carrier’s alleged default.Rights under the contract of carriage may also be transferred to a third party. The carrier’s liability may be excluded in the event of listed “excepted perils” (17 excepted perils listed in article 4.2 of the Hague-Visby Rules; nine listed by article L.5422-12 of the Code of Transport) related to:■ the ship (e.g. act, neglect, or default of the master, mariner,

pilot or the servants of the carrier in the navigation or in the management of the ship);

■ external events (e.g. act of God, arrest or government measures); or

■ the cargo itself (e.g. loss or damage arising from inherent defect, quality or vice of the goods; insufficiency of packing).

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The requirement of “sufficient security” to be paid by the guarantor will be appreciated by the courts. The criterion is the respect of the interests of each party. Thus, in principle, any kind of safe security which is equivalent to the guarantee offered by the arrest of the ship might be accepted. A recognised bank or insurance guarantee, or P&I club letter of undertaking, will be accepted. It is also possible for the debtor to escrow a sufficient amount to secure his debt.

5 Evidence

Since the French procedural system does not provide for the hearing of witnesses of facts and experts, the appointment of a court surveyor is the main, if not the only, way to enlighten the court on the causes and circumstances of a casualty, the implications thereof, the extent of the damages thereby caused and, in certain cases, to provide a technical solution and mitigate losses. Provided that no action has been commenced on the merits, an application for the appointment of a court surveyor should normally be made inter partes (“procédure de référé”). In the case of an emergency, a party may seek to have the court surveyor appointed by means of an ex parte application (“requête”). If substantive proceedings on the merits have already been commenced, the appointment of a court survey can be requested from and ordered by the court in charge of the merits of the case.The court-appointed surveyor will usually call upon the parties to the survey to attend a number of meetings, whose purpose is to collect relevant information and documents and to hear any material witness of fact.In the same manner as for the appointment of a court surveyor, a party may also seek from the court an order authorising the taking of conservative measures or ordering a party not to dispose of specific and identified documents likely to be in its possession.

Unlike proceedings before English courts, there is no equivalent of discovery of documents before the French courts. Therefore, unless otherwise expressly ordered by the court (in exceptional cases), a party is not required to disclose documents which may adversely affect its case or support the other side’s case. Each party is only required to provide documents to which specific reference is made in its pleadings and/or which may be necessary to support its arguments. (An application may be made to the court to order the disclosure of specific and identified documents, but the court will not authorise fishing expeditions and such orders are only given in exceptional cases.)

The applicant must file a request and demonstrate that he has a maritime claim as listed by the 1952 Arrest Convention or (i) he has a good prima facie claim, and (ii) recovery of his claim is in jeopardy (an allegation that can be substantiated in every manner) (article L.511-1 CPCE).The judge to whom the application is submitted has jurisdiction over the defence claim to lift the arrest order (article R.512-2 CPCE).

Yes, it is possible under French law for a bunker supplier to arrest a vessel for such claim. The arrest is also possible on the grounds of the 1952 Arrest Convention if the vessel concerned by the arrest is the one to which the bunker has been supplied.

(i) French law provides that the carrier and/or the owner hold a lien on the cargo for the payment of freight (articles L.5422-8, L.5422-9 and L.5423-3 of the Code of Transport).

The carrier is entitled to lien the cargo within a period of 15 days as from delivery, if the property of the cargo has not been transferred to a third party.

In the event the owner does not receive payment of the freight at the time of discharge, he is entitled to have the cargo retained in the hands of a third party, and have it sold, except if the charterer can provide a guarantee. Such retention of the cargo can only be allowed by an ex parte court order, while the sale of the goods must be granted by an interlocutory judgment.

This lien is for the guarantee of the payment of freight, deadfreight and demurrage only. It does not guarantee salvage or general average.

Such a lien extends to all cargo on board but only to the extent of the amount of freight still owed for transporting it. Therefore the owner can exercise a lien on all goods loaded on board, whether the property of the charterer or of any other person (receiver or otherwise), but only insofar as that person owes the said amount in performance of the contract of carriage.

(ii) As regards further security options, two principles govern the obtaining of security under French law: (i) it is possible to claim against all of the debtor’s assets, whatever the claim – a consequence of the principle of ‘patrimonial unity’ (article 2284 Civil Code); and (ii) any claim gives rise to a right to seek any sort of conservatory security, as these are not prioritised.

The applicant must file an ex parte request and demonstrate that: (i) he has a good prima facie claim; and (ii) recovery of his claim is in jeopardy (an allegation that can be substantiated in every manner) (article L.511-1 CPCE).

The creditor can thus obtain: a freezing order on the defendant’s bank accounts; a conservatory attachment of the defendant’s titles, claims and assets; a conservatory mortgage on their real estate properties; etc.

A letter of guarantee from a protection and indemnity club will be accepted by the French courts. In practice, this is the most commonly used guarantee.

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EU Regulation n°1215/2012 dated 12th December 2012 governs recognition and enforcement of judgments from EU countries.Enforcement of judgments from non-European countries requires a more complex procedure (a request for exequatur must be introduced by way of a writ of summons).

France is a party to the 1958 New York Convention. As such, the recognition of awards from other contracting countries is relatively straightforward.The recognition and enforcement of arbitral awards are subject to the French civil procedure rules which require filing an ex parte request for exequatur before the relevant civil court.The civil court with which the application is filed will only perform a top-level examination of the award. The unsuccessful party is always entitled to challenge the exequatur order that has been rendered and request inter partes proceedings in relation to the recognition and enforcement of the arbitral award.

French contract law has been substantially modified by ordinance (“ordonnance”) n°2016-131 dated 11th February 2016. The aim of this ordinance is the modernisation and simplification of French contract law.The new rules codify decades of case law in order to increase legal certainty. One of their main purposes is to reduce a significant contractual imbalance between the parties. The ordinance covers a wide scope of French contract law and notably sets new rules regarding:■ Pre-contractual relations.■ Economic and contractual imbalance.■ Interpretation and cancellation of contracts.■ Hardship and force majeure.■ Transfer of contracts, rights and obligations.■ Remedies for non-performance.This ordinance became effective on 1st October 2016. As a matter of principle, contracts signed before this date remain subject to the previous regime.It is worth noting that by a decision dated 11th December 2017, the French Tribunal des Conflits (a court that has been established to settle conflicts of jurisdiction between judicial and administrative courts), has held that any claim that the State may have on a private person for the expenses relating to an intervention at sea carried out as part of the administrative police mission is inherently an administrative claim. Therefore, only the administrative courts shall have jurisdiction to deal with such a claim.

6 Procedure

(i) There are no specialised maritime courts in France. Most maritime disputes will be considered before commercial courts, and occasionally before a civil court, in cases where one of the parties is not a commercial entity or a business person, or in certain matters relating to arrests or enforcement of judgments.

A commercial action is initiated by the service of a writ, made by a bailiff, to the defendant. If the defendant is a European Union resident, the rules of service within the European Union apply as set out by EU Regulation n°1393/2007 dated 13th November 2007. Otherwise, service will have to be done through the intermediary of the prosecutor of the civil court having jurisdiction in the place where the proceedings have been commenced.

A commercial action involves a series of procedural hearings, at which the matter will be called before the court which will set down the deadlines for the parties to comply with their procedural obligations (service of pleadings, supporting documents, etc.).

Once it appears that the matter may be ready for trial, the date of the final hearing, at which the matter will be heard, shall be set.

First instance proceedings typically take between 12 and 18 months (this varies according to the complexity of the case and/or the number of parties involved).

An appeal can always be brought by any party at first instance on questions of law and/or facts.

(ii) Arbitration is a common method of dispute resolution in maritime matters (as many maritime contracts subject to French law contain an arbitration clause).

The Chambre Arbitrale Maritime de Paris is the French maritime arbitral institution which is specialised in handling maritime matters. It has a list of maritime arbitrators and issues its own rules that are tailored to deal with mediation proceedings, small and fast arbitration claims and longer cases.

Mediation and ADR can be envisaged before mediators appointed by the parties or before specialised bodies. ADR is now encouraged by the French judicial system.

Court costs are very limited (almost close to zero) and urgent matters can be dealt with rapidly through interlocutory proceedings.A formal power of attorney is not required for a lawyer to be able to act.Claim documents and their translation do not require notarisation. Lawyers’ fees are not automatically recoverable from the losing party. The court will award, at its absolute discretion, a sum for the cost incurred in pursuing or defending an action that would otherwise be irrecoverable. The amounts awarded are seldom representative of the costs actually incurred.Judges of commercial courts (at first instance) are lay magistrates, chosen from the local business community, whose knowledge of complex legal or maritime issues may therefore vary. However, in traditional “maritime” jurisdictions, commercial judges have real practical experience of maritime matters.

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Created by the merger of BCW & Associés and Lerins Jobard Chemla Avocats in 2017, LERINS & BCW gathers some 40 lawyers, including 16 partners, with over 15 years’ experience advising French and foreign companies in the main areas of business law.

The lawyers at LERINS & BCW benefit from a wide variety of professional backgrounds, from big Anglo-Saxon firms and niche boutique French firms to in-house legal departments. As such, they pride themselves on their entrepreneurial values and provide services in a wide range of sectors through both litigation and counsel, with particular expertise in sectors such as transport, commodities, healthcare and industry.

LERINS & BCW has recognised and in depth-experience in handling international trade and transport disputes, in France and abroad.

Rémi Racine is an Associate at LERINS & BCW.

He deals with commodities, transport (shipping, air and land transport) and business litigation.

Rémi joined the firm as an Associate in 2017 and qualified as an Avocat of the Paris Bar.

Laurent Garrabos is a Partner at LERINS & BCW. He joined the firm (previously BCW & Associés) as a Partner in 2007 after having practised at different international law firms in Paris and acted as General Counsel for a French trading company.

Laurent specialises in international trade, shipping, transport and insurance. He advises traders, carriers, freight forwarders, brokers and insurance companies and industrial companies generally with particular expertise in commodity, charterparty, bill of lading and express transport disputes. Laurent handles disputes throughout France before French courts, as well as disputes in the Chambre Arbitrale Maritime de Paris (CAMP), Chambre Arbitrale Internationale de Paris (CAIP) and the International Chamber of Commerce (ICC) Arbitration Court. He also sits as an arbitrator with the CAIP.

Laurent qualified as an Avocat of the Paris Bar in 1992 and as an Attorney of the Louisiana Bar in 1994. He graduated from the University of Paris II-Assas and from Tulane University, New Orleans, Louisiana (LL.M. in Admiralty, 1993).

Rémi RacineLERINS & BCW25, rue du Général Foy75008 ParisFrance

Tel: +33 1 42 84 84 70Email: rracine@lerinsbcw.com URL: www.lerinsbcw.com

Laurent GarrabosLERINS & BCW25, rue du Général Foy75008 ParisFrance

Tel: +33 1 42 84 84 70Email: lgarrabos@lerinsbcw.com URL: www.lerinsbcw.com

Chapter 21

1 Marine Casualty

(i) CollisionGermany is a party to the Collision Convention 1910 (Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels of 23 September 1910) and partly incorporated its provisions in sec. 570 to 573 of the German Commercial Code (Handelsgesetzbuch – HGB). German courts will apply German law if (i) the collision took place in German territorial waters or (ii) the Parties made a choice of law after the collision (art. 40 of the Introductory Act of the German Civil Code (EGBGB)), or (iii) will apply the Collision Convention directly if all ships involved fly flags of contracting states (art. 12 of the Collision Convention).Sec. 570 to 573 HGB are based on the Collision Convention 1910, however, Germany did not incorporate the convention into the HGB. German courts tend to apply a prima facie evidence or rules of experience (for instance, if an anchored vessel breaks loose, there is prima facie evidence that it was insufficiently secured) that comes close to a presumption of fault which should be excluded by art. 6 para 2 of the Collision Convention 1910. (ii) PollutionGermany is a party to the relevant international conventions such as MARPOL, the Bunker Oil Convention (International Convention on Civil Liability for Bunker Oil Pollution Damage), the CLC (Convention on Civil Liability for Oil Pollution Damage) and the Ballast Water Convention (International Convention for the Control and Management of Ship’s Ballast Water and Sediments) and the relevant provisions of MARPOL. Under the Bunker Oil Convention, it is obligatory to have the Blue Card on board. Violation of environmental provisions may result in civil, criminal and administrative liability. Criminal liability is regulated by sec. 324 Criminal Code and imposes up to five years’ imprisonment for intentional pollution and up to three years for negligent pollution of water. Under civil and administrative law, the clean-up costs can be claimed from the shipowner and/or master.For claims under the Bunker Oil Convention, sec. 611 HGB clarifies that limitation of liability under the Limitation Convention (see below) applies.

(iii) Salvage / general averageGermany incorporated the Salvage Convention (International Convention on Salvage, 1989) into sec. 574 et seq. HGB. These provisions are of dispositive nature and only apply when no agreement is in place. Given that salvage is usually agreed on the basis of Lloyds Open Form, which provides for arbitration in London, there are but very few older court decisions on salvage in Germany. A dispute about salvage will usually concern the remuneration. German law incorporated the criteria of art. 13 Salvage Convention into sec. 577 HGB, so a German court seized with such a dispute will consider criteria such as the salved value of the vessel and other property, skill and effort of the salvors, measure of success obtained by the salvor, etc. as laid down in art. 13 Salvage Convention. The Special Compensation for preventing environmental damage, as provided for in art. 14 Salvage Convention, has been incorporated into sec. 578 HGB, so a salvor that prevents environmental damage is entitled to compensation even if the salvage fails. In sec. 588 et seq. HGB, German law contains basic rules regarding General Average (GA) which would apply if the York-Antwerp Rules (YAR) are not agreed upon. GA adjustment is done by specially appointed average adjusters. The GA statement can be confirmed by the local court at the place the GA statement was drawn and – with the confirmation of the court – becomes an enforceable title against all participants of the GA proceedings. Participants to the GA who do not agree with the GA statement may file an objection, which is then decided by the competent court at the place the GA statement was made. Once all objections are decided by the court, the GA statement is confirmed and may be enforced against all participants to the GA.(iv) Wreck removalGermany is a party to the Nairobi Convention (Nairobi International Convention on the Removal of Wrecks), but did not opt for the choice offered by art. 3 para 2 to extend the application of the Nairobi Convention to territorial waters. So German courts will apply the Nairobi Convention to wrecks in the exclusive economic zone, and national German law to wrecks within territorial waters.In both cases, the authorities have the right to order the removal of the wreck if it poses a danger to shipping or the environment. Authorities have the right to demand removal of the wreck or to effect the removal themselves. If the authorities choose to organise the removal, they may do so by instructing private salvage firms and they may demand a security for the expected costs from the owner.Liability for wreck removal may be limited according to sec. 612 HGB by establishing a separate limitation fund.

Henrike Koch

Dr. Axel Boës

KOCH DUKEN BOËS

Germany

GermanyKOCH DUKEN BOËS

Visby Rules will apply, unless the B/L was issued in a country that is only a contracting state of the Hague Rules, in which case, the Hague Rules will apply. Germany has not ratified the Rotterdam Rules and has so far no intention to ratify them.

Germany follows the generally accepted principles of the Hague-Visby Rules, that is, the carrier is liable for losses that occur between loading and unloading of the cargo. The carrier is not liable if the loss is attributable to errors of the shipper (such as packaging or misdeclaration). Since the latest reform of maritime law in 2013, errors in navigation and fire on board are no longer defences of the carrier, unless they are explicitly agreed upon in the contract of carriage or the B/L.Another particularity of German law is the liability of the actual carrier (sec. 509 HGB): If the contract was subcontracted (which is always the case if the B/L was issued by a NVOCC), under German law there is a direct claim against the actual carrier. There is still a lot of dispute about the question of whether this provision applies in case the actual carrier is not a German entity. It is argued that this provision applies for all contracts where the place of delivery is in Germany, as this is the place where the damage occurs. In that case, the consignee could claim directly against the actual carrier, although he has no contractual relation with that party.Limitation of the carrier is always limited to 2 SDR/KG or 666.67 SDR per unit. There are a few decisions in which German courts allowed for a breach of this limitation in cases of gross negligence. The particularity here is that according to art. IV 5 (e) of the Hague-Visby Rules, only intent or recklessness of the carrier (and not of his employees) will deprive the carrier of the possibility to limit liability. Under German law, there is a concept of organisational errors, which allows certain errors to be attributed to the top management of the carrier and thus provides for means to brake the limitation of the Hague-Visby Rules.

The shipper is liable towards the carrier for damages resulting from misdeclaration of cargo, especially with regard to weight and hazardous materials. In addition, the shipper is liable for providing necessary documentation for customs clearing. If the shipper fails to give correct information, he is liable for damages.

3 Passenger Claims

Germany is a party to the Athens Convention (Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974 as amended by the Protocol of 2002), and EU Regulation 392/2009 (Athens Regulation) also applies. Under the Athens Convention, there is strict liability (with a limited number of exonerations) for shipping incidents for losses caused by personal injury or loss of life up to 250,000 SDR, and unlimited liability for losses resulting from personal injury, loss of life or loss of cabin luggage with a presumption of fault on the carrier. A shipping incident is defined by the convention as “shipwreck, capsizing, collision or stranding

(v) Limitation of liabilityGermany is a party to the 1996 Protocol of the Limitation Convention (Convention on Limitation of Liability for Maritime Claims 1976), so the tacit amendment from 2012 came into effect in Germany on 8 June 2015, i.e. the limitation amounts have been increased to a minimum of 1.51/3.02 million SDR. The Limitation Convention has been incorporated into sec. 611 et seq. HGB by reference, that is, all amendments to the 1996 protocol come into effect without any transition necessary. As stated above, claims under the Bunker Convention are subject to the limitation fund created under art. 6 of the Limitation Convention, whereas claims for wreck removal are subject to a separate limitation fund.(vi) The limitation fundThe limitation fund can be established by way of cash deposit, bank guarantee or guarantee by a recognised insurer. A letter of undertaking from a major P&I club is usually acceptable.Limitation may also be invoked as a defence in court proceedings without establishing a limitation fund (cf. art. 10 of the Limitation Convention). If limitation is invoked as a defence, the claimant who has a claim exceeding the limitation amount may only obtain a judgment not exceeding that amount. If the defendant can prove other claims, the judgment will be limited to a quota of the limitation amount. If the defendant is unable to prove other claims, he may apply for a judgment which may only be enforced against the limitation fund, in which case the defendant will have to establish the fund.

There are two different aspects that need to be distinguished: (i) the prevention of further damage: In this respect (especially if it comes to pollution/environmental protection), the authorities have vast powers of ordering certain (even very costly) measures to prevent further damage to the environment; and (ii) investigations: There are numerous authorities who investigate casualties; in the first place, the Federal Bureau of Maritime Casualty Investigation (Bundesstelle für Seeunfalluntersuchungen) which investigates casualties with the aim to prevent similar losses in the future. In most major casualties, there is at least the possibility of criminal or administrative offences (such as pollution, damage to property, endangering navigation, etc.), so the authorities can use the powers of the criminal investigation bodies, which allows them to interrogate all witnesses and seize all required documents. That way, the file of the public prosecutor can become a very valuable tool in the hands of opponents in civil proceedings. Therefore, it is advisable to check carefully which authority, and under which set of rules, seizes certain documents and – if possible – to file a complaint against that and/or at least require that opposing parties (such as the other party to a collision) are refused access to the file.

2 Cargo Claims

Germany has the rather peculiar situation that it only ratified the Hague Rules and not the Hague-Visby Rules, however, the commercial code implemented the Hague-Visby Rules with certain amendments (for instance, neither error in navigation, nor fire on board is a defence against carrier’s liability, unless agreed upon in the contract of carriage). In consequence, in most cases the Hague-

The first choice of German law in terms of security is a cash deposit with the court or the guarantee of a bank registered in the EU. However, the court has discretion to allow other forms of security, so a club letter of undertaking may be acceptable (and is widely accepted). In any case, the parties are free to agree on the form of security, so if both parties agree, a P&I letter of undertaking has to be accepted by the court.

5 Evidence

It is advisable to take statements from master, crew and everybody else who was involved and is accessible right after any major incident. Although witness statements are not admissible as evidence by themselves under German law, any witness summoned by the court may rely on written documents, so statements taken properly, at a time close to the incident, can be very valuable at a later stage. In addition, party-appointed experts who prepare expert reports and secure evidence can be a very valuable source of evidence in later proceedings. These experts can be heard as witnesses and, given their expertise in the field and the fact that they usually take pictures and copies of documents at the time of the incidents, are a very valuable source of information for the court. Party-appointed experts will not substitute an expert appointed by the court, but considering that court proceedings are usually started a long time after the incident, any court-appointed expert will have to rely on the facts established by the party-appointed experts.Apart from these – voluntary – measures, German law has neither pre-trial discovery nor disclosure proceedings as may be known from Anglo-Saxon legal systems. The only measure that comes close to pre-trial investigation is a procedure known as independent taking of evidence (selbständiges Beweisverfahren). It is possible to ask the court to appoint an independent expert to preserve evidence that otherwise might be lost. In these proceedings, it is possible to appoint an independent expert even prior to starting legal proceedings. Both parties to the (later) dispute are allowed to participate in the taking of evidence and therefore the findings of the independent, court-appointed expert may be used in later proceedings.

There are no general disclosure obligations in court proceedings. Each party has to present the evidence it intends to rely on. In limited cases, for instance if a party refers to a certain document, or if a document has been prepared in the joint interest of both parties, the court may order a party to present certain documents. When it comes to taking factual evidence, a party may be ordered to grant access to premises or a vessel to allow a court-appointed expert or the court itself to get its own impression of the circumstances.

of the ship, explosion or fire in the ship, or defect in the ship”. The carrier is also liable for damages resulting from death or personal injury not caused by a shipping incident if the passenger proves fault of the carrier.

The typical measure to obtain security for a maritime claim against a shipowner would be the arrest of the vessel. In 2013, Germany amended the rules for ship arrest in order to render them more “arrest-friendly”. Thus, sec. 917 of the civil procedure code (ZPO) provides that an arrest in a sea-going vessel is always possible if the claimant can establish a claim against the owner, there is no need to prove urgency or the risk that the claim would otherwise be endangered. If the arrest application is prepared carefully, the court should grant it within a few hours. There is usually no requirement to pose security before the arrest is granted; however, it is at the discretion of the court to order the provision of security. The arrest order is usually rendered without an oral hearing and without informing the owner of the vessel. The arrest is executed by the bailiff who takes over possession of the vessel. The bailiff will demand an advance of the costs incurred by this. If the arrested ship has cargo on board, the bailiff may arrange for the discharge.It should be noted that under German law, the arresting creditor is liable for all costs incurred during the arrest (berthing, insurance, minimum crew) and the bailiff, who will have to arrange for it, will demand regular advances for these costs. The owner can file an appeal against the arrest order and if he is successful and the arrest is lifted, the arresting creditor is liable for damages, regardless of fault (sec. 945 ZPO).

In general yes, however, it would be necessary to establish a claim against the owner of the vessel. Since bunker is usually ordered by the time-charterer, this requirement is only fulfilled if the bunker was ordered by the owner. Bunker supplies do not create a maritime lien under German law. It is, however, possible to arrest the bunker itself if there is a retention of title.

The carrier has a lien over cargo belonging to the shipper or a third party that agreed with the transport of the goods (sec. 495 HGB) for all claims resulting from the contract of carriage. For goods belonging to the shipper, the lien extends to claims resulting from other contracts as well. The lien may be exercised until 10 days after delivery, if the goods are still in the possession of the consignee.For a limited number of claims secured by maritime liens (such as crew claims for payment, claims resulting from collisions, port dues, etc.) a creditor may arrest the vessel regardless of the question whether or not the owner is the debtor of the claim.

of Appeal rejected that possibility, the underlying party can appeal directly to the BGH with the application to allow the cassation appeal. Only 10–15% of all cases are appealed to BGH, but if they are decided at that level, that adds another one to two years to the proceedings, and the decision might well be that the matter is referred back to the Court of Appeal for reconsideration.

It should be noted as well that under German law, the underlying party has to bear the costs of the proceedings, that is, the court fees and the lawyer’s fees of his opponent. For the purpose of this rule, lawyer’s fees are capped by a statutory scale, so usually not the full hourly fees are recoverable.

(ii) Arbitral proceedings in maritime cases will usually be considered under the rules of the German Maritime Arbitration Association (GMAA) or by an ad hoc tribunal. GMAA rules are flexible and can be amended by the parties to reflect their special requirements. By default, a GMAA tribunal consists of only two arbitrators, appointed by the parties. If these two cannot agree on a matter of procedure or law, they appoint an umpire. However, the majority of cases are decided by two arbitrators only. GMAA arbitration is not limited to considering cases of German law; many GMAA arbitrators are qualified as solicitors or barristers and consider cases under English law as well. The language of arbitration can be chosen by the parties; it is common to have arbitration proceedings in English under GMAA rules.

(iii) Mediation, expert adjudication and conciliation are provided for in the rules of GMAA and other arbitral institutions such as DIS (German Institute for Arbitration). However, in practice, they are rarely used.

In maritime cases, German courts and arbitration institutions compete with English courts and arbitration. The advantage of German courts and arbitration in this respect is certainly that a party receives a decision with the same quality as one might expect from an English court or tribunal, but the proceedings are less cumbersome and usually less expensive. The active approach of German judges and arbitrators helps to identify the core issues of the dispute and avoids lengthy submissions and several days of hearings on minor aspects that are irrelevant for the decision of the case. In addition, the judges and arbitrators will encourage settlements which help to reach a final solution. The downside of German courts may be the duration; German judges are very thorough and sometimes lack a proper commercial background that would allow them to render a more commercial and quicker decision. This last point can, however, be compensated by choosing arbitration.

There are four different types of foreign judgments that need to be distinguished: 1. Judgments from EU countries are recognised without

any formality and enforced if they are accompanied by a certificate according to art. 53 of EU Regulation 1215/2012. The certificate according to art. 53 summarises in standardised form the content of the judgment, the date service was made, interests and their amount, and the date on which the

6 Procedure

(i) A claim in the national courts will usually start at the District Court (Landgericht). There are specialised commercial chambers (Kammern für Handelssachen), which only deal with commercial disputes, but there is no specialised body for maritime or admiralty law. The commercial chambers are composed of one professional judge and two laymen who must have a background as director (or senior manager) of a commercial firm.

The proceedings are started with the filing of the statement of claim which must be accompanied (or followed suite) by the payment of an advance of the court fees. Court fees are calculated according to a statutory scale in (decreasing) relation to the amount in dispute. For example, a claim of EUR 100,000 will require an advance payment of EUR 3,000 and a claim of EUR 1,000,000 will require an advance payment of EUR 16,008, so there is no percentage of the claim but a decreasing scale.

Upon payment of the advance of court fees, the court (and not the claimant) will serve the statement of claim on the defendant. At the same time, the court will usually impose a delay to file a reply to the claim; the delay (which may be extended) will usually be between two and six weeks. As a matter of principle, each party has to prove the facts it relies on, and has to offer evidence for these facts. However, if factual circumstances remain undisputed by the other party (or if the court deems that they are not substantially disputed), the court will abstain from taking of evidence. German judges usually take a pro-active stand towards the proceedings and will use the first hearing to give preliminary views of the case and direct the parties with regard to the facts that will require the taking of evidence. In addition, German judges are called upon to initiate and propose settlement in all stages of the proceedings, so it is not uncommon that a judge will even propose a settlement, if the parties declare that they are generally open to such a proposal. If the parties cannot agree on that proposal, the judge will not be considered as biased.

The duration of court proceedings differs considerably. A simple matter (which is rare in shipping) may take around six months from the filing of the claim until the judgment. A more complicated matter, which requires expert evidence and the hearing of witnesses, may take up to two or three years in the first instance.

After the first instance, there is always the right to appeal to the Court of Appeal. In the appeal instance, the facts established by the first instance remain unchanged, unless the Court of Appeal considers that the District Court overlooked relevant facts or failed to take evidence on relevant issues. In that case, even the Court of Appeal can take evidence. The duration of appellate proceedings depends very much on the circumstances and would usually vary from six months if the matter is simple and no new evidence is taken, to one or two (in rare cases, more) years if the Court of Appeal has to hear witnesses or appoint experts.

If the matter is of principal relevance, the Court of Appeal may grant leave to file a cassation appeal to the German Supreme Court (Bundesgerichtshof – BGH), or, if the Court

Awards), so in general, foreign arbitral awards are recognised and enforced in Germany without much problem (unless one of the grounds for refusal stated in the New York Convention is established). Applications to recognise and declare enforceable a foreign arbitral award have to be filed at the Higher District Courts (which are usually the second instance), which allows for a concentration of these decisions at a higher level with highly qualified judges. The court may order preliminary enforcement of the award while the matter of recognition and enforcement is pending. In general, Germany can be considered an arbitration-friendly country and there are but a few cases (usually related to a violation of fair trial) in which the recognition of a foreign arbitral award is refused.

Given the dominance of English law in the maritime world, there is a tendency for disputes to be shifted to London. The GMAA, with very flexible rules and a competitive cost structure, works against that by providing arbitration of English law disputes with German procedural law, which offers an advantage over the rather cumbersome proceedings in London.

judgment became enforceable. EU judgments do not require a confirmation by a German court and can be enforced in the same way as German judgment.

2. Judgments from countries with which Germany has a treaty about recognition and enforcement: Germany has bilateral treaties with many countries in the world about the enforcement of court decisions. In that case, court decisions need to be presented to a German court, which checks only formal requirements and may only consider a limited number of defences that constitute a violation of public order (such as a violation of the right to a fair trial) and, in the absence of any viable defence, issues a so-called “Exequatur” which renders the foreign judgment enforceable in Germany.

3. Judgments from third countries are recognised and enforced on the basis of reciprocity; that is, if the foreign country recognises and enforces German judgments, Germany will recognise and enforce judgments from these countries as well. A claimant wishing to enforce a foreign judgment in this category will have to present an original or certified copy of the judgment and in the proceedings it might become necessary to prove that reciprocity exists. However, for many countries there is an established praxis which can be looked up in the relevant commentaries, so no special evidence is required.

4. In the case that no reciprocity exists (this is the case, for example, for Russia), the foreign judgment will still be considered documentary evidence; that is, it is necessary to start proceeding on the merits again; however, the foreign judgment can be used as prima facie evidence of the existence of the claim and the defendant will have to argue that the (first) judgment was incorrect.

Germany is a Member State of the New York Convention 1958 (UN Convention on the Recognition and Enforcement of Foreign Arbitral

KOCH DUKEN BOËS is a highly specialised law boutique in Hamburg with a strong focus on maritime and commercial law as well as arbitration.

Clients of KOCH DUKEN BOËS are particularly shipping companies and shipyards, but also private equity investors and service companies from the shipping industry.

Henrike Koch, Dr. Axel Boës and Jan Duken have gained their experience and expertise over more than 20 years in different companies and positions before starting their law boutique in summer 2015. This broad and in-depth experience enables them to not only work closely with their clients on legal issues, but also to offer a tailored approach to corporate management and strategy challenges.

The team offer accompanying advice and support their clients from initial analysis of a problem, through to strategy development, until its successful implementation. A mandate always ends with a holistic and critical evaluation of the progress and the targets achieved, both from an economic and legal perspective.

Henrike Koch advises clients from all segments of the maritime industry and uses her former in-house experience to the benefit of a commercially optimised and reliable solution that always stands the test of being practicably enforceable. After her graduation (Abitur) she successfully completed an apprenticeship as a shipping merchant in Bremen. Thereafter Henrike studied law, focusing especially on economics and business competition, with stages in Hamburg and Copenhagen. Initially she worked as an academic assistant, and subsequently as a project leader in the Institut für Seeverkehrswirtschaft und Logistik, and provided assistance to the management of the Deutsche GVZ-Gesellschaft, which is the umbrella organisation of German freight centres.

Furthermore, Henrike lectured in the department of law at the University of Bremen and Hochschule Bremen, as well as on the Shipping and Chartering course at the German Academy for Foreign Business. At Hochschule Ostfalia, Sazgitter she was a lecturer on Freight Traffic Systems.

From July 2012 to June 2015 Henrike was a Legal Counsel of Rickmers-Group. She was one of two founding partners of KOCH DUKEN PARTNER, now KOCH DUKEN BOËS.

Shipping, arbitration and Russia are the threads which run through the career of Axel Boës. Axel studied law in Mainz, Chambéry (France) and Hamburg and received a Doctorate degree from the University of Hamburg, the topic of his thesis being the law on limited liability companies in Russia.

Axel started his career in a boutique shipping law firm in Hamburg and before joining KOCH DUKEN BOËS as a partner in 2018, he worked as Of Counsel at an international law firm.

Axel has extensive experience in complex litigation and arbitration matters, particularly in international transportation and maritime law. Axel’s clients include German and foreign insurance companies, shipping companies and shipowners, which he regularly represents in disputes before state courts and in arbitration matters. A main aspect of his work is representing clients in dispute matters related to Russia and advising Russian-speaking clients. Axel has sat as an arbitrator under the rules of DIS, GMAA, Hamburg Chamber of Commerce, Riga District Court of Arbitration and acted as counsel in arbitration under the rules of LMAA, ICC and Stockholm Chamber of Commerce as well.

Axel lectures on international transportation and maritime law at the University of St. Petersburg and is a vice president of the German-Russian law association and a member of GMAA, DVIS and DFJV.

Henrike KochKOCH DUKEN BOËSColonnaden 2120354 HamburgGermany

Tel: +49 40 30 70 90 714Email: h.koch@kdb.legalURL: www.kdb.legal/en

Dr. Axel BoësKOCH DUKEN BOËSColonnaden 2120354 HamburgGermany

Tel: +49 40 30 70 90 716Email: a.boes@kdb.legalURL: www.kdb.legal/en

Chapter 22

1 Marine Casualty

(i) CollisionGuatemala has not signed any international treaty that regulates vessel collisions. In 1993, Guatemala adopted the International Regulations for Preventing Collisions at Sea 1972 (COLREG). In case any collision occurs in Guatemala’s jurisdiction, general rules will be applicable. For example, article 868 of book III of the Code of Commerce, Decree No. 2946 establishes that the owner of a vessel is obligated to respond civilly to the facts of the Master or crew, will constitute an offence, damages or finding of mere guilt.Likewise, article 1651 of the Civil Code, Decree No. 106, establishes that the ship owner is jointly and severally liable for the damages that may be caused by the driving of the vehicles. This responsibility prevails even if the handling of the vehicle has been temporarily entrusted to the person who caused the incident.Finally, if, as consequence of the collision of the vessel, a person dies or is injured, the Criminal Code, Decree No. 17-73, establishes that the person responsible for the commission of crimes against a person can be sentenced to a prison term of between one and 50 years.(ii) PollutionIn the Republic of Guatemala, the pollution caused by vessels is regulated by the following laws: (i) Law for the Protection and Improvement of the Environment, Decree No. 68-86; (ii) Commercialization of Hydrocarbons Law, Decree No. 109-97; (iii) Penal Code, Decree No. 17-73; (iv) International Convention for the Prevention of Pollution from Ships (MARPOL); (v) International Convention on Civil Liability for Oil Pollution Damage (CLC); and (vi) Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter (London Convention).Environmental liability in Guatemala is punishable with a fine, if the offence is committed as a result of a procedural error or by accident, caused by bad operating practices, driving and negligence of compliance with industrial and environmental safety measures. An example of that may be spills of oil or petroleum products originating from a collision. Depending on the magnitude of the pollution, the Prosecutor can initiate criminal prosecution for the crime of environmental pollution contained on article 347 ter of the Criminal Code, Decree No. 17-73. This crime is punishable with

imprisonment from two to 10 years, and a fine of 3,000 to 10,000 Quetzales (Guatemalan national currency).(iii) Salvage / general averageIn the Republic of Guatemala, the rescue of passengers and the cargo of a vessel in case of collision are governed by the following rules, included in book III of the Code of Commerce, Decree No. 2946: “It is the obligation of the captain to ensure the safekeeping and rescue of passengers on board the vessel. Likewise, passengers have the obligation to assist the captain in all urgent cases that require it for the salvation of the vessel.” (Article 1082.)Regarding merchandise, in case it is necessary to save the vessel, the captain has the right to throw part of the cargo into the sea (article 901 numeral 12). In the case that it is necessary to proceed in this way, the loss of the load is considered a common fault. Common fault consists of any damage suffered by the vessel or the cargo, before or during the trip, by piracy, liberation of the vessel, loss of things thrown into the sea to save the vessel, among others (article 1089).By the common fault, all those interested in the ship and in what it transports, will bear the consequences of the measures taken for salvage, as the cost of the damage. However, the owner of the thing that has suffered the damage or caused the expense may claim compensation for it, in the event that the damage is due to fault of a third party. The crew have the same right.(iv) Wreck removalBook III of the Code of Commerce, Decree No. 294, does not establish specific regulation regarding the contract of towing or wreck removal caused by a collision or any other flaw. The Code establishes the rules and rights the captain has to collect fragments of the vessel and the cargo in case of shipwreck or stranding. In accordance with the provisions of article 1149 of the aforementioned Decree, the captain of the vessel shall extract the most valuable goods from the cargo, and after that, he must go to the nearest authority to the place where the shipwreck occured. He has to make an affidavit in relation to the event, check it with the statements of the crew and passengers, and request the delivery of the original proceedings in defence of their rights. Those interested in the vessel or cargo may produce evidence against the statements of the captain, crew or passengers.(v) Limitation of liabilityIn Guatemala there is no applicable law related to the limitation of liability that allows the ship owner and carrier to stand against the claimant. For this reason, the determination of the liability may be on a case-by-case basis, according to general legislation.In cases of environmental pollution caused by fuels, the limit of liability will be according to the CLC, to which Guatemala has been

NASSAR ABOGADOS

Guatemala

Tomás Nassar Pérez

GuatemalaNASSAR ABOGADOS

The shipper has the obligation to declare accurately a description of goods, weight, quantity, signs and packaging, as established in article 805 of the Code of Commerce.In addition, as Guatemala is a signatory of the SOLAS Convention, shippers are obliged to comply with the verified gross mass (VGM) of packed containers prior to loading on board ships. This obligation, which entered into force worldwide on 1 July 2016, is also enforceable under local law following the issuance of Ministerial Agreement No. 787-2016, issued by the Communications and Infrastructure Ministry.According to the said Agreement, companies entitled to verify the weight of containers must first register at the National Port Commission of Guatemala.If the shipper does not comply with the regulation related to the correct declaration of goods and dangerous goods, the carrier has the right to claim against him for any loss or damage caused by its misdeclaration. When dangerous goods are shipped, the shipper would be liable not only towards the carrier but also towards cargo owners shipped on board.The Master is also entitled to unload cargo on board, if it has not been declared accordingly.

