amcl – a part of china for a few beans more – the ... · beacon jan 2005 origi 09.02.05 02:30...

beaconISSUE 184 FEBRUARY 2005SKULD magazine

Skuld puts the spotlighton the Far EastPAGES 4-11

AMCL – a part of ChinaMerchants Group

PAGE 6

Loss prevention update

PAGE 12

For a few beans more – thesaga continues

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Beacon jan 2005 origi 09.02.05 02:30 Side 1

Contents

BEACON (SKULD MAGAZINE) is the official publication ofAssuranceforeningen Skuld(Gjensidig)

Issue 184 February 2005

ADDRESS

P.O Box 1376 VikaN-0114 Oslo, NorwayTel: +47 22 00 22 00Fax: +47 22 42 42 22

Dear reader

In this edition of Beacon we focuson our fast growing Far Eastmarket as well as our HongKong-based syndicate. Withoutour local knowledge we wouldnot have been able to grow in linewith our members, underlininghow important it is for ourorganisation to be easilyaccessible and service orientated.

Our online serviceAs another measure to improve service to our members, we have significantly improved our online communications.A new website is operational, and the recent launch of SkuldExtranet is giving members and their brokers direct accessto their own claims reports and statistics. See page 32 formore information.

BBB stable outlookStandard & Poor has recently upgraded Skuld’s credit and strength ratings from BB+ to BBB stable outlook.

According to S&P, the revised rating reflects Skuld’ssignificant improvements in operating performance andcapitalisation. Management and corporate strategy wereconsidered as strengths in the review. This is a welcomedrecognition of the hard work Skuld has completed over the past years to successfully restore its balance sheet and obtain a balanced underwriting result.

Strong resultsThe result for the third quarter of 2004 was USD 10.6 mill.This represents a doubling of the second quarter result and brings Skuld’s contingency reserve to USD 92.2 mill.

During 2004, frequency claims have dropped, while we haveseen an increased number of larger claims. Large claimsare by nature volatile, and we are confident that this doesnot constitute any new trend. Despite the claims situation,we saw a third quarter technical result of USD 4.7 mill. The half-year investment loss is now rectified by a strongthird quarter equity return, leaving a net investment profit of USD 6.1 mill. after nine months.

Looking aheadWe now enter into an interesting future where we willcontinue to place emphasis on balanced underwritingresults, offering exciting challenges for our staff and last,but not least, providing an improved and extended service to our business partners all over the globe.

Douglas JacobsohnPresident and Chief Executive Officer

VIEWPOINT

The U.S. Maritime Transportation Skuld Hong Kong 4MEMBER IN FOCUS: AMCL – a part of China Merchants Group 6The Indian Ocean tsunami 8LEGAL NOTES:Accidents in Hong Kong 10LOSS PREVENTION UPDATE:Skuld increases focus on loss prevention 12

2 BEACON


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[email protected]

VISIT OUR WEBSITE

www.skuld.com

EDITOR IN CHIEF

Ingeborg Berge

EDITORIAL STAFF

Lise Larson

LAYOUT

Transmission AS

REPRO AND PRINTING

Gan Grafisk as

Entire contents © 2005, all rightsreserved. Reproduction in whole orin part, without written permissionfrom Skuld, is prohibited. Opinionsexpressed by writers in Beacon arenot necessarily those held by Skuld.Skuld assumes no responsibility for unsolicited material

FRONT PAGE

Hong Kong

CONTENTS

PAGE 13 PAGE 22 PAGE 32PAGE 8

LEGAL NOTES: For a few beans more – the saga continues 28Maritime mediation 31New website at www.skuld.com 32Director of IOPC Funds visits Skuld 34Personnel news 35Contact Skuld 35Skuld news 36

LOSS PREVENTION:Disaster psychiatry: How crew react in a crisis can be a matter of life or death 13LOSS PREVENTION:Safety of steel transports 16LOSS PREVENTION:Terrorism and shipping 20LEGAL NOTES: MARPOL Annex VI: New regulations – prevention of air pollution 22LEGAL NOTES: Legal News summary 26


Skuld (Far East) Ltd. was opened in 1989, a difficult year in Hong Kong. During thisperiod, many shipping companies, as wellas local inhabitants, started leavingbecause of the Tiananmen Squaredemonstration in Beijing. The Companystarted out as a regional marketing officewith a staff of three, offering an exclusiveclaims service. Today, Skuld Hong Konghas become a fully-functional regionaloffice in Skuld’s Syndicate organisation.

Experienced managementThe office was started by ArthurPilkington, today EVP Defence Servicesand Emergency Response in Oslo. Hewas followed by Jan Katkjær in 1993,who is now Head of Skuld’s Syndicate 2in Copenhagen.

Patrick Wang was appointed head ofSkuld’s Hong Kong office in 1999. He wasthe former Deputy Managing Director ofChina P&I Club and had previouslyworked for Cosco’s head office in Beijingfor seven years, including a final periodas General Manager of the commercialdepartment. He joined Skuld Oslo in 1997after a short spell in one of the leadinglaw firms in Beijing. Patrick Wang is anexperienced shipping, insurance andlegal executive and he maintainsextensive connections with the regionalshipping society. Shortly after hisappointment, the office relocated to the

China Resources Building in the Wanchaiarea of Hong Kong.

Professional legal servicesPatrick Wang is assisted by eight well-qualified staff members. His deputy,Nicola Mason, is an experienced EnglishBarrister having served with Skuld HongKong for ten years. She is well liked bymembers for her dedication and qualityclaims service.

In addition, there are three dynamiclawyers who handle most of the P&I andDefence claims and services. Chris Hallis an American lawyer who has been withSkuld for six years and became a fatherlast August. He is popular with membersand business associates, and offersparticular expertise with regard to UStrading.

Lawrence Chen is a Chinese lawyer andan expectant father. He has been with theHong Kong office for a little over twoyears, since completion of his LLMstudies at Southampton University,England. Lawrence is busy providingservices to the growing Chinesemembership.

The latest addition to the legal team isChristian Ott who worked with a leadingshipping law firm in London beforejoining Skuld last year. Christian comes

from Germany, but grew up in England. Heis a devoted sailor and serves our memberswith great diligence and efficiency.

Skuld Hong KongThe development of Skuld’s Hong Kong office keeps pace with the growth of Skuld’s membershipin the Far East, ultimately reflecting the increase in merchant shipping in Asia.

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THE FAR EAST MARKET MAKES UP AGROWING PORTION OF SKULD’SOVERALL BUSINESS

Patrick Wang, Head of Skuld Hong Kong, maintainsextensive connections with the regional shippingsociety


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Dedicated staffThe office is efficiently assisted by asupport team headed by Jenny Yeung,our Office Manager, who also coversUnderwriting Assistance. Miley Tong,Amelia Cheung and Mary Chan providevaluable support on the claims side.

Growing tonnageReports state that Asian shipownersaccount for 40% of world tonnage andChina’s immense inward and outwardcargo movement is the single biggestdriver of the current world shipping boom.

The Far East market makes up a growingportion of Skuld’s overall business. Thecombined Far East businesses todayrepresent over 25% of Skuld’s overallportfolio, as compared to only some 8% six years ago.

Skuld Hong Kong is responsible for about7.65 million GT of mutual owners’ entries,some eight million weighted GT of fixedcharterers’ entries and a sizable amountof Defence business.

Singapore, Hong Kong and mainland ChinaGeographically speaking, the officecovers perhaps the biggest market areaof all Skuld Syndicates, with currentfocus on three main areas: Singapore,Hong Kong and mainland China.

Local correspondent servicesApart from taking care of the regionalmembership, the office also acts as acorrespondent assisting members ofother syndicates faced with problems inChina or other Far East areas.

Well positionedThrough its Hong Kong office, Skuld iswell positioned in the Far East market.Considerable tonnage growth has beenachieved over the last four years, in spiteof the increased premium levels seenduring this period.

The success of Skuld’s Far East operationis closely linked to the professional supportfrom the head office in Oslo, the services ofthe dedicated staff at the Hong Kong officeand the close co-operation with businessassociates worldwide. Most importantlythough, its success is due to theunderstanding, support and patronage of members from the region.

Through its Hong Kong office Skuld is well positioned to serve the Far East market

The team at Skuld Hong Kong is heading Skuld's expansion in the Far East. From left to right: Miley Tong, MaryChan, Jenny Yeung, Nicola Mason, Amelia Cheung, Christian Ott, Lawrence Chen, Christopher Hall

...CONSIDERABLE TONNAGE GROWTHHAS BEEN ACHIEVED OVER THE LASTFOUR YEARS...


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By Patrick Wang, Head of Skuld Hong Kong

Member in Focus:

AMCL – a part of Chi nAssociate Maritime Company (HK) Limited (AMCL) is the trademark of the tanker fleet owned andoperated by Hong Kong Ming Wah Shipping Co., Ltd. under the China Merchants Group of Hong Kong. The Group is housed in the China Merchant Tower, which is a part of the Hong Kong & Macau Ferrycomplex overlooking the renowned Victoria Harbour.

China MerchantsChina Merchants is a household name inChina and well known abroad due to itsunique position in contemporary Chinesehistory. It was set up in 1872 by the QingDynasty as the first national merchantshipping enterprise, with the aim of breakingthe western powers’ monopoly on Chineseshipping operations. It was the outcome ofthe Westernisation Movement, also knownas the Self-strengthening Reformation,during which time China opened her doorsto the outside world and tailored westernknowledge to her needs.

