modern admiralty law - gbv

MODERN ADMIRALTY LAWWith Risk Management Aspects

Aleka Mandaraka-Sheppard, LLM, PhD, SolicitorDirector of the London Shipping Law Centre

University College London

CavendishPublishing

Limited

London • Sydney

CONTENTS

Foreword by The Right Hon Lord Mustill vii

Preface ix

Acknowledgments xiii

Table ofCases xli

Table of Statutes Ixxv

Table ofStatutory Instruments Ixxxiü

Table ofEuropean Legislation Ixxxv

Table of International Legislation Ixxxvi

PART IADMIRALTY JURISDICTIONAND PROCEDURE

INTRODUCTION 3

1 INTRODUCTORY ELEMENTS 5

1 The jurisdiction of the Admiralty Court - Historical overview 5

2 Admiralty jurisdiction at the present time 9

3 Foreign aspects and extent of Admiralty jurisdiction 10

4 The civil law and common law approaches 10

5 Unique aspects of the Admiralty jurisdiction 11

6 The Admiralty Court 13

7 Limits of exercise of Admiralty jurisdiction 14

8 What is a ship? 14

8.1 Why is it important to define it? 15

8.2 Old definition 15

8.3 Modern definitions 17

8.3.1 Physical appearance 178.3.2 Used in navigation 18

2 NATURE OF THE ADMIRALTY JURISDICTION 21

1 Introduction 21

2 Maritime liens contrasted with other statutory rights in rem 22

3 Maritime daims unders 20(2) of the SCA1981 25

3.1 (a) Any daim to the possession or ownership of a ship orto the ownership of a share Hierein. 25

Modern Admiralty Law

3.2 (b) Any question arising between the co-owners of a shipas to possession, employment or earnings of that ship 28

3.3 (c) Any claim in respect of a mortgage of or a Charge on aship or any share therein 29

3.4 (d) Any claim for damage received by a ship 31

3.5 (e) Claim for damage done by a ship 313.5.1 Extent of the nature of this claim 313.5.2 Does it cover enforcement of claims for pure

economic loss? 333.6 (f) Any claim for loss of life, personal injury... 34

3.6.1 Origins of this provision 343.6.2 Wrongful act, neglect or default in the navigation

or management of a ship 373.6.3 Incidents that occurred on board another ship 373.6.4 Defect in a ship, her apparel or equipment under para (f) 383.6.5 Claims in the Admiralty Court by foreigners against a

foreign ship for a tort committed on the high seas 413.7 (g) Any claim for loss of or damage to goods carried on a ship 423.8 (h) Any claim arising out of an agreement relating to the

carriage of goods on a ship or to the use or hire of a ship 433.8.1 General prindple 433.8.2 Claims in negligence or deceit for ante-dated

bills of lading 453.8.3 Claims under an agreement for the mooring and

unmooring of a vessel 463.8.4 Claims against salvors for negligence during

the salvage Services 473.8.5 Claims for indemnity against a shipowner under

a towage contract for the loss of a tug 483.8.6 Claims for wrongful detention of goods 49

3.9 Excluded claims from para (h) 493.9.1 Non-payment of insurance premiums or brokerage 493.9.2 Non-payment of Container hire or damage

to Containers under a Container leasing agreement 523.9.3 The enforcement of an arbitration award

obtained in relation to a charterparty dispute 523.10 (j) Any claim under the Salvage Convention 1989 533.11 (k) Any claim in the nature of towage in respect of a ship

or aircraft 543.12 (1) Any daim in the nature of pilotage in respect of a

ship or an aircraft 54

Contents

3.13 (m) Any claim in respect of goods or materials supplied toa ship for her operations or maintenance 55

3.14 (n) Any claim in respect of the construction, repair orequipment of a ship or dock charges or dues 57

3.15 (o) Any claim by master or crew of a ship for wages 57

3.15.1 The breadth of seamen's wages 583.15.2 Wages in lieu of notice, when a Seaman is wrongly

dismissed, and emoluments 613.15.3 Severance payments (redundancy pay) were not

considered to be part of wages 62

3.16 (p) Any claim by a master, shipper, charterer or agent inrespect of disbursements on account of a ship 65

3.17 (q) Any claim arising out of an act which is daimed to bea general average act 67

3.18 (r) Any claim arising out of bottomry 67

3.19 s) Any claim for the forfeiture or condemnation of a shipor for the restoration of a ship or goods after seizureor for droits of admiralty 68

4 Further jurisdiction of the Admiralty court is given bys20(l)(b)and(3) 68

5 Power of the Court to grant injunctions 69

3 MODE OF EXERCISE OF JURISDICTION 73

1 Introduction 73

2 Claims in personam - s 21(1) of the Supreme Court Act 1981 74

3 The in rem claim (or the old action in rem) 75

3.1 The origins of non-truly in rem claims 75

3.2 Functions of the in rem proceedings 75

3.2.1 The crystallisation of non-truly in rem Claims on the property 763.2.2 Does 'action brought' mean institution of claim? 81