3 Passenger Claims

The Commercial Code of the Republic of Guatemala, Decree No. 2-70, regulates the transportation of passengers by sea (article 755). Claims related to the baggage of the passengers are precedent only in the value declared, unless the claimant proves that the value was greater. If the value is not declared, the carrier’s liability shall be limited to an equal amount, per kilogram of baggage, to the amount of the ticket corresponding to a journey of 50 kilometres, according to articles 801 and 802 of the said Code.In the event of injury or death of any passenger occurring in Guatemalan territory, the provisions of the Criminal Code shall apply, and whether they are invoked for the crime will depend on the circumstances of injury or death of the person. These kinds of crime are prosecuted ex officio by the Public Prosecutor of Guatemala.

The party that seeks to obtain security for a maritime claim may request the Court for precautionary measures to order the seizure of the the vessel.To make the request, the claimant must file a petition to the Judge and justify this by reference to the imminent danger that may occur. The precautionary measures are granted at the Judge’s discretion. If it happens, the Judge grants the claimant a period of 15 days to present the principal claim. If the claimant does not file, the precautionary measures will be left without effect.

a signatory since 1983. The Convention established the possibility to limit liability in case of oil pollution damage, and is applicable to all seagoing vessels actually carrying oil in bulk as cargo.According to the local legislation, the ship owner is obligated to respond civilly to the facts of the captain or crew, whether they constitute an offence or signify mere guilt. However, the obligations undertaken by the captain to his advantage are not the responsibility of the shipping industry, nor are those that are prohibited or permitted in which the enabling conditions or substantial formalities prescribed by law are omitted. To absolve themselves of responsibility, the carriers shall verify that the damage which resulted from the inherent defect of the thing, their special nature, force majeure, or facts or instructions of the shipper or consignee.(vi) The limitation fundLocal legislation does not contemplate the possibility for the ship owner to create a limitation fund.However, the CLC, to which Guatemala is a signatory, establishes that in order to benefit from the limitation of article V, paragraph 1, the owner shall constitute a fund for the total sum representing the limit of his liability with the Court. The fund can be constituted either by depositing the sum or through a bank guarantee or other acceptable form under the legislation.

In case of any maritime casualty such as collision, shipwreck or grounding, the authority that will initiate an investigation will be, in the first place, the Maritime Affairs General Directorate, which belongs to the Ministry of National Defence. Additionally, other authorities such as the Prosecutor of the Republic of Guatemala may initiate an investigation. If, as a result of the casualty, environmental pollution occurs, the Ministry of the Environment and Natural Resources and the Ministry of Energy and Mines, through the General Directorate of Hydrocarbons, will intervene as well.

2 Cargo Claims

The Republic of Guatemala has not ratified any convention related to the carriage of goods by sea. Any cargo claims carried through maritime transportation may be regulated by local legislation; for instance, chapter III of the Code of Commerce of the Republic of Guatemala, Decree No. 2946 of the Congress of the Republic. A new Commercial Code is in force; however, the aforementioned chapter is still enforceable.

In Guatemala, shippers and consignees are entitled to claim against the carrier for cargo damages or losses during the carriage of his goods.A Civil Court resolves the claim, because the Republic of Guatemala does not have a specialised Court for disputes arising from maritime trade.

6 Procedure

In the Republic of Guatemala, there are no specialised Courts to solve maritime disputes. As a consequence of that, disputes over maritime transport of goods can be resolved in different jurisdictions, such as administrative, criminal, civil, commercial or environmental, among others.i) National Courts: a judicial proceeding is composed of the

following stages:(a) Submission of the claim.(b) Admission process, which involves the analysis and review

of compliance with the minimum legal requirements of law, the issuance of the first resolution and the granting of precautionary measures, such as precautionary seizure of assets and intervention of commercial companies.

(c) Summons of the defendant.(d) Period to receive evidence.(e) Presentation of final conclusions.(f) Judgment. The parties involved have the right to file an

appeal against the judgment. Against the second instance decision, it is possible to file cassation before the Supreme Court of Justice.

The cassation is only applicable in disputes whose amount is over 400,000.00 Quetzales (approximately 50,000.00 USD).

The general trend is for this type of proceeding to last at least 36 months.

ii) Arbitration process: in Guatemala, this is handled by two authorised Arbitration Centres. The process can be resolved based on equity or based on the law; this aspect is determined by the parties to the agreement.

The procedure to be taken will depend on the internal regulation of the Arbitration Centre to which the parties have submitted. The arbitral award is not appealable, but it is reviewable by a Jurisdictional Court. The length of time that an arbitration lasts is approximately 18 months.

iii) Mediation: likewise, an alternative is available in Guatemala, to resolve claims through a Mediation Centre, which belongs to the judicial authorities. The parties may submit the dispute to this Centre on a voluntary and unilateral basis. The approximate duration is three months.

Guatemalan maritime legislation is outdated; the main aspects are regulated according to the Commercial Code of the Republic of Guatemala, issued in 1942. Additionally, the new Commercial Code does not include any rules related to maritime trade. The non-existence of a Maritime Court and specialised judicial process, as well as the lack of knowledge and experience in maritime disputes, are disadvantages when considering Guatemalan jurisdiction for maritime claims.The existence of arbitration proceedings is an advantage in relation to the time taken for resolution of the process. The disadvantage of

Yes, it is possible. According to book III of the Code of Commerce of the Republic of Guatemala, Decree No. 2946 (article 846), Guatemalan vessels can be arrested as a consequence of credits pending payment, like tax debts, payment of salaries, costs, or debts of piloting or tonnage. The vessel may be seized and sold by the Court through a public auction, which will be held in the port where the vessel is located (article 851). The public auction will take place at the request of any of the creditors. Foreign vessels can be seized at the ports of the Republic of Guatemala only for debts contracted in Guatemalan territory due to the cause or futility of the same (article 848).

The internal regulation related to maritime trade, contained in book III of the Code of Commerce, Decree No. 2946 of the Congress of the Republic, establishes that the acceptable guarantee for the parties or third persons is the bond issued by an insurer authorised to operate in the Republic of Guatemala. The aforementioned regulation does not establish any other kind of guarantee.

The guarantee acceptable under Guatemalan law is bail, according to article 848 ter of book III of the Code of Commerce, Decree No. 2946 of the Congress of the Republic. However, this security by provision of law can only be issued by an insurer that has been authorised to operate in the Republic of Guatemala.

5 Evidence

The steps to be taken to preserve evidence depend on the type of claim. If it is a civil claim, the first step will be to collect all documents related to the claim, affidavits and notarial acts about the facts.If it is a criminal claim, the evidence will be collected by the Prosecutor and the company will have access by an accreditation in the file. In both types of claims, there is a preliminary process before the Judge to prepare evidence. The process may consist of a declaration before the Judge and a recognition of documents, places, or things.

In Guatemala, if it is a civil claim, the parties have the obligation to present their own evidence for examination by the other party. In criminal proceedings, only the Prosecutor can present evidence, but the victim has the right to collaborate with the Prosecutor.

aforesaid Convention, the Arbitration Law Decree No. 67-95 was reformed, in order to be consistent with the requirements of the Convention.According to the CPC (articles 295 and 346), the process of execution of the award is processed before a Judge of Civil Instance, who admits the request for execution, dictates the pertinent precautionary measures to ensure the results of the claim, and summons the defendant for three days to express himself on the subject.The Arbitration Law provides the basic requirement that the plaintiff has to present the following for the execution of the award: (i) the original of the document that contains the foreign award;

and(ii) the original of the arbitration agreement signed by the parties.Both documents must be duly authenticated and duly translated into Spanish or, if there is no single language to determine the document, it will be translated under oath by two people who speak and write both languages, with legalisation of their signatures.The execution can be denied, among other causes, when: (a) one of the parties proves that he was affected by some incapacity at the moment of signing the agreement; (b) the party against whom the award is executed proves that he has not been duly notified of the appointment of the arbitration panel or of the arbitration proceedings; or c) the Court verifies that (i) according to the Guatemalan legal system, the object of the controversy is not to be resolved by arbitration, or (ii) the recognition or execution of the foreign award would be contrary to the public order of the Republic of Guatemala.

There are no further issues, updates or developments of particular note.

AcknowledgmentThe author would like to thank Carlos Pellecer, of NASSAR ABOGADOS’ Guatemala City office, for his contribution to the preparation of this chapter.Tel: +502 2428 4800; Email: cpellecer@nassarabogados.com.

the arbitration process is its cost, because the professional fees for the arbitration panel and the authorised arbitration centre are paid by the parties, and are high.

The recognition and enforcement of foreign judgments in Guatemala are regulated by the Civil Procedure Code of Guatemala (CPC) Decree No. 107. Article 344 of the said Code establishes that the foreign judgment has to be resolved by the Judge in Guatemala.The Arbitration Law provides that the plaintiff has to file the requirement of execution and a certified document that contains the foreign judgment. The document must comply with formalities such as the apostille and official translation if issued in a language other than Spanish.The procedure to execute a foreign judgment is the following: (a) request for execution; (b) first resolution and precautionary measures; (c) summoning of the defendant to reply within five days; (d) period of 15 days to receive evidence; and (d) judgment. The parties involved have the right to file an appeal against the judgment. The claim has to fulfil the following requirements:(a) the foreign judgment has to be emitted as a consequence of

the exercise of a personal, civil or commercial action;(b) the foreign judgment has to be issued with a summons and

participation of the defendant; (c) the obligation is not forbidden in the Republic of Guatemala; (d) the foreign judgment has to be executed according to the laws

of the nation in which it was issued; and (e) the foreign judgment has to meet all the necessary

requirements to be considered authentic.

The recognition and enforcement of foreign awards in Guatemala is regulated by the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1975, ratified by Guatemala through Decree No. 9-84.This Convention contains the rules on the recognition and execution of a foreign award in Guatemala. After the entry into force of the

Senior Partner

Education: Juris Doctor and Notary Public, Universidad de Costa Rica.

Practice Areas: Aviation, Commercial and Corporate, Litigation, Maritime.

Experience:

Tomás is the Senior and Founding Partner of the Law Firm NASSAR ABOGADOS Centroamérica. He is recognised as a highly skilled negotiator and litigator, and is also well known for his depth of understanding of the business environment and ability to structure highly complex deals. He is constantly invited by private companies and industry organisations to sit on the board of directors and advisory committees.

Tomás is a Professor of Commercial Law at the School of Law of the Universidad de Costa Rica, and Professor of Maritime Law and Aviation Law at the Law School of the University of La Salle.

He has represented Costa Rica in international negotiations and meetings regarding air and sea transport such as GATT, ICAO, OAS, COCATRAM and COCESNA. He is a consultant on several projects in international transport.

He is the President of the Costa Rican Association of Maritime Law; Vice-President and President of the Ibero-American Institute of Maritime Law; Secretary, Vice-President and President of the Association of International Airlines in Costa Rica (ALA). He is a member of the Board and Vice-President of the National Chamber of Tourism (CANATUR). He is also a legal adviser to the National Chamber of Ship Owners and Steamship Agents (NAVE), the Costa Rican Association of International Freight Agencies (ACACIA) and the Costa Rican Chamber of Food Industry (CACIA), among others.

Tomás is also ranked by Chambers & Partners.

Memberships: Costa Rican Bar Association, American Bar Association, L2B Aviation Group and ADVOC Latin America.

Tomás Nassar PérezNASSAR ABOGADOSOficentro Torres del CampoEdificio 1, 2º pisoBarrio TournónSan JoséCosta Rica

Tel: +506 2257 2929Email: tnassar@nassarabogados.comURL: www.nassarabogados.com

Chapter 23

1 Marine Casualty

(i) CollisionArticle 996 of the Commerce Code, Decree N° 73, states that if a ship collides with another due to fault, negligence or impairment of the Master, pilot or any other individual of the vessel, the shipowner of the responsible vessel shall indemnify the damages and losses that have occurred, prior to judicial appraisal. Additionally, article 997 of the Commerce Code provides that, if the collision was attributable to both ships, each one of them will be responsible for its own damage, and both will be jointly liable for the damages suffered by their cargo.In the event of collision, if the captain does not provide the name and registry port, place of origin and destination to the maritime authorities, he will be subject to a fine for a serious infraction (article 117 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras, Decree N° 167-94).(ii) PollutionLocal applicable legislation does not regulate the limitation of liability; nonetheless, according to the International Convention on Civil Liability for Oil Pollution Damage, Decree N° 26-97 (CLC 1969), the shipowner is entitled to limit his liability in respect of any one incident.Article v, 3) of this Convention provides that in order to limit his liability under article v, 1), the shipowner shall constitute a fund for the total sum representing the limit of his liability with the court or other competent authority of any one of the contracting states in which action is brought under article IX. The fund can be constituted either by depositing the sum, by producing a bank guarantee or other guarantee, acceptable under the legislation of the contracting state where the fund is constituted. The insurer or other person providing financial security is entitled to constitute a fund on the same conditions and having the same effect as if it were constituted by the owner (article v, 11)).(iii) Salvage / general averageThe General Directorate of Merchant Marine’s prior report of the Harbour Master, together with the port authorities, will adopt all the necessary measures to avoid the sinking of a ship in local ports. To this end, local authorities will require owners, lessees or shippers to remove the ship from the port or to proceed to its immediate repair.

Upon the failure to comply with this requirement, the General Directorate of Merchant Marine will proceed to remove the ship to a location that does not affect the port activities or navigation; or, if it is necessary, to sink the ship. All of the expenses involved in the salvage of a ship will be at the expense of the individuals or companies initially required (article 102 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras).General average shall be payable according to the York-Antwerp Rules. The York-Antwerp Rules are not mandatory and only apply on a contractual basis. Therefore, it is important to confirm whether general average is to be adjusted in accordance with YAR 1974, YAR 1994 or YAR 2004.(iv) Wreck removalArticle 115 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras states that the owners, lessees or shippers of ships at their sole expense will be required to remove shipwrecks or sunken goods as long as they affect the maritime traffic, navigation and natural resources. For the foregoing purposes, the General Directorate of Merchant Marine, together with the port authorities, will establish the period for the removal, procedures to be followed and safety measures to be adopted in order to avoid future shipwrecks.(v) Limitation of liabilityArticle 1363 (Paras 2–3) of the Civil Code, Decree N° 76, establishes that the debtor is not responsible in case of a force majeure event, except in default or where the event occurred by its own fault. The proof of diligence or care corresponds to the part which should have employed it; the proof of the event’s occurrence corresponds to the alleging party. As such, the carrier may limit his liability for cargo claims by submitting sufficient evidence of the existence of the force majeure event.Locally accepted legal principles establish the following requirements for an event to be determined as force majeure: a. The event occurred beyond the control of the debtor, and the

debtor did not contribute to its occurrence.b. The event was unexpected.c. The event was insuperable; in order words, within the means

of the debtor, its occurrence could not have been avoided.(vi) The limitation fundAlthough local legislation does not regulate limitation funds, it is standard practice for vessel owners to set up this type of fund to limit the shipowner’s liability.Honduras is not a signatory to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971.

Jessy Aguilar

René Serrano Zelaya

NASSAR ABOGADOS

Honduras

NASSAR ABOGADOS Honduras

With regard to defence, a carrier may assert exemption from liability for cargo claims (article 1363 (Paras 2–3) of the Civil Code), indicating that the debtor is not responsible in case of a force majeure event except in default or where the event occurred by its own fault. The proof of diligence or care corresponds to the party which should have employed it; the proof of the event’s occurrence corresponds to the alleging party. As such, the carrier may limit his liability for cargo claims by submitting sufficient evidence of the existence of the force majeure event.Locally accepted legal principles establish the following requirements for an event to be determined as force majeure: a. The event occurred beyond the control of the debtor, and the

debtor did not contribute to its occurrence.b. The event was unexpected.c. The event was insuperable; in order words, within the means

of the debtor, its occurrence could not have been avoided.As for limiting liability in respect of cargo claims, article 702 of the Commerce Code states that any agreement that excludes or limits in advance the responsibility of a company will be null in the following cases: a. Tort or negligence of their personnel or third parties used by

the company to comply with its corporate obligations.b. Violation of public order rules. The carrier will only be entitled to limit his liability in those cases expressly agreed and when the cargo claim is not due to deliberate actions.

If the shipper loads undeclared or misdeclared cargo without notice to the carrier, or any damages, confiscation, seizure or detention of the carrier or other shippers occur, he will respond with the value of its cargo and assets up to full compensation of all who were injured by the false or incorrect declaration (article 852 of the Commerce Code).Honduras, as a signatory of the International Convention for the Safety of Life at Sea, 1974 (SOLAS Convention), must oblige Honduran shippers to weigh their containers according to the verified gross mass (VGM) regulation prior to loading on board ships.If a shipper does not comply with the regulation related to the correct declaration of goods and dangerous goods, the carrier has the right to claim against him for any loss or damage caused by his misdeclaration. When dangerous goods are shipped, the shipper would be liable not only towards the carrier but also towards cargo owners shipped on board.The Master is also entitled to unload cargo which is on board, if it has not been declared accordingly.A resolution issued by the Marina Mercante entity states that all containers must be certified by the scale provided directly by the port terminal (Operadora Portuaria Centro Americana – OPC). The VGM transmission to the shipping line will be done directly by the OPC.

3 Passenger Claims

Article 867 of the Commerce Code states that if a passenger dies before initiating a voyage, his successors will only be required to pay half of the price of the ticket.

In general, the General Directorate of Merchant Marine of Honduras is the authority responsible for performing technical inspections of ships in order to examine their navigating conditions. If a ship suffers an accident that affects its navigability conditions, it will be subject to an extraordinary inspection by the General Directorate of Merchant Marine of Honduras to confirm the damages or repairs required (articles 18 and 19 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras).Upon confirmation that a ship is not in the necessary condition for navigation, the General Directorate of Merchant Marine of Honduras will order the suspension of the ship from rendering/offering services, or prohibit its sailing until the required repairs are completed (article 26 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras).As for shipwrecks, if the responsible party does not initiate or remove the wreck within the term established by the local authorities, then the General Directorate of Merchant Marine together with the port authorities will proceed to its removal or hire third parties to do so (article 113 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras).With regard to the sinking of a ship, if the responsible party fails to comply with the instructions delivered by the local authorities, the General Directorate of Merchant Marine will proceed to remove the ship to a location that does not affect port activities or navigation; or, if it becomes necessary, to sink the ship. All of the expenses involved in the salvage of a ship will be at the expense of the individuals or companies initially required (article 102 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras).

2 Cargo Claims

a. Unified Central American Customs Code, Resolution N° 223-2008 (COMIECO XLIX).

b. Regulation of the Unified Central American Customs Code, Resolution N° 224-2008 (COMIECO XLIX).

c. Civil Code, Decree N° 76.d. Commerce Code, Decree N° 73.e. Civil Procedure Code N° 211-2006.To date, Honduras is not a signatory to any international conventions regarding marine cargo claims.

According to article 104 of the Reglamento del Código Aduanero Uniforme Centroamericano (RECAUCA), the period of responsibility of the carrier for the goods covers the time during which the carrier is in charge of the goods at the port of loading during the carriage and at the port of discharge. This encompasses the period from port to port and accordingly increases the liability of the carrier. The carrier is not responsible until the receipt of the goods from the port authority or other third party pursuant to law or regulation.

Article 387 of the Civil Procedure Code (Decree N° 211-2006) provides the following forms of security:a. Cash.b. Certified cheque.c. Cashier’s cheque.d. Bank or financial institution’s guarantee.A Club’s letter of undertaking can be accepted by local authorities, due to its financial strength. However, local authorities advise that their acceptance will be reviewed on a case-by-case basis.

5 Evidence

Before any judicial process begins, the initiator may request the court to adopt the appropriate preventive measures to avoid material evidence being destroyed or altered due to human acts or natural events, it being impossible to use such evidence in trial at a later time.The request shall be filed before the same court which is resolving the principal claim. These measures will only be executed when there are sufficient reasons to presume that failure to adopt them may result in the impossibilty of being examined in the future. The evidence resulting from these proceedings shall remain in the custody of the secretary until the claim is filed, according to article 249 of the Civil Procedure Code.Each party has the burden of proof in connection with the facts each one alleges and access to evidence held by the counterparty is usually requested and granted directly by a court order and, in many cases, within the scope of an expert opinion to be prepared by an expert appointed by the court.Documentary evidence: all documentary evidence must be translated into Spanish by an official translator or a translator appointed by the judge. International public documents must be legalised (an apostille procedure applies).Witness evidence: witness objection can take place when the witness: i) is the spouse or relative up to the fourth degree of consanguinity or the second degree of kinship by choice, to the party that has presented him/her as a witness or his/her defendants; ii) is a dependant of the party that has proposed him/her as a witness or his/her defendants, or is in a partnership with any of them; iii) has a direct or indirect interest in the matter; iv) is a close friend or declared enemy of any one of the parties or their defendants; or v) has been convicted of giving false statements.

Disclosure obligations are not applicable in Honduras. Each party has the burden of proof in connection with the facts each one alleges

If the voyage is suspended due to a captain’s or shipowner’s fault, passengers will be entitled to claim the full price of the ticket paid and applicable damages. However, if the voyage was suspended due to a fortuitous event of force majeure or any other cause independent of the captain or shipowner, passengers shall only be entitled to obtain the refund of their ticket (article 868 of the Commerce Code).In the case that a voyage is interrupted, the passenger will only be required to pay a proportional value of the ticket for the distance travelled, without any right to claim damages unless the voyage was interrupted due to the fault of the captain (article 869 of the Commerce Code).

Any party seeking to obtain security for a maritime claim against a vessel owner has the option to seize or impose liens over the vessel (article 86 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras).The applicable procedure for the seizure of a vessel is the following:■ Filing of petition by creditor and final resolution. The seizure

of vessels may be requested for the following reasons:a. The debtor is not domiciled in Honduras.b. The credit is evidenced through public deeds or private

documents.c. Evidence has been submitted that the debtor is trying to

sell, hide or transport the goods mortgaged or pledged.d. Evidence has been submitted that the debtor does not have

a liability insurance to cover the damages caused.■ Once the seizure of the vessel has been judicially ordered,

the creditor must request the registration of the security at the property registry (articles 358 and 359 of the Civil Procedure Code).

■ Having completed the judicial process, the creditor must request the registration of the security (i.e. seizure) over the vessel at the Property, Mortgages and Other Naval Liens registry maintained by the General Directorate of Merchant Marine (articles 87, 88 and 89 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras).

Foreign vessels in Honduran port areas cannot be detained or arrested, even if they are free of cargo, for debts that have not been undertaken in Honduran territory and for the benefit of the same vessel or cargo, or payable in Honduran territory (article 745 of the Commerce Code).

Local legislation does not regulate additional options besides the vessel owner and charterer.

(ii) ArbitrationThe arbitration procedure is as follows:a. Request for appointment of arbitral tribunal.b. Appointment of arbitrators.c. Conciliation hearing.d. Acceptance of arbitral tribunal hearing.e. Filing of lawsuit.f. Admission/Refusal of the lawsuit.g. Answer of the lawsuit.h. Preliminary hearing. i. Examination of evidence.j. Filing of closing arguments.k. Final ruling.There is no statutory term applicable to the procedure. However, in practice, judicial procedures can take over five months.

ArbitrationThe parties to the dispute usually agree on the arbitrator(s), so the arbitrator(s) will be someone in whom both sides have confidence as regards impartiality and fairness. The dispute will normally be resolved much sooner, as a date for the arbitration can usually be obtained a lot faster than a court date. Arbitration is usually a lot less expensive. Unlike a trial, arbitration is essentially a private procedure, so if the parties desire privacy, the dispute and the resolution can be kept confidential. If an arbitration is binding, there are very limited opportunities for either side to appeal.The most recommended arbitral institution would be the Conciliation and Arbitration Centre at the Chamber of Commerce and Industry of Tegucigalpa. This institution offers wide experience in resolving international disputes. Parties are able to define the applicable procedure and resolutions are issued with great swiftness.Local courtsThe fundamental problem in our country lies in the bureaucracy and lack of transparency of the judges when applying and imparting justice; they do not provide enough of a guarantee of obligatory judicial impartiality. Historically, civil procedures are characterised by excessive prolongation on the part of the courts without any real justification in all matters that are submitted to their competence, and by a lack of confidence in the judges as well as their judgments.

In relation to the enforcement of a foreign judgment or arbitral award in Honduras, the following procedure must be followed:The party enforcing the foreign judgment or arbitral award – the executor – must file a written request to the Honduran Supreme Court of Justice requesting the enforcement of the foreign judgment/arbitral award. The executor may propose any evidence deemed necessary; the “executed” party will then be notified of this, in order to formulate any allegations.

and access to evidence held by the counterparty is usually requested and granted directly by a court order and, in many cases, within the scope of an expert opinion to be prepared by an expert appointed by the court. Pre-trial motions are not available as in the United States.In Honduras, the defences are filed as part of the response to the lawsuit, including defences such as: lack of capacity or representation (article 451 of the Civil Procedure Code); undue accumulation of petitions (article 452 of the Civil Procedure Code); faulty lawsuit (article 454 of the Civil Procedure Code); litispendence (article 455 of the Civil Procedure Code); inadequate procedure (article 456 of the Civil Procedure Code); arbitral commitment; and lack of necessary joinder (article 453 of the Civil Procedure Code).

6 Procedure

Honduras does not have specialised courts for maritime disputes; generally, judicial disputes are resolved before the Unified Civil District Court and administrative proceedings (i.e. fines, licences, permits, etc.) are resolved before the General Directorate of Merchant Marine.(i) National courtsAs such, maritime disputes are resolved before the Unified Civil District Court of the domicile of the defendant. The process for filing a lawsuit is: a. Filing of the lawsuit.b. Admission/rejection of the lawsuit.c. Service of the summons.d. Answer.e. Preliminary hearing: used for conciliation, remedies, or

proposal and admission of evidence.f. Evidentiary hearing.g. Hearing of closing arguments.h. Final ruling.There is no statutory term applicable to the procedure. However, in practice, judicial procedures can take over two years.Disputes with Government entities, such as the General Directorate of the Merchant Marine of Honduras, are resolved before the Contentious Administrative Court of the domicile of the defendant. The process for filing a lawsuit before this court is the following: a. Filing of the lawsuit.b. Admission/refusal of the lawsuit.c. Service of the summons.d. Filing of preliminary pleas and defences by the Government

entity.e. Preliminary pleas and defences hearing.f. Resolution of Preliminary pleas and defences.g. Answer of the lawsuit.h. Preliminary hearing.i. Examination of evidence.j. Filing of closing arguments.k. Final ruling.

iii. such judgment/arbitral award complies with all the necessary legal requirements imposed by the foreign court or arbitration in order to consider it authentic, as well as with requirements imposed by Honduran law for the purpose of admitting such judgment/arbitral award as evidence in Honduras;

iv. the judgment/arbitral award does not contradict Honduran public order principles, and the obligation contained therein complies with applicable laws in Honduras; and

v. the judgment/arbitral award does not conflict with another judgment previously or simultaneously issued by a Honduran court.

The recognition and enforceability process of arbitration awards in Honduras is the same as that established for foreign judgments.

There are no further updates or developments of particular note.

If the evidence is admitted by the Supreme Court, a date for a hearing will be set, in order for all evidence and allegations to be filed and presented to the Supreme Court. The hearing will not take more than 10 days and the Supreme Court will have to issue a judgment within such period. The Supreme Court may not take more than 10 days to issue its decision recognising or refusing to recognise the foreign judgment or arbitral award. No appeal may be filed against such decision.The following must also be considered for the recognition of foreign judgments/arbitral awards:Judgments/arbitral awards obtained in a foreign court or foreign arbitral tribunal, as applicable, shall be recognised and enforceable in the courts of Honduras, provided that:a) there is a treaty between Honduras and the country in which

such judgment/arbitral award has been rendered, and the provisions of such treaty shall apply;

b) in the absence of a treaty, under the reciprocity rule, reciprocity will be presumed and a judgment/arbitral award, given by a competent foreign court, will be admissible in the Honduran courts and will be enforceable thereby under the same terms and conditions under which such foreign court recognises judgments issued in Honduras; or

c) if (a) and (b) above are not applicable, such foreign judgment/arbitral award may be enforced in Honduras, provided that:i. the obligation pursuant to which the judgment was

rendered is considered res judicata in the issuing country, and has been issued by a competent court recognised as such by the Honduran norms for international jurisdiction;

ii. the defendant has been personally summoned, even if declared “in default”, the defendant was provided with the opportunity to exercise its right to defence, and the defendant has been duly notified of such judgment/arbitral award in accordance and compliance with the laws of the issuing country;

Associate

Education: Juris Doctor, Universidad Nacional Autónoma de Honduras (UNAH). Master’s degree in Business Law, Universidad Tecnológica de Honduras (UNITEC).

Practice Areas: Civil Law, Telecommunications, Transportation.

Experience:

Jessy is an Attorney with experience in business. She has provided legal assistance to various companies on issues related to contracts, mergers and acquisitions, due diligence processes, corporate restructuring, purchases of commercial establishments, as well as competition issues at the regulatory level.

Within her legal practice, she provides corporate advice to companies on corporate governance guidelines, advice on hiring in various branches, and on the organisation and administration of legal compliance before regulatory entities.

Jessy’s expertise includes providing legal advice to national and international companies on the local and international implementation of their projects, with special emphasis on telecommunications, transportation and customs matters, environmental issues, and all corporate matters related to obtaining required permits and authorisations to operate in Honduras, as well as their adherence to forms of modern contracting and e-commerce.

She has advised several maritime clients regarding vessel issues, personal injury and wrongful death, marine insurance, vessel arrests, liens, environmental law and tort claims, in addition to commercial and customs matters.

Languages: Spanish, English and French.

Associate

Education: Juris Doctor, Universidad de Navarra, Pamplona, Spain.

Practice Areas: Civil, Corporate, Labour and Tax.

Experience:

René provides legal advice to local and international companies established in the Central American region in their corporate, labour and tax structures. René acts as legal counsel to multilateral agencies and international financial entities in structuring cross-border loan transactions. He provides advice on foreign direct investment through the establishment of local operations, and in the design and negotiation of contracts in areas such as franchising, distribution and agency.

Languages: English and Spanish.

Memberships: Honduras Bar Association.

Jessy AguilarNASSAR ABOGADOSColonia Lomas del Guijarro SurEdificio Torre Alianza IQuinto piso (local 501)TegucigalpaHonduras

Tel: +504 2271 0061Email: jaguilar@nassarabogados.comURL: www.nassarabogados.com

René Serrano ZelayaNASSAR ABOGADOSColonia Lomas del Guijarro SurEdificio Torre Alianza IQuinto piso (local 501)TegucigalpaHonduras

Tel: +504 2271 0061Email: rserrano@nassarabogados.com URL: www.nassarabogados.com

Chapter 24

1 Marine Casualty

(i) CollisionThe International Regulations for Preventing Collisions at Sea 1972 as incorporated into the Merchant Shipping (Safety) (Signals of Distress and Prevention of Collisions) Regulations (Cap. 369N) apply to vessels registered in Hong Kong and to any other vessels within Hong Kong waters.The International Convention on Salvage 1989 is implemented in Hong Kong through the Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (“MSCO”) (Cap. 508). (ii) PollutionThe International Convention for the Prevention of Pollution from Ships 1973 as subsequently modified is implemented through the Merchant Shipping (Prevention and Control of Pollution) Ordinance (Cap. 413) and its subsidiary legislation.The International Convention on Civil Liability for Oil Pollution Damage 1992 and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992 are implemented through the Merchant Shipping (Liability and Compensation for Oil Pollution) Ordinance (Cap. 414).The Shipping and Port Control Ordinance (Cap. 313) governs the discharge of oil into Hong Kong waters.(iii) Salvage / general averageThe International Convention on Salvage 1989 has force of law in Hong Kong by the MSCO. The common law remains effective in relation to salvage operations falling outside the scope of the Convention and assists in the interpretation and application of the Convention.There is no legislation governing general average in Hong Kong. Common law rules form the law on general average. Usually, parties agree to apply the York-Antwerp Rules by contract.(iv) Wreck removalUnder the Shipping and Port Control Ordinance (Cap. 313), the Director of Marine has the power to direct the owner, master or other persons who have control over a stranded, abandoned or sunken vessel in Hong Kong waters to remove that vessel.If the directions are not complied with, the Director of Marine may seize and detain the vessel together with any cargo or things on

board. Subject to the payment of all expenses in the seizure, the Director may sell or dispose of the vessel, cargo or other things as he thinks fit.Hong Kong is not a party to the Nairobi International Convention on the Removal of Wrecks.(v) Limitation of liabilityThe Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap. 434) incorporates the provisions of the two main conventions of limitation of liability, namely the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the 1996 Protocol (“Limitation Convention”), and the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974 and its 1976 Protocol (“Athens Convention”). (vi) The limitation fundA limitation fund may be constituted with the Court of Hong Kong in accordance with Article 11 of the Limitation Convention.

Any casualty involving a Hong Kong registered ship or occurring within Hong Kong waters must be reported to the Director of Marine.The Marine Accident Investigation and Shipping Security Policy Branch of the Marine Department (“MAISSPB”) conducts investigations to establish the causes and circumstances of marine accidents (with the aim of improving the safety of life at sea). It also carries out official inquiries ordered by the Director under various shipping ordinances including the Merchant Shipping Ordinance (Cap. 281) and the Shipping and Port Control Ordinance (Cap. 313).Also, the Chief Executive may, whenever the circumstance warrants it, as detailed in the Merchant Shipping Ordinance (Cap. 281), order a marine court to make investigations as to casualties affecting ships or to inquire into charges of incompetency or misconduct on the part of the crew.

2 Cargo Claims

The Hague-Visby Rules have the force of law in Hong Kong by virtue of the Carriage of Goods by Sea Ordinance (“COGSO”)

Evangeline Quek

Andrew Rigden Green

Stephenson Harwood

Hong Kong

Hong KongStephenson Harwood

■ mortgages;■ damage done or received by a ship; ■ damage to life or goods; ■ agreements related to carriage of goods in a ship or the use or

hire of a ship; ■ salvage; ■ towage or pilotage; ■ goods or materials supplied to a ship for operation or

maintenance (i.e. necessaries); ■ construction, repair, dock charges and dues; ■ crew wages, Master’s wages and disbursements; or ■ general average. This includes the maritime liens available under Hong Kong law such as damage done by a ship, salvage, wages and Master’s disbursements. To arrest a ship in Hong Kong, the applicant must file (1) an admiralty writ in rem, (2) an application for an arrest warrant, and (3) a supporting affidavit. Before applying for the arrest warrant, the applicant should check the caveat book for caveats against arrest. When the warrant of arrest is obtained, the warrant is served by the Bailiff on the ship. The Bailiff must be provided with (1) a request to execute the warrant, and (2) an undertaking to pay the Bailiff’s costs of the arrest. Counter-security is not required. The affidavit must establish a right to arrest, including the existence of an admiralty claim and ownership of the ship to be arrested by the person who would be liable on an action in personam. As the application is usually made without notice to the opponent, the applicant has a duty to make full and frank disclosure when applying. If there is material non-disclosure, the warrant of arrest may be set aside and damages for wrongful arrest may be ordered if the non-disclosure amounts to proceeding in a “cavalier fashion” or “malicious negligence”.Alternatively, the claimant may consider applying for a Mareva injunction over assets in Hong Kong. A Mareva injunction may be obtained in aid of foreign proceedings (section 21M of the High Court Ordinance (Cap. 4)). Briefly, the claimant must demonstrate that there is a good arguable case, a real risk of dissipation of assets, and that the balance of convenience is in favour of granting the injunction order.

It is possible to do so, provided that the person liable for the unpaid bunkers is the owner or demise charterer of the vessel to be arrested. Where the bunker supply contract is with a third party, no right of arrest will exist unless it can be shown that the third party was acting as agent for the owner or demise charterer of the vessel.

In certain circumstances, a maritime claimant may have a lien. For example, a carrier may have a lien over cargo for outstanding freight and general average contribution. An owner of a ship may also have a contractual right to lien cargo, sub-hire or sub-freight under a charterparty.

(Cap. 462). The Hague-Visby Rules set out the responsibilities and liabilities of the carrier under every contract of carriage of goods by sea in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, and their rights and immunities.