Groundbreaking achievementsThe principle behind this initiative was to‘attract business from all over the worldand sail to five continents’. A series ofgroundbreaking achievements followed.China Merchants opened the first coastaland ocean-going shipping lines, set up thefirst modern Chinese navigation school totrain crews, sent the first batch of Chinese

students overseas to study westernscience and technology and formulatedand promulgated the first Chinese shippinglaws and regulations. It also establishedthe first Chinese insurance company, thefirst Chinese bank, the first Chinesetelephone hot-line, as well as the firstChinese machine-operated coal mine andtextile factory. In this way, China Merchantspioneered almost all early national,industrial and commercial activities inChina.

From the start, China Merchants Grouphas been inseparable from Chinesesociety, sharing her glory and humiliationand her ups and downs. In 1949, ChinaMerchants Hong Kong Division boldlyabandoned the Kuomintang in favour of the Communist Party. This revolt took theGroup into a whole new era.

China’s re-openingAfter the Great Cultural Revolution, ChinaMerchants Group foresaw the ‘re-opening’of China in the late 1970s and establishedthe Shekou Industrial Zone with a capital of HK$ 60 million in 1979. In this way, theGroup built on its heritage through leadingby example and showing greater opennesstowards the outside world. The ShekouIndustrial Zone, the first of its kind in

China, has since been known as the"Window of China's Opening".

Today, China Merchants Group hasemerged as a mega conglomerate withHK$ 54 billion worth of assets invested ininfrastructure, finance, property, industrialmanufacturing, trading, tourism, hotels aswell as her traditional shipping business.

Shipping business – AMCLThe flagship of all China Merchants’shipping business is now the Hong KongMing Wah Shipping Co., Ltd. whichoperates a fleet of tankers under thecompany AMCL (Associate MaritimeCompany (HK) Limited). This fleet includesdry bulk as well as a significant investmentin Liquid Natural Gas (LNG) transport. The combined DWT of all fleets is over 3.5 million. The tanker fleet consists of sixVLCCs, one Suezmax and seven Afromax,as well as another three VLCCs and oneAfromax on its order book.

For the last ten years, AMCL as managerof the tanker fleet, has placed health,safety, environmental awareness andefficiency at the forefront of itsmanagement philosophy.

CHINA MERCHANTS PIONEEREDALMOST ALL EARLY NATIONAL,INDUSTRIAL AND COMMERCIALACTIVITIES IN CHINA


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hi na Merchants Group

Apart from the tanker business, Hong KongMing Wah has recently teamed up withCosco Group in the biggest LNG project insouthern China and has ordered two LNGcarriers of 147,200 m3 each for thetransport of LNG from Australia toGuangdong Province, China, starting from 2007.

In connection with Ming Wah’s furtherexpansion in the energy sector, theCompany is scheduled to branch off fromits parent company as an independentenergy transport company with a listing onthe Shanghai Stock Exchange in 2005.

Skuld connectionsAMCL became a member of Skuld in 2004by transferring four modern VLCCs andthree Afromax tankers to the Club. This is astrong endorsement of their confidence inSkuld. Mr. Huang Shao Jie, the president ofboth Hong Kong Ming Wah and AMCL waselected to Skuld’s Committee at aCommittee meeting in Shanghai inDecember 2004. This representation iswelcomed by Skuld’s Board and Committeein conjunction with the strong growth oftonnage in the Far East.

Shao Jie is a shipping veteran who firststarted with Cosco’s head office as claimsand insurance manager and subsequentlytransferred to dry bulk operations. Fromhere, he moved on to tanker operationswhere he served for over 20 years. He wasappointed president at Ming Wah in 2000and has since led the Company out of theshipping downturn and into the currentboom.

Hong Kong Ming Wah has been a solidcontributor to the balance sheet of ChinaMerchants Group, and Skuld wishes HongKong Ming Wah and Shao Jie continuedsuccess in the years ahead.

There are six VLCCs in AMCL's fleet, with a further three on order


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As the tsunami violently attacked the coasts of the Indian Ocean, we expected at least someinterference in shipping. Skuld’s Emergency Response Team and Hong Kong office werebraced for the worst. To our surprise, only a few queries on port congestion were received.

By Chris Hall, Skuld Hong Kong

The Indian Ocean t

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The Indian Ocean Tsunami of 26 Decembercaused immense human suffering.Nearly 300,000 lives have been lostacross Indonesia, Thailand, Malaysia,India, the Andaman and Nicobar Islands,Bangladesh, Sri Lanka, the Maldives andSomalia. Thousands have been afflictedby disease and even more have lost lovedones and property. Our thoughts and bestwishes are with all those affected.

Despite the tragic toll in human suffering,the tsunami’s effects on internationalshipping were modest. Ships at seareportedly experienced the tsunami as a large swell, if anything at all.

Effects on ports The worst affected port was Chennai,India, where the port and many smallervessels were heavily damaged. As far aswe know, no vessels entered with Skuldwere among those harmed. The port isnow operating normally.

We understand that the Indian ports ofKakinada, Paradip and Visakhapatnamsuffered only slight impact. No shipswere damaged and the ports werefunctioning normally after the tsunami. In Visakhapatnam, however, a barge wassunk, which caused vessel movementproblems in the inner harbour.

Although Indonesia suffered the brunt ofthe tsunami’s force, none of the largeinternational shipping ports in Indonesiawere affected. Unfortunately, 15 localports in Aceh were badly damaged. Someferry services in Aceh have resumed, andthe port at Lhokseumawe is functioningas a discharge port for international aid.Sumatran ports, such as Belawan, arecongested due to relief efforts.

As most of Thailand’s major ports are onthe east coast, they were not affected.Even Phuket port sustained no seriousdamage and is operating normally.

The Sri Lankan ports of Galle andTrincomalee were closed as a result of the tsunami. All ports are now openand busy with relief operations.

Ports in Bangladesh were not affected,although one vessel was damaged.

None of the main Malaysian ports wereaffected. Several cruise lines are consideringshifting their calls to Malaysian ports whiletourism recovers in affected countries.

Other developments Nations in the region are consideringsetting up a regional warning system.Meetings are scheduled in Bangkok, Kobeand Brussels to address the matter. The United Nations is participating, withhopes that a system will be in place by July 2006.

As for navigation, some experts believethat the depths of shipping lanes mayhave been dramatically altered by thetsunami, especially in the Straits ofMalacca.

Finally, the International Maritime BureauPiracy Reporting Centre has speculatedthat many of the Achenese pirates mayhave been lost in the tsunami, given thatthere have been no pirate attacks in theStraits of Malacca since 26 December2004. Some are worried, however, thatcriminals may prey on vessels waiting inports congested with relief efforts.

Acknowledgements:Barwil Jakarta, Jakarta, Indonesia

Barwil Meridian Navigation, Sri Lanka

Barwil Westext Sdn Bhd, Malaysia

Interport Ship Agents Ltd., Bangladesh

Pandi Correspondents Pvt Ltd., Kolkata, India

Thai P&I Services International Ltd., Bangkok, Thailand

Transport & Claim Consultants Co. Ltd.,

Bangkok, Thailand

Norwegian Shipowners Association

TradeWinds

Paradise lost – the tsunami devastates Penang’s coastline

The remains of the fishing fleet at Nagapattinam, near Madras

THE WORST AFFECTED PORT WASCHENNAI, INDIA, WHERE THE PORTAND MANY SMALLER VESSELS WEREHEAVILY DAMAGED

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What types of accidents occurred in HongKong last year?1. A sailor was crushed to death by a 40 ft

container2. A stevedore fell on to the main deck

from the container top, when struck bywire rope slings

3. A worker jumped from the end of the fixed ladder in the cargo hold, landedunsteadily on the container top and fellto the bottom

4. A slinger, who was believed to have climbed up on to a container topthrough a container entry cell guide barin the cargo hold, fell to his death fromthe container stack

Can owners face prosecution? Yes. In it’s note no.9 of 2004, the MarineDepartment states, "This Department willnot hesitate to initiate prosecution againstthose breaching the Shipping ImportControl Ordinance or the Regulationsunder the Ordinance or their amendmentsby not observing the required safe workingpractices which have been widelypromulgated to the industry".

The Occupiers Liability Ordinance (OLO)(Cap. 314) and its effect on shipownersThe OLO imposes on the occupier of anypremises a duty to his visitor to take such careas is reasonable under the circumstances, to ensure that the visitor will be reasonablysafe in using the premises for the purposesto which he is invited or permitted by theoccupier to be there (Section 3(2) OLO).Section 2(3)(a) of the OLO extends this dutyto vessels.

When does the liability of an occupier arise?It will arise if the injury complained of wascaused due to any defect or danger in thecondition of the premises. An examplewould be an open hatch that should havebeen closed (see Marlene Susanne Courbetv. Mandarin Divers Marine Services Ltd. andothers, HCPI 677 of 2000), or suffocationcaused by oxygen depletion in a sealedcargo hold (see The Estate of Chan Man Yuan, deceased v. Allied MarineConsultants Ltd. and others, HCPI748 of 2000).

Who is the occupier?The term ‘occupier’, under the OLO forshipping purposes, would centre on whocontrols the vessel’s activities and thepeople on board. This will include theowners if they employ the crew.

Bareboat charterers?With regard to bareboat charterers, thecharterers rather than the owners willgenerally come within the definition ofoccupier if control of the vessel was in thehands of the bareboat charterers ratherthan the owners at the material time.