3.3 Who is the defendant in the in rem proceedings? 82

3.4 Nature and features of the in rem claim prior toThe Indian Grace (No 2) 84

3.5 The nature of the in rem claim after The Indian Grace (No 2) 85

3.5.1 The dedsion 853.5.1.1 Factual background 853.5.1.2 Ratio decidendi 863.5.1.3 Thereasons 86


3.5.2 Criticisms of the decision in The Indian Grace (No 2) 893.5.2.1 The misapplication of the procedural theory decisions 893.5.2.2 The sovereign immunity cases - an

inappropriate parallel 913.5.2.3 The service of proceedings is important in the

context of the Brüssels/Lugano Convention 923.5.3 Consequences of The Indian Grace 93

3.5.3.1 The Indian Grace may have indirectlyundermined The Monica S 94

3.5.3.2 The effect of The Indian Grace on other assets of thedefendant who would be liable in personam 96

3.5.3.3 Risk management issues 96

3.6 Extent to which the features of the in rem action are

affected by The Indian Grace 97

3.7 Another point of view 100

3.8 Conclusion 101

4 The relevant conditionsofbringing in rem claims 102

4.1 No conditions in truly in rem claims 102

4.2 Non-truly in rem: in personam link when the causeof action arose 103

4.3 Non-truly in rem: ownership criteria when theaction is brought 105

4.3.1 Beneficial ownership and arrest of the relevantship or a sister ship 105

4.3.2 Minority shareholding in a ship not sufficientfor the purpose of arrest 110

4.3.3 Investigation of who is the real beneficial owner:is it permitted? 111

4.3.4 When the corporate veil has been pierced 1144.3.5 When the corporate veil was not pierced 1164.3.6 Beneficial ownership and privatisation of State

owned corporations 1204.3.7 Benefidal ownership and risk management 122

5 Property against whidi an in rem claim may be brought 123

PROCEDURE (OVERVIEW) 125

1 Issue of the in rem daim form 125

2 Effect of issue 126

3 Service of the in rem claim form 126

4 Arrest by issue and execution of a warrant 127

Contents

5 The aftermath of arrest 128

5.1 Rights of third parties 128

5.2 Provision of security for the claim and release from arrest 130

5.3 Release in particular circumstances 131

5.4 Wrongful arrest 132

5.5 Can there be a re-arrest? 1335.5.1 Prior to judgment on liability there can be re-arrest

with the leave of the court 1335.5.2 No re-arrest after a judgment on liability has been given 1345.5.3 A foreign in rem judgment can be executed by

re-arrest in this jurisdiction 1365.5.4 Prohibition of re-arrest by s 21(8) of the SCA1981 1375.5.5 Re-arrest and risk management 138

5.6 Appraisement and sale by the court 1395.6.1 When it can be ordered 1395.6.2 Sale by the admiralty marshal and effect 1395.6.3 Sale pendente Ute 141

6 Competition of claims brought in Admiralty and Company Courts 143

7 Priorities in payment of claims out of the court fund 144

7.1 Statutory powers of port authorities for detention and sale 145

7.1.1 Effect of sale by the admiralty marshal uponthe right of the port authority 145

7.1.2 Effect of constituting limitation fund on theright of the port authority 146

7.1.3 The Scottish approach 1477.1.4 Reconciliation of approaches 1477.1.5 Port authorities' statutory right of sale and

risk management 148

7.2 The ship-repairers' lien and risk management 149

8 Distribution of the court fund by the court 152

9 Applicable law to maritime liens and conflict of laws 154

10 Extinction of maritime liens 159

11 Are maritime liens transferable by assignment of the claim to,or payment by, a third party? 15911.1 Assignment 159

11.2 Voluntary payment of claims 161


RULES AND DOCTRINES RESTRICTING THE JURISDICTIONOF THE ADMIRALTY COURT TO ADJUDICATE ON THEMERITS OF A CASE 163

1 Introduction 163

2 Jurisdiction bases 163

3 Occasions when jurisdiction may not be exercised or be maintained 164

3.1 Discontinuance of proceedings on ground of time bars 165

3.1.1 Cargo claims against the carrying ship or her owners 1653.1.2 Indemnity claims for liability to cargo owners 1673.1.3 Claims for loss of life or personal injury against

the carrying ship 1683.1.4 Claims of passengers carried on passenger vessels 1683.1.5 Property or personal injury/loss of life claims

against another ship at fault 1683.1.6 Claims for contribution 1693.1.7 Salvage claims 1693.1.8 Claims for wages 169

3.2 No assumption of jurisdiction if a claim in personam is notwithinOrdll 169

3.3 Stay on the ground oiforum non-conveniens 170

3.3.1 Historical perspective and 'the 1936 rule' 1703.3.2 Why was the 1936 rule distinct from the doctrine

of forum non-conveniens? 1723.3.3 The gradual incorporation of the Scottish doctrine

into English law 1733.3.4 The application of forum non-conveniens principles

and service out of the jurisdiction under RSC Ord 11 1783.3.5 The present formula offorum non-conveniens 179