It would depend on how the claim is framed by cargo claimants. If the claim is brought against the contractual carrier, the Hong Kong Court will consider the contract of carriage between the parties to ascertain the responsibilities of the contractual carrier and if liable, if the contractual carrier can rely on any contractual exceptions or limitations or the claim is time barred. The Hong Kong Court will also consider the Clause Paramount (if any) in the contract of carriage to determine if the Hague Rules or Hague-Visby Rules or the Hamburg Rules apply.

Assuming that the Hague-Visby Rules (as implemented in Hong Kong law) applies, the shipper is deemed to have guaranteed to the carrier the accuracy of the characteristics of the cargo furnished by him. If the declaration is inaccurate, the shipper will have to indemnify the carrier against all loss, damages and expenses arising or resulting from the inaccuracies. This indemnity may be expressly provided for in the contract of carriage.

3 Passenger Claims

The Athens Convention is in force in Hong Kong by virtue of the Merchant Shipping (Limitation of Shipowners’ Liability) Ordinance (Cap. 434). It sets out the liability of the carrier and its servants or agents and a system whereby they can limit their liabilities for incidents causing death, personal injuries or loss/damage to passengers’ luggage.Under the Control of Exemption Clauses Ordinance (Cap. 71), contractual clauses seeking to exclude liability arising from death or personal injuries of passengers caused by negligence are unenforceable in Hong Kong.

Hong Kong is a signatory to the International Convention on the Unification of Certain Rules relating to the Arrest of Sea-going Ships 1952. If the maritime claim comes within the admiralty jurisdiction of the Hong Kong Court, the party seeking to obtain security may apply for an arrest, subject to certain procedural requirements being fulfilled. The types of maritime claims over which the Hong Kong Court has admiralty jurisdiction are set out at section 12A of the High Court Ordinance (Cap. 4). Essentially, these are: ■ possession or ownership / disputes between co-owners in

respect of the ship;

6 Procedure

(i) National courtsThe Court of First Instance at the Hong Kong High Court has admiralty jurisdiction. Claimants may pursue against or arrest vessels to obtain security for the claim. An admiralty judge is assigned to hear such cases. Depending on the nature of the claim, cases may also be assigned to specialist court lists, such as the Commercial List and the Arbitration List.Litigants are expected to take a proactive approach in managing their cases. The Court has wide case management powers to facilitate expedient resolution of cases, particularly after the Civil Justice Reform in 2009. Cases typically take some 12 to 18 months for resolution, depending on the circumstances of the case and parties’ conduct of the case.(ii) ArbitrationHong Kong adopts a pro-arbitration approach. The Arbitration Ordinance (Cap. 609) incorporates most provisions of the UNCITRAL Model Law on International Commercial Arbitration 2006. Arbitration is also facilitated by the Hong Kong International Arbitration Centre (“HKIAC”), with established arbitration rules for administration of cases. The Maritime Arbitration Group, a division within the HKIAC, provides a list of arbitrators experienced in maritime matters. (iii) Mediation / alternative dispute resolutionThe Hong Kong Courts encourage parties to mediate and resolve their differences. It is a procedural requirement in civil litigation that parties state in a certificate that they have considered the possibility of a mediation, and if they do not wish to mediate, to state the reasons. There may be adverse costs consequences for a party that refuses mediation without good reasons. Various institutions are in place to assist a mediation where required.

Hong Kong retains the common law system post the 1997 handover; its jurisprudence is largely derived from English law. Judges are highly regarded for their impartiality and the soundness of the law. Renowned judges from major Commonwealth jurisdictions also sit on the Court of Final Appeal. With the Civil Justice Reform in 2009, certain court processes have been streamlined with the goal of expediting the fair resolution of cases.Arbitration has also steadily grown and Hong Kong is one of the premier arbitration centres in Asia. The UNCITRAL Model Law on International Commercial Arbitration 2006 applies in Hong Kong, subject to certain modifications as set out in the Arbitration Ordinance (Cap. 609). Finality and certainty are promoted, with restrictive grounds to challenge an arbitral award, but parties can agree to have a right to apply to the court to appeal a question of law.

Cargo liens should be exercised with particular consideration to a number of factors, including:■ whether cargo owners had in fact agreed to the exercise of a

lien over the cargo;■ whether the law of the place where the lien is to be exercised

recognises the lien; and■ practical and other logistical issues in the exercise of a lien. If there is a concern over dissipation of assets by the debtor, one can consider a Mareva injunction (see answer to question 4.1 above).

The Hong Kong Court will accept a bail bond or payment into court. If the arresting applicant agrees, security may be provided in the form of a P&I club letter of undertaking or a bank guarantee.

5 Evidence

Provisions within the court procedural rules are in place for the inspection of a ship or other property, obtaining of information or other evidence, detention and preservation of the subject matter and taking of samples. Anton Piller orders (i.e. orders to search premises and seize evidence without prior warning) may be obtained. Pre-action disclosure is possible subject to the satisfaction of the stringent necessity and relevance requirements.As to arbitration proceedings, the Arbitration Ordinance (Cap. 609) provides for the arbitral tribunal to have powers to make orders directing the inspection, photographing, preservation, custody, detention or sale of any relevant property by the arbitral tribunal, a party to the arbitral proceedings or an expert; or directing samples to be taken from, observations to be made of, or experiments to be conducted on any relevant property. The arbitral tribunal also has power to make orders to preserve evidence that may be relevant and material to the resolution of the dispute and/or to preserve assets out of which a subsequent award may be satisfied.

In Hong Kong, parties are obliged to disclose all relevant documents which are or have been in their (or their agents’ or employees’) possession, custody or power, including those that may be detrimental to their case. Parties and their lawyers are expected to take active steps to preserve such documents at an early stage of the litigation.“Privileged” documents are exempted from disclosure. Any document created for the dominant purpose of assisting an actual or contemplated litigation, such as communication with investigators and surveyors, is privileged. Communications between clients and their legal advisers for the purpose of obtaining legal advice are protected from disclosure, and this privilege is entrenched by article 35 of the Basic Law. The Court of Appeal in Citic Pacific Ltd v Secretary for Justice No. 2 [2015] 4 HKLRD 20 held that legal advice privilege may cover communications with in-house counsel and employees throughout the business under certain circumstances.

New York Convention on the Recognition and Enforcement of Arbitration Awards 1958. Awards from non-New York Convention contracting states are enforced in the same way as awards made in Hong Kong under the Arbitration Ordinance (Cap. 609). The Ordinance also sets out provisions for the enforcement of arbitral awards from mainland China and Macau.

In recent years, Hong Kong has taken a tougher stance on air pollution, as reflected in the penalties against dark smoke emission and the use of high sulphur fuel at berth. Currently, there are discussions to extend the current cap of 0.5 per cent on the sulphur content of fuel oil on ocean-going vessels at berth to cover all marine vessels operating in Hong Kong waters.New arrangements have been made by the Immigration Department to allow non-local seafarers joining a vessel stranded in Hong Kong to work on board beyond the original 14-day limit and subsequently depart with it, where the vessel is stranded due to unforeseeable circumstances including ship arrest. This greatly reduces the cost of ship arrest in Hong Kong waters. For the first time since the Competition Ordinance came into effect in Hong Kong, the Competition Commission granted a conditional block exemption of vessels sharing agreements between liner shipping companies. The block exemption is valid for five years starting from 8 August 2017. However, voluntary discussion agreements are not exempted.

The Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap. 319) and the Foreign Judgments (Reciprocal Enforcement) Order (Cap. 319A) govern the reciprocal recognition of foreign judgments in Hong Kong, including judgments of certain Commonwealth countries, including Australia, Bermuda, Brunei, India, Malaysia, New Zealand, Singapore and Sri Lanka, and to some non-Commonwealth countries, including Austria, Belgium, France, Germany, Israel, Italy and the Netherlands. The Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) governs the enforcement of judgments given on or after 1 August 2008 of the Supreme, Higher and Intermediate People’s Court in mainland China and certain recognised Basic People’s Courts. The arrangement applies only to the enforcement of money judgments in civil and commercial matters, not being a sum payable in respect of taxes or other fines or penalties. In the absence of any applicable statutory regime, the common law principles apply. To enforce in common law, the judgment creditor of the foreign judgment has to commence civil proceedings in Hong Kong by way of writ. The court will enforce the foreign judgment if certain conditions are met, such as the judgment being shown to be final and conclusive, and it is a claim for a fixed sum. Usually, it is possible to apply for summary judgment to speed up the recognition and enforcement process.

Hong Kong continues to take a pro-enforcement approach towards arbitral awards after the 1997 handover, and remains a party to the

Stephenson Harwood is a law firm headquartered in London, with over 1,000 people worldwide, including more than 170 partners, and is committed to achieving the goals of clients – listed and private companies, institutions and individuals. Our offices in Asia provide English and Hong Kong legal advice and in conjunction with our associated offices provide Chinese, Indonesian and Singapore legal advice. Our lawyers are fluent in English and the major Asian languages: Chinese (Cantonese, Mandarin, Shanghainese), Bahasa and Korean as well as French and Russian.

Our world-leading marine law practice offers a breadth of services to clients in the shipping, insurance, offshore and commodity sectors. Our clients include many of the world’s largest shipowners, shipyards, major ship finance banks, marine insurers and P&I clubs, energy services companies, oil and gas businesses and commodities traders.

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Evangeline specialises in dispute resolution, focusing in particular on commercial, international trade and shipping matters. She practised in Singapore before moving to Hong Kong with a well-known international law firm in 2008. She is currently qualified to practise English and Hong Kong law. She is a native English speaker and speaks fluent Mandarin Chinese and conversational Cantonese.

She is instructed on a regular basis by international group P&I Clubs and shipowners and charterers in Hong Kong, Taiwan and the PRC. She is very experienced with obtaining pre-action security. The disputes are then resolved by LMAA, HKIAC, ICC, SIAC or ad hoc arbitrations or litigation in the English or Hong Kong courts.

Part of Evangeline’s practice is also focused on providing non-contentious advice to shipowners and operators. She negotiates and drafts both standard form and custom commercial and shipping agreements for her clients.

Andrew specialises in marine business and international trade, in both dispute resolution (arbitration, litigation and mediation) and advisory work (contract drafting and negotiation). His practice includes commercial shipping, shipping litigation, ship-building and offshore construction, commodities and marine insurance. He regularly represents ship-owners, charterers, commodity traders, energy clients, bill of lading holders, P&I clubs, insurers, shipyards, offshore contractors and banks.

He has represented clients in a number of substantial disputes and cross border transactions involving different jurisdictions in Europe, the former Soviet Union, Asia, Africa and the Caribbean. He is familiar with maritime, trade and institutional arbitration as well as high court litigation.

Andrew speaks fluent French and Russian. Andrew has been with the firm since 2001 and is a partner in both London and Hong Kong. He has worked in the Marine and International Trade group for over 10 years.

Evangeline QuekStephenson Harwood18th floor, United Centre95 QueenswayHong Kong

Tel: +86 21 5385 2299Email: Evangeline.Quek@shlegal.comURL: www.shlegal.com

Andrew Rigden Green Stephenson Harwood18th floor, United Centre95 Queensway Hong Kong

Tel: +852 2533 2761Email: Andrew.RigdenGreen@shlegal.comURL: www.shlegal.com

Chapter 25

1 Marine Casualty

(i) CollisionThe legal regime relating to collisions and accidents at sea occurring in Indian territorial waters, is governed by the Part X of the Merchant Shipping Act, 1958 (MSA), which provides for:1) Division of loss in case of collision (Section 345). The

apportionment of liability shall be in proportion to the degree in which each ship is at fault.

2) Damages for personal injury (Section 346). The liability of the owners of the ships concerned is joint and several.

3) Right of contribution (Section 347). In case of loss of life or personal injuries suffered by a person on board a ship owing to the fault of that ship and of any other ship or ships, and a proportion of the damages being recovered from the owners of one of the ships which exceeds the proportion in which she was at fault, the said owner may recover, by way of contribution, the amount of the excess from the owners of the other ship or ships by which those ships were respectively at fault; the right of limitation of liability being, however, unaffected.

4) The duty of the Master of Ship to assist in case of a collision (Section 348).

5) A requirement to record the collision in the official log book of the vessel involved in the incident (Section 349).

6) A report to be given to the Central Government of India regarding accidents to ships, specifically in relation to loss of life or injury or damage (Section 350).

7) Notice of the loss of an Indian ship to be given to the Central Government (Section 351).

A suit for damages by the shipowner against any vessel for collision on the high seas must be tried exclusively by the High Court on its Admiralty side, regardless of whether the vessel is an Indian vessel or a foreign flag vessel (Kamlakar Mabadev v. Scindia Steamship Navigation Co. Ltd ([1962] Bombay 146)).A suit for damages with respect to loss of life as a result of collision on the high seas, whether in rem or in personam, falls within the exclusive jurisdiction of the High Court under its Admiralty jurisdiction (Bai Kashibai v. Scindia Steamship Navigation Co. Ltd ([1961] AV 8209)).

(ii) PollutionThe Sections under Parts X-B, X-C and XI-A deal with the prevention and containment of pollution of the sea by oil. India follows the International Convention on Civil Liability for Oil Pollution Damage, 1992 (as amended). Section 352 G applies to every Indian ship, wherever it is, and every foreign ship while it is at a port or place in India or within Indian territorial waters or marine areas adjacent thereto over which India has or may have exclusive jurisdiction. In regard to control of marine pollution under territorial waters and on the continental shelf, the Exclusive Economic Zone and any Maritime Zones Act, 1976 or any other law currently in force applies.The MSA also provides for civil liability for oil pollution damage and international oil compensation funds. Apart from the above, there are several rules that have been drawn up with regard to pollution. These rules are as follows:■ The Merchant Shipping (Civil Liability for Oil Pollution

Damage) Rules, 2008.■ The Merchant Shipping (International Fund for Compensation

for Oil Pollution Damage) Rules, 2008.■ The Merchant Shipping (Prevention of Pollution by Garbage

from Ships) Rules, 2009.■ The Merchant Shipping (Prevention of Pollution by Sewage

from Ships) Rules, 2010.■ The Merchant Shipping (Prevention of Pollution by Harmful

Substances Carried by Sea in Packaged Form) Rules, 2010.■ The Merchant Shipping (Control of Pollution by Noxious

Liquid Substances in Bulk) Rules, 2010.■ The Merchant Shipping (Prevention of Pollution by Oil from

Ships) Rules, 2010.The Union Cabinet, chaired by the Prime Minister, has approved the Ministry of Shipping’s proposal for India’s accession to the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunker Convention) of the International Maritime Organization (IMO) as well as to amend the Merchant Shipping Act, 1958, Part XBA.The proposed amendments to the Merchant Shipping Act 1958, if enacted, shall also give effect to the Nairobi Wreck Removal Convention and the Salvage Convention of the IMO, to which India is already a party.(iii) Salvage / general averagePart XIII of the MSA governs Wreck and Salvage (Sections 402 to 404).The MSA does not contain any specific provisions or rules in relation to general average. The law on general average would therefore be

Mulla & Mulla & Craigie Blunt & Caroe Shardul Thacker

IndiaMulla & Mulla & Craigie Blunt & Caroe

(v) Limitation of liabilityPrior to 2002, India was following the Convention of Limitation of Liability of the Owners of Sea-Going Ships 1957 (1957 Convention) and the MSA incorporated the 1957 Convention on Limitation of Liability. However, in 2002 the MSA was amended to bring it into line with the Convention on Limitation of Liability of Maritime Claims (LLMC) 1976. The said Convention provides for a higher limitation fund but makes it extremely difficult to deprive the owner of the right to limit liability. The test to the owner of the right to limit liability is: “the loss should result from any personal act or omission committed by the ship owner or the salvor with the intent to cause such loss committed recklessly and with knowledge that such loss would probably result.”On 23 March 2011, India acceded to the 1996 protocol, which prescribes a higher limit. The protocol of 1996 amends the Convention on Limitation of Liability for Maritime Claims, 1976. The shipowner, salvor or any person for whose act, neglect or default, the shipowner or salvor, as the case may be, is responsible and an insurer of liability for the claims to the same extent as the assured himself, may limit his liability as provided under Section 352 B in respect of loss of life, personal injury, loss or damage to property including damage to harbour works, basins and waterways and aids to navigation, delay in carriage by sea or cargo or passengers or their luggage by sea, etc.The following persons/entities are now allowed to limit liability:(i) The owner of a vessel.(ii) The charterer/manager/operator of a vessel.(iii) Master/crew/other servants of the owner, manager or operator

of the vessel acting in the course of their employment.(iv) A salvor, including for any act, neglect or default of persons

for whom he or she is responsible.(v) An insurer of liability to limit his or her liability to the same

extent as his or her assured.The old Section 352 A(2) has been deleted from the Act, and the onus of proof now lies on the claimant or a person attempting to break the limitation as construed by Article 4 of the Convention on Limitation of Liability for Maritime Claims, 1976 (LLMC).The Ministry of Shipping, by notifying the Merchant Shipping (Limitation of Liability for Maritime Claims) Rules, 2015 and further amending the same by the Merchant Shipping (Limitation of Liability for Maritime Claims) Rules, 2017, has specified the limit of liability for claims under Section 352 A, particularly those relating to loss of life, personal injury, loss or damage to property.Section 352 B provides for limitation of liability in accordance with LLC 1996.Section 352 C provides for the constitution of limitation funds and consolidation of claims.Section 352 D provides for Release of Ship, etc.Section 352 F also extends the right to limit the liability to the charterer, manager or operator of the vessel; master, members of the crew and other servants of the owner, charterer, manager or operator acting in the course of the employment; in the same manner as they apply in relation to the owner.Part XA of the MSA enumerates the provisions for Limitation of Liability. A suit is required to be filed by the owner or salvor, etc., as the case may be, to limit liability.(vi) The limitation fundThe limitation fund would have to be set up in accordance with the limits provided in the Protocol of 1996 amending the Convention of Liability for Maritime Claims, 1976. Specific provisions relating to limitation funds and their procedure are mentioned in Part X-A of the MSA, and more particularly under Section 352 C.

dependent upon the common law and the provisions of the contract between the parties. Generally, the contract or a bill of lading incorporates the York-Antwerp Rules for adjustment of general average and for security and payment of general average contribution. However, Section 352 A(3)(b) exempts claims for salvage or to claims for contribution in general average from the limitation of liability.(iv) Wreck removalWreck removal is governed by Part XIII of the MSA (Sections 390 to 404).Where any ship is wrecked, stranded or in distress at any place or near the coast of India, the receiver of wreck, within the limits of whose jurisdiction the place is situated, is entitled to proceed and take command, and takes steps for the preservation of the vessel and the lives of the person belonging to the vessel and its cargo or equipment (Section 392). Investigations are carried out by the receiver of wreck in respect of wrecks which are stranded or in distress (Section 396).The receiver may in certain cases order immediate sale of the wreck where it is under the value of Rs. 500 or it is damaged, or the cargo is perishable in nature, to the extent that it cannot be kept or is not of sufficient value to be worth incurring warehousing costs.Section 392 governs the duty of the receiver where a vessel is in distress.Section 394 gives powers to the receiver of wreck, where necessary, to suppress, plunder and disorder by force (Section 394).Section 395 lays down the procedure to be observed by persons finding a wreck.Section 396 governs investigations to be carried out by a receiver into certain matters in respect of vessels wrecked, etc.Section 398 governs the immediate sale of a wreck by the receiver in certain cases.Section 399 provides for claims made by owners of a wreck.Sections 400 and 401 provide for the prohibition of certain acts in respect of wrecks, and search warrants where a wreck is involved, respectively.Section 402 governs salvage payable for saving life, cargo or wreck.Any dispute concerning the amount due for salvage services is to be determined by: (i) a Judicial Magistrate of the first class or the Metropolitan Magistrate, as the case may be, where the amount claimed does not exceed Rs.10,000; or (ii) High Court where the amount exceeds Rs.10,000.There are, however, amendments suggested in the Merchant Shipping (Amendment) Bill, 2016 in relation to Section 390.The old Section 402 relating to salvage will be substituted with the following:(i) New Section 402 – Application of the part to salvage.(ii) Section 402 A – Definitions.(iii) Section 402 B – Salvage payable for saving life, cargo or

wreck.(iv) Section 402 C – Salvage operations controlled by Government

or port and public authorities.(v) Section 402 D – Salvage contracts.(vi) Section 402 E – Annulment and modification of contracts.(vii) Section 402 F – Duties of salvor and of owner and master.(viii) Section 402 G – Rights and duties of Central Government in

relation to salvage operations.(ix) Section 402 H – Rights of salvors.(x) Section 402 I – Adjudication of disputes.(xi) Section 402 J – Extinguishment of claims.

■ Section 373 provides that a Marine Board outside India may investigate casualty, loss of life, incompetency or misconduct, damage, etc.

■ Sections 374, 375 and 376 provide for the constitution and procedure of a maritime board, powers of a maritime board and the decision of the maritime board to be given by majority.

■ Sections 377 to 381 provide for cancellation, suspension of the certificate of master, mate or engineer, and the modalities in respect thereof.

■ Sections 383 to 386 provide for the constitution of a Court of Survey, its procedures and its power to make rules.

2 Cargo Claims

India has enacted the Indian Carriage of Goods by Sea Act, 1925 (COGSA), which has adopted the Hague Rules subject to some notifications. The COGSA was amended in 1993 by the Multimodal Transportation of Goods Act, 1993 (MTOGA) to give effect to the amendments to the Hague Rules, more particularly the Hague-Visby Rules and SDR Protocol, by the Protocol signed at Brussels in 1968 and 1979. Cargo claims can be enforced by instituting proceedings by seeking principles of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (Admiralty Act). The Admiralty Act came into force on 1 April 2018 and repealed the application of the following acts in India:(a) the Admiralty Court Act, 1840;(b) the Admiralty Court Act, 1861;(c) the Colonial Courts of Admiralty Act, 1890;(d) the Colonial Courts of Admiralty (India) Act, 1891; and(e) the provisions of the Letters Patent, 1865 insofar as they

apply to the admiralty jurisdiction of the Bombay, Calcutta and Madras High Courts.

The important changes to the COGSA brought about by the MTOGA are:(i) it provides for parties to agree on the extension of the one-

year period to bring suit for cargo claims;(ii) it has increased the per-package limitation to bring the

COGSA into line with the Hamburg Rules, i.e. the package limitation under Indian law is now 666.66 special drawing rights (SDR) per package or unit or 2 SDR per kilogram of gross weight of the goods lost or damaged, whichever is higher; and

(iii) neither a carrier nor the ship shall be entitled to the benefit of the package limitation of liability if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result.

Under the Admiralty Act, loss or damage to or in connection with any goods constitutes a maritime claim.

The key principles applicable to cargo claims brought against the carrier are set out under the COGSA.The rules set out in the Schedule of the COGSA are applicable to the carriage of goods by sea in ships carrying goods from any port in India to any other port whether in or outside India. The Schedule sets

Section 352 C deals with limitation fund and consolidation of claims against owners. This Section states that where any liability is alleged to have been incurred by the owner of a vessel in respect of claims arising out of an occurrence and the aggregate of the claims exceeds or is likely to exceed the limits of liability of the owner, then the owner may apply to High Court for the setting up of a limitation fund for the total sum representing such limits of liability.To set up a limitation fund, the owner is required to make an application to the High Court. The High Court determines the owner’s liability and directs him or her to deposit such an amount or security as it deems fit to constitute the fund.

Part XII (Sections 357 to 372) of the MSA provides for investigations and inquiries. The fundamental purpose of a marine accident investigation is to determine the circumstances and the causes of accidents that have been reported, with the aim of improving the safety of life at sea and the avoidance of accident in the future. Towards this objective, shipping casualties occurring in relation to Indian ships are investigated, in pursuance of the mandate requirement of Part XII of the MSA. Similar reports are received from foreign flag administrations for accidents occurring on ships where Indians have been involved. These reports are collated and disseminated for information and learning.Section 359 provides for the obligation of any officer such as the master, pilot, harbour master or other person in charge of the ship or, where two ships are concerned, in charge of each ship at the time of the casualty, to notify the Central Government forthwith about the shipping casualty.The officer appointed by the Central Government may proceed to make a preliminary inquiry into the casualty (Section 360).A formal investigation into the shipping casualty is also carried out by the Judicial Magistrate of the first class and/or a Metropolitan Magistrate (Section 361).Under Section 362, the court has the power while making a formal investigation into a shipping casualty, to inquire into any charge of incompetency or misconduct arising in the course of investigation against any master, mate or engineer to any charge of a wrongful act or default on his part in causing a shipping casualty.Under Section 363, the Central Government has powers to direct inquiry into charges of incompetency or misconduct of any master, mate or engineer.Further provisions are as follows:■ Section 364 gives a person an opportunity to make a defence.■ Section 366 provides that a court may appoint any assessor

(not less than two to three persons) who is conversant with either maritime or mercantile affairs, to assist the court.

■ Section 367 empowers the court to arrest or issue a warrant of arrest for any person or witness.

■ Section 368 empowers the court to make an investigation or an inquiry to arrest or commit a person, or hold him under bail to take his trial before a proper court, and to oblige any person to give evidence at trial.

■ Section 369 provides for a full report, including the conclusion arrived at, together with evidence in relation to the investigation, and any inquiries to be transmitted to the Central Government.

■ Sections 370, 371 and 372 enumerate the powers of the court to censure, suspend and/or appoint a new master, mate and engineers based on investigations and enquiries held suo moto.

the High Court within whose jurisdiction the vessel is located would have to be moved for any reliefs for arrest in India. If the vessel is within the territorial waters of the Bombay High Court, viz. if it is at the vicinity of any port in the State of Maharashtra, this court would have jurisdiction, and likewise other High Courts would have jurisdiction over the coastal waters of the respective State.The claimant is required to file a plaint in court and pay the requisite court fees and thereafter move an application for arrest of the vessel ex parte. If the court is prima facie satisfied with the merits of the case, it will sign and issue a warrant for the arrest of the vessel. The warrant of arrest is then served through the officer of the court upon the vessel. The court and customs authorities are notified of the arrest of the vessel and they are required to ensure that the vessel does not sail away from the jurisdiction of the court.Under the Admiralty Act, the High Court may order arrest of any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim which is the subject of an admiralty proceeding, where the court has reason to believe that:(a) the person who owned the vessel at the time when the

maritime claim arose is liable for the claim and is the owner of the vessel when the arrest is effected;

(b) the demise charterer of the vessel at the time when the maritime claim arose is liable for the claim and is the demise charterer or the owner of the vessel when the arrest is effected;

(c) the claim is based on a mortgage or a charge of a similar nature on the vessel;

(d) the claim relates to the ownership or possession of the vessel; or

(e) the claim is against the owner, demise charterer, manager or operator of the vessel and is secured by a maritime lien as provided in Section 9 of the Admiralty Act.

When instituting an action for arrest, the plaintiff is required to furnish a written undertaking to pay damages in the event of a wrongful arrest. Under the Admiralty Act, the High Court may, as a condition of arrest of a vessel, impose upon the arrestor an obligation to provide an unconditional undertaking to pay such sums of money as damages, or such security for any loss or damage which may be incurred by the defendant as a result of the arrest. An application for interim relief by way of arrest is passed on a Judge’s Order, and a warrant of arrest is issued by the Sheriff. This warrant may be served on the vessel and the master at any time of the day or night. Upon service being complete, the vessel stands arrested. To ensure that the vessel does not sail away while under arrest, the vessel’s port agents, the port authorities and the customs authorities are also informed, and customs clearance will be denied. If there is an imminent risk that despite the order of arrest, the vessel will still evade arrest, on an application the court may also order the ship’s papers to be removed from the vessel and taken into custody by the Sheriff. The plaintiff is not obliged to maintain the vessel or pay any crew wages during the period of arrest of the vessel. (Coromandel International Limited v. M.V. Glory I and Andromeda Ship Holdings Ltd 2014 (3) AIR BR 365.)The vessel can be released upon the owner furnishing security of the claim, either by way of a bank guarantee or cash deposit.

Yes, it is possible for a bunker supplier to arrest a vessel for a claim relating to bunkers supplied by them to that vessel. Furthermore, the bunker suppliers whose dues remain unpaid can be secured by a maritime claim and/or by arresting the vessel to which the bunkers were supplied.

out the following powers/duties of the carrier (in short, the COGSA is applicable to onward cargo and not inward/import cargo):■ Article 3 provides for responsibility and liabilities.■ Article 4 provides for rights and immunities.■ Article 5 provides for the surrender of rights and immunities.■ Article 6 provides for special conditions where a carrier

is at liberty to enter into any agreement to enhance his responsibility or liability.

■ Article 7 provides for limitation on the application of these rules.

■ Article 8 provides for limitation of liability.■ Article 9 was amended in 1993 by the Multimodal

Transportation Goods Act, 1993 which provides for special drawing rights as the basis for calculating the liability of a carrier in relation to the cargo claim.

Article 3 (5) of the Carriage of Goods by Sea Act, 1925 obligates the shipper to guarantee to the carrier the accuracy at the time of shipment of the marks, number, quantity and weight of the cargo as furnished by him, and the shipper is obligated to indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars. If the shipper breaches this obligation, he will be liable to compensate for any loss caused to the carrier.Moreover, Article 4 (5) Para 4 of the COSGA further limits the liability of the carrier by stating that where the nature or value of the goods has been knowingly misstated by the shipper (so as to cause such entries) in the bill of lading, the liability of the carrier or ship shall not exceed the value so stated. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be binding or conclusive on the carrier.

3 Passenger Claims

Part VIII of the MSA contains provisions applicable to passenger ships and maritime passenger claims.Section 275 provides for refund of passage money and deposits.Section 279 provides for compensation for delay in sailing.The High Court may exercise jurisdiction to hear and determine any question on a maritime claim, against any vessel, inter alia arising out of any:■ loss or damage to or in connection with any goods; or■ agreement relating to the carriage of goods or passengers

on board a vessel, whether contained in a charter party or otherwise.

If a claimant has a claim which falls under the Admiralty Act, it is entitled to file an admiralty suit. The Admiralty Act stipulates that

5 Evidence

Under Order XXXIX, Rule VII of the Code of Civil Procedure, 1908 (CPC), the court may, on the application of any party to a suit, and on such terms as it thinks fit, make an order for the detention, preservation or inspection of any property which is the subject matter of such suit, or as to which any question may arise.For all or any of the aforesaid purposes, any person may be authorised to enter upon or into any land or building in the possession of any other party to such suit; and, for all or any of the aforesaid purposes, may be authorised to take any samples, make any observation or attempt any experiment, which may seem necessary or expedient for the purpose of obtaining full information or evidence.Under Section 139 of the Evidence Act, 1872 a person in possession of a document can be called upon to produce it in court, and the mere fact that he produces it does not make him a witness.

In every litigation process, each party is required to disclose the documents that are relevant to the issues in dispute to the other party. If disclosure is not sufficient, the other party can seek the production of these documents. As India has an adversarial litigation system, parties must prove their own cases, and discovery and production orders are not commonly used. An order for the discovery and production of documents can be sought before and, in certain cases, after the trial starts.Generally, in the event of non-disclosure, courts can draw adverse inferences.

6 Procedure

As far as national courts are concerned, it depends upon where court proceedings are filed. Proceedings in the Bombay High Court would take between seven and 10 years to be heard and decided finally.However, according to the Arbitration and Conciliation (Amendment) Act, 2015, particularly Section 29 A, the Arbitral Tribunal is required to give its award within 12 months of the formation of the Tribunal.Mediation proceedings can be completed within a year or so.

The judicial system in India is slow and there is a backlog of cases. It could take seven to 10 years for a suit to be decided, if not longer. An admiralty action in rem is an excellent remedy available to seek

In many other jurisdictions, while the bunker supplier’s claim is not secured by a maritime lien, it may qualify as a ‘maritime claim’, which may entitle the bunker supplier to arrest the vessel to which the bunkers were supplied (in some cases, also sister vessels).The Hon’ble Court has accordingly held that arrest of a vessel is not permissible for unpaid bunkers ordered by the time charterer of the vessel, since there is no in personam liability on the shipowner. The Hon’ble Court, in the case of Gulf Petrochem Energy Pvt. Ltd. v. m. t. Valor, followed this view and further held that in personam liability of a shipowner may arise in contract, quasi contract and tort.As per Indian law, bunkers are not considered to be maritime property (Peninsula Petroleum Ltd. v. Bunkers on Board the Vessel, M.V. Geowave Commander 2015(3) Bom CR 693).

It is not possible for the charterer/claimant to arrest a ship against which there exists no maritime claim. However, the Admiralty Act contemplates arrest of any other ship which is within the jurisdiction of the court. However, for the arrest of such other ship, it is important that the owner/demise charterer of the vessel at the time when the maritime claim arose is liable for the claim and is the owner/demise charterer of the vessel. In absence of any of the two aforesaid conditions, arrest of any other ship is not possible/permissible under Indian law. Lien on cargo can be exercised for unpaid freight or for general average contribution. Lien can also be exercised if there is a contractual right of the lien which is improperly exercised; the only remedy is to move the court.As per Section 5(1) of the Admiralty Act, the High Court may order the arrest of any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim which is the subject of an admiralty proceeding, where the court has reason to believe that: (a) the person who owned the vessel at the time when the maritime claim arose is liable for the claim and is the owner of the vessel when the arrest is effected; (b) the demise charterer of the vessel at the time when the maritime claim arose is liable for the claim and is the demise charterer or the owner of the vessel when the arrest is effected; (c) the claim is based on a mortgage or a charge of a similar nature on the vessel; (d) the claim relates to the ownership or possession of the vessel; or (e) the claim is against the owner, demise charterer, manager or operator of the vessel and is secured by a maritime lien as provided in Section 9 of the said Admiralty Act.

Security may often be placed ‘without prejudice’ to the owner’s contention that the vessel is wrongfully arrested, so that the vessel may not be unnecessarily detained until the issue of whether the arrest is wrongful or otherwise is ultimately determined by the court. Security is only accepted by way of a cash deposit or a bank guarantee. A Protection and Indemnity (P&I) Club letter of undertaking is not accepted without the plaintiff’s consent. The Bombay High Court, in the case of M.V. Nordlake v. Union of India (2012 (3) Bom CR 510), held that in the event that the value of the arrested vessel is less than the value of the plaintiff’s claim, the shipowner is liable to furnish security up to the value of the vessel.

(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;

(b) the original agreement for arbitration or a duly certified copy thereof; and

(c) such evidence as may be necessary to prove that the award is a foreign award.

(2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.

Conditions for enforcement of foreign awards:(1) Enforcement of a foreign award may be refused, at the

request of the party against whom it is invoked, only if that party furnishes to the court proof that:(a) the parties to the agreement referred to in Section 44

were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;

(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case;

(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced;

(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

(2) Enforcement of an arbitral award may also be refused if the court finds that:(a) the subject matter of the difference is not capable of

settlement by arbitration under the law of India; or(b) the enforcement of the award would be contrary to the

public policy of India. Explanation: without prejudice to the generality of clause

(b) of this sub-section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.

(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1), the court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.

Section 49 provides that where the court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that court.

security of a claim. The majority of the cases where security is furnished in court pursuant to an action in rem are settled out of court. The Admiralty Court can award damages against the plaintiff where the order of arrest was unjustifiably restrained and the party has suffered prejudice by such an order.

A foreign judgment is enforceable in India if it complies with the requirements of Section 13 of the CPC. A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigation under the same title, except:(a) where it has not been pronounced by a court of competent

jurisdiction;(b) where it has not been given on the merits of the case;(c) where it appears on the face of the proceedings to be founded

on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable;

(d) where the proceedings in which the judgment was obtained are opposed to natural justice;

(e) where it has been obtained by fraud; and(f) where it sustains a claim founded on a breach of any law in

force in India.A judgment of a court of a reciprocating territory country can be put into execution straight away if it complies with Section 13 of the CPC (supra).Section 44 A of the CPC states the following:(1) Where a certified copy of a decree of any of the superior

courts of any reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by the District Court.

(2) Together with the certified copy of the decree, a certificate from such superior court shall be filed, stating the extent, if any, to which the decree has satisfied or been adjusted, and such certificate shall, for the purposes of proceedings under this Section, be conclusive proof of the extent of such satisfaction or adjustment.

(3) The provisions of Section 47 shall, as from the filing of the certified copy of the decree, apply to the proceedings of a District Court executing a decree under this Section, and the District Court shall refuse execution of any such decree if it is shown to the satisfaction of the court that the decree falls within any of the exceptions specified in clauses (a) to (f) of Section 13.

Enforcement of foreign awards is governed by Part II of the Arbitration and Conciliation Act, 1996.Sections 47 and 48 of Part II of the Arbitration and Conciliation Act, 1996 are summarised below:Evidence:(1) The party applying for the enforcement of a foreign award

shall, at the time of the application, produce before the court:

Mulla & Mulla & Craigie Blunt & Caroe is a world-class firm with a broad-based practice and a diversified client base. It is one of India’s leading law firms proudly acting as legal counsel to numerous multinational companies, several large Indian corporates and a number of Fortune 500 companies. Individual partners concentrate on different practice areas providing specialist legal, commercial and technical services to clients. The firm’s in-depth knowledge and sound understanding of commercial and market realities result in providing relevant solutions which are legal and of real commercial value. Chambers and Partners have always ranked the firm as Band 1 in the field of shipping.