Can more than one party be an occupier?If both owners and charterers exercisesome degree of control over the vessel,they would be deemed joint occupiers for

Accidents in Hong Kong

Nicola Mason, Vice President, Skuld Hong Kong

LEGAL NOTES

The Hong Kong Marine Accident Investigation and Shipping Security Police Branch investigate allmarine accidents in Hong Kong and on board Hong Kong registered ships. The investigation’s aim isto ascertain circumstances and the cause of accidents, with a view to improving safety. Findings arepublicised, but the investigation is not intended to apportion blame or lead to disciplinary action.

THE TERM ‘OCCUPIER’, UNDER THEOLO FOR SHIPPING PURPOSES, WOULDCENTRE ON WHO CONTROLS THEVESSEL’S ACTIVITIES AND THE PEOPLEON BOARD


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the purposes of the OLO (see The Estate ofChan Man Yuan, deceased v. Allied MarineConsultants Ltd. and 2 others, supra).

Who is a visitor?A visitor is someone who has permission,either expressed or implied, to be on boardthe vessel. Expressed includes an oral orwritten invitation. Implied permissionmeans that the claimant must show thatthe occupier had legally tolerated regularvisits, leading to circumstances where areasonable occupier would feel that unlesshe acted to stop the visit, the claimantwould believe he had permission to bethere.

Who is a lawful visitor for a vessel?Agents, stevedores, workmen, repairmen,suppliers, surveyors and doctors are alllawful visitors. Would a stowaway be alawful visitor? Under the OLO, the answeris no, unless the stowaway was allowed toremain on board the vessel, in which casehis status from unlawful visitor wouldchange to lawful visitor.

Can more than one party be found liable?In the leading maritime case of the Estateof Chan Man Yuan, deceased v. AlliedMarine Consultants Ltd. and others, theowners, demise charterer, employer andthe victim himself were all held liable.

The factsOn 28 November 1997, Mr. Chan Man Yuan(the deceased), an experienced marinesurveyor, entered an enclosed space in thecargo hold access hatch on board the shipMadonna Lily and died as a result ofsuffocation caused by oxygen depletion.The defendants were his employer (HongKong survey firm), the owner and thedemise charterer of the vessel at the time.On the owners’ behalf, the deceased waschecking the condition, quality and quantityof a cargo of soya beans. An AB wasassisting the surveyor to take samples. Itseems that the AB may have entered thehatch first and the deceased followed toassist, having seen the man collapse. Bothwere subsequently discovered dead by thecrew. Judge Wolley stated, "It cannot bedenied that the Captain is in overall chargeof the ship and responsible for the safety ofall on board, including lawful visitors."Judge Wolley went on further to state: "Wehave a situation where all parties have toshoulder a proportion of the blame for this

tragic accident. The first defendant (theemployer) for the lack of training; thesecond and third defendants (owner anddemise charterer) for failure to ensure thesafety of the deceased on their ship, andthe deceased himself for his ownnegligence in carrying out his duties." Thesecond and third defendants were found50% negligent, the employer 30% and thedeceased 20%.

Lessons LearnedMasters should ensure: 1. That all visitors are properly supervised

and accompanied in their activities byexperienced crew

2. That a safe working procedure should beadopted by stevedores and workersattending the vessel

3. That there is effective communication among officers, supervisors andworkers to ensure the vessel’s safetystandards and that guidelines arefollowed.

Acknowledgements:Hong Kong Marine Department Notices of 2004

Note: Copies of the Safety Guide for Shipboard Container

Handling are available free from MARDEP (Contact Skuld

Hong Kong for further details).

Messrs Holman Fenwick & Willan, Hong Kong – Article on

Occupiers Liability Ordinance (Cap 314).

WE HAVE A SITUATION WHERE ALLPARTIES HAVE TO SHOULDER APROPORTION OF THE BLAME FORTHIS TRAGIC ACCIDENT

Approach with caution – several seamen died by falling from containers in 2004


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Skuld increases focus on loss prevention

’’It is likely that theunlikely will happen.’’Aristotle, 400 B.C.

Knowing the risks and potential for loss is vital in understanding how accidents can be prevented.Skuld is here to help you.

As of 1 December 2004, I have beenappointed Loss Prevention Officer inSkuld. My goal is to help Skuld’smembers handle their risks and educatethem in understanding their potentiallosses. In Skuld, we have the experienceto know how and where accidents occur,and how to avoid them. From now on, Iwill help members obtain this knowledgethrough circulars, handbooks, seminars,etc. and, of course, through articles inBeacon. In this way, by assistingmembers to manage their own risks, wewill prevent losses together and achievebetter results in the future.

My focus will not only be on the few largeaccidents, but also on the many smaller ones.Major accidents are often caused by chains ofsmaller events. By breaking the chain andstopping the smaller events from happening,you can also avoid the larger accidents. As foraccident type, claims caused by navigationalerror (collision and grounding) and damage tocargo undoubtedly contribute the most to totalclaim costs. In future Beacons, you will seeeven greater focus on how to prevent thesetypes of accidents.

From now on, I will provide a ‘loss preventionupdate‘ in each edition of Beacon. In this

issue of Beacon, we have four articles onloss prevention: • How you react in a crisis can mean the

difference between life and death.Experience and training are vital. Readmore about crisis psychology on thefollowing page.

• The attack on the tanker Limburg off Yemen in October 2002 clearly illustratesthat shipping is a target for terrorism.Jonathan Hare provides you with asummary from a maritime terrorismseminar held in Oslo by the NorwegianShipowners’ Association.

• You can also find legal advice on loss prevention in accordance with theupcoming "Regulations for thePrevention of Air Pollution from Ships",MARPOL Annex VI.

• Langh Ship’s innovative solutions for carriage of steel drastically cutslosses. See page 16.

I hope you will find these articlesinteresting and that they will motivate youin carrying on your loss prevention work.

Morten Lyssand can be contacted to discussany issue of loss prevention by calling +47 22 00 23 19 or [email protected].

LOSS PREVENTION UPDATE

By Morten Lyssand, Loss Prevention Officer, Skuld

Morten Lyssand, Skuld’s new Loss Prevention Officer, is ready to help members handle their risks and reducepotential for loss


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DISASTER PSYCHIATRY:

How crew react in a crisis can be a matter of life or death

LOSS PREVENTION

No more than a few weeks ago, along the coast of South East Asia, we saw how the devastating powerof nature underscored the fragility of human life. Despite our machines and technology, our modernsociety and its institutions, our knowledge and understanding, we were shaken into the reality of anunpredictable world where events are dictated by a force beyond our control.

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We’ve heard heart-breaking stories oflost loved ones, of death and destruction,but also stories of miraculous escapeswhere split-second decisions andindividual bravery made the differencebetween life and death. This articleshows how your immediate reaction in alife-threatening situation is crucial. Thatreaction can mean survival, impair orimprove your ability to help others andinfluence whether your group cooperatesrationally or disintegrates in blind panic.

Research completedOver the course of the last 30 years I have researched a range of criticalsituations involving seamen, such as the explosion at the Jotun paint factory in Sandefjord, Norway, the AlexanderKielland oil platform catastrophe in theNorth Sea, the Libyan imprisonment and torture of the Germa Lionel’s crew in 1984, and the 1980-88 tanker war in the Arabian Gulf.

Pioneering this field of study were theresearchers who analysed crews’ reactionsto torpedo attacks in World War II. Thedeath toll from British and American shipswas higher than from equivalent attacks on

Norwegian vessels. Seemingly, this is not only explained by the vessels’ higherquality, but more importantly, by goodseamanship. Research also shows that a person’s immediate reaction in adangerous situation is critical indetermining the type, strength andduration of post-traumatic stress.

The Jotun catastropheOn the evening of 15 October 1976,workers at the Jotun paint factory were hithard by a violent explosion. A large numberhad previously spent many years at sea,either on whalers or in the merchantmarine. Some had even served on NorthSea convoys in the Second World War.

Key causes of stressThe key causes of stress during theexplosion and the catastrophic fire thatfollowed were the:1. Intensity and duration of the risk of

death2. Type and degree of bodily injury3. Strain of bearing witness to the injury

and death of colleagues4. Necessity of making difficult decisions,

e.g. between personal safety and the risk of helping others

While under stress, the immediate reactionfrom as many as 37% of the workers wasvery constructive. Despite the lack ofwarning and time to put into effect pre-planned emergency procedures, each ofthem were able to make the best of thesituation they found themselves in.

By Lars Weisæth, MD/Professor,Norwegian Center for Violence and Traumatic Stress Studies, University of Oslo/The Joint Norwegian Armed Forces Medical Services

Lars Weisæth is one of Norway’s leading experts on traumatic stress

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Main findingsThe report’s main findings showed thatpeople’s immediate reactions, or‘catastrophe behaviour’, was largelygoverned by their previous experience ofdangerous situations and/or training forsuch conditions. These two issues weremuch more important than any otherfactors. In other words, if the only thingthat was known about a person was theirprevious experience or training in crisissituations, then their reaction to dangercould largely be predicted. Factorsmeasured to characterise ‘crisis behaviour’were perceptiveness, thinking, control offeelings and behaviour, ability to cooperateand rescue efforts.

Those who reacted constructively had alow risk of developing short- and long-term post-traumatic stress disorder, themost usual psychological illness sufferedafter a catastrophe.