3.3.5.1 General principle 1803.3.5.2 Bürden ofproof 1803.3.5.3 Effect of founding jurisdiction as of right 1803.3.5.4 Connecting factors (first stage test) 1813.3.5.5 Second stage test (all the circumstances) 1813.3.5.6 Treatment of a legitimate personal juridical

advantage 1813.3.6 Order 11 and forum non-conveniens compared 1833.3.7 What change did The Spiliada bring to the doctrine

oiforum non-conveniens? 1843.3.8 Forum Shopping by way of limitation actions 184

Contents

3.4 Stay on the ground of a foreign jurisdiction agreement 188

3.4.1 General principle 1883.4.2 What is a strong cause or reason for the court to

refuse stay of proceedings? 1893.4.2.1 Availability of factual evidence in England

is not in itself a strong cause 1893.4.2.2 Time bar in the contractual jurisdiction is

not in itself a strong cause 1913.4.2.3 Expert evidence in England would be a strong cause 1933.4.2.4 Multiplicity of proceedings is a strong cause 1943.4.2.5 The Spiliada connecting factors provide a strong cause 1963.4.2.6 Forum Shopping in breach of a jurisdiction

agreement and risk management 197

3.5 Stay on the ground of an arbitration agreement 200

3.5.1 General principles under s 9 of the Arbitration Act 1996 2003.5.2 Application of principles in recent cases 2013.5.3 The scope of s 11 of the AA 1996 203

CONVENTION JURISDICTION BASES AND MULTIPLEPROCEEDINGS IN ADMIRALTY 205

1 Introduction 205

1.1 The Athens Convention 1974 205

1.2 Convention relating to Contracts for International Carriageof Goods by Road 1956 (CMR) 205

1.3 The International Convention on Civil Liability for OilPollution Damage 1992 206

1.4 The International Convention Relating to the Arrestof Sea-going Ships 1952 206

1.5 The International Convention on Civil Jurisdiction inmatters of Collisions 1952 206

1.6 The Brüssels and Lugano Conventions 207

2 The ECJCs 209

2.1 Application of the Conventions 209

2.1.1 The domicile rule and allocation of jurisdiction 2092.1.2 Mandatory versus optional derogation from

the domicile rule 2102.1.3 Inapplicability of certain national jurisdictional rules 2112.1.4 Convention allocation to other Convention jurisdiction 211

2.2 Community versus national law concepts 211


2.3 Conflicts of jurisdiction - multiple proceedings withinContracting States 2132.3.1 When does a court of a Contracting State have an

Obligation to decline its jurisdiction? 2132.3.2 When does a court of a Contracting State have

an Obligation to stay its proceedings? 2142.3.3 When does a court of a Contracting State have

discretion to decline or stay its proceedings 2142.3.4 How do the Convention rules resolve lis alibi pendens? 215

2.3.4.1 English lis pendens versus Convention lis pendens 2152.3.4.2 When is a court seised 2162.3.4.3 When is there a 'pending action' under

the Convention rules? 2222.3.4.4 The 'same cause of action' and Tjetween

the same parties' 222

How do the Convention rules delegate jurisdiction on the merits? 228

3.1 The window of Art 57 2293.1.1 The flight to the Arrest Convention 1952 2303.1.2 HowhasthetrapofTfeDezcWandbeenprevented? 2323.1.3 Submission to jurisdiction and bail 2343.1.4 The new Arrest Convention 1999 2353.1.5 The flight to the Collision Convention 1952 236

3.2 Return to the general Convention ground of jurisdiction 2373.2.1 Operation of Arts 21 and 22 2373.2.2 Definition of related actions 238

Can principles oiforum non-conveniens be permitted in theECJC Regime? 239

4.1 The Convention approach 239

4.2 When the defendant is not domiciled in a Contracting State 2414.2.1 The effect of Art 4 of the Conventions 2414.2.2 Limitation actions within the Conventions

regime and risk management 244

4.3 When the competing court is in a non-contracting State 245

Jurisdiction Agreements, Art 17 248

5.1 Is jurisdiction under Art 17 exclusive, in a sense ofbeing mandatory? 248

5.2 Why is the Status of Art 17 important? 2515.3 Is there a conflict between Arts 57 and 17? 254

5.3.1 When does jurisdiction under Art 17 apply? 255An mronnour nfremeHio« fnrWrparli nf iiirisHir+inn aurppmmts 258

Contents

7 ANTI-SUITINJUNCTIONS 261

1 Underlying principles 261

2 When an anti-suit injunction can be granted 263

2.1 The 'breach of contract' cases 2632.1.1 General principles 2632.1.2 Breach of an arbitration agreement 2652.1.3 Breach of an English jurisdiction agreement 2672.1.4 Discretion of the judge in 'breach of contract' cases 268

2.2 The 'non-breach of contract' cases and anti-suit injunctions 2692.2.1 Historical overview 2692.2.2 The new formula - stricter approach having

regard to comity 2712.2.2.1 Brief facts of Airbus v Patel 2712.2.2.2 Airbus v Patel (general principle) 272

2.3 Jurisdiction allocated by a Convention and anti-suit

injunctions (in 'non-contract' cases) 273

2.4 Mixture of 'contract' and 'non-contract' cases 274

2.5 Are there any common considerations applicable to thevarious categories? 2752.5.1 'Vexatious or oppressive' - an offensive element in

the pursuit of justice 275

2.5.2 The second common consideration is 'comity' 276

2.6 Practical considerations and risk management 277

2.7 Conclusion 279

PART IIACQUIRING OWNERSHIP IN SHIPS

OVERVIEW 283

8 OWNERSHIP, REGISTRATION AND MANAGEMENT OF SHIPS 285

1 Introduction 285

1.1 Importance and role of the ship's flag 285

1.2 Flags of convenience 286

1.3 The regulatory regime 2871.3.1 The Flag and Port State Controls 2871.3.2 The role of classification sodeties in the safety of ships 2891.3.3 The role of the ISMC and further initiatives on safety 2891.3.4 The missing link in the equation of safety 291