Key areas of practice: Admiralty; Arbitration (Domestic & International); Aviation Law; Banking & Securities; Capital Markets; Competition/Antitrust; Construction; Company/Commercial Law; Customs & Tariffs; Employment & Industrial Relations; Energy Law (Oil & Gas); Entertainment Law; Environmental Law; Finance Law (Aircraft, Ship & Project); Foreign Investment; IT; Infrastructure Projects (Power & Ports); Intellectual Property; Insurance Law; Litigation; Logistics; Mergers & Acquisitions; Media & Entertainment; Offshore Investment & Securities; Privatisation; Real Estate & Property Law; Tax Law; Telecommunications; and Trade & Transport.

Mr. Shardul Thacker heads the firm’s Banking, Maritime and Offshore practice group.

Lloyd’s List, on 12 December 2014, ranked him third in the ‘Top 10 Lawyers’ list, stating: “Highly regarded for his work in the liquefied natural gas sector, particularly for interesting and highly geared finance deals in relation to infrastructure projects, energy, ports and ships.”

He has extensive experience in structured ship and asset finance, acting for lenders. He advises on regulatory issues including Indian flagging, cabotage, tonnage tax, applicable taxes, licensing, etc.

Mr. Thacker has a sizeable practice in the offshore and energy project sectors, advising on upstream as well as downstream projects. His in-depth knowledge of these sectors assists him in offering solution-based and well-rounded advice. Mr. Thacker currently acts for a multinational in India’s first FSRU/FSU-based LNG port. Chambers’ interviewees testify to his leading position in the shipping sector, conferred on him by his outstanding depth of knowledge. He has been described as a “very safe pair of hands who’s aware of what’s going on, is very commercial and uses his vast experience to avoid pitfalls”.

He is India correspondent for Lloyd’s Maritime and Commercial Law Quarterly Digest and is the Vice President, Indian Maritime Law Association, affiliated to the Comité Maritime International (CMI).

He has received the Leading Lawyers Award from Chambers and Partners for Shipping and Maritime for several years, and is ranked in Who’s Who Legal for Transport – Shipping.

Shardul ThackerMulla & Mulla & Craigie Blunt & Caroe51, M. G. Road, Mulla HouseFortMumbai 400001India

Tel: +91 22 6634 5496 +91 22 2262 3191Email: shardul.thacker@mullaandmulla.comURL: www.mullaandmulla.com

The Admiralty Act came into force on 1 April 2018. It consolidates the existing laws relating to admiralty jurisdiction of courts, admiralty proceedings on maritime claims, and arrest of vessels; and stipulates the order of priorities for maritime claims/liens inter se as well as against other claims and related issues. It also repeals five obsolete British statutes on admiralty jurisdiction in civil matters, namely: (a) the Admiralty Court Act, 1840; (b) the Admiralty Court Act, 1861; (c) the Colonial Courts of Admiralty Act, 1890; (d) the Colonial Courts of Admiralty (India) Act, 1891; and (e) the provisions of the Letters Patent, 1865 applicable to the admiralty jurisdiction of the Bombay, Calcutta and Madras High Courts. The Admiralty Act makes the statute retrospective in application and therefore all admiralty proceedings in the concerned High Courts pending before commencement of the statute, as well as all actions initiated, by-laws, rules framed and notices issued under the repealed enactments will be now be adjudicated by the provisions of the Admiralty Act, 2017, as long as they are not inconsistent with the provisions of the same.The Admiralty Act confers admiralty jurisdiction on High Courts to order arrest of any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim.The Merchant Shipping Bill, 2016 was introduced in Lok Sabha (Parliament) on 16 December 2016 and is pending approval/ratification. Among other changes, the Bill replaces the Merchant Shipping Act, 1958, and repeals the Coasting Vessels Act, 1838.

Chapter 26

Indonesia

SSEK Legal Consultants

1 Marine Casualty

(i) CollisionWith regard to liability in a collision, the Indonesian Commercial Code (“ICC”), which was enacted in the 19th century, provides that:a. If the collision is caused by force majeure, or if there are

doubts as to the cause of the collision, the damages shall be borne by those who have suffered them.

b. If the collision is caused by the fault of one of the colliding vessels, liability to remedy the damages shall be borne by the vessel that committed the fault. Wirjono Prodjodikoro, an Indonesian scholar, stated that a collision caused by a defect (unseaworthiness) of the vessel shall also be considered as the fault of the vessel.

c. If the collision is caused by the fault of two or more vessels, the liability of each vessel is in proportion to the degree of their respective faults. Prodjodikoro stated that the test of fault is the impact of the fault on the damage suffered, irrespective of the intention (culpa) of the vessel.

d. If a vessel being towed collides due to the fault of the towing vessel, the owners of both the towed and the towing vessel shall be jointly and severally responsible for the damage.

Upon declaring independence in 1945, Indonesia decided that the articles of the ICC would continue to be followed unless they were contrary to the Constitution.Under Law No. 17 of 2008 regarding Shipping (“Shipping Law”), unless it can be proven otherwise, the master of the vessel shall be held liable in a vessel accident.As to collisions, Indonesia has ratified the 1972 International Regulations for Preventing Collisions at Sea, by way of Presidential Decree No. 50 of 1979, but has not ratified the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels.(ii) PollutionIndonesia has ratified the following treaties:a. The United Nations Convention on the Law of the Sea of

1982 (“UNCLOS”), by way of Law No. 17 of 1985.b. The International Convention for the Prevention of Pollution

from Ships of 1973, as modified by the Protocol of 1978 relating thereto and by the Protocol of 1997 (“MARPOL”),

by way of Presidential Decree No. 46 of 1986 and Presidential Regulation No. 29 of 2012.

c. The International Convention on Civil Liability for Oil Pollution Damage of 1969 and its amendment of 1992 (“CLC”), by way of Presidential Decree No. 52 of 1999.

Indonesia has not ratified the International Oil Pollution Compensation (“IOPC”) Fund Convention of 1992 and the Supplementary Fund Protocol of 2003.Under the Shipping Law, all crew members in a vessel are obliged to prevent and mitigate environmental pollution from their vessel. In addition, vessel owners or operators are obliged to procure an insurance policy for their pollution liability. Failure to comply may result in imprisonment and/or fines for vessel owners or operators.(iii) Salvage / general averageWe are not aware of any salvage conventions that have been ratified by Indonesia.The Shipping Law was further implemented by Minister of Transportation (“MOT”) Regulation No. PM 71 of 2013 on Salvage and Underwater Works, as amended by MOT Regulation No. PM 33 of 2016 (“MOT Reg 71/2013, as amended”). This regulation defines salvage as the provision of aid to a vessel and/or its cargo that has suffered a vessel accident or perils of the sea, including removing the shipwreck or underwater obstacle or other object. MOT Reg 71/2013, as amended provides that a salvage operation may only be conducted by a business entity specifically engaging in the salvage business, fulfils the technical requirements under MOT Reg 71/2013, as amended and holds a permit from the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) upon the recommendation of the Directorate General of Sea Transportation (“DGST”).Under Article 547 of the ICC, a salvage reward shall be paid for any salvage operation. Such reward must be paid even if the salvage operation is not successful, unless otherwise agreed by the parties. The salvor is also entitled to receive compensation for costs, losses and loss of profits.Indonesia has not ratified the York-Antwerp Rules, but parties may agree to incorporate such rule within their agreements. In the absence of a contractual provision on general average, the provisions of the ICC shall apply.(iv) Wreck removalIndonesia has not ratified the Nairobi International Convention on the Removal of Wrecks of 2007.The Shipping Law, as implemented by MOT Reg 71/2013, as amended, obliges a vessel owner to remove its shipwreck and/or cargo that are disturbing navigational safety and security within 180 days after such vessel and/or cargo sank.

Stephen Igor Warokka

Dyah Soewito

IndonesiaSSEK Legal Consultants

Article 513 of the ICC provides that if the bill of lading states that the “content/nature/amount/weight/size is unknown”, or a similar clause to this effect, the carrier will not be responsible for any cargo claim, unless the carrier should have known the condition and type of the cargo or the cargo was quantified before the carrier.Unless otherwise agreed by the parties, the ICC provides a one-year limit to bring legal claims related to: (i) payment to be made by the consignee; (ii) carriage of passengers and luggage against the carrier; and (iii) compensation for cargo damages.Aside from the ICC, an injured party is also entitled to submit a civil claim on the basis of an unlawful act (similar to tort) under the Indonesian Civil Code. Like the ICC, the Indonesian Civil Code was promulgated in the 19th century and has not been amended since Indonesian independence.

The carrier shall be entitled to receive compensation for damages caused by incorrect or incomplete information related to the nature of cargo, unless the carrier knew or should have known about the nature of the cargo.

3 Passenger Claims

Indonesia has not ratified the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea of 1974.Article 522 of the ICC regulates that the carrier is responsible for passenger safety starting from when the passenger embarks on the vessel until when they disembark. The carrier is obliged to compensate for losses caused by injuries suffered by passengers related to the voyage, unless the injury was caused by the passengers themselves. Should the injury result in death, the carrier is responsible for compensating the spouse, children, and parents of the deceased for the loss. If the passenger is carried based on a third-party agreement, the carrier is responsible for both the passenger and the third party.

The Shipping Law provides that a vessel may be arrested by the harbourmaster at the relevant port, based on a written court order that is issued if the vessel is involved in a criminal or civil case. The Shipping Law further provides that a court order for a vessel arrest in a civil case relating to maritime claims may be issued without initiating civil court proceedings. Further provisions on the procedures for vessel arrest at Indonesian ports are supposed to be provided by Minister of Transportation regulation. However, as of the date of this writing, such regulation has not been issued.

MOT Reg 71/2013, as amended also requires vessel owners to insure their vessels with wreck removal insurance or protection and indemnity insurance from an insurance company recognised by the Government of Indonesia. This requirement is waived for war vessels, state vessels used for governmental duty, and motor vessels with a gross tonnage of less than 35 tonnes.(v) Limitation of liabilityIndonesia has not ratified the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships of 1957 or the International Convention on the Limitation of the Liability for Maritime Claims of 1976, including their Amendment Protocols.Based on the original text of Article 474 of the ICC, the liability of a vessel owner due to vessel collision or cargo claims is limited to 50 gulden (the currency used by the Netherlands during the East Indies occupation) per cubic metre of the net tonnage of a vessel. A mechanically moved vessel shall have the tonnage of the machinery added to the gross tonnage to determine the net tonnage for vessel collision liability. However, the tonnage of such machinery shall be deducted from the gross tonnage to determine net tonnage for cargo claims liability. The ICC uses 50 gulden because the ICC was enacted during the Dutch occupation of Indonesia and it has not been amended since Indonesia’s independence in 1945.(vi) The limitation fundIndonesian law does not specifically regulate the form or amount of a limitation fund. In practice, a shipper may request the vessel owner to provide a cash deposit to be used as a limitation fund.

The Shipping Law provides that any preliminary investigation with respect to vessel accidents shall be conducted by the relevant port authority. The port authority may forward the result of its investigation to the Shipping Court (Mahkamah Pelayaran) to be examined further.Presidential Regulation No. 2 of 2012 regarding the National Transportation Safety Committee (Komite Nasional Keselamatan Transportasi or “KNKT”) established the KNKT to conduct investigations related to vessel accidents for the purpose of preventing similar future accidents.

2 Cargo Claims

The ICC provides that a carrier is liable to provide compensation for any damages arising from its failure to deliver cargo, whether partially or entirely, or any damages to the cargo, unless such damage or failure to deliver was caused by force majeure.Indonesia has not ratified the Hague/Hague-Visby/Hamburg/Rotterdam Rules.

In practice, either the shipper, the consigner, the lawful holder of the bill of lading, the cargo owner or the cargo insurer (by subrogating) is entitled to bring cargo claims against the carrier for loss or damages arising from the carrier’s alleged default.

5 Evidence

Indonesian law does not specifically regulate procedures for investigations and evidence-gathering for maritime claims.

Indonesia does not recognise general disclosure obligations (i.e. the discovery rule) in a court proceeding as a means to obtain evidence. Each party to a dispute has the burden to produce evidence to support their claims.

6 Procedure

Maritime claims are already regulated in Indonesia under the Shipping Law. However, under the elucidation of Article 223 of the Shipping Law, maritime claims are conducted in accordance with the provisions on vessel arrest. As discussed in section 4, Indonesia has not enacted an implementing regulation on the procedure for vessel arrest in Indonesia. Thus, there is no typical procedure or timescale applicable to maritime claims.

With regard to ship arrest, as we stated above, there are as yet no specific guidelines for ship arrest under Indonesian law. Indonesia is a signatory to the International Convention on the Arrest of Ships of 1999 (“Ship Arrest Convention”), although Indonesia has not ratified the Ship Arrest Convention. Under Law No. 24 of 1999 regarding International Treaties (“Treaties Law”), ratification of an international convention must be done through the issuance of a Law (Undang-Undang) or Presidential Decree (Keputusan Presiden), as the case may be, in order to be enforceable in Indonesia. Pursuant to Articles 10 and 11 of the Treaties Law, the Ship Arrest Convention should have been ratified by way of a Presidential Decree. Although the Ship Arrest Convention has been signed by the Government of Indonesia, it is still not applicable in Indonesia absent the ratification of the same into law. We note that in 2005, the President of Indonesia enacted Presidential Instruction No. 5 of 2005 regarding the Empowerment of the National Shipping Industry, in which the President instructed the legislature to accelerate the process of ratifying the Ship Arrest Convention. In conclusion, Indonesia has recognised the basic principles of ship arrest, but has yet to implement those principles.

Yes. The elucidation of Article 223 of the Shipping Law provides that costs related to bunkering activities are one of the legitimate bases for a maritime claim.

Article 316 of the ICC provides that several receivables over a vessel are given priority right, namely (in order of priority):1. Cost of seizure and auction.2. Receivables of the vessel master and the crew arising from an

employment agreement during their tenure in that vessel.3. Salvage reward, pilotage cost, signal cost and port cost, and

other shipping costs.4. Collision claims.Under the Shipping Law, a party may exercise a maritime lien (referred to as “prioritised maritime receivables”) upon claims to receivables for which a vessel acts as a security. Upon such claim against receivables secured by the vessel, the payment of maritime receivables must be prioritised.The Shipping Law provides that maritime receivables include:a. Payment of wages, costs, and other payments to the master

and crew of the vessel.b. Payment for the death or medical expenses for bodily injuries

related to the operation of the vessel.c. Payment for the salvage of the vessel.d. Payment of port fees or other shipping routes and pilotage

costs.e. Losses arising out of physical loss or damage caused by

the operation of the vessel aside from loss or damage to the cargo, container, and baggage.

Under the ICC, the Indonesian Civil Code, and the Shipping Law, payment of maritime receivables shall be prioritised over payment of pledges, mortgage, and registered receivables.If there are no prioritised receivables or maritime liens, then parties may make claims to the district court by way of a regular civil claim.Indonesia has also ratified the International Convention on Maritime Liens of 1993, by way of Presidential Regulation No. 44 of 2005.

There is no mandatory type of security under Indonesian law. However, in practice, a bank guarantee or corporate guarantee is more commonly used than P&I letters of undertaking.

However, it should be noted that according to the ICC, as further regulated in the Shipping Law and MOT Reg 39/2017, a vessel may only be registered if it has a gross tonnage of at least 7 tonnes, is owned by an Indonesian citizen or a legal entity established under Indonesian law, or is owned by an Indonesian joint-venture company in which at least 51% of the shares are owned by an Indonesian citizen.(ii) Cabotage principleThe Shipping Law requires that domestic sea transportation be carried out by an Indonesian shipping company using an Indonesian-flagged vessel and Indonesian crew. These provisions are broadly interpreted to cover most vessels, including different types of vessels operating in Indonesian waters that are not engaged in domestic sea transportation. However, pursuant to MOT Regulation No. PM 100 of 2016 regarding Procedure and Requirement to Obtain License to Use Foreign Vessels for Other Activities Not Included within the Carriage of Passenger and/or Goods in Domestic Transportation, as amended by MOT Regulation No. PM 115 of 2017 (“MOT Reg 100/2016, as amended”), specific types of foreign-flagged vessels operated in Indonesian waters for specific types of activities may be exempted from cabotage rules. Such foreign-flagged vessels may be operated in Indonesia by a holder of a Shipping Company Business License (Surat Izin Usaha Perusahaan Angkutan Laut or “SIUPAL”) after meeting the requirements provided in MOT Reg 100/2016, as amended. The cabotage exemption is granted in the form of a permit to use foreign vessels (Izin Penggunaan Kapal Asing or “IPKA”), which can only be issued to SIUPAL holders.Under MOT Reg 10/2016, as amended, an IPKA is granted for a maximum period of one year and may be extended with a recommendation from an evaluation team appointed by the DGST, if the applicant has exhausted all efforts concerning the procurement of an Indonesian-flagged vessel and provides proof of its latest procurement or tender offer.A list of foreign-flagged vessels that can conduct drilling activities in Indonesian waters up to the end of December 2018 is provided in Annex I to MOT Reg 10/, as amended. These vessels include:a. Jack-up rigs/jack-up barges/self-elevating drilling units.b. Semi-submersible rigs.c. Deepwater drill vessels.MOT Reg 10/2016, as amended allows for foreign-flagged vessels not included in Annex I to MOT Reg 10/2016, as amended to be used in Indonesian waters. However, these foreign-flagged vessels may be used in Indonesia only at the discretion of the MOT, rather than through the typical IPKA. The MOT shall approve the use of such vessels in Indonesian waters after taking into account the following:a. The availability of Indonesian-flagged vessels that have the

specifications required by the applicant, as confirmed by the evaluation team.

b. Whether the activity of the foreign-flagged vessel is to support Indonesian national interests, with a recommendation confirming such from the relevant ministry and/or institution.

c. The limited time period of the permit.

Indonesian law does not recognise foreign court judgments as enforceable in Indonesia. The parties must submit a new claim in an Indonesian court to enforce a judgment awarded by a foreign court. The foreign court judgment may be submitted as evidence in the new claim in the Indonesian court.

Indonesia has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (“New York Convention”), by way of Presidential Decree No. 34 of 1981.Pursuant to Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution (“Arbitration Law”), a foreign arbitral award is recognised and enforceable in Indonesia if:a. The award is given by an arbitrator or tribunal in a state that

is, along with Indonesia, a party to a bilateral or multilateral treaty that recognises foreign arbitral awards.

b. The award is only limited to an award that is considered to fall within the scope of commercial laws under Indonesian law.

c. The award does not contravene public order.d. The award has received an execution order from the Central

Jakarta District Court.e. If the award involves the Republic of Indonesia as one of

the parties in dispute, the award may only be enforced after receiving an execution order from the Indonesian Supreme Court.

(i) Vessel registrationThe Shipping Law states that an Indonesian vessel’s legal status can only be valid if the vessel has already been registered in a jurisdiction. To implement the provisions of the ICC and the Shipping Law, MOT Regulation No. PM 39 of 2017 regarding the Registration and Nationality of Vessels (“MOT Reg 39/2017”) states that vessel registration includes registration of: (i) ownership right; (ii) granting of mortgage; and (iii) other proprietary right, such as by way of bareboat charter and leasing. Vessel registration can be done with a Vessel Registrar, a government official appointed by the Director of the DGST.

SSEK is an independent Indonesian law firm formed in 1992. Our practice includes shipping and logistics, banking and finance, capital markets and securities, construction and real estate, corporate and commercial matters, employment law, energy, mining and natural resources, foreign investment, IT, telecoms and e-commerce, litigation and dispute resolution, mergers and acquisitions, oil and gas law, project finance and infrastructure development, and restructuring and insolvency.

SSEK was named the 2014 Indonesian Law Firm of the Year by Who’s Who Legal, the 2013 Indonesian Law Firm of the Year by Chambers Asia-Pacific, and an Asian-MENA Counsel Law Firm of the Year every year since 2009.

SSEK produces a series of publications that track and examine changes in the Indonesian legal environment. SSEK’s Legal Alert is a monthly bullet-point summary of major new legislation. Our Legal Updates provide a more detailed analysis of the most important changes in Indonesian law. These publications are available at http://blog.ssek.com.

Stephen Igor Warokka is a senior associate at SSEK. Stephen is involved in a wide range of projects, including shipping and maritime law, general corporate law, mergers and acquisitions, foreign capital investment law, immigration law and negotiations with various government officials related to commercial transactions.

Stephen’s more recent experience includes: representation of various foreign shipping companies in the acquisition and sale of vessels; advising a foreign shipping company on the shipping agency business in Indonesia; advising and representing an Indonesian shipping company in connection with a facility agreement with syndicated lenders; and advising shipping companies on foreign ownership restrictions and Indonesian cabotage laws.

In 2015, Stephen was seconded to the Tokyo offices of Mori Hamada & Matsumoto, one of the largest and most highly regarded law firms in Japan. During his secondment, Stephen advised on Indonesian laws and regulations for Japanese companies doing business in the country.

Stephen Igor WarokkaSSEK Legal Consultants12th & 14th Floor, Mayapada TowerJl. Jend. Sudirman Kav. 28Jakarta 12920Indonesia

Tel: +62 21 521 2038Email: stephenwarokka@ssek.comURL: www.ssek.com

Dyah Soewito is a founding partner of SSEK Legal Consultants and the head of the firm’s award-winning shipping practice. She specialises in shipping and maritime law, foreign investment, and corporate and commercial law.

Dyah assists multinational and joint-venture shipping and offshore drilling companies with all aspects of their operations in Indonesia. Most recently, she advised a global provider of floating production services to the oil and gas industry in an $870 million lease deal. She has assisted a European multinational in navigating foreign ownership restrictions under Indonesia’s shipping law, represented a leading European contractor on a possible joint venture with an Indonesian shipping entity, and advised an Australian dredging marine company on the importation and reflagging of dredgers.

Dyah has been recognised by Chambers & Partners, Asialaw and IFLR1000 as one of the leading practitioners in Indonesia in shipping law, real estate and corporate law.

Dyah SoewitoSSEK Legal Consultants12th & 14th Floor, Mayapada TowerJl. Jend. Sudirman Kav. 28Jakarta 12920Indonesia

Tel: +62 21 521 2038Email: dyahsoewito@ssek.comURL: www.ssek.com

Chapter 27

1 Marine Casualty

(i) CollisionIreland is a party to the Collision Convention 1910, the Collision (Civil Jurisdiction) Convention 1952 (enacted into Irish law by the Jurisdiction of Courts (Maritime Conventions) Act 1989 (the “1989 Act”)) and the Collision Regulations (implemented by the Merchant Shipping (Collision Regulations) (Ships and Water Craft on the Water) Order 2012 [S.I. No. 507 of 2012]).Under the European Communities (Vessel Traffic Monitoring and Information System) Regulations 2010 as amended, it is an offence under Irish law to fail to immediately report to the Irish Coast Guard any incident or accident affecting the safety of a ship within the exclusive economic zone of the state. A failure to report is very likely to result in prosecution. Under the Merchant Shipping (Investigation of Marine Casualties) Act 2000 (the “2000 Act”), an owner, master, skipper, person in charge, ship’s agent or ship’s manager of a vessel involved in a marine casualty must also by the quickest means feasible notify the casualty to the Marine Survey Office immediately he is aware of a casualty.(ii) PollutionThe following international conventions are in force in Ireland:■ The International Civil Liability for Oil Pollution 1969

and the 1976 and 1992 Protocols – implemented by the Oil Pollution of the Sea (Civil Liability and Compensation) Acts 1988–2005.

■ The HNS Convention 1996 – implemented by the Sea Pollution (Hazardous Substances) (Compensation) Act 2005 (not yet in force).

■ The International Convention for the Prevention of Pollution (MARPOL) 1973 together with 1978 and 1997 Protocols – implemented by the Sea Pollution Acts 1991 to 2006 and subsequent statutory instruments.

■ The Fund Convention 1992 and Supplementary Fund Protocol 2003 – implemented by the Oil Pollution of the Sea (Civil Liability and Compensation) (Amendment) Acts 1998 and 2003.

■ The International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 – implemented by the Sea Pollution (Miscellaneous Provisions) Act 2006.

Ireland is also subject to all European Directives relating to pollution. Other relevant Irish legislation includes, but not exclusively: the Air Pollution Act 1987 which, inter alia, criminalises the failure to use the best practicable means to limit and, if possible, prevent emissions; and the Harbours Act 1946 (as amended) which imposes liability on a person putting or causing or allowing any substance to be put into the waters of a “harbour company” in Irish waters.(iii) Salvage / general averageThe International Convention on Salvage 1989 was incorporated in Ireland by the Merchant Shipping (Salvage and Wreck) Act 1993 (the “1993 Salvage Act”). There is no mandatory form of salvage agreement, with the Lloyd’s open form in common usage. There are no restrictions on who may carry out salvage operations. Parties may agree on whatever salvage agreement or terms they deem appropriate. Pursuant to section 22 of the 1993 Salvage Act, the Minister for Transport (the “Minister”) has the right to give directions in relation to the salvage operations if necessary.Generally, the York-Antwerp Rules 2004 will be incorporated by operators.(iv) Wreck removalUnder section 40 of the 1993 Salvage Act, the Minister has general superintendence throughout the state for all matters relating to every wrecked or stranded vessel. Under section 41, the Minister has the power to appoint a designated Receiver of the wreck if appropriate.Ireland is a signatory to the Nairobi International Convention on the Removal of Wrecks, 2007. To date, no enabling legislation has been published but it is proposed in the Merchant Shipping (International Conventions) Bill 2017 (see below). Pursuant to the National Monuments (Amendment) Act 1987, if salvage operations are to be carried out on a shipwreck over 100 years old within the Irish continental shelf, a licence is required from the Department of Arts, Heritage and the Ghaeltacht. The requirement for a licence extends to any activity that may affect the wreck, including, but not limited to, surveying, diving, salvaging, etc.(v) Limitation of liabilityThe 1976 Convention on Limitation of Liability for Maritime Claims (“LLMC”) was enacted into Irish law by the Merchant Shipping (Liability of Shipowners and Others) Act 1996 (the “1996 Act”). The Sea Pollution (Hazardous Substances) Compensation Act 2005 gives effect to the 1996 Protocol. The LLMC applies to seagoing ships, to non-seagoing ships (section 10 of the 1996 Act), and to any structure (whether completed or not) launched and intended for use in navigation as a ship or a part of a ship (section 9 of the 1996 Act).Article 2 of the LLMC lists the claims which are subject to limitation. Section 11 of the 1996 Act qualifies Article 2 by providing that the

Helen NobleNoble Shipping Law

Ireland

Noble Shipping Law Ireland

of such goods as if the contract contained in the bill of lading had been made with them.The 1855 Act only transfers rights of suit where the property passes to a consignee or endorsee; a pledgee of goods does not acquire the property. In addition, it does not apply to waybills, multimodal transport documents or delivery orders.The limitations in section 1 of the 1855 Act have been partially overcome by the established principle that where a consignee takes delivery of goods from the carrier by presenting the bill of lading and paying outstanding charges, a contract on the terms of the bill of lading may be implied between the consignee and carrier. The Irish courts would follow the leading English case Brandt v Liverpool, Brazil and River Stream Navigation Co Ltd (1924) 1 K.B 575. However, there are still situations where it is impossible to establish an implied contract. Whilst the Law Reform Commission of Ireland published a report in 2008 on Privity of Contract and Third Party Rights recommending statutory reform, no legislation has been passed to date.Where it is not possible to establish a contractual claim, a claim may still arise under the principles of tort or bailment.

Where the Hague-Visby Rules apply, the shipper is deemed to have guaranteed the accuracy of any information supplied by him for incorporation into a bill of lading issued by the carrier. A carrier can refuse to issue a bill where he has reasonable grounds for suspecting the information is misdeclared or where he has not reasonable grounds of checking (Article III Rule 5). The bill of lading, in accordance with the Hague-Visby Rules, is prima facie evidence of the quantity and condition of the cargo but it is open to the carrier to produce evidence to the contrary. Under the Hague-Visby Rules, however, it will not be possible to dispute information contained in the bill of lading once the bill is transferred to a third party acting in good faith. Where the Hague-Visby Rules are not applicable, section 3 of the 1855 Act applies and provides that information on cargo contained in the bill of lading is prima facie evidence of the quantity and condition of the goods provided. Once the bill is transferred into the hands of a third party, statements as to condition are binding on the master and/or person signing the bill of lading unless a misrepresentation was caused without any default on his part and wholly by the fraud of the shipper. This leaves open the possibility of a claim against the shipper.Marine Notice No. 05 of 2016 notified all shippers, consignees, freight forwarders, etc. of the requirement pursuant to SOLAS Chapter VI Regulation 2 to verify a packed container’s gross weight before the container can be loaded on a ship.

3 Passenger Claims

The Athens Convention 1974 and 1976 Protocol apply in Ireland under Part III of the 1996 Act. The Convention and Protocol are set out in the second schedule to the 1996 Act. Maritime passenger claims, therefore, are dealt with in Ireland in accordance with the provisions of the Athens Convention, including the limits of liability as amended under the Protocol.

right to limit liability under the LLMC shall not apply to claims in respect of the raising, removal, destruction or rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such a ship and that Article 3 (claims excepted from limitation) of the LLMC shall be construed accordingly. The party entitled to limit liability pursuant to the LLMC is the shipowner, as defined in Articles 1(2) to include the owner, charterer, manager and operator of a seagoing ship. Whether a charterer has the right to limit liability has not come before the Irish Courts. The Irish Courts would, however, most likely find the judgment of the English Courts in CGM v Classica Shipping (2004) EWCA Civ 2004 persuasive authority.(vi) The limitation fundArticle 11 of the LLMC permits any person alleged to be liable for a claim to constitute a fund with the court or competent authority in any state party where legal proceedings are instituted in respect of claims subject to limitation. Under Article 11(20), a fund may be constituted by producing a guarantee or by depositing a sum of money. Under Section 15 of the 1996 Act, the court may stay any proceedings relating to any pending claim against the person by whom the fund has been constituted and, under section 16 of the 1996 Act, the distribution of a fund is not affected by the rights of lien holders.

Article 11 of the LLMC permits any person alleged to be liable for a claim to constitute a fund with the court or competent authority in any state party where legal proceedings are instituted in respect of claims subject to limitation. Under Article 11(20), a fund may be constituted by producing a guarantee or by depositing a sum of money. Under Section 15 of the 1996 Act, the court may stay any proceedings relating to any pending claim against the person by whom the fund has been constituted and, under section 16 of the 1996 Act, the distribution of a fund is not affected by the rights of lien holders.

2 Cargo Claims

Section 31 of 1996 Act gives the Hague-Visby Rules force of law in Ireland. The Rules are set out in full in the third schedule to the 1996 Act. Ireland has neither signed nor ratified the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (the “Rotterdam Rules”). The rights and liabilities arising under bills of lading, including title to sue, are dealt with under the Bills of Lading Act (the “1855 Act”).

The 1855 Act provides that every consigner of goods named in a bill of lading, and every endorsee of it to whom the ownership of the goods described in it shall pass, will have transferred to them all the rights of action, and be subject to the same liabilities, in respect

Vessels can be arrested in Ireland by bunker suppliers under the 1952 Arrest Convention (supply of goods and materials to a vessel). The Irish courts have not considered the position as to whether there is a valid in personam claim against the owner of a vessel in circumstances where the bunker supply contract is with a time charterer and that contract and any applicable terms and conditions, as a matter of law, cannot bind or apply to the owners of the vessel. If and when the matter comes before the Irish courts, it is arguable that the Irish courts should find as persuasive authority the position adopted by the English courts that there must be a contractual link between the vessel’s owners and the supplier.

All liens that arise by operation of law or by agreement between parties can be recognised and exercised by the holder under Irish law. The right to lien may be challenged by, for example, interlocutory proceedings such as an injunction. In addition, a maritime claim can be enforced in the same way as any other contractual or tortious claim through the courts and, if judgment obtained can be enforced, against goods and chattels.

The format of security tends to be a letter of undertaking from a Protection and Indemnity (“P&I”) Club or alternatively a bank guarantee from a highly rated bank. However, absent agreement, the RSC provide for payment into court or a bail bond.

5 Evidence

There is no provision in the RSC for pre-action discovery. However, it is possible to get “Norwich Pharmacal” relief to identify a defendant or to formulate a claim. It is also possible to obtain freezing injunctions in relation to the preservation of evidence. A party may also seek a search order when documents may be destroyed or withheld from discovery. There are various steps that can be taken during proceedings to obtain access to evidence. These steps are governed by the RSC and include Orders 31 (Interrogatories, Discovery and Inspection), 39 (Evidence) and 40 (Affidavits). In addition, the RSC provide for discovery (see below). Pre-trial depositions do not occur in Irish proceedings.In relation to arbitration proceedings, under the Arbitration Act 2010 (the “2010 Act”) the UNCITRAL Model Law on International Commercial Arbitration has force of law in the state. Pursuant to Section 10 of the 2010 Act, the High Court has power to deal with procedural issues under Articles 9 and 27 of the Model Law

As from 31 December 2012, EU Regulation 392/2009 applied in Ireland by virtue of S.I. No. 552 of 2012 and raised the limits of liability and introduced compulsory insurance to cover passengers on ships as per the 2002 Protocol to the Athens Convention. The application of the regulation is deferred in relation to class B ships travelling in the state until 31 December 2018. The S.I. provides for prosecution and fines of up to €5,000 on summary conviction for failure to comply the legislation. S.I. No. 552 of 2012 also gives effect to EU Council decisions 2012/22/EU and 2012/23/EU amending the 1996 Act to give the force of law to the 2002 Protocol to the Athens Convention.

Ship arrest is possible in Ireland pursuant to the Admiralty (Ireland) Acts 1867 and 1876 and/or the 1952 Arrest Convention. The 1952 Arrest Convention was enacted into Irish law by the 1989 Act. Ireland is not a party to the Arrest Convention 1999.The 1989 Act confers jurisdiction on the High Court to hear and determine maritime proceedings. Maritime matters are dealt with in the Admiralty Court, a sub-division of the High Court, and are determined in accordance with Order 64 of the Rules of the Superior Courts (“RSC”).It is only possible to arrest a vessel in Ireland which is flying the flag of one of the contracting states to the 1952 Arrest Convention. It is not possible to arrest “associated ships”, only true “sister ships” (the MV ‘Kapitan Labunets’ (1995) 1 I.L.R.M. 430).Whilst the arresting party is not required to provide security to the court, the solicitor for the arresting party must provide an undertaking to the Admiralty Marshal to indemnify the Admiralty Marshal for all losses and expenses incurred in arresting a vessel. Following a vessel arrest, absent provision of sufficient security to obtain release, an application can be made by the arresting party to the Admiralty Court for the judicial sale of an arrested vessel. In addition, in default of appearance, the Admiralty Judge can also, pursuant to Rule 35 of Order 64 of the RSC, if satisfied that the arresting party’s claim is well founded, order the vessel to be appraised and sold. On application for sale of the vessel, the appraisal and sale is carried out by the Admiralty Marshal who appoints an auctioneer. The sale will usually take place within four to eight weeks. The net proceeds of sale are paid into court and, after payment of the sale or appraisal expenses and other expenses of the Admiralty Marshal, the various interested parties may agree distribution/priority or an application can be made to court for determination of order of priorities. The court costs associated with a judicial sale are usually 5 per cent of the sale price. There is also duty payable to the court of 10 per cent of the sale proceeds. Both of these amounts come out of the sale proceeds.The test for wrongful arrest is usually bad faith or gross negligence. In the 1997 case of MV Blue Ice (1997) IEHC 56, reference was made to the need to establish a “fair and statable” case and “sufficient grounds for the arrest of the vessel”.Where an arrest is not possible, it may be possible as an alternative interim remedy to seek a freezing injunction over assets, including a vessel, to secure a claim.

right to appeal an arbitration award to the Court of Appeal, thereby ensuring finality. If, however, arbitrators reach a conclusion that a party does not agree with, the lack of right to appeal is very negative.Since 2004, Ireland has had a dedicated Commercial Court – a division of the High Court which deals with commercial cases of at least €1 million in value (albeit it has a discretion to hear claims of a lesser value). The Commercial Court Rules provide greater flexibility in management of cases, and cases are therefore dealt with more swiftly with an average time for disposal of cases of 20 weeks with 90% of all admitted cases being disposed of in less than 51 weeks. The cases that the Commercial Court hears include disputes involving the carriage of goods by land, sea, air or pipeline. The establishment of the Court of Appeal in 2014 to hear appeals from the High Court and Circuit Court has significantly reduced delay in appeals.The Mediation Act 2017 came into effect in Ireland on 1 January 2018 and the rules of court have also now been amended to take into account any unreasonable refusal or failure by a party to proceedings to consider using mediation and to attend mediation when considering awarding costs – see section 8 below.

There are a few regimes that allow for the enforcement of judgments in the Irish courts. The most significant are probably those in respect of European countries. For proceedings commenced on or after 10 January 2015, EU Regulation 1215/2012 applies in Ireland and for those proceedings commenced before, EC Regulation 44/2001 applies. The Lugano Convention dictates the recognition and enforcement of judgments as between Ireland and the EFTA states. To enforce a judgment from another EU Member State, an application should be made ex parte by way of Notice of Motion and Grounding Affidavit to the Master of the High Court. The application is to be accompanied by a certificate from the court officials in the Member State in which the judgment was given. The Master, if satisfied, will order that the judgment is enforceable and the foreign judgment will then have the same force and effect as if it were a judgment of the Irish High Court. It is possible to appeal an order of the Master within one month of the service of the Notice of Enforcement.For uncontested claims, under EU Regulation 805/2004, a party can utilise as an alternative the European Enforcement Order procedure. The judgment can be certified by the originating state, avoiding the need for application to the Master. The creditor simply needs to provide to the Judgments Section of the High Court a copy of the judgment and the European Enforcement Order certificate.For non-EU/EFTA states, unless there is a reciprocal convention for enforcement such as with the US, Canada and Egypt, Irish common law will apply. In order to recognise a foreign judgment, the judgment must be for a definite sum, final and conclusive, and given against the defendant by a court of competent jurisdiction. In order to determine that the court that gave the judgment had competent jurisdiction, the following criteria will need to be met: the defendant must have been present in the country at the time of the foreign proceedings; and the defendant must have submitted to the jurisdiction either by prior agreement or participation in the proceedings (participation to challenge the jurisdiction will not suffice). Fresh proceedings have to be commenced by way of an originating summons in the High Court.

including protectionary measures and the taking of evidence. In addition, Article 17 of the Model Law provides that, unless the parties agree otherwise, the tribunal can order parties to maintain and preserve assets and evidence.