It should be noted that even though theindividual’s level of training/experience wasshown to be very important, other factorshad to be in place, such as strong trust inleadership, strong group cohesion, highmotivation levels, etc.

Seamen excelAn especially valuable skill, seeminglymore developed in seamen than ‘landlubbers’,is their ability to tackle so-called ‘restraintstress’, i.e. to withstand the desire to runfrom confined areas, when the opportunityexists, and to help neutralise the danger or assist the injured. This can be largelyexplained by the impossibility of calling the

fire brigade and the hard-held beliefamong sailors that launching lifeboats isthe last course of action open to them.

Expectation of positive reactionsAfter our research proved practitioners’long-held belief that training/experiencewas of critical importance, the opportunityarose to study which aspects of education,exercise, training and first-hand experienceof dangerous situations prove useful in crises. We completed research onpersonnel who had trained for smoke diving,underwater evacuation of helicopters andevacuation from oil platforms using free-fall lifeboats. These studies showed thattraining instilled so-called "positiveresponse expectation" in the personnel.

By "positive response expectation" wemean that a person has acquired anexpectation that if ‘it’ happens, they caneffectively contribute to finding a solution. Ifthis contribution proves so effective as toavert the danger or secure survival, thenwe can say that they have acquired a"positive result expectation".

When we study the way people respondwhen faced with real danger then the innerconviction that "this will go well" has aclear effect in reducing the effect of stresson their ability to perform. It was interestingto note that, even in situations whereindividuals were fairly helpless and had noreal possibility of controlling the destructiveforces facing them, they could still describea "feeling" of control after the event. Theexplanation seems to be that a high degreeof training and experience has given theseindividuals something meaningful to do ina crisis. Such tasks take their entireattention and energy, and reduce focus onthe overwhelming forces facing them andtheir inability of effectively tackling thethreat.

We therefore distinguish between:1. Real control (which is favourable)2. Perceived control, which can also have a

high value3. A third form called Cognitive control.

Here, one can see familiar traits in asituation as it develops. This third formof control also has a high value as itreduces the effects of surprise andinduces a feeling that it’s possible tohandle the situation.

Prevention of psychological illnessIt’s no surprise that measures geared toreducing the feeling of helplessnessprevent psychological illness. A breakdownor disturbance in thinking ability, a powerfulfeeling of emotional paralysis and areduction or loss of behavioural controlsignifies the traumatic effect of overwhelmingstress on an individual. Helplessness is

...‘CATASTROPHE BEHAVIOUR’, WASLARGELY GOVERNED BY THEIRPREVIOUS EXPERIENCE OFDANGEROUS SITUATIONS AND/ORTRAINING FOR SUCH CONDITIONS

The Jotun paint factory fire in full force


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central to this. Predominately people are atrisk of further dangers, either caused bynature, human error or the evil of mankind.

Natural forcesThe forces of nature represent danger thatis perceived as just that – ‘natural’ andunavoidable. Nature can be dangerous, butnot evil, and therefore doesn’t compromisepeople’s feelings of self-worth. People areoften forewarned of natural perils and canavoid them accordingly, they are knownand familiar to the population they affectand can largely be understood and accepted.In Norway, to use an example, a significantcontribution towards avoiding the damagingeffects of the forces of nature is in modernmeteorology, a field of research championedby Vilhelm Bjerknes and his team from1918 to 1923. We should all be thankful tothose who made it possible to predict theweather and consequently allow us to takethe necessary precautions to avoid itsharmful effects.

Accidents caused by manMan-made accidents are caused by humanerror – either something that has gonewrong or shouldn’t have happened. Theseaccidents happen suddenly and without

warning. Someone is responsible andperhaps to blame. As opposed to naturalcatastrophes, an accident involves a humanadversary. Accusations abound: poorlymaintained equipment, inadequate safety,lack of emergency procedures, etc. Losttrust and strong mistrust follow, accidentvictims and surviving relatives feel areduction or challenge to their self-worth,and aggression levels are often high. Self-interest and conflicts can, to a largedegree, influence the kind of symptomsand their strength.

ViolenceAfter a violent attack the pattern of post-traumatic stress is strongly coloured byfight/flee/submission. Violence challengesand, in the worse cases, destroys people’sperceptions of a safe, predictable and justworld. Violation of self-worth caused byviolent trauma can cause serious strainand ‘risk-reactions’.

Psychological after-effectsPioneering studies completed onNorwegian sailors serving during WorldWar II proved that psychological after-effects could surface many years after theevent. It appears that, for such after-effectsto occur, certain factors need to be in place:

1. The danger must be very serious, i.e. a relatively large number of lives must be lost

2. Strain must be long lasting and continuous

3. Constant uncertainty must exist, i.e.never feeling safe and always tense.This could happen, for example, on

vessels at risk of torpedo attack,unequipped with radar and otheruseful technology

4. Last, but not least, relative helplessnesswhen the attack came, i.e. littleopportunity to control the situation,was a decisive factor.

It appears that, when these four factorswork together simultaneously, the centralnervous system is often damaged.

NATURE CAN BE DANGEROUS, BUTNOT EVIL, AND THEREFORE DOESN’TCOMPROMISE PEOPLE’S FEELINGS OFSELF-WORTH

A WWII convoy – the strain of serving on board caused after-effects many years later

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LOSS PREVENTION

A cargo of highly-processed steel is very valuable. Using conventional methods, cargo damageoccurs frequently, causing significant claims costs for insurance companies. A new Cradle TweenDeck for steel coils, developed by the Finnish shipping company Langh Ship, is proving highlysuccessful in reducing loss – so successful in fact, that cargo damage is almost zero.

Pär-Henrik Sjöström, The Scandinavian Shipping Gazette, Finland

Safety of steel t

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Extreme movementsUsing conventional methods, steel coilsare carried on the bottom of the vessel’scargo hold. The heavy cargo tends tomake the vessel over-stable, causingviolent movements in heavy seas. The rolling period of the ship becomesextremely short. The vessel may heel fromher vertical position to her maximumheeling angle on both sides and returnback to the vertical position in just fiveseconds. As the maximum heeling anglemay exceed 30 degrees, cargo damageoccurs frequently in such circumstances.The cargo is valuable and the claims on theinsurance companies are high. In addition,stowing steel coils in this way is clearlydangerous. The heavy-weight cargo has tobe extremely well lashed otherwise, if itbecomes loose, the consequences may befatal. Experienced seafarers know the riskswith steel shipments in bad weather andtry to eliminate them as much as possible.However, the constant violent movementsof the ship affect all activities on board,presenting a risk to safety at work as well.Insufficient rest causes tiredness and alack of alertness.

The problems with carrying steel have beenacknowledged for a long time. They aremainly due to the practice of carrying heavysteel at the bottom of the hold. A higherlocation for the cargo means that thevessel is more stable but, until the

introduction of the Cradle Tween Decksolution, there had not been a safe methodfor securing the cargo on a higher deck.

New innovationIn the late 1990s, after many years oftransporting steel between Finland and theContinent, the shipping company LanghShip started developing new methods forreducing cargo damage and improving thequality of shipments. The owner HansLangh has been in charge of the projectfrom the beginning.– It is a result of many years of co-operationwith the Finnish steel manufacturers, Mr Langh explains.– I had some ideas about how the quality ofthe transports could be improved and westarted a development project within LanghShip. Now our invention has been thoroughlytested and proved to be successful inRuukki’s and Outokumpu’s demandingtransport systems, he continues.

Langh Ship decided to adopt solutions wherethe cargo is stowed higher up in the cargohold. The idea itself was not new, but themethods were. The Company developed apurpose-designed tween-deck integratedcradle system for carrying steel coils. Thecoils are secured in the cradles and earlierproblems with inadequate lashing havebeen solved with a totally new and simplerapproach.

Cradle Tween DeckWith the Cradle Tween Deck (CTD) in use,the typical distribution of an all steel coilcargo is one layer on the bottom of the holdand one on the CTD. This also correspondsto the vessel’s maximum deadweight. Thesteel coils are lifted in position by crane andlashing of the coils with belts in astandardised way is quick and easy. CTDalso makes it possible to mix different typesof cargo. It is, for example, possible to carrysteel plates in the lower part of the holdand coils on the CTD.

The system also shows its flexibility whenthe CTD is not in use. Designed as easilyliftable steel pontoons, the Cradle TweenDeck is mounted or stowed away with thesame cranes that handle the steel coils.When not in use, the cradles are stowed inthe hold, occupying only a minimal amountof cargo space, or in front of the deckhouse.The vessel can therefore carry other typesof cargoes, e.g. raw materials back to thesteel mill.

No cargo damageThe prototype of the CTD was installed inLangh Ships dry cargo/container vesselChristina in the beginning of 2000. Theadvantages of this innovation became

l transports

The innovative Cradle Tween Deck from Langh Ship has drastically reduced damage to steel coils

THE STEEL COILS ARE LIFTED INPOSITION BY CRANE AND LASHINGOF THE COILS WITH BELTS IN ASTANDARDISED WAY IS QUICKAND EASY


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immediately evident. Now, as four LanghShip vessels are equipped with CTDs, therehas not been any cargo damage at sea tocoils transported by the new system. Inaddition, other cargo has greatly benefited.Damage is almost non-existent on thesevessels.