2 Statutory overview of ownership and registration of British ships 293

2.1 The effect of the Merchant Shipping Acts prior tol995 293

2.2 Who can own and register a British ship under thepresent Statute? 2962.2.1 Eligibility to own a British ship under the MSA1995 2962.2.2 Eligibility to own a British fishing vessel 297

2.3 The decline of British shipping 297

3 Ownership principles 299

4 Management of ships 303

4.1 General overview 303

4.2 The framework of management of ships 305

4.3 Authority of ship managers and risk management 306

4.4 Duties arising from the management agreement 311

4.5 Consequences of breach by the manager and

contractual exclusion or limitation of liability 314

4.6 Indemnity and 'Himalaya' clauses 315

4.7 Insurance 316

4.8 Safety aspects and the manager's obligations

under the ISMC 316

5 Legal implications of the ISMC 319

5.1 Effect of non-compliance 319

5.2 The rule of attribution 320

5.3 The due diligence provision of the HVR 322

5.4 Privityof the assured under s 39(5) of the MIA 1906 324

5.5 Limitation of liability 3285.5.1 From an English law perspective 3285.5.2 From a US perspective 330

5.6 Criminal liability 3345.6.1 Statutory offences under the MSAs 3345.6.2 Criminal liability under SI1998/1561 3365.6.3 Criminal liability of a Company for involuntary

manslaughter 3385.6.3.1 The test for gross negligence manslaughter

against individuals 3395.6.3.2 Attributing liability for gross negligence

manslaughter of individuals to the Company 3405.6.3.3 The future of corporate manslaughter 344

Contents

9 SHIPMORTGAGES 347

1 Introduction 347

2 What is the nature of a ship mortgage in English law? 348

2.1 The property transfer theory 348

2.2 The statutory nature of a ship mortgage perfected byregistration 350

3 Effect of the statutory scheine of registration 353

4 Unregistered ships and Status of an unregistered mortgage 355

5 Comparison of a ship mortgage with other types of security 357

5.1 Charge 3575.2 Apledge 3585.3 Common law possessory lien 359

6 Priorities of mortgages 359

6.1 Priorities between mortgages 359

6.2 Further advances 361

6.3 Harbour authority claims and risk management by

the mortgagee 362

7 Conflict of laws 363

7.1 Law governing the mortgage and law of the agreement

to grant a mortgage 363

7.2 Priorities between foreign liens and mortgages 365

7.3 Proposed Solutions and risk management issues 3698 Rights and obligations of the mortgagor 370

8.1 The mortgagor is bound by contractual covenants 3708.1.1 An Obligation to insure 3708.1.2 An Obligation to maintain the ship in good

condition and repair 3718.1.3 An Obligation to notify the mortgagee 3728.1.4 An Obligation to discharge claims or liens 3728.1.5 An Obligation not to seil or grant a charge on the ship 3738.1.6 An Obligation of legal trading 3738.1.7 A covenant as to charterparties 373

8.2 The mortgagor's statutory obligations 373

8.3 The mortgagor's right of ownership of the mortgaged ship 373

8.4 The mortgagor's right to redeem the ship 375


9 Mortgagee's rights and obligations 379

9.1 The right to take possession 3799.1.1 What would amount to default? 3809.1.2 When would the security be impaired? 380

9.2 Mode of exercising his powers 382

9.3 Mortgagee's rights and obligations in possession 3839.3.1 Right tofreight 3839.3.2 Obligation during Operation and management 384

9.4 Power of sale 3859.4.1 Source of power 3859.4.2 Role of the mortgagee in the sale of the ship 3859.4.3 Nature of duty of the mortgagee in the exerdse

of his power of sale 3869.4.4 Effect of sale by the mortgagee 391

9.5 Appointment of a receiver 3919.6 Foreclosure 392

10 Effect of mortgagee's exerdse of rights upon charterparties 393

10.1 The issues 393

10.2 Charterparty subsequent to the mortgage (leading cases) 394

10.3 Charterparty entered into prior to the mortgage(leading cases) 396

10.4 Can a purchaser of a ship be bound by a pre-existingcharterparty? (A related matter) 399

10.5 An injunction on the ground of tort of knowinginterference with contractual rights 400

10.6 Conclusion 40310.6.1 A post-mortgage charterparty: the

impairment factor 40310.6.2 A pre-mortgage charterparty: the knowledge factor 40310.6.3 Exception to De Mattos principle 40410.6.4 The tort of wrongful interference with a contract 404

11 Risk management and insurance issues of the mortgagee 406

10 SHIPBUILDING 409

1 Introduction 409

2 Nature of shipbuilding contrads 409

3 Pre-contract stage 415

Contents

5 The making of a shipbuilding contract and risk management 417

6 The framework of the contract 420

7 Types of contractual terms 421

7.1 General 421

7.2 Implied terms under the SOGA1979 4217.2.1 Compliance with descriprion (the law before

3Januaryl995) 4227.2.2 The 'taming' of the SOGA 1979 by the SSGA1994 4247.2.3 The Demise of 'merchantable quality' 425

7.2.3.1 The law until 3 January 1995 4257.2.3.2 The law after 3 January 1995 425

7.2.4 Fitness for purpose 4267.2.4.1 Reliance on the skill and judgment of the seller 4277.2.4.2 Idiosyncrasy of the subject matter 428