Rule 12 Order 31 of the RSC, as amended, sets out the discovery obligations. Discovery requires the disclosure by the parties of all relevant documents, now or previously in its power, possession or procurement. Disclosure can be sought from a non-party to proceedings.There is no “general disclosure” obligation as in some other common law jurisdictions. Discovery is sought by way of a request setting out the various categories of documents that are required, referable to the written pleadings, and the reasons such discovery is required. The party seeking discovery must demonstrate that the discovery sought is both relevant and necessary either for disposing fairly of the issues or for saving costs. A party seeking discovery cannot “indulge in an exploratory or fishing operation” (Finlay CJ in Bula Limited (in receivership) v Crowley [1990] ILRM 756).Discovery can be voluntarily agreed between the relevant entities or ordered by the court. A party has a duty to provide discovery under oath and to provide documents regardless of whether or not they support or oppose their position or that of its opponent(s). This obligation is subject to the right to claim privilege.

6 Procedure

To commence admiralty proceedings in Ireland, you must firstly establish the jurisdiction of the court (Rule 1 Order 64 RSC) and then issue a summons (plenary or special). Admiralty proceedings are heard by the Admiralty Judge. The Irish procedure follows the common law adversarial standard; summons, claim, defence, reply to defence, etc. Timescales vary from 12–24 months for proceedings other than in relation to arrest or judicial sale. Order 64 of the RSC provides for modular trials on any question or issue, appointment of experts and assessors by the Admiralty Judge, and a power to order an early trial and dispense of the normal rules for delivery of pleadings.Alternative dispute resolution is encouraged in Ireland under the RSC, providing for a stay of proceedings in appropriate circumstances (parties can refuse to mediate, though this can be taken into account by the court when awarding costs). There is no dedicated maritime arbitration service in Ireland. Whilst arbitration proceedings tend to be shorter in duration that court proceedings, that is dictated by the issues to be heard.

Ireland has adopted the UNCITRAL Model Law on International Commercial Arbitration, with the result that there are limited grounds for judicial intervention in matters referred to arbitration. There is no

In accordance with Marine Notice No. 8 of 2018, the Department of Transport, Tourism and Sport (the “DTTAS”) has indicated that the maritime sector/industry should make cybersecurity an integral part of their risk assessment, following agreement on measures at the Maritime Safety Committee of the International Maritime Organization (“IMO”) in 2017. In relation to ports, the Department has indicated that cybersecurity risks will be factored into ports’ security assessments, which are carried out in accordance with Regulation (EC) No. 725/2001 and Directive 2005/65/EC in Irish ports and port facilities.In relation to Brexit, the Commission has published Notices to Stakeholders in relation to the fields of industrial products, seafarer certificates and maritime transport, to facilitate preparation for the possibility of the UK leaving the EU on 29 March 2019 without a deal on a transitional period. The DTTAS has published this guidance under Marine Notice No. 7 of 2018.Currently there are two recognition procedures for seafarer certificates. Firstly, for EU Member States, Article 3 of Directive 2005/45/EC provides for every Member State to recognise certificates issued to seafarers by other Member States. Secondly, a Member State can endorse certificates issued by recognised third countries pursuant to Article 19(4) of Directive 2008/106/EC.As of the withdrawal date, certificates issued to seafarers by the UK will no longer be recognised pursuant to Article 3 of Directive 2005/45/EC, as the UK ceases to be a Member State. Any endorsement issued prior to the withdrawal date will continue to be valid until expiry. A master or an officer holding an “endorsement attesting recognition” issued by a Member State will be able to continue working on board vessels flying the flag of that Member State. However, they will not be able to change and work on board a vessel flying the flag of another Member State on the basis of their existing UK-issued certificates, given that the basis for the recognition of their certificates by that Member State (Directive 2005/45/EC) would no longer be applicable. As of the withdrawal date, recognition by a Member State of certificates issued to seafarers by the United Kingdom will be subject to the conditions set out in Article 19 of Directive 2008/106/EC6, in line with the new status of the United Kingdom as a third country.In relation to maritime transport, as at the withdrawal date, and in the absence of any transitional arrangement, the EU Rules in this field will no longer apply in the UK, which has significance for maritime transport between Ireland and the UK. It will impact on issues such as cabotage, port state control, and UK fishing vessels operating in Irish waters.

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “NY Convention”), was given effect in Irish law by Part III of the Arbitration Act 1980 (the “1980 Act”). Ireland has made the reciprocity reservation under Article 1(3) of the NY Convention, which means that under the NY Convention one can only enforce awards that were made in a state that is a party to the NY Convention.In practical terms, the NY Convention has been overtaken in Irish law by the UNCITRAL Model Law on International Commercial Arbitration, which was given the force of law by the 2010 Act. A party may now seek recognition and enforcement of an arbitration award under Articles 35 and 36 of the Model Law. Unlike the NY Convention, the Model Law, as implemented by the 2010 Act for both domestic and international arbitration, allows enforcement of an arbitration award irrespective of where it was made. It does not need to be a foreign award, nor is there a requirement that it be given in a state which is a party to any particular convention.Ireland is a party to the Washington Convention on the Settlement of Investment Disputes between States and nationals of other States, 1965 (the ICSID Convention). Part IV of the Arbitration Act 1980 makes provision for enforcement under this convention. The procedure entails an application for permission for enforcement under the provisions of section 16(1) of the 1980 Act.

The Mediation Act 2017 came into force in Ireland on 1 January 2018. This Act encourages the use of mediation by parties in order to relieve strain on the court system, achieve fairer outcomes for the parties and reduce costs involved. Section 14 of the 2017 Act imposes certain obligations on solicitors prior to issuing proceedings, to include advising their client to contemplate mediation and advising on the benefits of mediation.

Noble Shipping Law is Ireland’s only law firm specialising exclusively in shipping and transport law, providing a complete contentious and non-contentious advisory service.

The firm’s client base includes international shipowners and ship mangers, hull and machinery and P&I insurers and brokers, port operators, international freight forwarders, hauliers, transport managers, borrowers, lessors, commercial banks and overseas law firms.

On the non-contentious side of the practice, Noble Shipping Law acts for a number of international banks and shipowners in relation to ship finance transactions and ship sale and purchases. The firm advises regularly on international and Irish regulatory and environmental issues.

On the contentious side, the firm has acted in a number of casualties and groundings in Irish waters. The team acts on behalf of both operators and insurers in defending personal injury claims of crew and passengers, and regularly advises clients in relation to cargo claims in both the shipping and haulage sectors.

Helen has over 23 years’ experience specialising in all areas of admiralty, maritime and transport law, including ship arrests, collisions, cargo claims, charterparty and bill of lading disputes and crew and passenger personal injury claims.

Helen regularly advises on issues of port state control, marine casualty investigations by authorities and has routinely represented owners and crew in prosecutions. Her experience includes advising clients on commercial negotiations and drafting of commercial agreements such as ship management and sale and purchase agreements. She is regularly appointed as an independent Irish legal maritime and transport law expert for international disputes.

Helen is the President of the Chartered Institute of Logistics and Transport in Ireland, a titulary member of the Comité Maritime International, and the Irish representative for ForwarderLaw.com. She is an overseas supporting member of the London Maritime Arbitrators Association and a member of the Irish Maritime Law Association.

Helen Noble Noble Shipping LawArds, St Mary’s RoadArklowCo. Wicklow, Y14 W586Ireland

Tel: +353 402 28567Email: helen@nobleshippinglaw.comURL: www.nobleshippinglaw.com

Chapter 28

1 Marine Casualty

(i) CollisionThe Merchant Shipping (Distress Signals and Prevention of Collisions) Regulations 1996 apply and give effect to the International Maritime Organisations Regulations for Preventing Collisions at Sea 1972. Manx vessels wherever they may be, and other vessels (including hovercraft and seaplanes) in Manx waters, are required to comply with the International Regulations as amended.(ii) PollutionThe key provisions in force in the Isle of Man relating to pollution are as follows: ■ The International Convention for the Prevention of Pollution

from Ships (“MARPOL”) 1973, together with its 1978 and 1997 protocols as applied by the Isle of Man Merchant Shipping (MARPOL Annex III – Prevention of Pollution by Harmful Substances) Order 2015. MARPOL is the leading international convention dealing with the prevention of pollution of the marine environment by ships.

■ Merchant Shipping (MARPOL Annex VI – Prevention of Air Pollution) Order 2014.

■ Merchant Shipping (MARPOL Annex V – Prevention of Pollution by Garbage) Order 2014.

■ Merchant Shipping (MARPOL Annex IV – Prevention of Pollution by Sewage) Order 2014.

■ Merchant Shipping (MARPOL Annex II - Control of Pollution by Noxious Liquid Substances in Bulk) Regulations 2008.

■ The International Convention on Oil Pollution, Preparedness, Response and Co-operation 1990 is applied by the Isle of Man Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) Regulations 2000 and requires the manager of an offshore installation in Manx waters, where there is present risk of an oil pollution incident, to have an oil pollution emergency plan.

■ The International Convention on Civil Liability for Oil Pollution Damage (“CLC”) 1992, which establishes the principle of strict liability for tanker owners for damage caused by spills of persistent oil from laden tankers and creates a system of compulsory liability insurance, is applied by the Isle of Man Oil Pollution (Compulsory Insurance) Regulations 1998. The Regulations define “oil” for the purposes of Isle

of Man section 163 of the Merchant Shipping Act 1995 (the “MSA 1995”), which requires certain Shipowners to have insurance or other security against oil pollution damage.

■ Merchant Shipping (Prevention of Oil Pollution) (Reception Facilities) Order 1986.

■ Merchant Shipping (Prevention of Oil Pollution) (Records) Order 1986.

■ Oil Pollution Act 1986.■ Oil Pollution (Compulsory Insurance) Regulations 1981.■ The Fund Convention 1992 and the Supplementary Fund

Protocol 2003 apply to the Isle of Man and provide for payment of supplementary compensation where the funds available under the CLC prove insufficient.

■ The International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 also applies to the Isle of Man and provides compensation to parties who suffer damage caused by spills of bunker oil when carried as fuel in ships’ bunker tanks.

(iii) Salvage / general averageThe provisions of the International Convention on Salvage 1989 are applied by the Isle of Man Merchant Shipping (Miscellaneous Provisions) Act 1996. The Convention does not apply (a) to a salvage operation which takes place in inland waters of the Island and in which all the vessels involved are of inland navigation, or (b) to a salvage operation which takes place in inland waters of the Island and in which no vessel is involved. Part 9 of the MSA 1995 also sets out the provisions relating to salvage. (iv) Wreck removalThe MSA 1995 grants wide-ranging powers to the relevant coastal authorities to intervene in relation to wrecks, including the power to remove, destroy or take possession of wrecks as necessary. The Wreck Removal Convention Act 2011 implements the Nairobi International Convention on the Removal of Wrecks 2007 (“WRC”), which came into force in 2015. Vessels with a gross tonnage of 300 or more may not enter or leave a port in the Island or elsewhere unless the vessel has wreck removal insurance and the Department of Enterprise (née The Department of Economic Development) (the “Department”) has certified that it has wreck removal insurance.(v) Limitation of liabilityThe Convention on Limitation of Liability for Maritime Claims (“LLMC”) 1976 as amended by the 1996 Protocol is in force in the Isle of Man. The Convention sets limits of liability based upon the tonnage of the vessel concerned. Amendments to the 1996 protocol (providing for significantly increased limits of liability) came into force in June 2015.

Kirsten Middleton

Mark Dougherty

DQ Advocates

Isle of Man

Isle of ManDQ Advocates

Article IV(6) of the Hague Rules provides for further extensive rights to the carrier in relation to “goods of an inflammable, explosive or dangerous nature carried without the consent of the carrier”. The carrier may, at any time before discharge, land, destroy or render innocuous the cargo without providing compensation to the hauler. The hauler is held liable for all damages and expenses directly or indirectly arising out of, or resulting from, such shipment.

3 Passenger Claims

The provisions of the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974 is in force in the Isle of Man by virtue of section 183 of the MSA 1995.The carrier is liable for the damage suffered as a result of the death of or personal injury to a passenger, and the loss of or damage to luggage, if the incident which caused the damage so suffered occurred in the course of the carriage and was due to the fault or neglect of the carrier or of his servants or agents acting within the scope of their employment. Fault or neglect of the carrier, or of his servants or agents acting within the scope of their employment, shall be presumed unless the contrary is proved, if the death of or personal injury to the passenger, and the loss of or damage to cabin luggage, arose from or in connection with a shipwreck, collision, stranding, explosion or fire, or a defect in the ship.The burden of proving that the incident caused the loss or damage that occurred in the course of the carriage, and the extent of the loss or damage, shall lie with the claimant.

Isle of Man law provides that arrest proceedings may be commenced following the issuing of an in rem claim against a ship. The right to bring proceedings in rem is governed by Part 1 of Schedule 1 of the High Court Act 1991 (“HCA”) and Rule 13.39 of the Isle of Man Rules of the High Court of Justice 2009 (the “Rules”). Part 1 of the HCA lists a number of claims that may be brought in rem, and a ship arrested in respect of them. The HCA lists 18 types of maritime claims within the admiralty jurisdiction of the High Court, and in respect of which a ship may be arrested. These include:■ claims relating to the possession or ownership of, or mortgage

on a ship;■ claims for damage done by a ship;■ claims for loss of life or personal injury due to a defect in a

ship;■ claims relating to the carriage of goods on a ship;■ claims for towage, pilotage and/or salvage in respect of a

ship;■ claims in respect of goods or materials supplied to a ship for

operation or maintenance;■ claims in respect of construction, repair or equipment of a

ship;■ claims by a master or member of the crew of a ship for wages;

(vi) The limitation fundArticle 11 of the LLMC (as applied by Schedule 7 of the MSA 1995) provides that the “fund may be constituted, either by depositing the sum, or by producing a guarantee acceptable under the legislation of the State Party where the fund is constituted and considered adequate by the Court or other competent authority”.

The Isle of Man Shipping Casualties (Inquiries, Investigations and Reports) Act 1979 (the “1979 Act”) provides that the Department shall, for the purposes of investigation, appoint such number of persons as it may determine to be inspectors.Where such an accident has occurred, the Department may (whether an investigation has been carried out or not) cause a formal investigation into the accident to be held by the High Bailiff. The Inquiries (Evidence) Act 2003 applies to a formal investigation.The Isle of Man Merchant Shipping (Accident Reporting and Investigation) Regulations 2001 (to be read in conjunction with the 1979 Act) state that the fundamental purpose of investigating a casualty, an accident, or an incident under the Regulations is to determine its circumstances and the causes, with the aim of improving the safety of life at sea and the avoidance of accidents in the future. The purpose is neither to apportion liability, nor – except so far as is necessary to achieve the fundamental purpose – to apportion blame.

2 Cargo Claims

As with the UK, the Isle of Man Carriage of Goods by Sea Act 1974 (the “1974 Act”) gives effect to the 1968 Protocol to the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (the “Hague Rules”). The 1974 Act addresses the rights and liabilities arising under bills of lading, including title to sue.

The 1974 Act will apply in circumstances where the bill of lading is issued in a contracting State or where the port of shipment is in the contracting State. When claims arise under the bill of lading, these will be determined in the Isle of Man in accordance with Isle of Man law, then the Isle of Man Courts will apply the Hague Rules.

Under the Hague Rules, the hauler has established obligations to the carrier regarding declaration of cargo. Under Article III(5) of the Hague Rules as applied by Schedule 1(2) of the 1974 Act, the hauler is deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity and weight, as furnished by him, and the hauler shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars.

action arises and remains so attached until satisfied or time-barred. In the event that the ship has changed ownership, and the claim is against the Shipowner, but does not constitute a maritime lien, arrest of a sister ship is still possible, provided such sister ship was owned by the same entity/Shipowner connected to the claim at the time the cause of action arose, and the Shipowner is the beneficial owner in respect of all shares in the sister ship.

In practice, it is likely that the Court will limit the security either to the value of the vessel or to the statutory limit of liability with interests and costs. Whether the form of security is acceptable will depend on the facts of each case and what security is available. Commonly, payments into Court have been a popular method of security; however, provision of security by way of a guarantee or undertaking is not uncommon. This type of security is contractual, in that there are no actual funds being paid into Court or held in a secure account, and such agreement will only be enforceable on its terms. Whether an agreement is in addition to or replaces any liens will again depend on its terms. Under Isle of Man law, there is no prescribed form of security, and this is a matter of negotiation between the parties. In the event that the Court is required to intervene, it will consider the financial position of any guarantor being proposed (whether the guarantor is the Shipowner, his or her P&I Club or another entity). It is not necessary for security to be provided by an independent financial institution.There is also the possibility of lodging a caution against release from arrest over the specific property. The person with the benefit of the caution will be notified in the event that the property arrested was to be released/sold.

5 Evidence

It may be possible to seek a pre-action disclosure application pursuant to Rule 7.45 of the Rules, which permits an application for disclosure to be made before proceedings start. The Court will only make an order under Rule 7.45 where:(i) the defendant is likely to be a party to the proceedings;(ii) the applicant is also likely to be a party to those proceedings;

and(iii) the documents would be disclosable if the proceedings had

already started.The purpose behind this rule is to resolve the dispute without proceedings and to save costs. Pre-action disclosure, however, is not granted as a matter of course. It is for the applicant to satisfy the Court that it is just to order that disclosure be given at a time other than in the normal course of proceedings.It may also be possible to seek an order for specific disclosure pursuant to Rule 7.41 of the Rules, to direct a party to carry out a thorough search for any documents which it is reasonable to suppose may adversely affect his own case or support the case of the party applying for disclosure.

■ claims in respect of disbursements made on account of a ship; and

■ claims arising out of bottomry.The procedure for ship arrest is provided under the Action of Arrest Act 1953 and Rule 13.39 of the Rules, and is relatively straightforward. It is not necessary to provide counter-security for the arrest, although an undertaking to meet the expenses must be provided. It must be established that: (i) there is a good cause of action; (ii) the defendant is about to depart the Island or will remain absent; and (iii) the defendant has not settled the action or submitted to the jurisdiction.In accordance with Rule 13.39 of the Rules, a claimant may apply to the High Court to have the property arrested, subject to certain conditions. A party making an application for arrest must: (i) request a search to be made in the register before the warrant is issued, to determine whether there is a caution against arrest in force with respect to that property; and (ii) file a declaration (which incorporates the undertaking to pay the fees and expenses of the coroner in executing the warrant of arrest).Where a claim in rem is not available, a party may seek to apply for a freezing injunction (formerly known as “Mareva” injunctions) over the assets to prevent the defendant from disposing of, or dealing freely with the assets prior to the determination of the claim. It is used to preserve those assets with a view to enforcing a judgment against them. A freezing injunction is an interim remedy and an application can be made ex parte (i.e. without the defendant having notice). Whilst a freezing order is not a form of security in itself, it does require the defendant to comply with the terms of the order or be held in contempt of Court.The grounds that must be established when applying for a freezing injunction are:(i) there must be a good arguable case against the defendant (i.e.

more than “barely capable of argument”);(ii) there must be a real risk that a judgment will go unsatisfied

due to the disposal of assets (a high standard of proof due to the potential injustice to the defendant); and

(iii) it must be just and convenient in all the circumstances to make the order.

Under Isle of Man law, a bunker supplier can only proceed against the party with whom that supplier has contracted, and cannot arrest a vessel if it did not contract directly with the owner or demise charterer. Furthermore, even if the bunker supply contract with the charterer contains an express term giving the supplier a lien on the vessel under the law governing that contract, this would have no effect under Isle of Man law because the owners are not party to that contract. Bunkers, however, could still be subject to a freezing injunction (please see question 4.1).

A lien is usually exercised by refusing to discharge or release the cargo until payment is made, and is, therefore, dependent on the Shipowner having retained possession of the cargo. If the claim is a maritime lien, the vessel may be arrested even in change of ownership, as the lien attaches to the property at the time the cause of

a limitation period, which can be extended by the Court. The arbitration agreement will set out the provisions in respect of the appointment of an arbitrator and how the arbitration will progress. An award may be made in arbitration proceedings at any time. A party may apply to the Court for an order allowing an arbitration award to be enforced as though it were a judgment of the Court.Special rules apply to arbitration under the Arbitration (International Investment Disputes) Act 1983. These are set out in Rule 13.55 of the Rules.

The Isle of Man is a self-governing dependent territory of the Crown which has a long and distinguished maritime history dating back to 1786 and is one of the Organisation for Economic Cooperation and Development’s (“OECD”) “white-listed” jurisdictions. The Isle of Man Ship Registry provides flexibility in respect of mortgage registration. The Isle of Man operates on a system of English law and enables parallel registration with other States as well as both demise-in and demise-out registration. The Isle of Man flies the British Red Ensign as a badge of quality and has a strong performance on memorandum of understanding (“MoU”) white-lists and the United States Gulf Coast (“USGC”) Qualship 21 program. In addition, the Isle of Man Ship Registry provides a 24/7 emergency response and out-of-hours registration, as well as being relatively low in costs and registration fees.

The Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968 makes provision for the enforcement in the Isle of Man of judgments given by certain prescribed “superior Courts” of countries which are afforded reciprocal treatment to judgments given in the Isle of Man. At present, these include the following: (i) the United Kingdom and Channel Islands (excluding

Guernsey and Jersey);(ii) Guernsey;(iii) Jersey;(iv) Suriname;(v) Israel; (vi) Italy; (vii) the Netherlands; and(viii) the Netherlands Antilles (covered by Dutch legislation).A judgment of such a superior Court (the “original Court”) can be registered in the Isle of Man if it is final and conclusive and there is payable thereunder a sum of money (not being a sum in respect of taxes, fines or similar penalties). Note that a UK judgment in respect of VAT can be registered in the Isle of Man. A judgment will be treated as final and conclusive notwithstanding that an appeal may be pending. Registration will not be permitted, however, if, at the date of the application for registration: (i) the judgment has been wholly satisfied; or (ii) the judgment could not be enforced by execution in the

country of the original Court.

Under Isle of Man law, disclosure is an important exercise and each party is under a duty to disclose. A “document” is anything in which information of any description is recorded, including written documents, audio tapes, videotapes, photographs, USB hard-drives, etc.The duty continues throughout the proceedings and any new documents which come to light must be disclosed. Each party’s advocates must advise each party at the outset on their respective obligations for disclosure. A party must disclose all documents (whether originals or copies): which are or have been in its control, including physical possession; over which it has a right to possession; and which it has a right to inspect or take copies of. In order to identify which documents are disclosable, each party must carry out a reasonable search. Pursuant to Rule 7.36 of the Rules, each party must then consider the proportionality of the disclosure, which includes (but is not limited to): (i) the number of documents involved; (ii) the nature and complexity of the proceedings; (iii) the ease and expense of retrieving a particular document; and (iv) the significance of any documents likely to be located during

the search.

6 Procedure

Claims are heard pursuant to the admiralty jurisdiction in the High Court. The title of the proceedings shall begin with the words “Admiralty claim in rem against” and brief particulars of the property against which the claim is made (including in the case of a ship, her name and port of registry). Such particulars must be served on the defendant either in the claim form or within 75 days after the service of the claim form. An acknowledgment of service must be filed within 14 days after service of the claim form. In any event, the claim form must be served within 12 months after the date of issue.There is no obligation in the Isle of Man for parties to mediate; however, mediation has become increasingly popular. In accordance with the Rules, any time after a defence is filed, any party to the proceedings can make an application for the whole or part of the claim to be referred to mediation. All parties must provide written consent and agree who the mediator will be. The Court may set directions as to providing reports on the progress of the mediation and informing the Court if an agreement is reached or, alternatively, if the mediation should be terminated. Mediation is encouraged as an alternative route to resolving disputes without the need for protracted litigation and excessive costs.Arbitration in the Isle of Man is governed by the Arbitration Act 1976 (the “1976 Act”) and Part 13, Chapter 6 of the Rules. Once a party has entered into an arbitration agreement, any party may apply to the Court to have any proceedings relating to a dispute to which the agreement applies stayed. The agreement may define

“New York Convention”). As such, enforcement is relatively straightforward and relates to an award made in pursuance of an arbitration agreement in the territory of a State other than the UK which is a party to the New York Convention. Foreign awards relate to parties of the Geneva Convention on the Execution of Foreign Arbitral Awards (signed at Geneva on 26 September 1927) (the “Geneva Convention”) in territories to which the Geneva Convention applies.

The Isle of Man Ship Registry has achieved certification to the new ISO 9001 standard 9001:2015. In addition, the Ship Registry now operates under the general inspection scheme.

Enforcement of judgments from countries that do not hold reciprocal treatment may apply to the Isle of Man Court, pursuant to Rule 12.56 of the Rules, to register such foreign judgment. A foreign judgment once registered shall, for the purposes of execution, be of the same force and effect as if the judgment had been a judgment originally given in the High Court of Justice of the Isle of Man and entered on the date of registration.

Section 27 of the 1976 Act permits an award on an arbitration agreement, with leave of the Isle of Man Court, to be enforced in the same manner as a judgment or order to the same effect; and where leave is given, judgment may be entered in terms of the award.In respect of foreign arbitration awards, the 1976 Act defines two types of awards: (i) convention awards; and (ii) foreign awards made after 28 July 1924. The Isle of Man is a party to the 1958 New York Convention on the Recognition and Enforcement of Arbitration Awards (the

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Mark DoughertyDQ AdvocatesThe Chambers5 Mount PleasantDouglas, IM1 2PUIsle of Man

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Chapter 29

1 Marine Casualty

(i) CollisionIsrael adopted the 1972 Collision Regulations set in London on 20 October 1972, through the Ports Ordinance Regulations, under the Ports Regulation (prevention of collisions at sea) 1977.(ii) PollutionThe key provisions in force in Israel relating to pollution at sea are as follows:■ The Prevention of Sea Pollution by Oil Ordinance 1980, and

its Regulation (implementation of the Convention) 1987, which adopted into Israeli law the International Convention for the Prevention of Pollution (“MARPOL”) 1973 together with its 1978 protocol.

■ The Liability for Compensation of Damages by Oil Pollution Law 2004, which adopted into Israeli law the Fund Convention on Civil Liability for Oil Pollution Damage (“CLC”) 1992 as amended in London on 18 October 2000.

It is important to emphasise that sea pollution in Israel is a criminal act to which a presumption of liability is set under law, and therefore proving ‘mens rea’ is not necessary for conviction.(iii) Salvage / general averageThe key provisions in force in Israel relating to salvage and GA are as follows:■ The Lost Goods and Salvage Ordinance.■ The Ottoman Marine Commerce Law 1863.■ The Unlawful Enrichment Law 1979.In practice, the York-Antwerp Rules will apply contractually in most cases.(iv) Wreck removal■ The Shipping Law (Vessels) 1960.(v) Limitation of liability■ The Shipping Law (Limitation of Vessel Owners’ Liability)

1965, which adopted into Israeli law the International Convention relating to the Limitation of the Liability of Owners of Sea-going Ships (Brussels, 10 October 1957) and Protocol made on 21 December 1979.

■ The Shipping Regulations (Limitation of Vessel Owners’ Liability) (Legal Procedure) 1970.

(vi) The limitation fundSee point (v) above.

The Administration of Shipping and Ports (“ASP”), serving under the Ministry of Transport, is the authorised party to investigate marine accidents.

2 Cargo Claims

The following are relevant to such claims:■ The Hague-Visby Rules, which were adopted into Israeli Law

by the Carriage of Goods by Sea Ordinance 1926.■ The Torts Ordinance 1968.■ The Contracts Law 1973.■ The Uniform Contracts Law 1982.■ The English Marine Insurance Act 1906.

The Hague-Visby Rules govern cargo claims brought against the carrier by the parties to the Bill of Lading issued by the carrier, or their insurers.Jurisdiction clauses on Bills of Lading must be both explicit and exclusive in order to be recognised by the Israeli courts as such.Marine insurances in Israel are subject to the English Marine Insurance Act 1960.Foreign (non-Israeli) insurance companies are generally not allowed to pursue subrogation claims in Israel; however, foreign marine (and aviation) insurers are allowed to do so on cargo claims.Foreign law, if applied by the contract of carriage, must be proved to the court by legal experts.Bona fide (or ‘good faith’) is a ‘supreme principle’ under the Israeli legal system, and will be examined in each and every case, including marine cargo claims.

Avi Cordova

Roy GiladGrossman, Cordova, Gilad & Co. Law Offices (GCG)

Israel

IsraelGrossman, Cordova, Gilad & Co. Law Offices (GCG)

The shipowner may rely upon a lien on the cargo; however, such lien must be proportional to the interest protected (for example, it is not possible to place a lien on cargo worth 1 million USD for freight debt of 100 USD).The key provisions covering the subject matter are Contract Law 1973, the Uniform Contract Law 1982, and Contractor Agreement Law 1974.

The following are acceptable:■ Bank guarantee.■ P&I Club guarantee (“LOU”).■ Cash deposit at the court’s treasury.

5 Evidence

Under the Civil Procedure Regulations (“CPR”), it is possible to seek a court order for pre-action disclosure, subject to certain conditions, if the court is convinced that same is desirable and also necessary at such an early stage (i.e., cannot be done sufficiently at a later stage).It is of course possible to seek a court order for specific disclosure, and/or testimonies.

Generally, all documents must be presented to court and to opponents at the pre-trial hearings, otherwise their presentation may not be allowed in later stages. The ‘supreme principle’ under local legal system is ‘Open Cards’, and any document which a party wishes to keep concealed for later stages must be granted the court’s permission in advance.

6 Procedure

Claims up to 2.5 million NIS are heard before the Magistrates’ Courts; while those above this sum are heard before the District Courts.The average timescale for a court claim is about two years, but mainly depends on the circumstances.

The shipper is fully responsible and liable for any and all information provided to the carrier regarding the cargo. Any damage and/or expense caused to the carrier by misdeclaration of cargo interests is subject to claims, whilst the burden of proof lies with the carrier. There is no limitation of liability.

3 Passenger Claims

Israel is not a party to the Athens Convention 1974.Tort law is the major relevant provision relating to bodily injuries and death of passengers. There is no limitation on compensation available by law.Contract Law 1973 is the major relevant provision relating to passengers’ luggage claims.

An in rem claim before the Admiralty Court with a request for an arrest of the vessel, with the purpose of obtaining a security in return for lifting the arrest.The authority of the Admiralty Court derives from the Colonial Courts of Admiralty Act 1890 (an English Law which is still in force in Israel from the days of the British Mandate over Palestine), and from the Admiralty Courts Law 1952, which provided this authority to the Haifa District Court.In order to succeed in obtaining an arrest, the claimant must prove a recognised cause such as ‘damage done by ship’. The list of recognised causes which may lead to a vessel arrest can be found in case law, and in the Shipping Law (Vessels) 1960, and in the Admiralty Court Acts of 1840 and of 1861, as well as in the Vice Admiralty Rules 1883 (all originally English laws which are still in force in Israel since the time of the British Mandate over Palestine).

Generally yes, since bunker supply fits the recognised cause, under the Israeli Shipping Law (Vessels) 1960, for maritime lien, as the bunker supply is considered a necessity (and also under Admiralty Court Act 1861).However, such lien/arrest is limited – in accordance with the precedent set under Admiralty Court Case No. 45897-02-12 O.W. Bunker Malta Limited v. M/V Emmanuel Tomasos – to the direct party who entered the supply agreement with the vessel only, and will not be granted to any other party in the ‘chain of supply’.

■ The judgment does not contradict natural justice principles.■ The judgment does not contradict public policy.■ The judgment will be enforced only in the case that the

defendant is residing in Israel or agreed to the jurisdiction.Another major principle is that a foreign judgment shall be neither recognised nor enforced if given in a country/state which, according to its laws, does not enforce Israeli judgments.Finally, the procedure for recognition and enforcement of a foreign judgment in Israel is submission of an application to court, together with a sworn affidavit.

The subject of arbitration is regulated in Israel under the Arbitration Law 1968.The subject of enforcement of foreign arbitration awards is regulated under the Regulation for Execution of the New York Convention (Foreign Arbitration) 1978.

Israeli law applies the Hague-Visby Rules on actual carriers; however, it does not resolve the legal status of freight forwarders acting as contractual carriers/principals/non-vessel-operating common carriers (“NVOCCs”).In several cases, the courts have found the forwarder’s demand to equalise its status concerning its contractual liabilities vis-à-vis its clients in connection with the transport of cargo to that of the actual carriers, to be reasonable. In other cases, the courts determined that the freight forwarder was not entitled to the defences of the Hague-Visby Rules because it does not meet the definition of a “carrier” under the Hague Convention.

Vessel arrests are dealt with only at the Admiralty Court (the District Court in Haifa), regardless of the amount of the claim, and are usually resolved more quickly – within an average of one year.Arbitration is usually resolved after one to two years on average, depending on the circumstances.Mediation usually take four to six months on average.

The Hague-Visby Rules apply on actual carriers but not necessarily on contractual carriers like freight forwarders and so forth.Israeli courts are known to be less formalistic, which means the Israeli judges tend to place less weight on procedural issues and regulations, and more weight on the essence of the incident brought before them.The majority of cargo claims in Israel end in out-of-court settlements.Court judgments in Israel usually order low expense payments in favour of the winning party, which are not in proportion to the actual expenses.

A foreign judgment may be recognised and enforced only under the Foreign Judgments Enforcement Law 1958.The basic conditions for recognition and enforcement are as follows:■ The judgment was given in a state in which, according to its

laws, the courts were authorised to give such judgment.■ The judgment cannot be appealed.■ The compulsion under the judgment is applicable under

Israeli law.■ The judgment is attainable in the state in which it was given.■ The judgment is personal only.

Grossman, Cordova, Gilad & Co. Law Offices (GCG) is a leading and dominant law firm in the fields of maritime law and international trade in Israel. The firm’s partners have many years of experience, professional know-how and legal skills in a wide range of civil and commercial law practice areas. The firm was ranked among the leading law firms in Israel in the field of maritime law by Globes Dun’s 100 rankings in 2017 and 2018. The firm represents some of the largest Israeli freight forwarders, global freight forwarders, customs brokerage companies, shipping agents, logistics and trading companies, importers and exporters, and international insurance corporations engaged in insuring and managing risks in international trade and transportation. The main office of the firm is located in Givatayim, adjacent to Tel Aviv. The firm has a branch in Haifa run by Adv. Ariel Zisman, who has extensive know-how and experience in the field of maritime law.

LL.B. and Israel Bar Association member since 1998. Roy Gilad, Adv. specialises in civil/commercial law, international trade, maritime and aviation law, international forwarding, customs brokerage, international transportation, commercial transactions, contracts, international sales, agencies and distributers, marine insurance, professional liability in global transportation and international trade and civil/commercial litigation. He represents international forwarding and customs brokerage companies, logistics companies, international insurance corporations, trading companies and commercial entities. He speaks Hebrew and English.

LL.B. and Israel Bar Association member since 1988. Avi Cordova, Adv. specialises in civil/commercial law, international trade, international forwarding, customs brokerage, international transportation, maritime and aviation law, contracts, commercial transactions, financing, insolvency, labour law, commercial litigation in the courts and arbitration. He represents international forwarding and customs brokerage companies, logistics agencies, shipping agents, shipping companies, financing companies, etc. He speaks Hebrew, English, Greek and French.

Roy GiladGrossman, Cordova, Gilad & Co.Law Offices (GCG)53 Hashalom RoadGivatayim 53454Israel

Tel: +972 3733 1599Email: roy@gcglaw.co.il URL: www.gcglaw.co.il

Avi CordovaGrossman, Cordova, Gilad & Co.Law Offices (GCG)53 Hashalom RoadGivatayim 53454Israel

Tel: +972 3733 1599Email: avi@gcglaw.co.il URL: www.gcglaw.co.il

Chapter 30

1 Marine Casualty

(i) CollisionIn case of collision, the matter of compensation for damages will be governed by the Brussels Convention dated 23 September 1910, provided that all vessels concerned belong to contracting states. Otherwise, the matter will be regulated by the Italian Code of Navigation, which contains a number of rules which are partially different from those of the Convention.Both under the Convention and under national law, liability can be established in tort and is founded on negligence. When the collision is caused by the fault of two or more vessels, each vessel responds for the percentage of the fault committed and, according to the Code of Navigation, also in relation to the seriousness of the consequences. Each vessel would instead bear its own losses in cases where the collision is accidental, caused by force majeure or if the cause of the collision is left in doubt. Once a collision occurs, the local Port Authority will immediately start an investigation to collect evidence on the casualty. The final report of such investigation will be made available to the Judicial Authority. If a ship-owner applies for the arrest of the other vessel in order to obtain security for his claim for damages, the Italian Court shall retain jurisdiction to determine the case upon its merits (pursuant to article 7.1 (d) of the 1952 Arrest Convention) even if there are no links with the Italian territory.(ii) PollutionThe most important pieces of national legislation concerning the protection of the environment are the following Acts of Parliament: n. 979 of 31.12.1982; n. 220 of 28.02.1992; and n. 349 of 08.07.1986. These establish the notion of protection of the environment and set measures to be implemented by both the administrative bodies and the private parties involved. As far as oil pollution potentially deriving from cargo is concerned, Italy has ratified the Civil Liability Convention 1969 (CLC) and the 1992 Protocol. Italy is also a contracting party to the 1971 Convention establishing the International Fund for compensation for oil pollution, as well as the 1992 and 2003 Protocols thereto.