A comparison of the sea-keeping qualitiesof two identical sister vessels carryingsteel products – one with CTD and theother in the conventional way – showedamazing results. Both vessels weresimultaneously sailing in the same area inheavy weather. The heeling angle withconventional stowage of the cargo wasabout 30 degrees and the rolling periodfrom one side to another and back againwas as short as five seconds. In the sistership, the CTD reduced the maximumheeling angle to ten degrees while therolling period was prolonged to 12seconds. The working conditions on the

first vessel were extremely difficult, whilecircumstances were regarded as quitenormal on the second ship.

SavingsSeveral years of service have proved thatloss prevention is not the only advantage ofthe CTD. Cargo handling is faster andmore efficient without the need ofadditional investment in equipment orinfrastructure. Less labour is requiredwhen loading the vessel and disposablelashing is no longer needed.

For lashing of steel coils, strong belts areused. The method is standardised and fast,significantly reducing the overall timespent in port. Even the need for lashingother cargo carried in the same vessel isreduced, as the vessel’s motions in roughweather are lessened.

Special unitsAnother way to optimise a vessel’s stabilitywhile carrying steel is to unitise the cargo.If carried in containers, part of the cargomay be carried on deck, for example, thuseliminating over-stability. In this case, themain problem is that lashing of steelproducts inside a container is labour-intensive, and therefore expensive andquite time consuming. The cargo has to besecured manually in a non-standardisedway. Therefore, containers have usuallybeen utilised for steel shipments only intransoceanic traffic.

With short sea shipments in mind, LanghShip has developed a special container forsteel products, allowing fast and easystuffing. At first glance, the unit looks justlike a standard 20 ft container, but thedifference becomes obvious when opened.Instead of being equipped with conventionaldoors at the end of the unit, the long side

Easy access is the key to Langh Ship’s container solution for carriage of steel

The tables below show the measured differences between two sister vessels carrying similar steel cargo and sailing in the same weather conditions (actually, they were evenwithin sight of each other). One was equipped with Cradle Tween Deck and the other with a traditional stowing solution


is completely open. The cargo may then bequickly stored in the container by, forexample, a forklift truck.

Lashing of the cargo inside the container isprovided by a new supporting system.Moveable stanchions may be placed indifferent positions to support a cargo of anykind. They are mounted between the floorand the roof of the unit, and tightened witha clamping system against the goods. Asthe cargo unit has standard dimensions,this solution also enables steel transportationon container feeder vessels. This opens upnew possibilities for steel shipments, usingan extensive liner network made up offrequent feeder services.

The payload of Langh Ship’s special unit is32 tonnes. After an extensive test programmewith prototypes that still serve Outokumpu’stransports, an improved series of containershave been produced for Ruukki. The resultsare encouraging and Langh Ship is developingother special units for transportation of heavyproducts.

Widely acknowledgedLangh Ship’s cargo solutions have beenacknowledged all over the world. Theproducts are already patented in Europe,USA and the Far East. Outside Europe,marketing and sales are handled byMacGREGOR, which is a global marketleader in marine cargo flow solutions.Langh Ship also won the "Innovation inShip Operations" category in the Seatrade

Awards 2003 and has been recognisedseveral times in Finland for its cargosolutions.

Improved working conditionsCrews are pleased with the CTDs.– Working conditions have improvedremarkably, says Master Mariner MarkkuYli-Kahri, who is the Captain of LanghShip’s dry cargo vessel Aila. He explainsthat the violent rolling, which is typical for avessel carrying steel products, is no longera problem. As an experienced ‘old salt’ henow regards the conditions on board as"quite normal" even in rough weather.– Especially during the winter season,when one low pressure usually relievedanother, it was not possible earlier for the crew to get a long undisturbed rest.Everyone used to be tired all the time,Captain Yli-Kahri says.

For someone who has not been at sea inbad weather, it is difficult to imagine whatit is like to spend several weeks on duty ina place that is constantly rolling andpitching. It is impossible to sleep properlyand, when on watch on the bridge, theOfficer has to continuously struggle toremain seated in his chair. No wonder theprofessionals responsible for carryingvaluable cargoes welcome such innovations.

Securing of steel coils in the CTD is quick and easy

AS THE CARGO UNIT HAS STANDARDDIMENSIONS, THIS SOLUTION ALSOENABLES STEEL TRANSPORTATION ONCONTAINER FEEDER VESSELS

THIS OPENS UP NEW POSSIBILITIESFOR STEEL SHIPMENTS, USING ANEXTENSIVE LINER NETWORK MADE UPOF FREQUENT FEEDER SERVICES

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Terrorism and

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Jonathan Hare, SVP Defence Services, Skuld OsloLOSS PREVENTION

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The oil industry was identified as a cleartarget for advancing the terrorist goal ofdamaging western economies. Shipsengaged in transportation of oil aretherefore evidently at risk, as the attack onthe tanker Limburg off Yemen in October2002 graphically illustrates. Ayman Al-Zawahiri, second only to Bin Ladin on themost wanted list, has referred to "crusaderships" as legitimate targets.

Although there will be cases, such as theLimburg, where a ship is the primarytarget, there will be other cases when theship will simply be used as a mediumthrough which to deliver a bomb. In the US,there has been recent focus on the damagewhich could be caused by a vapour cloudexplosion (likened to a nuclear explosion)resulting from an attack on a LNG vessel.Several participants at the seminar pointedout that it would be very difficult to make aLNG cargo ignite and explode, although a

LPG tanker could cause considerabledamage. The container trade representeda much greater risk. An estimated 15 millioncontainers are moving at sea or on land atany one time. Only a small percentage canbe screened and many are delivered tomajor population centres.

Several speakers referred to the ISPS Codeas one method of reducing the risk ofterrorism. The introduction of the Code on1 July 2004 has undoubtedly helped toconcentrate the attention of shipownersand their crews on the need to takeconcrete measures. Although there wasa last minute rush, shipowners did wellin obtaining International Ship SecurityCertificates. However, ship operatorsexpressed some scepticism about thetrue value of the Code and some hadexperienced heavy-handed and misguidedenforcement in some ports.

Generally, shipowners will not beresponsible for losses arising out ofterrorism. If liability is based on fault, it isclear that it is the terrorist and not theshipowner who is responsible. Maritimeconventions which impose strict liability(such as CLC, HNS and the AthensConvention) contain exclusions for acts ofwar. However, terrorism may not amountto an act of war. Shipowners must then rely

on another exception clause, i.e. damagecaused intentionally by a third party. Theproblem with this exception is that theconventions use the words "wholly caused"by the act of the third party. The benefit ofthe exception may therefore be lost if thereis an element of contributory negligence.

Several speakers dealt with insurancecovering war risks, which have traditionallybeen separate from hull and P&I policies.Hull and P&I war risks cover is normallyprovided by specialist war risk insurers,such as DNK, up to the insured value ofthe ship, while P&I clubs in the InternationalGroup provide excess cover for an additionalUSD 400 million, increasing from 20 February2005 to USD 500 million. However, theexceptional risks of war and terrorismapproach the limits of what is insurable.The primary aim of the terrorist is not todamage shipping, but to damage thestate. It is for this reason that the shippingindustry has been lobbying for states tostep in to provide cover for risks whichcannot be insured.

nd shippingAt the end of October, the Norwegian Shipowners’ Association, in co-operation with the NorwegianShipowners' Mutual War Risk Insurance Association (DNK), arranged a seminar on maritimeterrorism in Oslo. The scene was set by two excellent presentations by speakers from theNorwegian Institute of International Affairs.

...THE EXCEPTIONAL RISKS OF WAR ANDTERRORISM APPROACH THE LIMITS OFWHAT IS INSURABLE

AN ESTIMATED 15 MILLION CONTAINERSARE MOVING AT SEA OR ON LAND AT ANYONE TIME

The oil industry is a clear target for terrorists, as the attack on the Limburg in October 2002graphically illustrates

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ixBeacon jan 2005 origi 09.02.05 02:34 Side 21

By Olav Tveit, Regional manager Nordic Countries, Russia & the Baltic area, DNV Petroleum Services

Annex VI of MARPOL 73/78 "Regulations for the prevention of Air Pollution from ships" will enterinto force on 19 May 2005, and apply to all ships, fixed and floating drilling rigs and other platformsof 400 gross tons and above. Such vessels are required to hold an International Air PollutionPrevention Certificate (IAPP Certificate).

LEGAL NOTES

MARPOL Annex VI

New regulations – prev e

This certificate must be on board upondelivery of newbuildings with keels laidafter 19 May 2005. For other vessels, theIAPP certificate must be on board at thefirst scheduled drydocking after 19 May2005, but not later than 19 May 2008.

Annex VI requires that every vessel forwhich the regulation applies is subject to an initial survey as well as annual,intermediate and renewal surveys.

Regulation 12 – Emissions from OzoneDepleting Substances (ODS) fromrefrigeration plants and fire fightingequipment

Annex VI prohibits any deliberate emissionsof ODS (CFC’s, Halons, HCFC’s) as definedin the 1987 Montreal Protocol. Minimalreleases in connection with recapture orrecycling are, however, permitted.

New installations containing ODS areprohibited on all ships after 19 May 2005,with the exception of those containingHydrochlorflouro-carbons (HCFCs), such as R22. These are permitted until1 January 2020.

Regulation 13 – Nitrogen Oxide (NOx)emissions from diesel enginesRegulation 13 of Annex VI concerns NOx-emissions from diesel engines and applies to:• Diesel engines with a power output of

more than 130 kW installed on a shipkeel laid on or after 1 January 2000.

• Diesel engines with a power output of more than 130 kW that undergo a majorconversion on or after 1 January 2000.