7.3 Exclusion clauses and the Unfair Contract Terms Act 1977 429

8 The specification 430

9 Increase of price 431

9.1 Lack of consideration and risk management 4319.2 Economic duress and risk management 434

10 Basic rights and obligations of the parties 435

10.1 Payment, transfer of title and protection of the builderin the event of non-payment 43610.1.1 Title and risk 43610.1.2 Statutory protection of the builder in the event of

buyer's default 43610.1.3 Buyer's default and contractual protection of

builder 43710.1.4 Repudiation of contract and risk management 43710.1.5 What is to happen to the vessel on rescission by

the builder? 43810.1.6 Rights of the builder under the guarantee for

payment of instalments 43910.1.7 Acceleration in payment and penalty clauses 441

10.2 Builder's guarantee, trials and risk management 44310.3 Default by builder - the buyer's right to reject the

ship or rescind the contract 445

10.4 Delay in delivery and force majeure 446

10.5 Effect of buyer's rescission 44810.6 Can sperific Performance be ordered? 449


11 Insurance and management of risks 450

12 Manufacturer's or builder's liability to third parties fordefective products 451

11 SHIP SALE AND PURCHASE 455

1 Introduction 455

SECTIONA THE NEGOTLATIONS AND CONTRACT STAGE 457

2 The making of the contract and good faith 457

3 The parties' Obligation to avoid misrepresentations 458

3.1 Untrue Statements forming express terms of the contract 458

3.2 Mere representation inducing the contract 459

3.3 Brokers' role and risk management 460

4 On the making ofabinding contract and risk management 461

4.1 Express your intention clearly 461

4.2 The effect of non-signing a formal document upon thevalidity of the contract 463

4.3 The effect of Tmyer to be nominated' on the validityof the contract 465

4.4 What do'subjects'mean? 467

5 Classification of terms of a contract and their importance 473

5.1 At common law 473

5.2 Under the Sale of Goods Act 1979 4745.2.1 Sale by description 475

5.2.2 The passing of property 475

6 Contractual terms under Standard forms of the sale contract 477

6.1 When is the deposit payable? 477

SECTIONB THE INSPECTIONS STAGE 479

6.2 Inspections by the buyer 479

SectionC THE COMPLETION STAGE 480

6.3 Inspection by classification society (drydocking) 480

6.4 Notice of readiness and risk management 483

6.5 Essential documentation for exchange at delivery 487

6.6 Seilers'obligations under cl 9 4876.6.1 Seilers' undertaking 4876.6.2 Construction of cl 9 4886.6.3 Comments on the wordine of cl 9 in the 1987

Contents

6.6.4 Judicialinterpretationofcl9NSF1993 4906.6.5 Risk management in drafting and safeguarding against

breach of cl 9 492

6.7 Condition of vessel on delivery and risk management 493

6.8 The closing meeting 498

6.9 Post-delivery matters 498

7 The parties' respective remedies for default 499

7.1 Buyer's default 499

7.1.1 The seller's contractual remedies 4997.1.2 The seller's statutory remedies 500

7.2 Seller's default 501

7.2.1 Delay in delivery or non-delivery as per contract 5017.2.2 Other breaches by the seller 502

7.3 Causation and remoteness of loss 503

7.4 Mitigation of loss by the buyer 504

7.5 Currency of loss 505

8 Legal and commerdal risk management for the buyer 506

8.1 Considerations before exercising the Option to reject the ship 506

8.2 Considerations before applying for a freezinginjunction against the purchase money 5078.2.1 The underlying principles 5078.2.2 Limits of granting such an injunction to a buyer of a ship 508

8.2.2.1 There mustbe an accrued cause of action 5088.2.2.2 Obligation to notify the sellers of the application

prior to delivery 512

9 Civil liability of Classification Societies to buyers and otherthird parties 513

PART IIISAFETY REGULATIONS IN NAVIGATION AND LIABILITIES

OVERVIEW 529

12 COLLISIONS AT SEA AND LIABILITIES 531

Introduction 531

SECTIONA 531

1 The Collision Regulations and their application 531

1.1 Origins of the regulations 531

1.2 Statutory presumption of fault and its subsequent abolition 532


1.3

1.4

1.5

1.6

The law and regulations at present

Ships being subject to the Collision Regulations

Definition of vessel and ship

Types of Collision Regulations1.6.1 General1.6.2 Steering and sailing rules (Pt B, Section I)1.6.3 Conduct of vessels in sight of each other (Pt B, Section II)1.6.4 Conduct of vessels in restricted visibility

(Pt B, Section III)1.6.5 Lights and shapes (Pt C)1.6.6 Sound and Signals (Pt D)

SECTION B2 Criminal liability

2.1

2.2

2.3

General

Statutory offences under the MSA19952.2.1 Disobeying the Collision Regulations2.2.2 Not giving assistance to vessels after collision or to

vessels or persons in distress2.2.3 Breach of documentation and reporting duties2.2.4 Dangerously unsafe ships and unsafe Operation

of shirjs2.2.5 Conduct endangering ships, structures or individuals2.2.6 Offence in relation to lighthouses, buoys or beacons2.2.7 Breach of duty to give directions after shipping casualtiesInvoluntary manslaughter for breach of duty