It is noteworthy, in respect of the interpretation of the CLC, that following the sinking of the Haven, the Tribunal of Genoa also included in the items of damages the purely economic loss of profit unconnected to any physical damage.Italy has further ratified the 2001 Bunker Oil Convention, but not the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 (1996 HNS Convention).(iii) Salvage / general averageItaly has ratified the 1989 London Convention on Salvage.The Italian Code of Navigation provides a series of rules specifically aimed at the discipline of salvage and inspired by the 1910 Brussels Convention. Such provisions, however, although technically never repealed, were rendered almost inapplicable following the ratification by Italy of the 1989 London Convention, in view of the wide-ranging scope of application set under article 2 of such Convention.As a consequence, the rules of the Italian Code of Navigation will only remain applicable to salvage services rendered by an Italian vessel to another vessel equally flying the Italian flag. Among such rules, it is worth mentioning the provision of the Code of Navigation (article 496) according to which the crewmembers of the salving vessel are entitled to receive two-thirds of the salvage reward.Although there are no specialised Courts in Italy having specific jurisdiction on salvage matters, Italian jurisprudence has still given rise to an impressive amount of reported decisions, dealing with several questions but particularly the issue of assessment of the salvage reward in accordance with the criteria indicated in articles 13 and 14 of the Convention.The conventional regime, founded on the principle of ‘no cure, no pay’, has been constantly upheld by the Italian Courts.(iv) Wreck removalThe Nairobi Wreck Removal Convention, which was adopted in 2007 and entered into force in 2015, has not been ratified by Italy as yet, therefore the matter is still regulated by a specific article of the Italian Code of Navigation (article 73) according to which wide discretion is given to the Port Authorities to issue orders for wrecks’ removal whenever the wreck may cause danger or an obstacle to navigation.The order of removal is to be addressed to the registered owner of the wreck with a deadline for compliance and if the owner of the wreck does not comply in time, the Authority will proceed ex officio by seeking recovery of the expenses from the enforced sale of the wreck and from the ship-owner. Detailed agreements are normally

Lawrence Dardani

Marco Manzone

Dardani Studio Legale

Dardani Studio Legale Italy

2 Cargo Claims

The Italian legal system is based on the so-called “double track” regime since, on the one hand, Italy has ratified the Hague-Visby Rules and, on the other hand, Italy enacted in 1942 the Code of Navigation on the basis of the Hague Rules, but without later enacting the modifications introduced by the Visby Rules. On the other hand, Italy is a contracting party neither to the Hamburg Rules nor to the Rotterdam Rules. The Code of Navigation is still in force, and it contains a number of articles (421–424) dealing with the carrier’s liability for damages to cargo, which broadly, but not completely, mirror the provisions contained in articles IV, V and VI of the Hague Rules.Since the Hague-Visby Rules are “lex specialis”, their application prevails on the application of the Code of Navigation which is, consequently, applicable only to cases which do not fall within the ambit of application of the Hague-Visby Rules, pursuant to article X of the same.The Italian Code of Navigation also applies to any carriage performed by Italian vessels between Italian ports.

The carrier’s liability regime is grounded on the so-called fault-based liability system. If the claimant proves that damage or loss occurred while the cargo was under the custody of the carrier, the latter is presumed at fault. As a result, the burden of disproving this presumption rests on the carrier, and in order to have its liability excluded, the carrier shall provide proper evidence that the loss or damage to the goods was caused by one of the excepted perils provided by article IV of the Hague-Visby Rules.The carrier has the right to limit its liability in accordance with the provision of article IV para. 5 of the Hague-Visby rules. In case the Italian domestic law applies, article 423 of the Code of Navigation provides that the liability of the carrier cannot exceed EUR 103.29 for each unit of cargo, or the major figure corresponding to the value declared by the shipper prior to loading. In any case, the carrier’s right to limit will be denied if the Court establishes that the carrier acted with wilful misconduct.Any cargo claim against the carrier pursuant to contracts of carriage of goods subject to the Hague-Visby Rules is time-barred within one year after delivery of goods or the date on which they should have been delivered. Such time limit can be avoided by the cargo interest by starting legal proceedings. However, the parties can extend such time limit by agreement. If, on the contrary, the domestic law applies, a cargo claim is time-barred after six months, but, in the event that either the port of loading or the port of discharge is located outside Europe or outside the Mediterranean countries, the limitation period will be one year.The limitation periods provided by the Code of Navigation cannot be extended or shortened by agreement, but they can be interrupted by the claimant by serving a written claim to the carrier with a request of payment.

stipulated between the competent Port Authority, on the one side, and the ship-owner and its Protection and Indemnity (P&I) Club, on the other, to ensure that the removal operations are carried out safely and by protecting the environment. (v) Limitation of liabilityThe Italian traditional regime of limitation of liability was based in the past on a specific article of the Italian Code of Navigation (article 275) according to which the ship-owner could limit his liability (in connection with the obligations arising from a voyage) to an amount equal to the aggregate of the value of the vessel, the amount of the freight and of the other earnings of the voyage. For the purpose of determining the value of the vessel, article 276 specified that such sum should be determined in an amount between one-fifth and two-fifths of the insured value of the vessel, depending on the vessel’s actual value at the end of the voyage.Such discipline has recently been dismantled by an Act of Italian Parliament dated 28 June 2012 n. 111, according to which the rule contained in the abovementioned articles of the Code applies only to vessels having a gross tonnage below 300 tons.Furthermore, the above Act n. 111/2012, which was adopted in order to comply with the European Directive 2009/20/EU on the insurance of ship-owners for maritime claims, has in practice introduced into the Italian legal system the limitations of ship-owners’ liability as foreseen by the Convention on Limitation of Liability for Maritime Claims (LLMC Convention), which Italy has not yet ratified.The result of the above is an extremely dissatisfactory legal system, giving rise to numerous discrepancies between the regime of insurance of claims adopted with Act n. 111/2012 and the LLMC regime incorporated therein, but not ratified by the Italian Government as yet. (vi) The limitation fundA further negative consequence which derives from the failure of the Italian Government to adopt the LLMC Convention is the legal uncertainty in connection with the procedure for the establishment of the limitation fund, which is still governed by a few articles of the Italian Code of Navigation (articles 620 to 642) which by now must be considered obsolete.

Administrative investigation into maritime casualties is regulated by articles 578–584 of the Code of Navigation. The Code foresees two types of maritime investigation: a summary investigation, aimed at determining the causes and liabilities arising out of the accident; and a more extended investigation – the so-called formal investigation – which is carried out only in case of major casualties. During the formal investigation, the parties involved, such as the ship-owner, the registered owner of the vessel, crewmembers, insurers and injured persons, can be represented before the competent maritime authority. It is noteworthy that facts ascertained during the formal investigation will be considered as admitted in the relevant civil merits proceedings, unless there is evidence to the contrary. Act n. 165 of 2011 has implemented Directive 2009/18/EC, thereby creating, within the Italian Ministry of Transport, the body of a Central Commission of Investigation of Maritime Casualties, whose aim is to carry out investigations for the purpose of identifying causes and liabilities from a strictly technical perspective. The body is also aimed at reporting maritime casualties in order to implement measures for the avoidance of future casualties. In case of deaths or serious personal injuries, the prosecutor will require a criminal investigation to be carried out.

assets can also be obtained in accordance with the general rules established by the Italian Code of Civil Procedure. Ships flying the flag of contracting states of the Brussels Convention can be arrested only in respect of the maritime claims set out in the list contained therein. Furthermore, according to the prevailing trend in Italian case law, the Brussels Convention will also be held applicable to ships flying the flag of non-contracting states, in case the arrest is sought for a maritime claim included in the list. If Italian Courts have no jurisdiction over the merits of the case, the arrest can be filed before the Court having territorial jurisdiction to enforce the arrest measure, i.e. the place where the vessel is located. Therefore, Italian Courts acquire jurisdiction to arrest a ship when the ship enters the territorial area of the port. A power of attorney is required in order to file an application for arrest.Although the Italian Code of Civil Procedure indicates that Judges have discretion to order the claimant to deposit counter-security, this is normally not required. The application for arrest of a ship can be granted ex parte. In such a case, the order of the Judge will be immediately enforced by the Court chancellor, by informing the Harbour Master that a civil arrest is pending over such ship and that she is prevented from sailing until further Court order. However, a hearing will be scheduled a few days later, at which the ship-owner can appear in Court and challenge the arrest. As a result of such hearing, the arrest of the ship can be confirmed or revoked. If the arrest is confirmed, the claimant will have to start proceedings on the merits within 60 days. An appeal against the order of confirmation of arrest or against the order of revocation of arrest can be filed within 15 days.

Legal issues arise when the bunker supplier does not have a credit against the vessel’s owner but against other vessel operators, such as a demise charterer or a time charterer. In such a case, it will be necessary to examine the construction made by Italian Courts of article 3.4 of the Brussels Convention. There is a conflict under Italian law as to whether a claimant can arrest a ship for a credit not against the owner of the vessel, irrespective of the nature of such claim, i.e. whether such credit is supported by a maritime lien or not. Recent Italian case law has adopted a wider approach, allowing claimants to arrest the particular ship for a credit not against the owner of the vessel, but against the time charterer, even if not supported by a maritime lien. However, the case law is not set in stone and the contrary opinion is favoured by part of the Italian jurisprudence and eminent doctrine. In any case, the physical bunker supplier will have to establish a contractual relationship with at least one of the vessel’s operators in order to try to successfully plead its right to arrest the ship.

A maritime lien can be exercised by the vessel owner over cargo only with the permission of the local Court, which will verify whether legal requirements set out in the Italian Code of Navigation are met by claimants. The lien can indeed be exercised by the owner of the vessel to secure its claim for freight and demurrages arising out from a contract of

The shipper is obliged to provide a complete and accurate description of the cargo to the carrier both as per article III para. 5 of the Hague-Visby Rules and as per article 457 of the Code of Navigation. Thus, at the time of loading of the cargo on board, the shipper should provide accurate indications of marks, quality, quantity, numbers and weight of the goods.Should the shipper fail to do so, he will be liable against the carrier for the damages and losses due to such misinformation. In case of goods of an inflammable, explosive or dangerous nature, loaded without the consent of the carrier, the carrier may, at any time before discharge, land, destroy or render innocuous the cargo without providing compensation to the shipper, who will be held liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment.

3 Passenger Claims

Rules on maritime passengers’ claims can be found in the Code of Navigation and in EC Regulation n. 392/2009 dated 23 April 2009, by which the regime of the 1974 Athens Convention was implemented in Italy, although such Convention has so far not been ratified by Italy. However, contrary to the Athens Convention, the EC Regulation is also applicable to carriages within a single Member State, if effected on board class A and B ships (as defined under article 4 of Directive 98/18/EC). In accordance with rules contained in the Regulation, Italy has chosen to defer the application of the Regulation in respect of such domestic carriages: presently, the Regulation is applicable to Italian domestic carriages effected on board class A ships, whilst for carriages on board class B vessels, the EC Regulation will be applicable from 1 January 2019. The Italian Code of Navigation applies only in case the EC Regulation is not deemed applicable. Regarding the regime set out in the Code of Navigation, key provisions are the liability regime and limitation period: article 409 of the Code of Navigation establishes a regime of strict liability and, according to article 418, the limitation period is shorter than that established in the EC Regulation: only six months; or one year in the case that the carriage started or finished outside the Mediterranean Sea or outside Europe. However, as indicated, the application of the regime of the Code of Navigation is now residual, and from 1 January 2019, it will be even further reduced.

Italy has ratified the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-going Ships, signed in Brussels on 10 May 1952. Conversely, Italy is not a party of the 1999 Arrest Convention signed in Geneva. Security over a debtor’s

process is indeed based on the principle that evidence admitted is only that gathered by the parties before the Judge and “fishing” discovery requests are not admitted. As an exception to the above rule, the Italian procedural law allows the parties to request the Judge to order (to the other party or to a third party) the production of a specific and properly identified document, which proves to be material to the requesting party’s case. The requesting party should also demonstrate that the document to be produced exists.

6 Procedure

A typical and special procedure applicable to maritime claims can be found in the so-called “cause marittime” (maritime claims). These are Court cases dealing with claims deriving from maritime casualties, such as claims for damages arising out of collisions, damages to vessels in performing anchorage and berthing operations or other ports’ manoeuvres, damages arising out of the use of loading or unloading mechanisms and from the handling of goods in port, claims for salvage compensation or remunerations. Apart from special rules for establishing the competent local Court, the main characteristic is the compulsory presence of a nautical expert appointed by the Court. Other special procedural rules can be found in the proceedings concerning adjustments of general average and in the procedure for establishing the ship-owner limitation fund. All other claims are regulated by standard civil procedure. No special procedure is foreseen under arbitration proceedings. Mediation does not entail any special rules as to its conduct, which is free.

Italy is a maritime country with a long-established maritime law tradition. The Italian Association of Maritime Law was founded only few years after the establishment of the Comité Maritime International. Practitioners, scholars, lawyers and Judges have been qualifying through universities such as Genoa, Naples and Trieste, all of which have a profound maritime orientation. Nowadays this signifies that Courts have many precedents to rely upon in the maritime field, thereby creating a degree of certainty when industry players approach a Court for maritime matters, especially before historical maritime Courts. Trial length is by far the main disadvantage when analysing the health of the overall Italian judicial civil system. However, in recent years Italian Governments have tried to overcome this issue by establishing reforms aimed at reducing trial time. Among these, it is noteworthy that Italian proceedings are now managed via an entirely electronic system.

carriage. The Court application must be filed within 15 days from discharge of cargo and, in any case, before the delivery of the goods to third parties.According to article 437 of the Italian Code of Navigation, it is possible to exercise the lien and to obtain permission to discharge the cargo at the same time, under control of justice (but arrangements will have to be made in advance with the local agents to identify the shore installations where cargo can be stored under lien).The arrest of bunkers can be obtained (as security for a claim against a time charterers of a vessel) by triggering the general procedure for arrest of moveable goods, set out in the Italian Code of Civil Procedure, thereby implying that the creditor will not only need to establish prima facie evidence of its claim ( fumus boni iuris) but also that there is the risk that enforcement of a later decision on the merits will be impaired by the financial conditions of the debtor (periculum in mora).

As per article 684 of the Italian Code of Civil Procedure, the ship-owner may obtain the release of the vessel from the arrest, by placing an adequate guarantee in substitution of the goods under arrest. It has been held that an adequate guarantee is constituted by the deposit of a sum equivalent to the credit sought plus expenses in a bank account opened in the name of the Court or by a bank guarantee. Italian Judges do not accept P&I Clubs’ LOUs as adequate guarantee, unless there is an agreement between the parties.

5 Evidence

Preservation of physical evidence is achieved in Italy through the so-called accertamento tecnico preventivo. Pursuant to article 696 of the Italian Code of Civil Procedure, in case of urgency, one party has the right to apply to the President of the competent Court to have a surveyor appointed in order to ascertain the physical state, quality and condition of goods. The Court might require the expert to provide technical evaluations as to the causes and damages. The Italian Code of Civil Procedure also contemplates pre-examination of witnesses. One party, who has grounded reasons to consider that one or more witnesses would not be available to render their deposition during the future Court proceedings, might ask the Court to grant permission to hear such witnesses. The rule is normally triggered in case of extreme and poor health conditions of witnesses, but it can be also triggered in case of non-EU crewmembers on board non-EU vessels, arguing that, after departure of the vessel, it will be difficult, or even impossible, to hear the crewmembers as witnesses in Italy.

The Italian legal system does not include the Anglo-Saxon concept of general and wide discovery of documents. The Italian civil

Italy is part of the “European judicial area” which is based on the principle of free circulation of judgments and is presently governed by Regulation (EU) No. 1215/2012 (so-called “Brussels I bis”), which provides for a mechanism of automatic recognition and immediate enforcement of judgments in Europe (without any special procedure or declaration of enforceability of the Italian Courts being required). In this European system, the recognition or the enforcement of a judgment is refused only upon application of the interested party, who must prove that the judgment does not meet the requirements indicated in the same Regulation No. 1215/2012.On the other hand, as far as extra-European judgments are concerned, the Italian Private International Law Act of 1995 provides for automatic recognition of judgments which comply with some material requirements (aimed at ensuring that the “adversarial principle” and the principles of fundamental rights of defence and of public policy are observed). For enforcement purposes, as well as in case of any dispute about recognition, a special procedure must be commenced before the competent Court of Appeal.

Italy has ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NY Convention). At the same time, the Italian Code of Civil Procedure provides autonomous procedural rules which are subsidiary to the system of the 1958 NY Convention, and apply if a foreign arbitration award has been rendered in a non-contracting State of the Convention.Under both systems, in order to obtain the recognition or the enforcement in Italy of a foreign arbitration award, a special procedure must be commenced before the competent Court of Appeal by the interested party. In case of opposition, a new phase of the proceedings is opened and the burden of proving that the requirements for recognition or enforcement are not met lies with the opposing party. In respect of recognition of foreign arbitral awards, it is worth noting that Italian Courts have taken a strict interpretation approach on the requirement of the agreement in writing to arbitrate as prescribed in the NY Convention, thereby creating issues as to the recognition of maritime arbitral awards when the agreement to arbitrate is not effectively signed or agreed by one party. In order to circumvent the above issue, and if the award is issued in England, it is sometimes advisable to turn the arbitral award into an English judgment, so that only the judgment is enforced in Italy by taking advantage of EU Regulation No. 1215/2012.

The adoption of the LLMC Convention is still on the agenda of the Italian Minister of Transport. In the meantime, confusion is reigning over the matter of ship-owners’ limitation of liability, feeding different opinions and arguments among scholars. It is hoped that the new Italian government will boost such an important piece of legislation for the Italian maritime industry.

* * *The recent reform of the registration procedure of yachts, which is aimed, among other things, at digitalising and centralising the Italian Yacht Registry, may open the way to a digitalisation of the entire Italian ship registry and particularly of the Italian International Ship Registry, which, lacking the necessary modern digital structure, has not been capable of reaching one of its original goals: to open its arms to foreign owners. A new challenge that the Italian International Ship Registry may face in the near future is represented by the EU pilot procedure established by the EU Commission against Italy, questioning the advantages available to owners of Italian vessels registered under the International Registry. As a result of this, by the Italian Act n. 167 dated 20 November 2017, an amendment has been introduced to the Italian Registry Act to make the Italian International Registry’s benefits available to shipowners (who are residents in Italy or with an Italian permanent establishment) operating vessels that fly other EU or EEA flags (however, such amendment is yet subject to a ministerial decree for the implementation of the practicalities of the reform and, at the time of writing this chapter, such decree has not yet been published). The dilemma is: will such a new development constitute an opportunity for Italy to attract new operators or will this result in a floodgate of tonnage to more efficient registries? The answer will depend on the innovative measures that will be implemented in the Italian International Ship Registry.

* * *There is no doubt that the Italian ship-owners community has suffered in recent years. However, many have managed to remain afloat, after concluding successful restructuring agreements, and are now looking to the market and considering new projects, especially ahead of the technical revolutions that will soon have an impact on the shipping industry. Unfortunately, the Italian ship financing system has not yet shown any sign of recovery, as Italian banks are not encouraging new debt exposure, being yet embroiled in issues concerning previous non-performing loans. In this scenario, foreign funds are becoming more active in trying to acquire non-performing loans from Italian banks, which are now keen on disposing of their debt exposure due to a more favourable second-hand market. The hope is that foreign funds will soon appreciate the competence and professionalism of the Italian maritime industry, thus assisting Italian owners in financing their new projects.

Based in Genoa and Milan, Dardani Studio Legale is an international boutique law firm that gathers a team of advocates specialised in maritime and international trade law, dealing with a broad range of commercial, corporate, ship finance and competition matters.

The firm originates from the expertise of the founding partner Maurizio Dardani, who is recognised as one of the major experts in the field, and it consists of four additional partners, Luca Di Marco, Marco Manzone, Lawrence Dardani and Brian Dardani.

Dardani Studio Legale assists clients in all shipping matters, including both dry and wet issues. The firm regularly advises Italian and foreign clients in transactions involving all kinds of shipping contracts; in particular, ship sale and purchase, shipbuilding contracts, charterparties, bills of lading, salvage and complex matters of ship financing are among the areas of the firm’s expertise. Clients include Owners, Charterers and P&I Clubs.

Lawrence is an Avvocato at the Italian Bar and a Barrister at the Bar of England and Wales.

His practice covers all areas of shipping law, both dry and wet shipping, Italian and English law-related matters and disputes, comparative law and international private law issues. He appears as an advocate and counsels in charterparty disputes, issues related to the carriage of goods by sea, the liability of classification societies, as well as shipbuilding contracts, ship sale and purchase, and ship finance.

Lawrence has been a partner at Dardani Studio Legale since 2014. He speaks Italian, English and Spanish.

Marco assists clients in transactions in the sale and purchase of ships, in shipbuilding contracts, and in ship finance. He also advocates for clients in charterparty disputes, and in precautionary measures such as the arrest of ships or liens on cargo. He also handles cargo claims mainly on behalf of ship-owners.

Marco is particularly keen on the law of international trade and he assists clients in commodity disputes (including international arbitrations) and non-litigation matters.

He was admitted to the Italian Bar in 2006 and he is a member of the Genoa Bar. Having completed the qualified lawyer transfer test, in October 2012 he joined the Law Society as a Solicitor of the Senior Courts of England and Wales.

Marco has been a partner at Dardani Studio Legale since 2014. He speaks Italian, English and Spanish.

Lawrence DardaniDardani Studio LegaleSalita di Santa Caterina 10/8AGenoaItaly

Tel: +39 010 576 18 16Email: lawrence.dardani@dardani.it URL: www.dardani.it/en

Marco ManzoneDardani Studio LegaleSalita di Santa Caterina 10/8AGenoaItaly

Tel: +39 010 576 18 16Email: marco.manzone@dardani.itURL: www.dardani.it/en

Chapter 31

1 Marine Casualty

(i) Collision(a) Jurisdiction and governing lawThe international jurisdiction of Japanese courts over a claim arising out of a collision, grounding or other major casualty is determined according to the Civil Procedure Code. Japanese courts have jurisdiction over such a claim if: a) the above marine casualty was occurred in Japanese territorial sea; b) the damaged vessel first arrived at a Japanese port after the marine casualty; c) the defendant is domiciled, or keeps doing business, in Japan; or d) there are the assets owned by the defendant in Japan. The agreement on the jurisdiction is enforceable and precedes the above international jurisdiction articles in the Civil Procedure Code.The governing law of marine casualty is determined by the Act on General Rules for Application of Laws. A claim arising out of a marine casualty would be governed by the law of the place where the marine casualty occurred, but the agreement on the governing law precedes it.(b) Navigation rulesJapan has ratified the Convention on the International Regulations for Preventing Collisions at Sea 1972 (COLREGs) and has enacted the Act on Preventing Collisions at Sea based thereon. Also, the Maritime Traffic Act provides special navigation rules for channels, and the Port Regulation Act provides those in ports. The fault of the master or officer, and the blame ratio, would be decided according to these navigation rules.(c) Time-barJapan has acceded to the Collision Convention 1910, thus if a collision occurred between Convention-country-flagged vessels, the time-bar would be two years from the date of the collision. For a collision that has occurred between Japanese vessels or a Japanese vessel and a non-Convention-flagged vessel, the Commercial Code and the Civil Code would apply. For such a collision, inter-ship claims are subject to a one-year time-bar from the date when the claimant comes to know of the damages and the identity of the defendant, and personal injury claims are subject to a three-year time-bar from the date when the claimant comes to know of the damages and the identity of the defendant.

In Japan, an amendment to the Commercial Code in relation to maritime law has been discussed, and a draft amendment was submitted to the Diet. The amendment could be enacted in 2018 and enter into force within a few years. The draft amendment includes the same time-bar regime of the Collision Convention for all claims arising out of a collision other than personal injury claims.(ii) PollutionJapan has ratified the CLC Protocol 1992 and the Fund Protocol 1992, and enacted the Act on Liability for Oil Pollution Damage thereon. The Act was amended in 2005 to reflect the Fund Protocol 2003.Japan had not ratified or acceded to the Bunkers Convention 2001, but the Act on Liability for Oil Pollution Damage requires non-tanker vessels entering Japanese ports be covered by protection and indemnity (P&I) insurance in respect of oil pollution damage by bunkers.The oil pollution claim is subject to a three-year time-bar from the date when the claimant comes to know of the damages and the identity of the defendant. The above ongoing amendment of the Commercial Code may change the time-bar period to two years in respect of a pollution claim arising out of a collision.(iii) Salvage / general averageJapan has ratified the Salvage Convention 1910. Japan has not ratified or acceded to the Salvage Convention 1989, but the ongoing amendment to the Commercial Code in relation to maritime law, which is expected to enter into force within a few years, would introduce a right to special compensation in respect of salvage efforts preventing or minimising environmental damage, similar to the Salvage Convention. While the time-bar for a salvage claim is currently one year in the Commercial Code, the draft amendment would change it to two years.The Commercial Code has some articles for general average, but it has not been used because carriage contracts usually have a clause from the York-Antwerp Rules 1994. The ongoing amendment may make the Code consistent with said Rules.(iv) Wreck removalJapan has not ratified or acceded to the Nairobi International Convention on the Removal of Wrecks 2007, but the Act on Liability for Oil Pollution Damage requires vessels entering Japanese ports to be covered by P&I insurance in respect of wreck removal expenses. The authorities may order the vessel owner to remove the wreck according to administrative laws such as the Port Regulation Act and the Act on Prevention of Marine Pollution and Maritime Disasters, but if the vessel owner fails to do so, the authorities may remove it by themselves and recover the cost of the wreck removal from the vessel owner.

Taichi Hironaka

Norio Nakamura

Yoshida & Partners

Yoshida & Partners Japan

covers such ocean carriage contracts that designate either (or both of) a port of loading or a port of discharging outside of Japan. Claims under a pure domestic contract are governed by the Commercial Law.COGSA is also applicable to a contract of carriage for which bills of lading or other similar documents of title (e.g. sea waybills) are not issued. Carriers’ obligation under COSGSA, in contrast to that under the convention, is extended from receipt by carriers to delivery against receivers.

A governing law of the contract (including bill of lading) may affect the liability of the carrier in cargo claims, as our court would approve a foreign law clause.A rightful holder of the bill of lading is entitled to the cargo and may submit cargo claims. In the case that a bill of lading has not been issued, a shipper exclusively has a title to the cargo until it reaches a destination but, thereafter, a consignee may demand delivery of the cargo to the carrier.Sometimes, a dispute as to who should be a responsible carrier under the bill of lading for cargo claims (i.e. identity of carrier) will break out, particularly in such a case where a bill of lading is issued using a charterer’s form but signed “for the Master”, following a demise clause or an identity-of-carrier clause on its reverse side; whether the carrier is a shipowner or a charterer. Our Supreme Court held, in one case, that the shipowner should be the carrier, but this will not bind other cases which involve different situations.Our courts would recognise a jurisdiction clause or an arbitration clause stipulated on the reverse side of a bill of lading.

In general, a shipper has an obligation to accurately notify the specification of goods to a carrier before shipment. If a shipper fails to observe such obligation and a carrier suffers loss or damage resulting therefrom, a carrier is entitled to claim against a shipper for breach of contract or in tort.In particular, a shipper is required to identify whether or not goods to be carried are named under the International Maritime Dangerous Goods Code (IMDG Code) or related regulations. In such a case, a shipper must classify the dangerous nature of goods as prescribed and notify accurate information of goods to a carrier before shipment.

3 Passenger Claims

Japan has not ratified or acceded to the Athens Protocol 2002. Japan has no limitation regime for passengers’ claims in respect of loss of life or personal injury, while luggage claims of passengers are subject to the limitation of liability under the Act.

(v) Limitation of liabilityJapan has ratified the LLMC 1976 and the LLMC Protocol 1996, and enacted the Act on Limitation of Liability of Shipowners based thereon. The Act was amended in 2015 to reflect the 2012 amendments to the Protocol 1996.The vessel owner, demise charterer and charterer can limit their liability in the limitation proceedings by establishing the limitation fund, which is the limit of liability calculated by the gross tonnage of the ship plus 6% interest per annum (it will be changed to 3% per annum from April 2020, and the changed interest rate will be applied to the limitation proceedings relating to marine casualties occurring after 1st April 2020) from the date of the marine casualty until the date of establishing the fund. The limitation fund should be established by cash deposit or guarantee of a bank, an insurance company, the Japan P&I club or a licensed foreign insurance company (including some International Group (IG) clubs).It should be noted that registered gross tonnage of Japanese domestic vessels is different from, and generally less than, the gross tonnage measured according to the International Convention on Tonnage Measurement of Ships 1969, which should be used for calculation of the limit of liability under the Act. Thus, when calculating the limit of liability of a Japanese domestic vessel, the gross tonnage should be newly obtained or calculated according to the above Convention.Claims for loss of life or personal injury to passengers of a ship are not subject to the limitation under the Act.(vi) The limitation fundSee above.

(i) Japan Coast Guard (JCG)The JCG are in charge of casualty response and also criminal investigations of a marine casualty. In most cases, they request voluntary cooperation with their investigation from the vessel owner or crew members, and as a result, the negligent master or officer who caused the marine casualty may be charged a fine of up to JPY500,000, or up to JPY1,000,000 if it involved loss of life or personal injury. In serious casualties involving gross negligence of the master or officer, there have been some cases in which the JCG arrested the master or officer in charge, who stood in criminal courts thereafter. Even in such cases, it is very rare for them to be sent to prison.(ii) Japan Transport Safety BoardThe Japan Transport Safety Board is in charge of investigating causes of marine casualties. Its investigation is carried out separately from the criminal investigation. They release their investigation reports to the public upon completion of the investigation.(iii) Japan Marine Accident Tribunal The Japan Marine Accident Tribunal imposes disciplinary actions against Japanese-licensed seafarers who have caused marine casualties. Seafarers without a Japanese licence are not subject to the disciplinary actions, but could be investigated by the Tribunal.

2 Cargo Claims

The Carriage of Goods by Sea Act (COGSA), which implements the Hague-Visby Rules, is applicable to the marine cargo claims. It

A claim of a bunker supplier for bunker price is secured by a maritime lien and it is possible for a bunker supplier to arrest a vessel under Japanese law. The claim should be against the vessel owner, demise charterer or time charterer of the vessel, and that against the bunker trader may not be secured by a maritime lien.The above is the summarised position of bunker suppliers in respect of a maritime lien under Japanese law, but if the bunker was supplied outside Japan, the governing law of the supply contract was the law of a foreign country, or the bunker was supplied to a foreign flagged ship, there would arise an issue of conflict of laws. This issue has not yet been settled in Japan. There are three major views on the application of laws to a maritime lien in respect of a claim of bunker suppliers:(a) Apply both the law of the vessel’s flag and the governing law

of the supply contract. Only if a maritime lien were admitted under both laws, could the bunker supplier arrest the vessel.

(b) Apply both the law of the bunker supply and the law of the governing law of the supply contract. Only if a maritime lien were admitted under both laws, could the bunker supplier arrest the vessel.

(c) Apply only Japanese law as the law of the forum. If the claim is against the vessel owner, demise charterer or time charterer, the bunker supplier may arrest the vessel.

In most cases, the governing law of the supply contract is U.S. federal law, which recognises a maritime lien for a claim of a bunker supplier. Thus, the law of vessel’s flag and the governing law of the bunker supply are key for a maritime lien to arise before Japanese courts.Bunker suppliers may also try provisional attachment to arrest a vessel if they cannot enforce a maritime lien. In such a case, the claim should be against the vessel owner, and the suppliers should put up security by cash deposit or bonds, as explained above.

A maritime claim against the vessel owner (or demise charterer) cannot be enforced against the assets owned by other parties. There would be no lien over cargo in respect of a maritime claim against the vessel owner (or demise charterer).

The usual course is: the vessel owner would provide a letter of undertaking issued by a competent P&I club or a bank guarantee to the claimant, and in response the claimant would voluntarily release the vessel by withdrawing the arrest proceedings.Another way to release the vessel arrested by a maritime lien is to file a lawsuit requesting confirmation of non-existence of a maritime lien, and obtain an order of interlocutory injunction of the arrest proceedings, and then put up security in the amount of the claim plus all estimated costs for the judicial sale. The court will accept cash deposit or bonds by banks, insurance companies or P&I clubs, etc.In order to release the vessel arrested by provisional attachment, the vessel owner should put up security in the amount of claim or the value of the vessel, whichever is the lesser. The court will accept only a cash deposit.

A claimant may arrest a vessel to obtain security for a maritime claim against a vessel owner. There are two kinds of ship arrest for a maritime claim: one is enforcement of a maritime lien; and the other is provisional attachment.(i) Enforcement of a maritime lienMaritime liens arise with respect to claims for pilotage, towage, bunker expenses, crew wages, salvage remuneration and general average contribution, and also claims in connection with marine casualties. The claims should be against the vessel owner, demise charterer or time charterer of the vessel, and the maritime liens are subject to a one-year time-bar. It should be noted that these maritime liens have priority over a ship mortgage. Sister or associated ship arrest is not possible by enforcement of maritime liens.A maritime lien holder is entitled to arrest a vessel without putting up counter-security. In most cases, the vessel owner provides the lien holder with security to release the ship, but if they do not, the holder is ultimately entitled to recover his claim from the proceeds of the judicial sale. The usual course of the enforcement of a maritime lien is as follows:(a) The maritime lien holder obtains a court order to take up the

certificate of the vessel’s nationality and any other documents necessary for her sailing before her arrival at a Japanese port.

(b) Upon arrival, an enforcement officer confiscates the foregoing documents from the vessel so that she cannot sail out of the port.

(c) Within five days of the documents being apprehended, the holder must formally apply for commencement of the judicial sale of the vessel to the court.

(d) In response, the court decides to commence the judicial sale proceedings and appoints a trustee to secure the vessel until completion of the sale. By this stage, the holder has to pay expected costs and expenses for the proceedings, which are recovered from the proceeds of the sale. The advance payment could be approximately JPY10,000,000 or more.

(e) The court sells the vessel by means of public auction, and the dividends from the proceeds are distributed to the holder.

It usually takes about six months from the commencement of the judicial sale to the distribution of the dividends.(ii) Provisional attachmentClaimants of maritime claims may arrest the vessel by provisional attachment putting up counter-security. The claim should be against the vessel owner, but can be of any type. The amount of counter-security is decided by the court’s discretion, taking the ship’s value, certainty of the claim and the claim into account. It depends on the particular case, but would be 10% to 30% of the ship’s value. Counter-security may be put up by cash deposit or bonds issued by banks or insurance companies, etc. In most cases, the vessel owner provides the claimant with security to release the ship, but if they do not, the claimant will be required to file a suit against the vessel owner. If the claimant can get a favourable judgment, the claimant may enforce the judgment, applying judicial sale of the ship.Sister ships within the same ownership may be arrested by provisional attachment. Associated ships owned by affiliates of the vessel owner may possibly be arrested by provisional attachment if the claimant is able to pierce the corporate veil, but it is generally very difficult.

At the initial stage of the proceeding, parties attend the court for a hearing a few times (or many more, depending on the case), where written pleadings and evidence are submitted to the court and exchanged between the parties. The hearings are held usually every four to eight weeks until the parties rest their case. Upon completion of parties’ activity in documents, usually 10–18 months after the filing of suit, examination of witnesses or experts is held. Our court usually permits a small number of witnesses, so that the examination can be made in a day or half-day, and the time allowed for examination per person is considerably limited. A losing party may appeal to a higher court within 14 days from the next day of receiving service of the judgment. The time schedule of a higher court is very speedy and many of the cases are completed by document examination only, without hearing from witnesses. An appeal to the Supreme Court is strictly limited to such cases that would involve material legal disputes or defects. (ii) ArbitrationArbitration at the Tokyo Maritime Arbitration Commission (TOMAC) of the Japan Shipping Exchange, Inc. is popular for maritime disputes. Candidates for the role of arbitrator are specialised in shipping, and arbitration fees are quite reasonable. The time schedule of the proceeding varies depending on the complexity of the case. As English documents are accepted as they are, the parties are released from the obligation to have these translated.(iii) Mediation / alternative dispute resolution.In Japan, judges and arbitrators who preside over the proceeding may mediate the disputes which are pending before the court or arbitration before giving a judgment or award. A formal mediation procedure is seldom used for maritime claims.

In our court practice, recovery of legal costs is not expected, particularly in contract disputes. In tort cases, about 10% of the claims allowed have been accepted by courts as a part of damages, but generally no more than this. Under the arbitration rule of TOMAC, a legal fee is allowable at the discretion of arbitrators, according to the nature and merit of a case.

Foreign final and binding judgments are automatically recognised if they satisfy all the requirements of the law, as follows: (i) the foreign court had proper jurisdiction; (ii) the losing defendant was properly given service or appeared without service; (iii) the judgment and the proceedings made in the foreign country are not against public policy in Japan; and (iv) recognition of Japanese judgments is also guaranteed in the said foreign country on a reciprocal basis.In order to actually enforce a foreign judgment in Japan, the winning party must file a suit for execution of judgment before a competent court, where the above issues are examined but no propriety of the foreign judgment shall be investigated.