This regulation does not apply to emergencydiesel engines, engines installed in life boatsor any equipment intended to be used solelyin case of emergency.

An EIAPP (Engine International Air PollutionPrevention) certificate is required for alldiesel engines as described above, and is a pre-requisite for issuing of the IAPPcertificate.

The EIAPP certificate is issued for marine dieselengines after demonstrating compliance with NOxemission limits

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s

v ention of air pollution

The EIAPP certificate is issued for marinediesel engines after demonstratingcompliance with NOx emission limits, asper the NOx Technical Code issued by IMO.

All certified engines are to be provided withan individual Technical File that containsthe engine’s specifications for compliancewith the NOx regulation and onboardverification procedures. Further, eachengine is to be provided with a RecordBook of engine parameters, where anychanges to the engine are to be recorded.

The phrase "major conversion", means amodification of an engine where:• The engine is replaced by a new engine

built on or after 1 January 2000, or • Any substantial modification is made to

the engine, or • The maximum continuous rating of the

engine is increased by more than 10%

Note that for engines installed on keels laidon or after 1 January 2000, a substantialmodification would be classed as anymodification outside the ranges specifiedin the Technical File (see later description).

For engines installed on vessel keels laidbefore 1 January 2000, a substantialmodification means any modification made

to an engine that increases its existing NOxemission. These changes include, but arenot limited to, changes in its operation orits technical parameters (e.g. to reducefuel consumption).

Regulation 14 – Sulphur Oxide (SOx)emissions from ships

Upon entry into force of Annex VI toMARPOL on the 19 May 2005, themaximum sulphur content of marine fueloils used on board ships, regardless ofapplication, is 4.5%. Further, a limit of 1.5%on the sulphur content of marine fuel oil,applies in the following designated SOxEmission Control Areas (SECAs):

• The Baltic Sea Area which enters into force on 19 May 2006

• The North Sea Area and the English Channel which will not enter into forceuntil 19 November 2007

An alternative to using marine fuel oil witha 1.5% sulphur content in SECAs, is anexhaust gas cleaning system or otherequivalent abatement technology. Theemission criteria for such systems are 6 g SOx/kWh.

Operational impact of low sulphur fuelFuel quality issues

There have been indications that lowsulphur fuel oil production may lead toincreased quality problems, such asinstability, incompatibility, ignition andcombustion difficulties, increase in levels

Designated SOx Emission Control Areas

Excessive sludging in fuel oil separator


of catalytic fines and the potentialintroduction of chemical waste.

Fuel tank/system configurationWhen approaching a SECA a change to1.5% sulphur content fuel must be madeand recorded before entry into the area.Given fuel compatibility problems, and inconsideration of the differences in cost,some owners are considering installing anadditional set of service and settling tanksfor low sulphur fuel oils. Such measureswould also simplify change-overprocedures and bunker management.

Inadequate availability of low sulphur heavyfuel oils may force owners to increaseconsumption of low sulphur diesel oilswithin SECAs. Accordingly, allocation ofadditional marine diesel oil tank capacitymay have to be considered.

Lube oil considerationsExperience has indicated that for 2-strokeengines, long term operation on blendedlow sulphur fuel oils and the use of highbase number (BN 70) cylinder lube oilsmay lead to deposit build-up on pistoncrowns, piston ring grooves and,subsequently, liner scuffing.

The maximum operation time on fuel oilswith low sulphur content and high BN lubeoils appears to vary substantially dependingon fuel quality, engine make, type, age, loadprofile, liner temperature, efficiency of watermist catchers, installation of scraper rings,as well as cylinder lube oil quality, feed rate

and lubrication system. Accordingly, therelevant engine manufacturer and lube oilsupplier should be consulted prior tooperation on low sulphur fuel oil.

Regulation 15 – Volatile OrganicCompounds (VOC) emissions from cargo oil tanks in oil tankersThe requirements apply to tankersoperating in terminals that have beendesignated by the Port state as an areawhere VOC is regulated. The relevant Port state is required to give advancenotification to IMO of such designations.

Any tanker that has a USCG compliantvapour emission control system willautomatically comply with the IMOrequirements.

Regulation 16 – Emissions fromshipboard incineratorsEach incinerator installed on board on orafter 1 January 2000 is to be type approvedunder the IMO Resolution MEPC 76(40).The operation manual and the typeapproval certificate for such incineratorsmust be provided on board and the crewtrained and capable of operating theincinerator in accordance with the manual.

Further, shipboard incineration of certainspecified substances (e.g. PCB’s) isprohibited. Incineration of sewage sludgeand sludge oil is not permitted in boilers ordiesel engines inside ports, harbours andestuaries.

Regulation 18 – Fuel oil quality

General pointsRegulation 18 specifically requires that fueloil supplied to ships must be free frominorganic acids or chemical wastes thatcould jeopardise the safety of the ship, beharmful to ships' personnel, or pollute the air.

Guidelines relating to Regulation 18 arefound in Resolution MEPC. 96(47)"Guidelines for the sampling of fuel fordetermination of compliance with Annex VIof MARPOL 73/78".

Bunker delivery notesRegulation 18 requires that any fuel oildelivered on board must be recorded on a Bunker Delivery Note (BDN).

There is a requirement that BDNs mustcontain specific information, includingquantity, sulphur content and a declarationby the fuel oil supplier's representative thatthe fuel oil supplied conforms withregulations 14 and 18.

The BDNs must be kept on board for athree-year minimum and be ready forinspection at all times.

MARPOL Annex VI fuel oil samplesRegulation 18 requires that every BDN is to be accompanied by a representativesample of the fuel oil delivered, taking intoaccount the guidelines in ResolutionMEPC.96(47).

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The sample is to be sealed and signed bythe supplier's and ship’s representativeand kept on board in a safe location, untilthe fuel oil is substantially consumed, or a minimum of 12 months has elapsed.

Sampling proceduresNote that the referred to resolution,MEPC.96(47), specifies that the fuelsample is to be obtained at the receivingship’s inlet bunker manifold and drawncontinuously throughout the bunkerdelivery period. The term ‘continuouslydrawn’ means a continuous collection ofdrip samples throughout the delivery of bunker fuel.

Supplier’s responsibilitiesAnnex VI of MARPOL requires Port States to:• Maintain a register of local suppliers of

fuel oil.• Require local suppliers to provide the

BDN and a sample, where the fuel oilsupplier certifies that the fuel oil meetsthe requirements of regulations 14 and 18.

• Take appropriate action against fuel oil suppliers found to have delivered fueloil that does not comply with thatstated on the bunker delivery note.

• Inform IMO, for transmission to Parties to the Protocol of 1997, of all caseswhere fuel oil suppliers have failed tomeet the requirements specified inregulations 14 or 18.

FUEL SULPHUR CONTENTCLAUSE FOR TIME CHARTERPARTIES

BIMCO’s recommended clausefor use in connection with AnnexVI of MARPOL 73/78 "Regulations for the prevention of Air Pollution from ships":

Quote

Notwithstanding anything elsecontained in this Charter Party, the Charterers shall supply fuels of such specifications and grades topermit the Vessel, at all times, tomeet the maximum sulphur contentrequirements of any emissioncontrol zone when the Vessel istrading within that zone. TheCharterers shall indemnify, defendand hold harmless the Owners inrespect of any loss, liability, delay,fines, costs or expenses arising orresulting from the Charterers' failureto comply with this Clause.

For the purpose of this Clause,"emission control zone" shall meanzones as stipulated in MARPOLAnnex VI and/or zones regulated byregional and/or national authoritiessuch as, but not limited to, the EUand the US EnvironmentalProtection Agency.Unquote

Sampling at ship manifold using DNV Petroleum Services Line sampler and cubitainer

BIMCO clause


26 BEACON

With reference to our article in Beacon no. 2,December 2003, page 24, we are pleased toconfirm that Legal News online is alsoavailable on Skuld's new website, whereLegal News articles are now even easier tolocate. Simply go to our homepagewww.skuld.com, then to ‘News andPublications’ and then to ‘Legal News’, whereall new articles are instantly available. On thispage, there is also a link to the archive,where all previous articles are filed.

Since Beacon no. 2, December 2003 wasprinted, several articles dealing withcrucial topics have been published, someof which are summarised below. The fulltext of these and other articles are eitheravailable on the Legal News section or inthe www.skuld.com Legal News archive.

Taiwanese law and maritime mattersby Nicola Mason and Roger KC Wang, 12 January 2004In this article, the procedures relating toarrest of vessels in Taiwan are reviewed. Itwas highlighted that if the defendant doesnot have his principal place of business inTaiwan, a claimant should be able to arresta vessel owned by the defendant. This isdone by seizing the defendant's assets, i.e.his vessel. As there is no maritime law,there is no recognition of ‘in rem’ writs. Tomake the application to arrest the asset(the vessel), the claimant has to establish a

prima facie case against the owners of thevessel. The claimant will be required toprovide security as assessed by the court,and is only allowed to arrest the offendingvessel (e.g. if there is a cargo claim orclaim arising under a C/P). The claimantwill not be entitled to arrest another vesselwhich is in the same beneficial ownershipor management, and it may be difficult toestablish a sister ship arrest in Taiwanunless ownership is registered with thesame company.

It is not possible to arrest a vessel whenshe is outside of the port in Taiwaneseterritorial waters.

A party wishing to release the vessel willhave to deposit the amount of the claim,plus arrest fees, with the Court.