SECTION C3 Civil liability

3.1

3.2

Introduction

Who may be liable?3.2.1 The employer of the wrongdoer in personam3.2.2 Persons responsible for the management and

Operation of the ship3.2.3 Liability attaches on the ship3.2.4 Master and crew3.2.5 Tug or tow3.2.6 Salvors3.2.7 Pilots3.2.8 Port authority3.2.9 Shipbuilders and ship-repairers

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Contents

3.3 Actionable negligence 568

3.4 Breach of the duty of care 5693.4.1 Standard of care and bürden of proof 5693.4.2 Res ipsa loauitur 571

3.5 Causation in fact 573

3.6 Causation in law 576

3.7 Defences available to the defendant 577

3.7.1 Inevitable accident 5773.7.2 Contributory negligence 579

3.7.2.1 The proportionate fault rule 5793.7.2.2 When and how does the rule apply? 5793.7.2.3 The effect of subsequent negligence by the

claimant - multiple causes 5833.7.3 Actus novus interveniens 5883.7.4 Exceptions to the proportionate fault rule 590

3.7.4.1 Alternative danger 5903.7.4.2 When a clear line can be drawn between two

separate negligent acts 5913.7.4.3 When an innocent third ship claims against one

of the tortfeasors 5933.7.4.4 Claims for personal injury or loss of life 594

3.7.5 The defence of necessity 594

3.7.6 Time bar defence 594

3.8 How claims for loss of life and personal injury are dealt with 595

3.9 Claims in relation to cargo damage 596

3.10 Claims in relation to collision between a ship and

other objects 602

3.11 Contribution between Joint tortfeasors 605

3.11.1 The common law rule in non-admiralty cases 6053.11.2 Property claims in admiralty 6063.11.3 Non-property daims in admiralty 6063.11.4 When the common law rule applies in admiralty 606

3.12 Remoteness of damages 6073.12.1 General prindple 6073.12.2 The kind of damage 6173.12.3 Extentof damage 6183.12.4 Mitigation of loss or damage 6203.12.5 The idiosyncrasy of the daimant, remoteness and

mitigation of damages 621


4 Assessment of damages

4.1 General principle: restitutio in integrum

4.2 Total loss of a ship4.2.1 Value of the ship (how is it ascertained)4.2.2 Loss of a profitable charterparty

4.3 Partial loss of the ship and incidental losses4.3.1 Cost of repairs4.3.2 Loss of profit4.3.3 Out of pocket expenses and financial loss4.3.4 Detention time and dock charges

4.4 Pollution damage

4.5 Damages in foreign currency

5 Limitation of liability

6 Limitation periods for commencement of claims

7 Insurance issues and risks arising from collisions

PART IVASSISTANCE AT SEA AND IN PORTS

OVERVIEW

13 SALVAGE

1 Introduction

2 The Concept of Salvage under maritime law

3 Salvage under contract

4 The Salvage Conventions

5 Preconditions of salvaee

627

627

628

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652

654

5.1 The relevant waters for salvage prior to theSalvage Convention 1989 654

5.2 The law under the Salvage Convention 1989 657

5.3 What is a recognised subject of salvage 6585.3.1 The law prior to the Convention 6585.3.2 The law after the Convention 6585.3.3 Hovercrafts/aircraft 6595.3.4 Bunkers 6605.3.5 Cargo 6605.3.6 Freight 6605.3.7 Life salvaee 660

Contents

Elements of salvage 662

6.1 Danger 6626.1.1 General principles 6626.1.2 Future or contingent danger 6656.1.3 Effect of danger on a towage contract 6666.1.4 Threat or danger to the environment 668

6.2 Voluntary Services 668

6.2.1 Pre-existing agreement preventing salvage 6686.2.2 Exemptions 670

6.2.2.1 When would the Services of the master andcrew qualify for salvage award? 670

6.2.2.2 When would the Services of tugs under towagequalify for salvage award? 670

6.2.2.3 When would the Services of pilots qualify forsalvage award? 671

6.2.2.4 Would cargo-owners be able to claim a salvageaward for Services rendered? 674

6.2.3 Could Performance of duties arising underStatute or official duty be a bar to salvage award? 676

6.2.3.1 Duty to assist after a collision 6766.2.3.2 Duty to assist others in distress 6786.2.3.3 Salvage by officers under Orders of a naval Commander of

the Royal Navy 6796.2.3.4 Salvage operations controlled by public authorities 6806.2.3.5 Salvage operations and HM coastguards 6826.2.3.6 Salvage by lifeboat crews of the RNLI 682

6.3 Success 6836.3.1 Meritorious Services 6836.3.2 Salvage Services by Standing by a vessel in danger 6866.3.3 Salvage and engaged Services 686