5 Evidence

A court may, upon application by a party, permit the preservation of evidence or the carrying out of an examination of evidence before filing or during a suit, if it is expected that the utilisation of such evidence at later stage would become difficult. Preservation of evidence would include obtaining statements from witnesses, taking pictures or videos and collecting documents from holders. A party who wishes to preserve evidence before filing a suit must apply to a competent court for its permission.

We do not have an extensive discovery or disclosure rule as in the US or UK, and parties of a suit may enjoy submitting only such evidence as is favourable to their position, which tactics are allowed under the adversary system. In a court proceeding, a party often asks the other party to submit further evidence or to clarify obscure facts on which he/she may rely. In such a case, a judge usually instructs him/her to make it clear. However, even if he/she does not satisfactorily respond to it, no specified penalty will be imposed, and it is subject to the principle of “free evaluation of evidence” by a court.A party may apply for a court order requesting a document’s holder to submit specified documents, but our law allows a wider excuse for “a document for exclusively own use”. If a document’s holder is ordered by a court to submit specified documents, he/she must follow it. If not, the court may take an applicant’s assertion in respect of the description of such documents to be true.

6 Procedure

(i) National courtsNeither courts nor judges are specialised in shipping, and maritime claims are dealt with by general judges at civil courts. For serious claims in special or technical fields including shipping matter, our courts sometimes appoint a technical adviser to hear expert views as to disputes or evidence. Except for small claims of less than JPY1,400,000, the competent district court (placed in each administrative district) has jurisdiction over maritime claims. Service of a plaintiff’s complaint is made to a defendant under the strict control of the court and must not be made by the plaintiff or its attorney. If overseas service is required, the court proceeds through a diplomatic channel, which usually takes several months or longer. If a Japanese attorney has been retained by a defendant, such attorney can receive service from the court by submitting a power of attorney.

The draft “amendments to the Commercial Code”, including the part relating to maritime law, was submitted to the National Diet in October 2016 and is being deliberated there. The points of amendment include: the shipper’s obligation to notify as to dangerous goods is newly provided; a carrier’s liability arising from a seaworthiness warranty is deregulated to one relating strictly to negligence; the time-bar of a ship collision is extended to two years; and so on.

Japan is a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). For enforcement of an arbitration award here, a party must apply to a competent court for a recognition order. A certified true copy of the arbitration award must be submitted, together with its Japanese translation.

Yoshida & Partners, one of the leading law firms in Japan specialising in maritime cases, also deals with other areas of practice such as trade, commerce, logistics and other international and domestic business law. It was originally founded in 1924 in Kobe. The firm is known as a leader in training maritime lawyers and has a team of attorneys-at-law, marine counsels and consultants specialised in the shipping industry.

Since joining Yoshida & Partners in 2002, Taichi Hironaka has handled a number of maritime cases. In light of his knowledge, understanding and keen interest in technical aspects, he has also dealt with many disputes involving engineering matters relating to engine, hull structure and sometimes offshore construction (wind farms). He has been engaged in advisory work for insurance companies and vessel operators. He became a partner in 2017.

Mr. Hironaka graduated from Kyoto University in 2001 with a Bachelor of Engineering degree, majoring in architecture. He was called to the Bar in 2002, and, in 2013, received his LL.M. from the University of Southern California – Gould School of Law.

Norio Nakamura has dealt with all aspects of maritime law since joining Yoshida & Partners, including charterparties, ship finance, ship sale, shipbuilding, collision, salvage, cargo recovery or defence, marine insurance, personal injury, ship arrest, bankruptcy and marine pollution. He was made a partner in 2002 and has been involved as an arbitrator of the Japan Shipping Exchange.

Taichi HironakaYoshida & Partners4th Fl., Suitengu-Hokushin Bldg.1-39-5 Nihonbashi-KakigarachoChuo-kuTokyo 103-0014Japan

Tel: +81 3 5695 4188Email: hironaka@japanlaw.co.jpURL: www.japanlaw.co.jp/en

Norio NakamuraYoshida & Partners4th Fl., Suitengu-Hokushin Bldg.1-39-5 Nihonbashi-KakigarachoChuo-kuTokyo 103-0014Japan

Tel: +81 3 5695 4188Email: norio@japanlaw.co.jpURL: www.japanlaw.co.jp/en

Chapter 32

1 Marine Casualty

(i) CollisionThe provisions of the Korean Commercial Act (“KCA”) pertaining to collisions between vessels (Articles 876–881) are applicable to “collisions between sea-going vessels or collisions between sea-going vessels and vessels of inland navigation” (Article 876). The KCA categorises collision into four cases according to the cause of the collision, and prescribes the rule on liability of the relevant parties (i.e., the owners of the vessels involved in the collision) for each case. The four categories include: (i) collision due to force majeure; (ii) collision due to fault of one party; (iii) collision due to fault of both parties; and (iv) collision due to the fault of the pilot. Under the KCA, a statutory time bar of two years from the date of the collision is applicable to claims for damages arising from collision between vessels (Article 881). It is possible for the parties to extend the time bar by mutual consent.For cases of collisions which do not fall within the scope of the KCA (e.g., collisions between vessels of inland navigation, or collisions between a vessel and a dock), the general tort principle under the Korean Civil Code (Article 750) will be applicable instead of the abovementioned provisions of the KCA (i.e., Articles 876–881).On the other hand, it may be noted that Article 12 of the Seafarers’ Act imposes responsibility on masters of the vessel involved in the collision to take all necessary measures to rescue human lives and the vessel, and to provide the other vessel involved in the collision with the following information: name of the vessel; owner of the vessel; port of registry; port of departure; and port of arrival.As for the international conventions related to collisions of vessels, the Convention on the International Regulations for Preventing Collisions at Sea 1972 is currently in effect in the Republic of Korea (hereinafter referred to as “Korea”). On the other hand, Korea is not a party to the International Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels (the “1910 Collision Convention”). Nevertheless, the provisions of the KCA related to collision are influenced by the 1910 Collision Convention.(ii) PollutionThe Compensation for Oil Pollution Damage Guarantee Act prescribes the liability of owners of the oil tanker which contributed to oil pollution.

Another Act relevant to marine pollution is the Marine Environment Management Act, which restricts the discharge of waste, oil and noxious liquid substance from vessels (Article 22). The Minister of Oceans and Fisheries shall impose charges/fees for acts of discharging pollutants from the vessels exceeding the limit prescribed by the Enforcement Decree for the Act (Article 19).The relevant international conventions currently in force in Korea include the International Convention on Civil Liability for Oil Pollution Damage 1969 and its 1992 Protocol, the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971 and its 1992 and 2003 Protocols, and the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001.(iii) Salvage / general averageSalvageA section in the KCA exclusively addresses the issue of salvage (Articles 882–895). Korea is not a party to any international conventions on salvage, but the provisions in the KCA (e.g., the Articles on special compensation and salvage contracts) are generally interpreted as an implementation of major aspects of the International Convention on Salvage 1989.General AverageThe KCA has a section devoted to general average (Articles 865–875), which is mostly based on the York-Antwerp Rules of General Average 1950. It may be said that the provisions of the KCA are outdated in comparison with the York-Antwerp Rules of General Average 1994. In practice, the provisions of the KCA are seldom applied, as the relevant contracts such as time charterparties of the vessels generally contain a provision applying the York-Antwerp Rules of General Average 1994.(iv) Wreck removalThere are multiple statutes in Korea that regulate wreck removal. Firstly, the Act on Vessels Entering and Departing Port provides that masters, owners or occupants of any object that causes or may cause a hindrance to vessels’ navigation (which includes shipwreck) are obliged to remove such object or bear the costs and expenses for its removal (Article 40). Secondly, the Public Waters Management and Reclamation Act prohibits the act of abandoning or leaving the vessel in derelict condition on public waters, which includes the sea, seashores and state-owned rivers and lakes (Article 5). This Act also consists of provisions on shipwreck removal (Article 6). Thirdly, the Maritime Safety Act mandates that the master, owner, and operator of the vessel which created obstacles to navigation shall inform other vessels of the obstacles and remove the obstacles, which includes shipwreck removal (Article 28). Fourthly, the Marine Environment Management Act dictates that a master of a

Dahee Kim

Choon-Won Lee

JIPYONG

KoreaJIPYONG

of crew/vessel regulations, etc.), the Korea Prosecutors’ Office will have the authority to investigate the matter, with the preliminary investigation generally conducted by the Korea Coast Guard.

2 Cargo Claims

Korea is not a party to the Hague Rules or Hague-Visby Rules, but the KCA adopts substantial parts of the Hague Rules and Hague-Visby Rules regarding carriage of cargo.

It can be said that the Korean law position in this respect is generally similar to that in the Hague-Visby Rules. The carrier is responsible to conduct due care for carriage of the cargo, and shall be liable for damages, loss and/or delay unless the carrier proves that he has conducted due care or there is an indemnity event (navigational accident or peril, force majeure, insufficiency of packing, latent defect, etc.).

There is no specific provision in the KCA about the carrier’s claim against the shipper relating to misdeclaration of cargo. However, Article 853-(3) of the KCA stipulates that: “A shipper shall be deemed to have certified to a carrier the correctness of the kind, weight or volume of cargo, and the classification, number and mark of packing notified in writing by the shipper.”While there are not clearly established precedents, our view is that misdeclaration of cargo should be treated pursuant to the general principles. First, the carrier’s claim against the shipper relating to misdeclaration of cargo will be established pursuant to the provisions of the contract of carriage, including the terms and conditions of the bill of lading. In the event that there are no such clear provisions, terms and/or conditions in the contract of carriage, Article 853-(3) of the KCA will apply, and misdeclaration of cargo is likely to be deemed as a breach by the shipper in light of Article 853-(3). Therefore, the carrier may establish claims against the shipper for such breach, provided that the carrier has suffered damages due to the breach, and they are reasonably linked.

3 Passenger Claims

The KCA deals with maritime passenger claims in Articles 817–826. Under these provisions, a carrier is liable for the death or personal injury of passengers, unless the carrier is able to show that the carrier or its employees were not negligent. To determine the quantum of damages, the court shall take into account the conditions of the victim and the victim’s family (Articles 148 and 826).Korea is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, or its Protocols.

vessel which causes pollutants to be emitted into the sea is obliged to report to the relevant authority, prevent further emission, remove the emitted pollutants, and bear the costs and expenses of such operation (Articles 63–65), which will be applicable in case of the shipwreck emitting pollutants.(v) Limitation of liabilityGeneral LimitationWhile Korea has not ratified the Convention on Limitation of Liability for Maritime Claims (“LLMC”), the level of the shipowners’ global limitation matches the 1976 LLMC levels. Also, Korea adopted a substantial part of the LLMC Protocol 1996 for limitation levels in respect of passenger claims (Articles 769–776 of the KCA). In accordance with Article 776 of the Act, a special act titled “the Act on the Procedure for Limiting the Liability of Shipowners, etc.” was enacted to set out the procedures for limiting liability.Package LimitationAlthough Korea has not ratified the Hague-Visby Rules, package limitation under the KCA is identical to that of the Hague-Visby Rules. The carrier’s liability is limited to 666.67 special drawing rights (“SDRs”) per package/unit or 2 SDRs per kilogram, whichever is higher (Article 797).Oil PollutionThe Compensation for Oil Pollution Damage Guarantee Act limits the liability of the owners of the oil tanker which caused pollution (Article 8), and the limitation amount is identical to that of the 1992 Civil Liabilities Convention. The Act also establishes a special procedure for the owners/insurers of the oil tanker to secure such a limitation on their liability (Article 32).(vi) The limitation fundThe constitution of and distribution from the limitation fund is regulated by the Act on the Procedure for Limiting the Liability of Shipowners, etc. (Articles 11–15, 27 and 65–79) and, in the case of the oil tanker which caused pollution, by the Compensation for Oil Pollution Damage Guarantee Act (Articles 21–31 and 34).

In the event of a collision, the relevant authorities (which include the Korean Coast Guard and the Ministry of Oceans and Fisheries) may order the master or shipowner to take necessary measures to quickly control the marine accident and secure the safety of marine traffic (Article 43 of the Maritime Safety Act). Also, in the event that there exist obstacles to navigation due to such marine accident, the relevant authorities may order the master, shipowner or ship operator to remove such obstacles to navigation. If such orders are not complied with, the authorities may directly remove the obstacles to navigation and the costs shall be borne by the responsible party (Article 28 and 29 of the Maritime Safety Act). There are similar provisions in the Marine Environment Management Act (Articles 64 and 68), which applies to pollution arising from marine accidents.As for investigation, the Maritime Safety Tribunals are established under the jurisdiction of the Minister of Oceans and Fisheries pursuant to the Act on the Investigation of and Inquiry into Marine Accident. The Tribunals have investigators, who have authority to conduct investigation matters, including summoning and questioning relevant parties and inspecting ships (Articles 16 and 37 of the Act on the Investigation of and Inquiry into Marine Accident). In addition, when the marine accident constitutes a criminal case (for example, personal injury or death, sinking of ship, pollution, breach

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Under Korean law, the creditor may seek security by way of exercising a possessory lien over the cargo.Korean law acknowledges three types of possessory lien. Firstly, there is a carrier’s possessory lien – a carrier is entitled not to deliver the cargo unless the freight, demurrage, incidental expenses, etc. are paid, and may apply for auction of the cargo in order to receive payment (Articles 807 and 808 of the Korean Commercial Act).Secondly, there is a general possessory lien provided in the Korean Civil Act – if the possessor of a property belonging to another person has any claim arising in respect of such property, and if payment of the claim is due, he may retain possession of the property until the claim is satisfied, and may apply for auction of the property in order to receive payment of his claim (Articles 320 and 322 of the Korean Civil Act). It may be noted that in these first two categories, the property possessed/retained need not belong to the debtor.Thirdly and lastly, there is a mercantile possessory lien provided for in the Korean Commercial Act – if a claim that has arisen from a commercial activity between merchants has become due, the creditor may, until he/she obtains performance thereof, retain the property belonging to the debtor that has come into his/her possession through a commercial activity with the debtor. However, this shall not apply in cases where there are other agreements between the parties (Article 58 of the Korean Commercial Act). As set out in the provision, this mercantile possessory lien may be exercised on the property belonging to the debtor only.If the respective requirements for any possessory lien are satisfied, the creditor may seek security by exercising such possessory lien on the relevant property.

Under Korean law, security shall be deposited in the form of cash or securities recognised by the court, or a guarantee insurance policy as prescribed by the Supreme Court Regulations (Article 122 of the Civil Procedure Act of Korea). In practice, the Korean court accepts security in the form of cash or a bond issued by the Seoul Guarantee Insurance Company. One exception would be the limitation of liability proceeding, in which the applicant may file a motion requesting permission from the court to accept a deposit guarantee bond issued by a guarantor instead of a cash deposit (Article 13 of the Act on the Procedure for Limiting the Liability of Shipowners, etc.). The court generally accepts deposit guarantee bonds issued by protection and indemnity (“P&I”) clubs.

5 Evidence

The Civil Procedure Act of Korea provides that, when deemed that, unless an examination of evidence is conducted in advance, there exist situations which cause any use of the relevant evidence to be

Under Korean law, a creditor who has a pecuniary claim against a debtor may apply for pre-judgment attachment of an asset owned by the debtor. Therefore, a party may apply for pre-judgment attachment of a vessel insofar as (i) he has a pecuniary claim against the shipowner, and (ii) there is a need for securing his claim (generally, the fact that the debtor has failed to pay the claim, and no other easily attachable assets owned by the debtor will prima facie demonstrate such need). It is not required that the creditor’s claim be of a maritime nature, or related to the vessel, provided that the debtor is the owner of the vessel.The creditor will first make an application to the court for pre-judgment attachment of the vessel. The application process will generally proceed ex parte, i.e. based on the creditor’s application only, without summoning the debtor, unless the court sees a special need otherwise. After reviewing the application documents, if the court finds that the above two requirements have been prima facie proved, the court will order the creditor to post counter-security. The extent of counter-security will ultimately depend on all relevant circumstances, including how well the creditor’s claim and the need for security have been substantiated. Generally, for the pre-judgment attachment of a ship, the court will require the creditor to post counter-security in the region of 10 per cent of the claim amount, which can generally be paid either in cash or in the form of surety bonds issued by the Seoul Guarantee Insurance Company. If the creditor complies with the order and posts counter-security accordingly, the court will issue the pre-judgment attachment decision.One thing to note is that under Korean law, the court has jurisdiction only when the vessel is within the jurisdiction area. Therefore, the Korean court will not grant the pre-judgment attachment unless the vessel has entered and is staying within the port area.

Yes, bunker suppliers are able to arrest a vessel for claims relating to bunkers supplied by them to that vessel, but the method differs between bunker suppliers who hold a maritime lien over the vessel and those who do not.The general rule under the Act on Private International Law is that the law of the ship’s nationality governs the existence and priority of maritime liens. Therefore, if the law of the country where the vessel is registered recognises a maritime lien for a bunker supplier’s claim relating to bunkers supplied to the vessel, then the bunker supplier may arrest the vessel in Korea by applying for the court’s decision for commencement of judicial auction sale of the vessel based on the maritime lien. Our maritime team has successfully arrested vessels registered in Panama to secure claims of bunker suppliers, as the laws of Panama recognise maritime liens for the supply of bunkers.However, the laws of Korea do not recognise maritime liens for claims related to bunkers supplied to a vessel. Therefore, under Korean law, a bunker supplier may arrest a vessel only when the requirements set out in question 4.1 above are satisfied. This means the bunker supplier has to file an application to the court for a pre-judgment attachment order, by showing that the bunker supplier has a monetary claim against the owner of the vessel.

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ArbitrationThere is no arbitration board solely dedicated to maritime cases in Korea. The Korean Commercial Arbitration Board deals with general commercial matters, including maritime cases.To commence arbitration proceedings, the Claimant must submit the Request for Arbitration. The Secretariat will notify the Respondent, who has 30 days to submit an Answer. A tribunal will be constituted by the parties or the Secretariat and the tribunal will hold hearings. Once the hearings have been concluded, an award is rendered by the tribunal. The Secretariat delivers the award to the parties, which has the same effect as a final and conclusive judgment of the court. The parties cannot appeal the arbitral awards to the court – only the setting aside of awards may be granted upon certain requirements.MediationThe parties may apply for mediation to the court before or after filing a complaint for the litigation proceeding. Also, the court may refer the case to mediation at its discretion, before or during the litigation process. At the mediation proceedings, a court-appointed mediator will hear the parties’ positions. If the parties reach a settlement in the mediation proceedings, the record of the mediation will have the same effect as a final and conclusive judgment rendered by the court. Even when the parties fail to bridge the gap between their positions in the mediation proceedings, the mediator may issue a compulsory mediation decision if the mediator believes the case will be better resolved by mediation. The compulsory mediation decision will become final and conclusive, as long as none of the parties files an objection to the mediator’s decision within two weeks. If one of the parties files an objection within two weeks, the compulsory mediation decision is void and the case will be referred to the litigation proceedings at the court.

ProsThe Korean dispute resolution system is one of the most efficient and digitised systems in the world. In Doing Business (“DB”), issued annually by the World Bank Group, Korea was ranked first in the world under the category “Enforcing Contracts” for two consecutive years (2017 and 2018). The ranking was determined by taking into consideration various factors including the time and cost of litigation, and the quality of the judicial process (including court automation and alternative dispute resolution). According to the DB index, the time required to resolve a dispute (i.e., counted from the moment the plaintiff files the lawsuit in court until payment) in Korea is 290 days, which is nearly two times shorter than the average time required for dispute resolution in the OECD high-income countries (577.8 days). The Korean E-Court system allows for electronic filing of civil, commercial, administrative and family-affairs cases. The computerisation of the Korean court system provides users with 24/7 access to registries, case information, court documents and case law.ConsUnder the Civil Procedure Act, when a foreign national or corporation with no domicile, place of business or office in Korea files a lawsuit in a Korean court, the court, at the defendant’s request, shall order the foreign national or corporation to furnish security for the court costs (Article 117(1)). The defendant may refuse to respond/participate in the court proceedings until the plaintiff provides the security for the court costs (Article 119). In the event that the plaintiff fails to comply with such an order of the

difficult, the court may, upon motion of the parties, examine the evidence (Article 375). This procedure is called the “preservation of evidence” (Section 8 in Chapter 3 of the Civil Procedure Act of Korea), and the party may file a motion at any time necessary, either before or after filing the civil suit.The preservation of evidence procedure is also available in the Maritime Safety Tribunals proceeding – where an investigator, a person involved in a marine accident, or an inquiry counsel deems it impracticable to admit material as evidence unless such material is preserved as evidence, and files an application for the preservation of evidence, the competent Tribunal may conduct an inspection or hear expert opinions even before a request for inquiry is filed (Article 35 of the Act on the Investigation of and Inquiry into Marine Accident).

In Korean law, there is no particular process that corresponds to disclosure obligations in the common law system. Parties in court proceedings bear their respective burden of proof to submit arguments and supporting evidence. As for documentary evidence, a party can file a motion for disclosure of documents possessed by the counter-party, and the court may order the counter-party to produce documents if the court finds such a motion to be reasonable (Articles 344 and 347 of the Civil Procedure Act).

6 Procedure

National CourtsThere is no specialised maritime court in Korea exclusively hearing maritime cases. In a general court system, a civil action is commenced by filing a complaint with the court. Once the complaint has been submitted by the plaintiff, service of the complaint will be made on the defendant. The answer shall be filed within 30 days from the date the defendant received the complaint, or a default judgment may be rendered in favour of the plaintiff. The court generally holds two to five hearings per case at roughly one-month intervals until the court decides that the case is mature enough to render a judgment. The court generally delivers the judgment within two to four weeks from the closing of hearings. The authentic copy of the judgment is delivered to all the parties. The parties may lodge an appeal within two weeks from the delivery of the first instance court judgment. If the two-week period lapses without any final appeals being filed by the parties, judgment becomes final and conclusive. The appellate proceedings are similar to the proceedings at the court of first instance. The parties may lodge a final appeal within two weeks from the delivery of the appellate court judgment. If the two-week period lapses without any final appeals being filed by the parties, the appellate court judgment becomes final and conclusive. Unless there are special circumstances, the Supreme Court does not hold a hearing, while the parties are allowed to present and exchange written submissions only. In general, only issues of law (as opposed to issues of fact) can be adjudicated at the Supreme Court. As the Supreme Court is the court of final appeal, its judgment is confirmed and enforceable on delivery.

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Korea is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). Korea enforces arbitral awards issued in a New York Convention Member State, pursuant to the New York Convention (Article 39(1) of the Arbitration Act). The party seeking recognition or enforcement of a foreign arbitral award must file a separate complaint to the court for a recognition judgment or an enforcement judgment (Article 37(1) of the Arbitration Act).With regard to arbitral awards issued from a non-contracting state of the New York Convention, the party seeking recognition or enforcement of the arbitral award must file a separate complaint to the court for a recognition judgment or an enforcement judgment, in accordance with Article 217 of the Civil Procedure Act and Articles 26 and 27 of the Civil Enforcement Act, as explained in detail in question 7.1 above.

There is growing consensus calling for the establishment of a specialised maritime court in Korea. In 2017, four bills purporting to establish a maritime court were proposed and put before the National Assembly. It is yet to be determined if such efforts will materialise into the actual establishment of a maritime court in the near future.

court, the court can dismiss the case without giving the plaintiff a hearing. It may be said that such a requirement to deposit security for court costs imposes a burden on foreign entities filing suit in Korean courts; however, our understanding is that many countries have a similar system.

A final and conclusive foreign judgment will be recognised in Korea, only when the following requirements are met: (i) the international jurisdiction of such foreign court is recognised under the principle of international jurisdiction pursuant to the statutes or treaties of Korea; (ii) the defendant has been lawfully served (excluding service by public notice) with a written complaint or a document to the same effect, the notification of the date of the hearing or order, and was allowed sufficient time to defend the case, or the defendant responded to/participated in the lawsuit even without having been served such documents; (iii) recognition of such final judgment does not violate the public policy of Korea in light of the contents of such final judgment, etc. and judicial procedures; and (iv) there is a mutual guarantee, or the standards by which foreign judgments are recognised and enforced in that foreign country are not significantly different in major aspects from the standards in Korea and are not excessively onerous in comparison (Article 217(1) of the Civil Procedure Act). In order to enforce a foreign judgment in Korea, one must obtain an “execution judgment” from a court of Korea through a separate lawsuit. Such a suit will be dismissed if the foreign judgment is not final and conclusive, or lacks the requirements enumerated in Article 217(1) of the Civil Procedure Act specified above (Article 26 and 27 of the Civil Execution Act).

JIPYONG Korea

JIPYONG’s Shipping and Maritime Practice is one of Korea’s leading maritime law practice groups, and the team’s experience extends across the full spectrum of shipping, maritime, international trade, insurance and aviation law.

The team’s capabilities and experience include: accidents at sea, including collisions, sinking, oil spillage, fires and explosions; bills of lading; cargo loss and damage; attachments and arrests; bankruptcy and rehabilitation; charterparties and contracts of affreightment; negotiation and dispute resolution; environmental and pollution issues; enforcement of maritime liens and ship mortgages; ship sale and purchase contracts; shipbuilding and ship repair contracts; international trade and commodities; P&I club defence; and general long-term insurance matters. The team handles a variety of instructions from shipowners, charterers, shipyards, cargo owners, P&I clubs and maritime insurers.

The Shipping and Maritime Team also regularly counsels major Korean and foreign air carriers in aviation matters. The team has experience in handling major air disasters involving multi-district litigations and international law. The team has been retained to defend major domestic airlines in numerous cases involving cargo and baggage claims, delays, denied boarding and turbulence.

Dahee Kim is a senior associate of the Shipping and Maritime Practice Team at JIPYONG, which handles various instructions from both Korean and foreign shipowners, charterers, shipyards, cargo owners, P&I clubs, maritime insurers and air carriers. Her practice area includes accidents at sea, including collisions, sinking, oil spillage, fires and explosions; bills of lading; cargo loss and damage; attachments and arrests; bankruptcy and rehabilitation; charterparties and contracts of affreightment; negotiation and dispute resolution; enforcement of maritime liens and ship mortgages; ship sale and purchase contracts; shipbuilding and ship repair contracts; P&I club defence; international trade and commodities; and aviation.

Choon-Won Lee is the head and leading partner of the Shipping and Maritime Practice Team at JIPYONG, which handles various instructions from both Korean and foreign shipowners, charterers, shipyards, cargo owners, P&I clubs, maritime insurers and air carriers. He started his practice at Lee & Ko, and worked as a partner at Choi & Kim. He is one of Korea’s leading maritime lawyers, and his practice spans across: accidents at sea, including collisions, sinking, oil spillage, fires and explosions; bills of lading; cargo loss and damage; attachments and arrests; bankruptcy and rehabilitation; charterparties and contracts of affreightment; negotiation and dispute resolution; enforcement of maritime liens and ship mortgages; ship sale and purchase contracts; shipbuilding and ship repair contracts; P&I club defence; international trade and commodities; and aviation.

Dahee KimJIPYONG10F, KT&G Seodaemun Tower60 Chungjeong-roSeodaemun-guSeoul 03740Korea

Tel: +82 2 6200 1911Email: dhkim@jipyong.comURL: www.jipyong.com

Choon-Won LeeJIPYONG10F, KT&G Seodaemun Tower60 Chungjeong-roSeodaemun-guSeoul 03740Korea

Tel: +82 2 6200 1910Email: cwlee@jipyong.com URL: www.jipyong.com

Chapter 33

1 Marine Casualty

(i) CollisionThe Convention on the International Regulations for Preventing Collisions at Sea, 1971 has been implemented in Maltese law through the Merchant Shipping (Prevention of Collisions) Regulations, 2003 (Subsidiary Legislation 234.20).(ii) PollutionThe International Convention for Pollution from Ships, 1973 (MARPOL), as amended by the 1978 Protocol, is given force of law in Malta through the Merchant Shipping (Prevention of Pollution from Ships) Regulations, 2004 (Subsidiary Legislation 234.32). MARPOL Annex IV relating to the prevention of pollution by sewage and MARPOL Annex VI relating to the prevention of air pollution have both been implemented in Malta (Subsidiary Legislation 234.47 and Subsidiary Legislation 234.33) with effect from June 2011.Malta has acceded to the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended by the 1992 Protocol, as well as the International Fund for Compensation for Oil Pollution Damage, 1971, as amended by the 1992 Protocol through the Enactment of the Oil Pollution (Liability and Compensation) Act, 1999, Chapter 412. The Bunkers Convention has been implemented in Maltese law by virtue of the Merchant Shipping (Liability for Bunker Oil Pollution Damage) Regulations, 2009 (Subsidiary Legislation 234.46).(iii) Salvage / general average Under Maltese law, salvage is governed by the provisions of the Merchant Shipping Act, 1973 (Chapter 234 of the Laws of Malta), in particular articles 342 to 346, and also by the Commercial Code (Chapter 13 of the Laws of Malta).General average is covered by the provisions in Title IV of the Commercial Code (Chapter 13 of the Laws of Malta).(iv) Wreck removal Malta has acceded to the Nairobi International Convention on the Removal of Wrecks, 2007. The Nairobi Convention has been implemented in Maltese law by virtue of the Merchant Shipping (Wreck Removal Convention) Regulations (Subsidiary Legislation 234.53). This Convention will also apply to vessels located within the territorial waters of Malta. Furthermore, article 339 of the

Merchant Shipping Act gives the Minister responsible for shipping, including any person acting under his authority, power to remove any vessel which is sunk, stranded or abandoned on or near the coasts within the territorial jurisdiction of Malta, if it is the opinion of the Minister that the vessel is, or is likely to become, an obstruction or danger to navigation.(v) Limitation of liabilityThe limitation of liability vis-à-vis maritime claims is regulated by the Maritime Claims Regulations, 2004 (Subsidiary Legislation 234.16) and these Regulations give effect to the Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the Protocol of 1996.(vi) The limitation fundThe issue of a limitation fund is governed by the Merchant Shipping (Limitation of Liability for Maritime Claims) Regulations, 2003 which came into force on 1 March 2004. These Regulations make applicable to Malta the Convention on Limitation of Liability for Maritime Claims signed in London on 19 November 1976, as amended by the Protocol of 1996 thereto, signed in London on 2 May 1996.

This is regulated by Part VII of the Merchant Shipping Act, articles 312 to 317, which deals with inquiries and investigations as to shipping casualties, covering both preliminary inquiries by such person as is appointed by the Minister of Shipping, as well as formal investigations as to shipping casualties under the authority of the Court of Magistrates.

2 Cargo Claims

Malta is a party to the Hague Convention and the Hague Rules are applied by the Maltese Courts with regard to marine cargo claims by virtue of the Carriage of Goods by Sea Act, 1954. The Hague-Visby Rules are applied by Maltese Courts when dealing with a dispute relating to a bill of lading incorporating those Rules. Malta has not yet acceded to the Rotterdam Rules.Malta is also a party to the CMR Convention (Convention on the Contract for the International Carriage of Goods by Road, Geneva, 19 May 1956) which applies by virtue of the International Carriage of Goods by Road Act, 2006.

Dingli & Dingli Dr. Fleur Delia

Dr. Tonio GrechMalta

MaltaDingli & Dingli

Convention. The law provides for a precautionary, as well as for an executive, warrant of arrest. Creditors seeking to arrest a ship in security of a claim which is not yet judicially acknowledged must have recourse to the precautionary warrant. Judgment creditors and other creditors being in possession of an enforceable executive title or of an Authentic Instrument pursuant to the provisions of Regulation (EC) No. 805/2004 (such as a Mortgagee) may immediately proceed to issue an executive warrant.Ships may be arrested in Malta both in security of maritime ‘in rem’ claims as mentioned above, whenever the ship concerned is physically present within the territorial jurisdiction of the Maltese Courts, as well as in security of ‘in personam’ claims in those instances where the ship owner may be personally subject to the ordinary jurisdiction of the Maltese Courts. Ships may also be arrested in Malta pursuant to the provisions of article 35 of Regulation (EU) No. 1215/2012, dealing with provisional, including protective measures, in cases where the Courts of another Member State have jurisdiction as to the substance of the matter. However, in all of these cases, the ship must always be arrested in virtue of the warrant of arrest, which remains the only way in which a ship may be arrested in Malta.A total number of 25 maritime claims giving rise to in rem jurisdiction are provided for under paragraphs (a)–(y) of article 742B of the Code of Organisation and Civil Procedure. These follow closely the British Supreme Court Act, 1981 but also incorporate both the Arrest Convention of 1952 and that of 1999, even though Malta is not yet a signatory to either. The basic head of claim may be summarised as follows: a) claims to possession/ownership/title of a ship; b) questions

arising between co-owners; c) claims in respect of mortgage/hypothec/charge on a ship; d) claims arising out of a contract of sale; e) claims for damages received by a ship; f) claims for damage caused by a ship; g) claims for loss of life/personal injury caused by a ship; h) claims for loss of or damage to goods caused by a ship; i) claims arising out of agreement for carriage of goods/use or hire of a ship; j) claims for salvage; k) claims for damage to the environment by a ship; l) claims relating to wrecks; m) claims for towage; n) claims for pilotage; o) claims for supplies/services rendered to a ship; p) claims for construction/repair/conversion/equipping a ship; q) claims for port/dock/harbour dues; r) claims by crew for wages/repatriation; s) claims for disbursements made; t) claims for commissions/brokerage/agency fees; u) claims arising out of a general average act; v) claims arising out of bottomry; w) claims for forfeiture of a ship; x) claims for insurance premiums; and y) claims for fees due to registrar/tonnage dues.

In cases concerning any one of the maritime claims listed in a), b) and c) above, an action in rem may only be brought against that ship in connection with which the claim arose.In all other cases concerning the remaining maritime claims listed in d) to y), an action in rem may be brought against (i) that ship, where the person who would be liable on the claim for an action in personam (the “Relevant Person”) was, when the cause of action arose, an owner or charterer of or in possession or in control of the ship if, at the time when the action is brought, the Relevant Person is either an owner or beneficial owner of that ship or the bareboat charterer of it, and/or (ii) any other ship of which, at the time when the action is brought, the Relevant Person is the owner or beneficial owner in respect of all the shares in it.In these cases, therefore, sister ship and associated ship arrest is possible.The requirement that the Relevant Person is the owner or beneficial owner of the ship or the bareboat charterer at the time when the action is brought does not apply in regard to those maritime claims

The carrier is seen as a depository for cargo during carriage and is therefore responsible for its safekeeping as a bonus paterfamilias. Needless to say, the carrier can use the applicable clauses of the bill of lading in his defence.With respect to the ‘demise clause’ in bills of lading, under Maltese law, there is no relevant provision recognising or rejecting such a clause and Malta does not embrace the doctrine of binding judicial precedent. The only Maltese case that we are aware of where the Court of Appeal considered, but did not apply, the demise clause, was Advocate Dr. Philip Manduca nomine v Sun Maritime Limited, decided on 26 June 2009. The Court held that the teaching of the House of Lords in The Starsin (2003) was substantially compatible with the system of Maltese mercantile law.The incorporation of charter party provisions into a bill of lading is valid and enforced by the Maltese Courts. However, just a reference to a charter party containing an arbitration clause is not enough for that arbitration clause to be enforced. The arbitration clause must be inserted in the bill of lading. In the case of a “quality or quantity unknown” clause, the carrier would be provided with a defence insofar as the quality or quantity of the goods is concerned. The time limit to sue the carrier under Maltese law is the one-year period in accordance with the Hague Rules.It is possible to sue the carrier in tort, in the case of damages caused by the ship in non-contractual circumstances.

The carrier has an action against the shipper for damages suffered by the carrier due to the misdeclaration of cargo. This would be the case if the shipper does not declare to the carrier dangerous goods or goods subject to international sanctions.The carriage of dangerous goods is covered in articles 284 to 291 of the Merchant Shipping Act.

3 Passenger Claims

Malta is a party to the Athens Convention. Maritime passenger claims are regulated by the Merchant Shipping (Limitation of Liability for Maritime Claims) Regulations, 2003 which provide a regime of limitation of liability for maritime claims and give effect to the Athens Convention.

Malta is not a signatory to the 1952 and 1999 Arrest Conventions. Ships are arrested in Malta by a warrant of arrest issued on any one of the grounds listed in article 742B of the Code of Organisation and Civil Procedure giving rise to the in rem jurisdiction of the Maltese Courts. These include all maritime claims recognised under the

6 Procedure

(i) In Malta, the competent Courts taking cognisance over maritime disputes are the ordinary Civil Courts.

(ii) Maritime claims can also be decided by arbitration held under the auspices of the Arbitration Centre.

(iii) Maltese law does not provide for mediation/alternative dispute resolution with respect to maritime claims.

Ship arrest in Malta is a quick and efficient procedure with relatively inexpensive judicial costs. This, however, is to be followed by an action on the merits in relation to which the Court registry costs are worked out ad valorem by the registrar of Courts in accordance with an official tariff. Only judicial costs are recoverable and interest on the claim amount is due at 8% per annum.

With respect to foreign judgments delivered by a Court within the EU, Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) will apply. If the judgment is delivered by a Court which is not within an EU Member State, the ordinary procedural rules for the recognition and enforcement of foreign judgments found in article 826 of the Code of Organisation and Civil Procedure will apply.