Trigger happy owners beware!by Sara Gillingham, 21 April 2004With reference to London arbitration 3/04in Lloyd's Maritime Law Newsletter 635 itwas emphasised that timing is crucial inconnection with time charter withdrawalcases. If owners are too early inwithdrawing the vessel from a C/P, theycan be held liable for anticipatoryrepudiatory breach of contract and face avery substantial damage claim fromcharterers. On the other hand, if ownersare too late in withdrawing, they could beheld to have affirmed or confirmed the

contract and lost the right to withdraw. Awrong move here could also lead toowners facing damages claims fromcharterers.

Kilo limitation for cargo claims in Norway by Bjørn Flåm, 4 May 2004In Norway's Supreme Court judgment of23 March 2004 – an appeal case brought by Skuld on behalf of a member – theSupreme Court did endorse Skuld's view in a case involving kilo limitation.

The case involved a semi-trailer whichtilted on board a ferry causing damage toboth the semi-trailer and another semi-trailer parked next to it (although the cabsof both vehicles were also damaged, thisjudgment only concerned the damage tothe trailers).

The trailers were condemned and theSupreme Court, in an unanimousjudgment, held that the trailer could not besaid to be an integrated part of the vehicle.This endorsed Skuld's view that, for thepurpose of the limitation provisions, it isjust the weight of the trailers that isrelevant.

Mediationby Stig Gregersen, 24 June 2004Following the English Court of Appeal'sjudgment on 11 May 2004 in the Halsey and

Legal News summary

Stig Gregersen, Vice President and Lawyer, Skuld Copenhagen

LEGAL NOTES

Legal News is available on Skuld's new website. The aim is still to publish legal updates as andwhen new matters arise or new legislation is implemented.


BEACON 27

Milton Keynes General NHS Trust, importantaspects of mediation were outlined, notablywhat should be considered when evaluatingwhether a party had acted reasonably inrefusing to engage in mediation. It wasconcluded that, although the above judgmentmay not have answered all the uncertaintiesrelating to the evolution of mediation, it is stillanother strong reminder that in order toavoid adverse costs, litigants and theirlawyers should routinely consider whethertheir disputes are suitable for ADR, especiallymediation.

Notices of readiness againby Jonathan Hare, 20 September 2004In this matter, where Skuld representedthe owners, the arbitrator agreed that aNotice of Readiness tendered while thevessel was arrested was valid. However, itwas material to the arbitrator's decisionthat the arrest order specifically allowedthe vessel to berth and carry out cargooperations provided it remained within thejurisdiction of the local Court. It was alsoclear to all concerned that the owners hadno choice but to post security for the debtsof the insolvent former charterers. Theowners put arrangements in handimmediately, and the arrest was liftedwithin three working days. Once the arrestorder was lifted, the vessel remained atanchorage as no cargo was available, andthe vessel continued to wait. Thus, thearrest had absolutely no effect on the

length of time for which the vessel had towait before commencing loading.

However, the result might be different inother circumstances if, for example, therewas real doubt about whether the arrestwould be lifted by the time loading wasexpected to be completed.

Half demurrage under the AsbatankvoyForm clause 8by Karin A. Holm, 11 November 2004In this article, a London Arbitration awardfrom September 2004 and the Court ofAppeal’s judgment in the Afrapearl wereconsidered, and it was concluded that for abreakdown to fall under clause 8 of theAsbatankvoy Form and thereby trigger halfdemurrage for any resulting delay, it is nota condition that the breakdown took placewhen the vessel was in the port or at theberth, nor that laytime had commenced orthat the vessel was on demurrage. As longas: i) charterers can establish that therewas a breakdown, as defined in the abovearbitration and judgment ii) it can be provedthat the breakdown caused a delay to thevessel iii) owners cannot break the chain ofcausation by pointing to intervening events,then half demurrage will apply.

Domestic consumption – NYPE 46 Formby Sandro Vuylsteke, 23 November 2004In a matter where the Associationrepresented the owners, by reference to

clause 20 and the Sounion judgment, thecharterers had made a deduction fordomestic consumption in their final hirestatement.

However, the owners succeeded with anargument that this deduction was notlegitimate as clause 2 had been amended toread "That the Charterers shall provide andpay for all the fuel, …", i.e. with deletion of thewords "except as otherwise agreed".

Bill of Lading – NVOCC or Ocean Carrier:The Kirby case by Morten Ligaard, 1 December 2004The US Supreme Court's landmarkjudgment of 9 November 2004 in NorfolkSouthern Railway Company, petitioner v.James N. Kirby, Pty Ltd, DBA KirbyEngineering, and Allianz AustraliaInsurance Ltd, especially the NVOCCcarrier's role in relation to agency, isdiscussed in this article.

In an unanimous judgment, the SupremeCourt stated that when an intermediary(NVOCC) contracts with a carrier, the cargointerests are bound by the terms of thecontract (typically B/L) between theintermediary and the carrier if they areseeking recovery directly from the carrier.For this purpose, an intermediary isconsidered the cargo interest's agent andnot the carrier's agent.

Current and past legal articles are easily availablethrough the News and Publications/Legal News

section of Skuld’s improved website


28 BEACON

China barred imports of Brazilian soyabeans May/June 2004Napoleon supposedly once said, "China isa sleeping giant, and when it awakes theworld will tremble". [The Digest JamesThompson 1/8/2004.]

In May/June 2004, Brazil was reeling afterChina barred the import of approximately 90%of Brazilian soya beans, due to allegedinfection of a form of fungicide calledCarboxin. Many however, privately arguedthat Carboxin infection was a contrived excuseused as a means to drive down the price.

The result of the Chinese ban on Braziliansoya beansAs a result of the rejection of thesecargoes, the price of soya beans dropped20%. Many vessels were left waiting inlimbo unable to enter Chinese ports todischarge their cargoes. Over 23 leadingcompanies, such as Cargill Inc., BungeLimited and Louis Dreyfus, were affected.Those shipowners, who had their vesselson time charter to good charterers,continued to receive hire paymentswithout interruption during this period.

However, difficulties regarding theliabilities for this volatile cargo remainedunaddressed for many shipowners. Soyabeans, if they are kept on board the vesselwithout proper ventilation to deal withmoisture content, or shipped with moisturecontent above 12%, may not be able towithstand long periods in storage. [Seep.14 ‘Million dollar beans’, Beacon no. 1,2003.] Many vessels were delayed for over60 days. When vessels could enter thedischarge port, owners faced the possibilityof cargo deterioration, or rejection, andwere left to pick up the tab under the bill of lading.

Are owners protected under the timecharter?Under an unamended NYPE 46 charterparty, owners would have an indemnityagainst the consequences of followingcharterers’ orders to wait. Consequently,cargo deterioration resulting from thedelay would be the charterers’responsibility.

However, there is uncertainty of the legalobligation to put up security if the vessel is

arrested due to cargo claims resultingfrom such delay.

Are owners protected under a voyagecharter? Owners’ position is weaker under a voyagecharter as there is neither a generalindemnity against the consequences offollowing charterers’ orders nor (usually) is there a contractual right to payment for time spent waiting before the vesselarrives at the discharge port.

What more could be done to protectowners? A Letter of Indemnity (LOI) could beprovided to owners by charterers/shippers.The advantage of the LOI is that it specificallyaddresses the situation and compelscharterers to provide security to releasethe vessel should it be arrested or detained.

The Letter of Indemnity Under The Hague and Hague-Visby Rules,owners have an obligation under the bill oflading to proceed directly without delay tothe discharge port. Waiting offshore wouldconstitute a contractual deviation, which

Nicola Mason, Vice President, Skuld Hong Kong

LEGAL NOTES

"A soybean boom is sweeping South America like a gold rush leading farmers who have caughtthe fever to plow and plant by moonlight…" (Diego Gludice). On the back of this, ocean freightcosts have hit record highs, caused by China’s insatiable demand for goods and raw materials –including soya beans.

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BEACON 29

could deprive the shipowners of theirHague and Hague-Visby defences, such asinherent vice.

Therefore, the indemnity should addressthe following:1. Liability for any deterioration in the

cargo during the periods of delay2. Rejection of the cargo3. Liability for damages for delay in

delivery/discharge of the cargo 4. Consequences to the vessel and

owners as a result of complying with charterers’ orders

5. Fines6. Additional discharge costs7. Arrest8. Security or detention9. Additional insurance premium to

cover deviation risks10. Legal costs11. Survey costs12. Other associated costs

What about charterers and operators?For charterers and operators in the middleof the charter party chain, the situation canbe precarious. It is imperative for them toalso get a proper indemnity from their sub-charterers or shippers. This is especiallyso if the sub-charterers are voyagecharterers. The standard charter partydemurrage provisions may not cover delayto the vessel waiting off port limits. A well-

drafted LOI not only covers who bearsresponsibility for cargo claims, fines andliabilities as outlined above, but alsoincorporates remuneration for the delay.

How good is the Letter of Indemnity?One proviso – an indemnity is only good ifthe party issuing it has the financialresources to honour the indemnity.

Will this situation arise again?Demand for soya beans from China andthe rest of the world has increased.However, there are warnings that a similarsituation to that of May/June 2004 could berepeated. Brazilian government officialsare reportedly disappointed that theagreement reached with China did notaddress the difficulties faced by Brazilianexporters to China. Carlo Lovatelli, thePresident of Brazil’s Vegetable Oil IndustryAssociation (ABIOVE) said of ChineseRegulations,"The regulations they havenow are extremely vague. They guaranteenothing".