Salvage Agreements 687

7.1 General 687

7.2 Court's Intervention 6897.2.1 When the agreement is reached by extortion or

overbearing conduct 690

7.2.2. Misrepresentation and non-disclosure 690

The Master's authority to enter into salvage agreements 692

8.1 Master's authority at common law 6928.1.1 The basis of the master's authority to bind his

prindpal to a salvage contract 6938.1.2 The basis of the master's authority to bind

cargo interests to a salvage contract 693


8.2 Master's authority under the Convention 702

9 Duties and conduct of salvors 704

9.1 Bestendeavours 704

9.2 Duecare 705

9.3 Negligent misconduct 706

9.4 Unresolved issues 715

9.5 Negligence occurring before salvage Services wererendered 717

10 The position of several salvors 719

10.1 Dispossession of one salvor by another under maritimelaw salvage 719

10.2 Dismissal of a salvor under contract by the master ofthe vessel being salved 721

10.3 The position of several salvors under the Salvage

Convention 1989 724

11 Duties of the Salved 724

11.1 Duty to co-operate 724

11.2 Obligation to provide security to salvors 726

12 Assessment of the award and spedal compensation 727

12.1 The underlying prindples and developments 72712.2 The criteria of assessing the salvage award and

spedal compensation 73012.3 The decision in The Nagasaki Spirit 732

13 Problems arising from the drafting of the Convention 734

13.1 Territorial limits 735

13.2 Substantial physical damage 735

13.3 Threatened damage 735

13.4 Fair rate 736

13.5 The increment 736

13.6 Security for spedal compensation 737

13.7 The solution provided by the SCOPIC - governmentIntervention 737

14 Apportionment 740

15 LOF 2000 overview 740

16 An overview of environmental salvage 741

Contents

17 Jurisdiction 744

18 Time limits 745

14 TOWAGE 747

1 Introduction 747

2 Definitions 747

3 Towage versus salvage 749

4 The making of a binding contract 753

4.1 Authority of the master to bind the shipowners 753

4.2 Authority of the master to bind the cargo-owners 755

4.3 Authority of the tugmaster 756

4.4 Pre-contractual duties 757

4.5 Unfair contract terms 758

5 Commencement of towage, interruption and termination 759

5.1 Commencement 759

5.2 Interruption of towing 763

5.3 Termination of towing 765

6 Duties of the tugowner 766

6.1 Fitness of the tug for the purpose for which she is required 7666.1.1 Cases in favour of an absolute warranty of fitness 7676.1.2 The view that there is no absolute warranty

of fitness of the tug 7726.1.3 What do the contractual terms of Standard towage

contiacts provide? 774

6.2 The position of fitness when a specific tug is requested 775

6.2.1 One school of thought: no absolute warranty of fitness 7756.2.2 Second school of thought: there can be no general

rule about absence of a warranty of fitness 7786.2.3 Tug fitness and risk management 779

6.3 To use best endeavours to complete the towage 779

6.4 The duty to exerdse proper skill and diligence throughout 780

7 Duties of the tow 781

7.1 Duty to specify what is required and to disclose the

condition of the tow 781

7.2 The tow to exercise due care and skill during the towage 783

7.3 To pay remuneration to the tug 783


8 Relationhip between tug and tow and their liabilities tothird parties 784

8.1 Tug and tow 784

8.2 Tug, tow and third parties 7858.2.1 Tug in control of a particular manoeuvre 7868.2.2 Contrast between the 'unit' and the 'control' theories 787

8.2.2.1 The unit theory (the notion of identity) 7878.2.2.2 The control theory 7898.2.2.3 Application of the control theory for risk management 791

8.2.3 Joint tortfeasors (the common law rule) 7928.2.4 Contribution between Joint tortfeasors by Statute 795

9 Exclusion from liability and indemnity clauses (riskmanagement issues) 797

9.1 The ambit of the exception from liability clauses 798

9.2 Indemnity clause 802

9.3 Limitations to exclusion and indemnity clauses 804

10 The Substitution and Himalaya Clause of the UKSTC 808

10.1 Substitution 808

10.2 The Himalaya provision and the Contracts (Rights ofThird Parties) Act 1999 809

11 Limitation of Liability 812

15 HARBOURS AND PILOTAGE 815

Introduction 815

SECTION A-ASPECTS OF LAW AFFECTING HARBOURS 817

1 Sources of powers and definitions 817

1.1 Statutes and regulations regulating harbours' powers 817

1.2 Definitions 818

2 Types of harbour authorities 819

3 Powers, duties and liabilities of harbour authorities 820

3.1 Powers of harbour authorities 820

3.2 Duties and rights of harbour authorities 8213.2.1 Duty to operate the port 8213.2.2 Statutory duty to provide navigational safety,

and other safety procedures 8253.2.2.1 Abandonment of wreck by its owner and powers

of harbour authorities 8271 O T 9 T or»=»l r-icl-e manniKimpnt in Hraftincr 831

Contents

3.2.2.3 The duty to mark wrecks and liability to thirdparties arising from unmarked wrecks -risk management issues 832

3.2.3 Statutory duty to maintain the port in good conditionand risk management 835

3.2.4 Common law duty of care to make the port safefor users and risk management 836

3.2.5 Contractual duty to make the port reasonably safe 8393.2.6 The duty to provide efficient pilotage Services 840

4 Liability of shipowners for damage caused to harbours 842

5 Harbour dues 853

SECTION B-PILOTAGE LAW 853

1 Introduction 853

2 Duties of a competent harbour authority in relation to pilotage 855

2.1 Consideration and provision of pilotage Service 855

2.2 Authorisation of pilots 856

3 Charges by the competent harbour authority 857

4 Duties of masters and pilots in a compulsory pilotage area 857

5 Pilot's authority and division of control between master and pilot 859

6 Liability of a pilot 862

7 Liability of harbour authorities with respect to pilotage 863

8 Liability of the shipowner for negligence of the pilot 864

PARTVMISCELLANEOUS

OVERVIEW 875

16 EXCLUSION AND LIMITATION OF LIABILITY 877

1 Introduction 877

2 The scope of tonnage limitation of liability under the

1976 Convention 879

2.1 Reasons of acceptance of the 1976 Convention 880

2.2 Application of the Convention and limitations 8812.2.1 Limitation to sea-going ships 8812.2.2 Hovercraft not included in the Convention 8822.2.3 Minimum tonnage 8822.2.4 Floating and drilling platforms excluded 882