Foreign arbitration awards are awards to which any of the following treaties, namely the Protocol on Arbitration Clauses, Geneva, 1923, the Convention on the Execution of Foreign Arbitral Awards, Geneva, 1927, and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958, are applicable and, upon their registration by the Malta Arbitration Centre, shall be enforced by the Courts of Malta in the same manner as if such awards were delivered in domestic arbitration. Such awards, therefore, when registered, are enforceable as an executive title, thereby allowing the award creditor to issue any executive acts against the award debtor, including an executive warrant of arrest against a vessel and an application for judicial sale by auction in respect of an arrested vessel.

secured by a special privilege in accordance with article 50 of the Merchant Shipping Act, which survive the voluntary sale of the vessel for up to one year from when such sale is recorded in the ship’s register.

Yes, it is possible. A bunker supply is a maritime claim giving rise to in rem jurisdiction. It is privileged in the scenario envisaged under article 50 (g) and (m) of the Merchant Shipping Act. Bunkers are privileged under article 50 (g) if they are supplied after the vessel’s last entry into port. They are privileged under article 50 (m) if they are supplied previously to the departure of the vessel on her last voyage.

The creditor of a cargo owner can request the Court to issue a warrant of seizure of the cargo in security of his claim.Similarly, the ship owner can seek security for a claim for freight by the issuance of a warrant of seizure of the cargo.

The Maltese Courts normally accept a deposit of funds in the Court registry or a bank guarantee as adequate security. However, most Maltese maritime lawyers usually advise their clients to accept a P&I letter of undertaking.

5 Evidence

Evidence, whether testimonial or documentary, can be preserved through the intervention of the Courts in accordance with the relative provisions of the Code of Organisation and Civil Procedure (Chapter 16 of the Laws of Malta).

The Code of Organisation and Civil Procedure does not contain general provisions with regard to the parties’ disclosure obligations. In this scenario, the disclosure of facts and documentation is obtained through the examination and/or the cross-examination of witnesses.

conditionally approved, under EU State aid rules, the said tonnage tax scheme for a period of 10 years, subject to certain amendments which at the time of writing have been put into effect by Malta.Maltese shipping companies may apply to the Maltese authorities for the vessels which they own or operate to be declared as tonnage tax ships, upon certain conditions being satisfied. The vessel in question must be involved in shipping activities, being principally the international carriage of cargo or passengers, and separate accounts have to be maintained by the shipping company in question to ring-fence activities exempt under the tonnage tax system, since only income deriving from the ownership and operation of its tonnage tax vessel in its carriage of cargo or passengers is exempt from income tax.Whilst certain categories of vessels could never have qualified as tonnage tax ships, the new tonnage tax regulations specifically exclude these – such as fishing vessels and non-propelled barges – whilst the new tonnage tax regulations permit certain vessels – such as cable- and pipe-laying ships, as well as crane vessels and research vessels – to qualify as tonnage tax vessels, provided they are involved in the international carriage of goods or passengers and satisfy the criteria laid down in the new regulations. The new regulations also indicate the circumstances in which towage and dredging activities could qualify under the Maltese tonnage tax regime.Bareboat income will qualify as tonnage tax in two scenarios, being (a) intragroup bareboat, or (b) short-term over-capacity limited to a maximum period of three years, provided in this latter case that the net tonnage operated by the group does not exceed 50% of the shipping group’s fleet.

Reference should be made to the statutory amendments introduced in 2006 and further fine-tuned in 2008 with regard to ship arrest. These amendments reformed the system regulating judicial sale by auction of ships, as well as introducing the concept of Court-approved sales for ships. Court-approved sales have proved to be very popular.Mention should also be made of article 37 of the Merchant Shipping Act, by virtue of which any person claiming a right in or over a ship may apply for an order to the Maltese Court prohibiting any dealing with a Maltese-registered ship or any share therein for a specified time. Such an order would be entered in the vessel’s register by the Registrar of Shipping. Any claim (i) based on a right of ownership, (ii) secured by a mortgage, (iii) secured by a registered encumbrance, (iv) secured by a privilege or lien over the ship arising by operation of Maltese law or the law applicable to the claim, or (v) based on any other claim which gives rise to a claim in rem against a vessel under Maltese law, would give the claimant the right to apply for this caveat on the ship’s register. Such an order only affects the register of the ship and does not affect the commercial operation of the vessel.Following the European Commission’s investigation into Maltese tonnage tax, initiated in 2012, the Commission, on 19 December 2017,

Dingli & Dingli is a Maltese law firm established in 1982 with its offices at 18/2 South Street, Valletta, VLT 1102. Although by Malta’s standards it is a medium-sized firm, it enjoys a solid reputation for efficiency and effectiveness, leading to successful results. The firm handles all types of legal work, and in completely new areas of practice, it is ready to learn quickly. The firm is fluent in Maltese, English, Italian, French and Spanish, having also a basic understanding of German and Russian. Malta’s entry as a Member of the European Union has opened a window of opportunity, and the firm leaves no stone unturned to face the future with confidence and expectation.

The firm is particularly active in the areas of maritime law, corporate law, taxation and international tax planning, financial services, aviation law, intellectual property law, investment, residency, real estate, succession and trusts. The firm is often involved in the major maritime cases brought before the Courts of Malta or the Malta Arbitration Centre. To mention a couple of these cases, we refer to the Normand Carrier case, which involved a collision in the Grand Harbour in Malta; and the Nuria Tapias case, a collision between the Nuria Tapias and the Junior M in the Black Sea, which resulted in the limitation fund being set up in Malta.

1999–2005: Read law at the University of Malta and graduated as a lawyer.

2005: Joined Dingli & Dingli law firm as an associate.

2012: Appointed as a senior associate.

Member of the Chamber of Advocates and the Malta Maritime Law Association.

1979–1984: Read law at the University of Malta and graduated as a lawyer.

1984–1989: Practised as an advocate at the Attorney General’s Office dealing, inter alia, with transport matters as counsel to the Ports Department and the Department of Civil Aviation. Attended international conferences on civil aviation and drafted laws to update civil aviation legislation in Malta. Drafted the Eurocontrol Act which was enacted by Parliament in February 1989.

1989–present: Practising as a private litigation lawyer, dealing mainly with civil, commercial and maritime court cases, in particular where protection and indemnity matters are involved.

2001: Joined Dingli & Dingli law firm as a partner.

2004: Successfully completed a course on the Law and Administration of Trusts organised by the Malta Financial Services Authority. Became a member of the Institute of Financial Services Practitioners.

Dr. Fleur DeliaDingli & Dingli 18/2 South StreetValletta, VLT 1102Malta

Tel: +356 21 236 206Fax: +356 21 240 321Email: fleur@dingli.com.mtURL: www.dingli.com.mt

Dr. Tonio GrechDingli & Dingli 18/2 South StreetValletta, VLT 1102Malta

Tel: +356 21 236 206Fax: +356 21 240 321Email: tonio@dingli.com.mtURL: www.dingli.com.mt

Chapter 34

1 Marine Casualty

(i) CollisionAll maritime matters are governed by the Mexican Ley de Navegación y Comercio Marítimos (Law of Maritime Navigation and Commerce – LNCM by its acronym in Spanish, which is the official language of Mexico) and the applicable international treaties to which Mexico is a party. Thus, the Mexican law applicable in cases of collision is the LNCM, as well as the COLREGS and the Convention for the Unification of Certain Rules of Law with Respect to Collisions between Vessels (international treaties).(ii) PollutionThe main laws made by the Mexican congress dealing with marine pollution are the LNCM, the Ley General del Equilibrio Ecológico y la Protección al Ambiente (LEGEPA – General Law of Ecological Equilibrium and Environmental Protection), the Ley Federal de Responsabilidad Ambiental (LEFRA – Federal Law of Environmental Liability), the Ley de Vertimientos en Zonas Marinas Mexicanas (Law on Dumping in Mexican Marine Zones) and the Ley de la Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos (Law on the National Agency of Industrial Safety and Environmental Protection of the Hydrocarbons Sector).Mexico is also a party to international treaties dealing with the prevention, handling and compensation regimes of marine pollution, and also: OILPOL 1954; CLC 1969 and its 1976 and 1992 Protocols; MARPOL 1973; INTERVENTION 1969 and its 1973 Protocol; the London Convention 1972 and its 1996 Protocol; OPRC 1990; Antifouling 2001; and Ballast Water 2004.The Mexican government has also implemented a National Contingency Plan to deal with major marine pollution casualties, which calls for the action of the Navy and other Ministries of the Mexican government, as necessary. This plan also includes cooperation between the Mexican and United States governments, if so required by the circumstances, under the MEXUS plan created as per OPRC 1990. This plan was recently updated, in October 2016.(iii) Salvage / general averageMexico is a party to the Salvage Convention 1989. The LNCM and its regulations provide further details with regard to salvage issues,

the coordination role of the authorities, limits to compensation when rendered by port tugs within port premises, and specific issues of liability of the parties.The matter of general average (GA) is also envisaged in the LNCM, which provides for the application of the York-Antwerp Rules, but allows parties to agree otherwise and also provides for the role of the Mexican marine authorities and certain duties of the parties in the administrative sphere, which have an impact on GA. Mexican law also provides for special salvage and GA proceedings, with very specific provisions on how to lawfully exercise a lien.(iv) Wreck removalWreck removal is dealt with in the LNCM and calls for the application of other laws such as LEGEPA, LEFRA and the Law on Dumping in Mexican Marine Zones, as well as Regulations concerning the prevention of marine pollution. Each of these laws is enforced by different government offices such as the Navy, the Ministry of the Environment, the Ministry of Communications, etc.; the LNCM provides for a scheme of coordination amongst them.The chapter of the LNCM on wreck removal also provides for the application of LLMC 1976.(v) Limitation of liabilityLimitation of liability is envisaged in the LNCM in such a way that it provides for special judicial proceedings for all international treaties dealing with limitation of liability and specifically provides that these procedural rules will apply to CLC and its protocols as well as LLMC 1976, to which Mexico is a party (excluding its Protocols). The latter is probably the treaty that has been most tested in Court, where the Mexican Supreme Court of Justice has ruled in such a way that it requires very special attention in order to properly put forward the case to be heard, and to specify in great detail how it would apply in cases where a sea-going vessel causes damages to a fixed platform. Also, in a sui generis interpretation of Article 15.5.b), Mexican Courts have ruled that the LLMC will not apply in cases where a floating platform is damaged by a sea-going vessel. Amazingly, the Travaux Préparatoires show that the subject provision was once mistakenly understood in this way when the treaty was being discussed at the International Maritime Organization (IMO), until discussions led to the criteria that the LLMC applies in all cases where a sea-going vessel causes damages. This remains an evolving discussion in Mexican Courts.(vi) The limitation fundMexico is a party to the Fund Convention 1971 and its 1992 Protocols.

Rafael MurilloFRANCO, DUARTE, MURILLO, ARREDONDO

Mexico

FRANCO, DUARTE, MURILLO, ARREDONDO Mexico

Cases of misdeclaration of cargo have been ruled by the Mexican Courts in line with the provisions of the Hague-Visby Rules. It is noteworthy that cases of misdeclaration of dangerous cargo are severely sanctioned by the authorities, which entitle a carrier to claim against the shipper.

3 Passenger Claims

The LNCM provides for a compulsory regime where passengers are ensured a proper compensation, and seeks balance by limiting liability within the bounds of the LNCM and the Mexican Federal Civil Code.

The LNCM contains a chapter providing for special maritime proceedings for the arrest of ships. The provisions of the LNCM contain a numerus clausus catalogue of claims which may be made pursuant to the subject proceedings. If a particular type of claim should not be included in the catalogue, proceedings must be brought in terms of the Code of Commerce.A key element to bear in mind is that while Mexican law affords a Plaintiff the right to arrest a vessel and obtain security in Mexican Courts and have a competent Court of Claimants’ choice retain jurisdiction, the Claimant must produce proof acceptable to the Mexican Court that proceedings are being heard by the competent Court. This requirement should be met within five business days under the LNCM special maritime proceedings, or three business days if the rules of the Code of Commerce apply; failure to comply leads to the arrest being lifted, which may entitle the Defendant to a claim for wrongful arrest.Counter-security is also a requirement. Nonetheless, in specific cases where the Plaintiff applies for the arrest while exercising a lien, such as salvage claims, the Plaintiff may be excused from posting counter-security.

Yes. It is possible under an in personam claim brought by the bunker supplier against the party in default. This poses a matter to be reviewed before making the arrest, in the sense that the Plaintiff must ensure that the arrest will not cause damages to third parties, who could claim for the lifting of the arrest and claim damages for the wrongful detention or arrest of their property.

In all ports, the main authority shall be the Harbour Master’s Office (HMO). The LNCM provides that a protest must be rendered to the HMO by the Master of a vessel involved in an incident. The lodging of the protest triggers an investigation where the HMO may involve other authorities as necessary.In addition, the HMO may order measures to be taken in the event of a casualty, for which they may coordinate with civilian, Coast Guard or Naval vessels.In cases where circumstances require, the HMO shall coordinate with the Coast Guard, the Navy and other authorities as necessary in terms of the National Contingency Plan and in bilateral cooperation with the United States.The HMO used to be managed by the Ministry of Communications and Transport and as from June 18, 2017 they have been transferred to the Navy, in their capacity as National Maritime Authority, therefore officers formed in the Navy are now trained to take on a non-military role running the HMO. New laws have also given the National Maritime Authority the role of a Coast Guard, as opposed to playing the role of a purely military institution.

2 Cargo Claims

Mexico is a party to the Hague-Visby Rules. Mexico is also a party to the United Nations Convention on International Multimodal Transport of Goods 1980 but its application has proven to be ineffective in cargo claims, where it is normally ruled that carriage is segmented, therefore the laws applicable to the stage of carriage where the loss has taken place shall apply. Nonetheless, this is matter that is presently being discussed by the High Courts of Mexico, on which developments are being awaited by the market. The inland carriage of goods, whether by road or rail, is subject to a limitation of liability for 15 Units of Measure per tonne, which is equivalent to approximately US$60.00 per tonne.

As per the Hague-Visby Rules, a key principle is that, prima facie, cargo has been delivered in good order and condition or in the same order and condition as received on board, unless cargo interests make a claim upon discharge or three days after discharge at the latest.Limitation of liability in road or rail carriage is a common discussion, which has been tested in Court confirming the validity of bill of lading clauses providing for the application of the laws governing the stage of carriage where the loss took place.Law and jurisdiction clauses are valid and enforceable in Mexico, although their writing should be clear in the sense that the parties submit to a specific law and jurisdiction and waive any others.

didactic purposes, judicial proceedings, in the First Instance, can be divided into five different stages, namely (i) complaint, (ii) response, (iii) production and evaluation of evidence, (iv) allegations, and (v) judgment. Second Instance proceedings are based on appeals and subsequently follow Amparo and Revision proceedings. First Instance proceedings will normally last between nine and 12 months, appeals may last two months, and Amparo and Revision proceedings another three months. It will really depend on the opposition of the parties and the complexity of the case.

The Power of Attorney required under Mexican law to prove standing is a rather complex document, which requires time and effort to prepare. The standard of evidence to be produced in Court is burdened by formalities. This may or may not be an advantage, depending on legal argumentation and the ability to meet procedural formalities.While Mexico does not have specialised Maritime Courts, all maritime matters should be heard by Federal Courts, which have been the subject of continued education programmes and anti-corruption controls that favour fair proceedings, and where the parties are heard and the rulings are vastly reasoned before being delivered, based on the legal argument made by the parties.

All judgments should meet certain requirements of law, as follows:I. Compliance with formalities as per applicable international

treaties and compatible with the Mexican Code of Commerce.II. Proof that the Defendant was served with process in strict

regard of his right to be heard, and production of a defence in the proceedings.

III. That the obligation claimed by the Plaintiff not be contrary to Mexican Public Order.

IV. That the judgment be apostilled.V. Proof should be produced evidencing that these types

of judgments are enforced in the place where they were delivered.

The judgment must be filed with the Court, which will verify that all requirements are met in order to rule on its enforcement in Mexico.

Although the rules for enforcement of an arbitration award seem less strict than the rules applicable to judgments, the Courts will tend to demand that the requirements for the enforcement of judgments be met by the applicant. In addition, the Defendant may oppose the enforcement of the award if he proves that the applicable rules of the arbitration at issue were not properly met. The Court will be rather focused on whether the Defendant’s right to produce a defence was regarded by the Arbitration Tribunal. It is advisable to involve Mexican counsel in the arbitration proceedings and have foreign and Mexican lawyers go through a mutual education process that can ease the process of enforcement at the appropriate time.

These types of claims are covered in the arrest of vessels chapter of the LNCM, and the procedural rules are the same as in question 4.1, including the possibility of being excused from posting counter-security if the claim arises out of the exercise of a maritime lien.

The general rule is that only cash deposits or bonds issued by a Mexican bonding company are acceptable. In specific cases, Letters of Undertaking issued by a Protection and Indemnity (P&I) Club or fixed premium underwriters will be acceptable as well, provided always that the issuer of the Letter of Undertaking is recognised by the Mexican government, through the General Direction of the Merchant Marine, as able to do so in Mexico. It is recommended that underwriters seek recognition well in advance and on a permanent basis if their insured vessels are calling at Mexican ports.

5 Evidence

The Mexican procedural rules for admission and evaluation of evidence are burdened by formalities. Thus, the safest options are always to involve authorities or public officers such as notaries in the collection of evidence. The practice of carrying out joint surveys is also helpful in rendering the collection of evidence effective, as long as the parties agree on the findings.

The rules for disclosure impose limited obligations in the sense that the party demanding disclosure bears the burden to accurately describe the type of evidence demanded from the other. Interrogation of witnesses is supervised by the Court, which approves or rules out the questions prior to and during the interrogation as per the somewhat strict procedural rules.

6 Procedure

While alternative dispute resolution is allowed and encouraged by Mexican law and practice, it is still not a popular alternative. Judicial proceedings are the most usual means of resolving disputes. For

Mexican maritime laws have been evolving and modernising at a rather rapid pace in the last few years. The LNCM was enacted in 2006 and has been amended in several parts throughout the years to better deal with several issues, especially environmental and security matters. The efforts of the Mexican government have been fruitful in the sense that the maritime, environmental and naval authorities are better equipped and educated to enforce the reformed laws.The legal reforms of maritime laws and regulations – which came into effect in June 2017 – plus the reforms in energy and fiscal laws, have brought about encouraging changes for the Mexican maritime milieu, which offer the opportunity for the legal maritime community to work together with authorities and Courts to craft or amend criteria, to the benefit of the international maritime community investing in Mexico.

Our firm has always held the point of view that laws are aimed at solving or dealing with the problems faced by society or an industry. We have strived to earn the trust of our growing list of clients in Mexico, the Americas, Europe and Asia by approaching their business with a philosophy aimed at preventing or expeditiously solving their problems cost-effectively. We thank them for their valued trust and loyalty throughout 18 years, which we will celebrate in December of 2018.

As a response to the demands of the market and the trust of our clients, in April 2016 we began a transformation process. We are thrilled about this process, which has satisfactorily served the purpose of transforming the firm into a full-service law firm, where we now offer a variety of legal services beyond maritime and insurance law, such as fiscal, corporate, finance, antitrust and telecommunication. This expansion is our response to the demands of the market, for which we are most appreciative.

Our practice is based on values and a high standard of ethics and has been devoted to rendering legal advice in matters concerning marine companies from their birth, dealing with corporate and fiscal matters, maritime, ports, insurance, environmental and customs law, as well as litigation concerning tax law, civil, commercial, constitutional and administrative proceedings in judicial and arbitration forums. As a result of our transformation, we have opened a tax law practice led by well-reputed attorneys which we have brought on board from prestigious firms.

Our Insurance practice has specialised in the handling of maritime claims and coverage issues for P&I Clubs, as well as for fixed-premium liability and Hull & Machinery underwriters.

Mr. Murillo studied law in the Universidad Iberoamericana, Mexico City Campus, graduating with distinction with a thesis on wreck removal. His professional experience was gained as from 1991, working in the area of civil and commercial litigation. He started his maritime career in 1993 in the areas of government contracts with Pemex, ship finance, charter parties, P&I claims and FD&D claims. He has successfully handled high-profile maritime cases involving salvage, collisions, wreck removal, large claims for government liability, environmental damages, charter party disputes, reorganisation and bankruptcy of marine companies, and has served as an expert witness on Mexican law in several Courts and arbitration proceedings in the United States, London and Hong Kong.

Mr. Murillo received training in maritime law in Houston and in New York, and took the Loss Prevention and P&I course delivered in Newcastle by the North of England P&I Association and South Tyneside College.

He has written articles on arrest of ships and subrogation. In addition, he has taught maritime law on courses for large maritime companies at the Tecnológico de Monterrey and at the Navy’s CESNAV postgraduate school.

Rafael MurilloFRANCO, DUARTE, MURILLO, ARREDONDOPaseo de las Palmas 755 Piso 6Lomas de Chapultepec11000 Ciudad de MéxicoMéxico

Tel: +52 55 19975948Email: murillo@fdma.mxURL: www.fdma.mx

Chapter 35

1 Marine Casualty

(i) CollisionThe following international conventions are enforceable in Mozambique:■ 1910 International Convention for the Unification of Certain

Rules of Law Related to Collision Between Vessels;■ 1952 International Convention for the Unification of Certain

Rules concerning Civil Jurisdiction in Matters of Collision;■ 1952 International Convention for the Unification of Certain

Rules relating to Penal Jurisdiction in Matters of Collision or other Incidents of Navigation; and

■ 1972 International Regulations for Preventing Collisions at Sea (“COLREGS”).

The above conventions and regulations are supplemented, in some cases, by domestic statutes, notably on rules of traffic within port areas, inland navigation, among others.(ii) PollutionThe Environmental Law (Law 20/97, of 1 October 1997), as amended by Law 16/2014, of 20 June, sets out the general provisions pertaining to the protection of the environment and imposes an environmental impact assessment process (which is governed by the Regulations on the Environmental Impact Assessment Procedure, approved by Decree 54/2015, of 31 December 2015) on companies carrying out activities which may have direct or indirect impact on the environment. In a nutshell, the Environmental Law sets forth the legal basis for a proper management of the environment, cumulatively with the development of the country. It applies to both private and public entities pursuing activities with a potential impact on the environment. Core principles such as the “polluter pays” principle, rational management and use of the environment and the importance of international co-operation are referred to and integrated in the Environmental Law.In order to specifically protect marine life and limit pollution resulting from illegal discharges by vessels or from land-based sources along the Mozambican coast, the Government enacted Decree 45/2006, of 30 November 2006. It should be noted that this Decree prevents pollution arising from maritime activity, particularly from oil tankers and very large crude carriers (“VLCCs”). Considering the prospective

gas reserves found offshore Mozambique, Decree 45/2006, of 30 November 2006 also details the activities that, due to their potential harm to the environment, fall within the oversight of the maritime authority, such as the loading, offloading and transfer of cargo, tank cleaning and discharge of water waste in the sea. The carrying out of such activities (except in the cases expressly provided for in the Decree 45/2006 of 30 November 2006) may result in heavy fines.Furthermore, the Regulation on Environmental Quality and Emission of Effluents (Decree 18/2004, of 2 June 2004, as amended by Decree 67/2010, of 31 December 2010) also establishes environmental quality and effluent emission standards for the purpose of controlling and maintaining the acceptable levels of pollutant concentrations in environmental components. Both of the above-mentioned statutes are complemented by the Conventions and Protocols signed by Mozambique, such as the:■ 1985 Convention for the Protection, Management and

Development of the Marine and Coastal Environment of the Eastern African Region, and Related Protocols;

■ 1973 International Convention for the Prevention of Pollution from Vessels (“MARPOL 73/78”) and Annexes I/II, III, IV and V;

■ 1990 International Convention on Oil Pollution Preparedness, Response and Cooperation (“OPRC 90”);

■ 1992 Protocol to Amend the 1969 International Convention on Civil Liability for Oil Pollution Damage (“CLC 1969”); and

■ 1992 Protocol to Amend the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (“FUND”).

(iii) Salvage / general averageSalvage is governed by the 1910 Salvage Convention and, where applicable, the provisions of the 1888 Commercial Code (Article 676 et seq.).General average is governed by the provisions of the 1888 Commercial Code (Article 634 et seq.).(iv) Wreck removalMozambique is not a signatory of the Nairobi International Convention on the Removal of Wrecks, 2007. The removal of wrecks must therefore be dealt with in light of the domestic law, namely the Environmental Law and ancillary statutes and regulations.(v) Limitation of liabilityBoth the 1924 International Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Vessels and the 1957 International Convention relating to the Limitation of the Liability of Owners of Seagoing Vessels apply.

José Miguel Oliveira

João Afonso Fialho

Vieira de Almeida | Guilherme Daniel & Associados

Mozambique

MozambiqueVieira de Almeida | Guilherme Daniel & Associados

of lading. In this respect, it is noteworthy that when in the presence of a: (i) straight bill of lading, the right to bring a claim remains with the named consignee; (ii) order bill of lading, only the latest endorsee is eligible to sue; and (iii) bill of lading to bearer, it is up to the rightful holder at a given moment to sue.In addition to the above, rights under a contract of carriage may also be validly transferred to third parties either by way of assignment of contractual position or subrogation of rights (which is typically the case when insurers indemnify cargo interests and then seek reimbursement from the carrier), as long as the relevant rules provided in the Civil Code are met.

In light of Article 3.5 of the Hague Rules, the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies regarding the information (marks, number, quantity and weight) on the cargo to be transported.

3 Passenger Claims

Mozambique is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea. Generally, carriage of passengers is governed by the Commercial and Civil Codes and the Consumer Law, in addition to the individual terms of the contract of carriage. Carrier’s liability is mostly fault-based. In the event of delays, unexpected changes of route, damages or loss of carriage, passengers are entitled to claim compensation for losses and damage caused by an action attributed to the carrier, regardless of its wilful misconduct.

The 1952 Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Vessels (“1952 Convention”) is applicable in Mozambique. Under the 1952 Convention, any person alleging that it holds a maritime claim is entitled to seek the arrest of a ship. A “maritime claim” is deemed to be a claim arising out of one or more of the situations named under Article 1.1 of the 1952 Convention.Outside the scope of the 1952 Convention, i.e., for the purposes of obtaining security for an unlisted maritime claim (e.g., arrest for a ship sale claim, unpaid insurance premiums, protection and indemnity (“P&I”) dues, amongst others) or to seek the arrest of a vessel sailing under the flag of a non-contracting state, the claimant must make use of the provisions of the Mozambican Code of Civil Procedure (“CPC”). In this case, and aside from the jurisdiction issue that needs to be properly assessed, in addition to providing evidence on the likelihood of its right/credit, the claimant shall also produce evidence that there is a risk that the debtor/arrestor may remove or conceal the ship (security for the claim) or that the ship may depreciate in such a way that, at the time that the final judgment is handed down in the main proceedings, the ship is no longer available or has substantially decreased in value.

(vi) The limitation fundThe limitation fund can be established in any way admitted in the law and is dependent on the filing of a proper application before the relevant court. The application must identify/list: ■ the occurrence and damages;■ the amount of the limitation fund;■ how the fund will be established;■ the amount of the reserve; and ■ the known creditors and the amount of their claims.The application must be filed along with the vessel’s documents supporting the calculation of the amount of the fund (e.g., a tonnage certificate).

The National Maritime Institute (Instituto Nacional da Marinha – “INAMAR”), in its role as the Maritime Authority, is the governmental body in charge of investigating and responding to any maritime casualty. In performing its duties, INAMAR is assisted by the Harbourmaster with jurisdiction over the area where the casualty took place. In addition, the National Institute of Hydrography and Navigation (“INAHINA”) has an ancillary role on maritime safety.In this respect, it is worth mentioning that Mozambique has recently ratified, by means of Decree 71/2017, of 31 December 2017, the International Code of Protection of Vessels and Port Facilities (“ISPS”), which makes governments, shipping companies, shipboard personnel and port facility personnel responsible for detecting security threats and taking preventative measures against security incidents affecting ships or port facilities used in international trade.

2 Cargo Claims

The 1924 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, also known as the Hague Rules, applies. Under the Hague Rules, the carrier is liable vis-à-vis the consignee in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods. Contracts of carriage are therefore governed by the terms of the Hague Rules and the 1888 Commercial Code (Article 538 et seq.), in the absence of detailed provisions set out in the relevant contract.It is important to note that if the shipment (i.e., loading and place of destination) takes place between two countries party to the Hague Rule, these rules shall apply. However, if the country of destination of the goods is not a signatory to the Hague Rules, then the applicable law would be determined by Mozambican courts in accordance with the lex rei sitae principle.

As a general principle, any party to a contract of carriage who holds an interest over the cargo and can demonstrate that it has suffered losses or damages arising from the carrier’s actions and/or omissions is entitled to sue for losses or damages. Taking the above into consideration, the rights to sue under a contract of carriage therefore assist (1) the shipper, and (2) the rightful holder of the bill

The relevant motion can be lodged whenever deemed suitable, the applicant always being required to provide due grounds for its request.

As a general rule, it is up to the parties to establish the object of their claim/proceedings and the judge cannot go beyond the limits of the claim as put forward by the parties. In addition, parties have the burden of presenting the facts of their interest and producing evidence in respect thereof. The court will take into account the evidence produced/requested by the parties, but it is not limited to this. In fact, the court is also allowed to request and compel the parties to disclose all evidence deemed necessary to the discovery of the truth and/or to the best resolution of the dispute.

6 Procedure

With the enactment of Law 5/96, specialised courts in maritime and shipping matters were established in the most important cities of the country, such as Maputo, Inhambane, Beira, Quelimane, Nacala and Pemba. These are independent courts exercising jurisdiction over all sorts of maritime contracts (from engineering, procurement and construction contracts for vessels, to bareboat charters) and disputes.In general, Mozambican courts will find themselves competent to rule on claims where the parties in dispute and the claim itself have a close connection/link to Mozambique.As regards legal procedures before national courts, these can be generally described as follows:■ Proceedings commence with the filing of an initial written

complaint before the court. In addition to listing the facts and arguments sustaining the claim, the claimant is required to list its witnesses and request the other evidence proceedings, such as inspections or surveys.

■ Service is made by the clerks, in person. Shipping agents represent owners’/disponent owners’/managers’ interests and can receive documentation on their behalf.

■ Generally, the defendant has 30 days to challenge and oppose the claim. If it fails to present its defence, the facts presented by the claimant are deemed proven (exceptions apply).

■ With the opposition lodged, the judge will summon the parties and will try to resolve the dispute amicably or, that not being possible, prepare the final hearing.

■ At the final hearing, the witness will be examined and cross-examined by the lawyers representing each party, and the judge may intervene whenever it is deemed necessary. At the end, lawyers are required to issue their final arguments verbally.

■ The judge will then prepare and issue the judgment which, depending on the amount of the claim, can entail an appeal.

As to the duration of maritime proceedings, as with any other legal proceedings, this is highly unpredictable. In our experience, excluding arrests and any other interim measures, it should not be expected to take less than one year to 18 months, as it depends on several variables, such as the court’s current caseload.The primary source of domestic law relating to arbitration is the Law on Arbitration, Conciliation and Mediation, commonly referred

Before ordering the arrest, the arrestee is granted the opportunity to oppose/challenge the arrest application. Please note, however, that if the arrest application is properly filed and duly documented, the court may order the detention of the vessel before summoning the arrestee or granting the arrestee the chance to oppose the arrest application. The arrestee has 10 days to oppose the arrest application/order.With the arrest in place, the claimant is required to file the initial claim for the main proceedings, of which the injunction will form an integral part, within 30 days as of the arrest order. During the proceedings, the parties are free to settle by agreement and withdraw the claim. If the main claim should be filed with a foreign court, then the judge dealing with the arrest application must set out the period within which the claimant must commence proceedings on the merits in the appropriate jurisdiction. The defendant is entitled to post a security before the relevant court in the amount of the claim brought by the claimant, and seek the release of the vessel pending foreclosure and auction.

A claim arising from a bunker supply may be considered as a maritime claim under Article 1.k of the 1952 Convention.

Assets (e.g., bunkers) belonging to the arrestee may be subject to arrest, provided that it is possible to establish ownership in respect thereof. In addition, the carrier is entitled to exercise a possessory lien over cargo. In this regard, please be advised that pursuant to Mozambican law, a lien is only enforceable by operation of the law and not merely by contract. By way of illustration, Article 755 of the Civil Code provides that any debts resulting from shipping services entitle the carrier/creditor to retain goods in its possession until the full discharge of those debts.

Typically, cash deposits (at the court’s order) and bank guarantees are the most effective forms of security. Letters of undertaking (“LoUs”) are acceptable in very limited situations and their acceptance is always dependent on the other party’s agreement.

5 Evidence

Whenever there is a serious risk of loss, concealment or dissipation of property or documents, as well as when it becomes impossible or almost impossible to obtain testimony or certain evidence by way of inspection, parties are free to start an action and file a motion requiring it to be enlisted by the court or taken prior to the hearing.

was rendered, except in cases where, under Mozambican law, there is no need to notify the defendant, or in cases where the judgment is passed against the defendant because there was no opposition.

■ The judgment is not contrary to the public policy principles of the Mozambican state.

■ The decision rendered against the Mozambican citizen/company does not conflict with Mozambique’s private law, in cases where this law could be applicable according to the Mozambican conflict-of-law rules.

After the application is filed, the court must serve notice of same on the defendant. Once notice is served, the defendant may oppose the exequatur if any of the above requirements are not met.If the defendant opposes the exequatur, the applicant may reply to the defendant’s arguments. Afterwards, the case follows various procedural steps until the decision is made on whether to grant the exequatur. The losing party may still appeal against the court’s decision.

Considering that Mozambique has acceded to the 1958 New York Convention, Mozambican courts are to give effect prima facie to an arbitration agreement and award rendered in another signatory country to the New York Convention. Where the arbitral award was not granted by another contracting state, to be enforceable it must have previously been reviewed and confirmed by Mozambique’s Supreme Court (see question 7.1 above).

Since its independence in 1975, Mozambique has been steadily revising its laws and regulations, at the same time as ratifying and adhering to a number of international treaties and conventions. In this respect, it is worth mentioning that a number of pivotal conventions on maritime and shipping-related matters applicable in the country date from the time when Mozambique was still a Portuguese overseas territory (e.g., the 1952 Arrest Convention). In fact, although after its independence Mozambique has not specifically adhered to the treaties/conventions to which Portugal was already a party, as formally required under the Vienna Convention on Succession of Treaties, it is commonly accepted that the treaties ratified by Portugal and extended to Mozambique over time still apply in light of Article 71 of the Constitution, approved immediately after the country’s independence, which provided for the survival of any (Portuguese) laws and regulations in force at the time of independence, as long as these did not conflict with the letter and spirit of the Constitution.More recently, the Government of Mozambique has been enacting important domestic legislation to support the shipping industry, and paving the way for foreign and national investments. Significant steps have been made in this direction, with the setting up of maritime courts, the creation of an institute exclusively dedicated to regulating and overseeing the shipping industry (INAMAR) and the opening of cabotage activities to foreign vessels and owners. The Government has recently boosted its drive to set up a consistent legal regime for maritime and shipping activities, with the enactment of new regulations on the private use of the Mozambican maritime space (Decree 21/2017, of 24 May 2017) and the new regulations on

to as LACM (Law 11/99 of 8 July 1999). The LACM governs both international and domestic commercial arbitration, recognises the New York and Washington Conventions but applies the rules set out in the CPC for arbitration proceedings. It is worth noting that the LACM does not diverge from the UNCITRAL Model Law on International Commercial Arbitration, and that it follows the general standards and terms of the UNCITRAL Model Law for the conduct of proceedings, tribunal composition and recognition of the award given.In order to submit a dispute to arbitration, there must be an arbitration agreement (often a clause which is express, valid and enforceable). Such agreement is required to be in a written format (in the contract under which the dispute arises or in any correspondence exchanged between the parties).As a final note, it is worth mentioning that the Government of Mozambique created the Centre for Arbitration, Conciliation and Mediation (“CAMC”) to oversee and promote arbitration, as well as other alternative dispute resolution mechanisms. The CAMC is headquartered in Maputo but also has branches in the cities of Beira and Nampula.

Despite the efforts of the Mozambican Government and the achievements reached in the past few decades, the country needs to continue developing its infrastructure and support the training and qualification of its citizens. Bureaucracy and a lack of qualified technicians still continue to be some of the biggest challenges to operating in the country. Despite the country’s high debt level, which has been a problem over the past few years, Mozambique’s economy is showing signs of recovery after the economic recession in 2016.

Articles 1094 and 1095 of the CPC set out that any judgment awarded by a foreign court is, as a rule, subject to review and confirmation by the Supreme Court in order to be valid and enforceable locally (i.e., to obtain the “exequatur”).The review and confirmation of foreign decisions under the CPC is mostly formal and should not involve a review of the merit/grounds of the judgment, but a simple re-examination of the relevant judgment and additional judicial procedure requirements. The process must begin with the filing by the interested party of an application to that effect with the Supreme Court. In order for the foreign decision to be recognised by the Supreme Court, the following set of requirements must be met:■ There are no doubts that the judgment is authentic and its

content understandable.■ It must constitute a final decision (not subject to appeal) in

the country in which it was rendered.■ The decision must have been rendered by the relevant court

according to the Mozambican conflict-of-law rules.■ There is no case pending before or decided by a Mozambican

court, except if it was the foreign court which prevented the jurisdiction of the Mozambican courts.

■ The defendant was served proper notice of the claim in accordance with the law of the country in which the judgment

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