Other factors influencing the price of soya beansThe American Soybean Association weeklyupdate for 4 October 2004 reports that soyabean exporters have set new financialterms for trading with China. This is in thewake of China’s defaults on payments in2004. The new requirements include downpayments of up to USD 2.5 million for thepurchase of 60,000 ton cargo; Chineseimporters’ requirement to take delivery oftheir cargoes within 30 to 45 days of thetransaction and to open a Letter of Creditwithin three days, instead of several weeks.They warn that all of this will have animpact on Chinese demand for soya beans.

The new financial terms for trading soya beans withChina may reduce demand

In May and June 2004 China banned the import of roughly 90% of Brazilian soya beans

FOR CHARTERERS AND OPERATORSIN THE MIDDLE OF THE CHARTERPARTY CHAIN, THE SITUATION CAN BEPRECARIOUS

– the saga continues

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30 BEACON

The American Soybean Association weeklyupdate for December 2004 also advisesthat Brazil’s soya bean sector is headingfor crisis in 2005 with international pricesfalling and import prices on the rise. Inaddition, Brazil’s 2004/05 soya bean crop isset to increase by 28.2%. As Brazilianfarmers held back more of their crop in2003/04 than normal because of lowprices, a shortage of storage space couldrapidly occur, thereby increasing soya beansales. This, coupled with the usual naturaldifficulties such as Soya Bean Asian Rustcontamination, fungicides e.g. Carboxin,the outbreak of foot and mouth in a remote

Amazon region in September 2004 (as aresult of which there was a suspension ofimport of Brazilian soya beans byIndonesia), can all create difficulties for thefuture of soya beans in the Far East and forowners or charterers carrying soya beancargoes.

The cost of the gold rushA cargo of 60,000 mt soya beans at USD400 per ton is worth USD 24 million.Claims for rejection or damage to soyabean cargoes can cost millions of dollars.Owners, charterers and operators are

therefore advised to carefully review theircharter party clauses dealing with thiscargo.

Acknowledgement, notes and sources:The Digest (Corn Soybean) Brock Online Notes21/6/2004The Digest (James Thompson) 1/8/2004American Soybean Association Weekly Update(issues 4/10/2004 and 6/12/2004)Bloomberg Com 20/12/2004South American Soybeans TransformingAgriculture Kevin G Hall (Knight RidderNewspapers)

AS BRAZILIAN FARMERS HELD BACKMORE OF THEIR CROP IN 2003/04THAN NORMAL BECAUSE OF LOWPRICES, THERE COULD RAPIDLYOCCUR A SHORTAGE OF STORAGESPACE, THEREBY INCREASING SOYABEAN SALES.

Brazil’s 2004/05 soya bean crop is set to increase by 28.2%

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Mediation is a relatively new method of resolving claims. While the concept of mediation has been around forconsiderable time and employed injurisdictions as far apart as the UnitedStates and Australia, it has recentlyreceived a kick-start after the Englishcourts made it clear that litigants wereexpected to try mediation before havingtheir day in court. It is a form of negotiationconducted with a neutral mediator who willshuttle between the parties to facilitate asettlement, which is acceptable to both.

Maritime Solicitors Mediation Services wasestablished recently by a group of 19English maritime law firms, with thepurpose of promoting the use of mediationin the maritime and marine insurancesector. As part of this promotion, solicitorsfrom eight law firms travelled to Oslo inNovember to conduct a "mock mediation".Playing roles as the mediator andrepresentatives of owners and charterers,their P&I Clubs and lawyers, they acted out

a mediation based on a realistic scenario.The core of the claim was the loss ofcargo in heavy weather caused in part byinadequate lashing and securing. It was aneffective demonstration to the 70 personsin attendance from the local shipping, legaland insurance community of how mediationworks in practice.

One of the benefits of mediation is toconcentrate the minds of the parties on thekey issues. It is natural enough for allinvolved in litigation or arbitration to feelthat they have a good case. The mediationprocess can lead to a more realisticunderstanding of the merits of the parties’respective positions. The mediator musthave good communication skills, theopportunity of speaking to both sidesconfidentially and be able to help theparties take a realistic look at the issues.For example, the mediator can invite theparties to look at different possibleoutcomes if a judge or an arbitratoreventually decided the case, and suggest

putting a figure on the potential financialexposure, having taken account of interestand costs. This can put a different perspectiveon the case and settlement may not seem likesuch a bad proposition after all.

The mediator cannot decide the case orforce the parties into an agreement. Themediation is conducted on a withoutprejudice and confidential basis, so that if no settlement is reached, the partiessimply continue with their arbitration orcourt proceedings.

Mediation lies somewhere betweennegotiation and arbitration. It is not amagic answer and will not be appropriatein all cases, but is a valuable form ofdispute resolution that will undoubtedlycontinue to grow in importance.

More information about the Maritime SolicitorsMediation Services can be found onwww.msmsg.com

Maritime mediationResolving disputes is central to the work of a club in relation to both P&I and Defence matters. Claimshandling largely consists of problem solving, a process which is time consuming and costly.

Good practice – the team lines up for mediation in Oslo

Jonathan Hare, SVP Defence Services, Skuld Oslo

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New website at w

As Skuld’s former site had been inoperation since 1997, there was a heartfeltneed for a major overhaul. The projectbegan in spring 2004 and, after a lot ofhard – but enjoyable – work, we launchedthe site last November as planned.

InvolvementSeveral Skuld members were involved in theproject. We received extensive feedback fromstaff members and management, and alsofrom some members and brokers whoserved as an important reference group.

The work is not over yet. Now thechallenge is to keep the site updated andplan for future improvements. If you have

not already visited the site, we encourageyou to do so. Here is a brief summary ofsome of the information you will find:

About Skuld gives you information onSkuld’s organisation, key figures, access to Statutes and Rules, vessels listed, etc.

Products and Services gives details of our P&I and Defence Services as well asinformation on loss prevention and ouremergency response capability.

News is published under three differentcategories: • Skuld News: Formal Circulars (also sent

out by letter), press releases and generalSkuld News articles published on webonly.

• Legal News: Articles on new judgments, laws and clauses, normally written bySkuld staff members with a legalbackground.

• Notices: Information supplied to us by correspondents, lawyers or othercontacts.

A mailing list function, where you mayregister your interest for news articles, is planned.

Publications include copies of Skuldpublications, such as annual reports,booklets and former issues of Beacon.

Correspondents is a search area forcorrespondent details.

New – Standard Forms!Several Skuld standard forms are nowavailable for downloading directly from ourwebsite or, even better, you can registerdirectly through the web. We are confidentthat this will help make communicationwith members and brokers more efficient.

Skuld’s new website was launched in November 2004 with a new technical platform, a whole new designand restructured and improved content.

Ingeborg S. Berge, Manager Marketing & Communication, Skuld Oslo

NOW THE CHALLENGE IS TO KEEPTHE SITE UPDATED AND PLAN FORFUTURE IMPROVEMENTS

Skuld’s new website is open for business


BEACON 33

t www.skuld.com

From January 2005, a simple, first versionof Skuld Extranet is accessible via Skuld’shome page. Members and brokers willreceive their login name and password from Skuld. Brokered members willsubsequently receive login details via their broker.

What we offerVia login from www.skuld.com, membersand brokers can access:• updated claims reports• three versions of their statistics;

- one similar to the paper version sent to them earlier

- one five-year updated (live) version - one updated 2004 report

We need your feedbackWhile we continue to develop our Extranet,your questions and comments are mostwelcome. Please make sure you try out the service and send your feedback [email protected]. Alternatively, contact your syndicate representative.

Thank you!

SEVERAL SKULD STANDARDFORMS ARE NOW AVAILABLE FORDOWNLOADING DIRECTLY FROM OURWEBSITE OR, EVEN BETTER, YOUCAN REGISTER DIRECTLY THROUGHTHE WEB

Extranet launched – so what’s extra?Extranet is a major step into the digital world for Skuld. In the future, we can imagine this as ourmajor distribution channel for statistics, policies, forms and maybe even charterer declarations.

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34 BEACON

Mr. Jacobsson first gave a brief summaryof the legal regime established by the CivilLiability Convention and the FundConvention. He then went on to deal withthe practical aspects of handling claimsfollowing a major oil pollution incident.This included matters such as setting up claims handling offices, instructingsuitable experts and procedures forevaluating the admissibility of claims.Emphasis was placed upon the importanceof close co-operation between the Cluband IOPC Funds secretariat.

A look was taken at a number of recentincidents, including the Erika andPrestige cases, which were of particularimportance since they had triggeredchanges in the compensation regime. The first of these changes was an increase

in the compensation limits under theConventions, which took effect inNovember 2003. This raised the totalamount of available compensation from135 million Special Drawing Rights to SDR203 million (or from approximately USD200 million to USD 300 million).

The second major change was the adoptionby the International Maritime Organisation,in May 2003, of a Protocol that creates aSupplementary Fund. This provides anadditional source of compensation for theexceptional cases that give rise to claimsexceeding the amounts available under CLCand the Fund Convention. This SupplementaryFund will bring maximum compensation toSDR 750 million or approximately USD 1.1billion). The Protocol will come into force on3 March 2005.

The prospect remains of further changes.A Working Group established by IOPCFunds meets again in Ma

amcl – a part of china for a few beans more – the ... · beacon jan 2005 origi 09.02.05 02:30...

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