Persons entitled to limit 882

3.1 Shipowners and others 883

3.1.1 Owner, manager or Operator 8833.1.2 Charterer 8843.1.3 Any person for whose act, neglect or default the

shipowner or salvor is responsible 885

3.2 Salvors 886

3.3 The liability insurer 887

3.3.1 When is there a right of action against the insurer? 8873.3.2 'Pay tobepaid rule'under the rules of the liability insurer 889

3.3.3 Insurer's contractual and statutory defences 8893.3.4 Implications for claimants in respect of personal

injury, or loss of life 8903.3.5 What the future holds for passengers 891

3.4 Harbour authorities 892

Claims subject to limitation 893

4.1 All claims whether for damages or for a debt or indemnity(Art2(l)(2)) 893

4.2 Expenses incurred for wreck removal imposed by law(not being incurred contractually) (Art 2(l)(d)(e)) 894

4.3 Claims occurring on board or in direct connection with theOperation of the ship or with salvage operations (Art 2(l)(a)) 895

4.4 Claims for consequential loss under Art 2(l)(a), and a

possible anomaly 896

4.5 Claims for loss resulting from delay (Art 2(l)(b)) 897

4.6 Claims for rights which have been infringed (Art 2(l)(c)) 8974.7 Claims in respect of measures taken in order to avert or

minimise loss (Art 2(l)(f))

Claims excepted from limitation (Art 3(a)-(e)) 898

5.1 Salvage and contribution in general average claims 899

5.2 Claims for oil pollution 899

5.3 Nuclear damage claims 900

5.4 Claims by the master and crew against employers 900

5.5 Claims by harbour authorities for expenses in relation towreck raising or removal in the UK 902

5.6 Claims of contractors with shipowners in respect of stepstaken to avert or minimise loss 902

Fvrhision of total liabilitv 903

Contents

7 Conduct barring limitation or exclusion of liability 905

7.1 Comparison between the 'fault and privity' System andthe present Systems of limitation 9077.1.1 Bürden ofproof 9077.1.2 Personal act or omission versus acts or omissions

ofothers 9087.1.3 'Fault or privity' versus 'intent or recklessly and with

knowledge' 9097.1.4 Faults of ship-managers under the old System

as compared with the present 9157.1.5 'Loss' and 'such loss' 917

8 Corporate personality and whose misconduct should be

attributed to the Company 919

8.1 The concept of the 'alter ego' of a Corporation 919

8.2 The 'identification' doctrine 924

8.3 The 'Meridian rule of attribution' by Interpretation ofthe Substantive rule of law 929

8.4 The effect of the ISMC on limitation and risk management 930

9 Establishment of the limitation Fund 934

9.1 Procedural matters under the Convention 934

9.2 Counterclaims 935

9.3 Amount of limitation 935

9.4 Procedure in the Admiralty Court in relation to limitation(brief account) 937

17 THE EUROPEAN COMMISSION AND MARITIME SAFETY 939

Recent developments 939

1 Introduction 939

2 First set of proposals 940

2.1 A proposed amendment to Directive (94/57/EC)

on inspections of ships 940

2.2 Phasing out single-hull tankers 940

2.3 Amending the directive on Port State Control 941

3 Second set of Proposals 941

3.1 The proposed directive for a Community monitoring,control and information System 942

3.2 The proposed regulation for establishment of aMaritime Safety Agency 943


3.3 The proposed regulation on the establishment of a fundfor compensation for oil pollution damage in Europeanwaters and reform of the liability regime 944

3.3.1 The present System of compensation for oil pollution 9443.3.2 The Commission's proposals and reasons 9463.3.3 A brief commentary on the Commission's proposal 947

18 RISK MANAGEMENT CULTURE AND COLLECTIVERESPONSIBILITY 951

1 Introduction 951

2 Understanding infrastructures of shipping companies 952

2.1 Infernal infrastructures 953

2.1.1 Vertical and horizontal structures 9532.1.2 Safety culture 9542.1.3 Risk tolerance 954

2.2 Relational infrastructures 9542.2.1 Corporate interrelations 9542.2.3 Owners and others 955

2.3 External infrastructures 956

2.3.1 Regulatory and fiscal 9562.3.2 Third parties' factors 9562.3.3 Market forces 957

3 Collective responsibility and commitment 958

3.1 Risk exposure 958

3.2 Riskprofile 959

3.3 Risk management Standards for risk control 960

3.3.1 At the incorporation stage 9603.3.2 At the technical and operational stage 9613.3.3 At the contract stage 9613.3.4 At the Performance stage 9623.3.5 At the dispute resolution stage 965

3.4 Enhanced safety culture 965

3.4.1 Adopting a systematic process 9653.4.2 Funding risks 9663.4.3 Commitment to change and collective responsibility 966

Index 969

modern admiralty law - gbv

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