salvage - the swedish club

No. 2 - 2008, June

NEW BOARD MEMBERS

Page 6-11

4-17

EnvironmentalSALVAGEDream & nightmare?

CREWING

Page 32-33

Page 36-37

ContentThe Swedish Club Letter 2–2008

www.swedishclub.com2

The Swedish Club is a mutual marine insurance

company, owned and controlled by its mem-

bers. The Club writes Hull & Machinery, War risks,

Protection & Indemnity, Loss of Hire, Freight

Demurrage & Defence insurance and any addi-

tional insurance required by shipowners.

Leading article The circle is closed 3 Law UNCLOS and the release of vessels from detention 4-5 Renewals P&I and FD&D renewals 2008 / New Members / Basic Facts 5 Crewing It takes more to recruit than to retain 6-7 Competence Management and Self Sufficiency 8-9 The Mad and the Bad 10-11 Human Error Accidents due to human error are increasing in the Maritime Industry 12-13 Annual General Meeting Dimitri Dragazis, New Board Member: A future based on shipping clean energy around 14 & 20 Tugrul Tokgöz, New Board Member: Geden’s newbuilding programme continues to unfold 15 & 20 Peter Claesson, New Board Member: Stena AB and the art of managing risk 16 & 25 Koay Peng Yen, New Board Member: IMC enters a new phase of development 17 & 25 Håkan Friberg, AGM-speaker: ”Rapid evolution of new air pollution controls for ships” 18-19 & 21 Jörgen Oom, AGM-speaker: The road to success is under constant construction 22-24 P&I Rough and ready justice: The application of the Interclub Agreement today 26-27 Transparency and exposure in P&I 28 The Swedish Club Academy Marine Insurance Course 2008 29 MRM The importance of ”the right culture” / Out and About with MRM / New MRM training providers 30-31 Salvage Environmental salvage. Salvors’ dream – P&I Clubs’ nightmare? 32-33 Club Information News from Asia 33 Legislation Is there a new cargo liability regime just around the corner? 34-35 The new Bunker Convention 36-37 Club Information News from Piraeus 37 Out and About 38-43 Staff News 43 Public Holidays 43 Club Information Club Calendar 44

Head Office Sweden Visiting adress Gullbergs Strandgata 6 411 04 Göteborg

Postal adress P.O. Box 171 SE-401 22 Göteborg Sweden

Tel +46 31 638 400 Fax +46 31 156 711

E-mail [email protected]

Emergency tel +46 31 151 328

Hong Kong Suite 6306, Central Plaza 18 Harbour Road, Wanchai Hong Kong

Tel +852 2598 6238 Fax +852 2845 9203


Emergency tel +852 2598 6464

Greece 5th Floor, 87 Akti Miaouli GR-185 38 Piraeus Greece

Tel +30 211 120 8400 Fax +30 210 452 5957



Japan Suzuyo Hamamatsucho Building 5F 2-1-16 Kaigan, Minato-Ku, Tokyo 105-0022 Japan

Tel +81 3 5442 5466 (24 hour tel) Fax +81 3 5442 5922


Dear Friends, Please permit me to be slightly more personal than usual and

apologies for being a bit more longwinded than previously.In 1908, my great grandfather, Frans Didrik Malmros, born in 1865,

joined the board of The Swedish Club. He was suc-ceeded by my grandfather, Jarl W. Malmros in 1931 and my father, Frans J.

Malmros, joined in 1958, initially as an auditor and then in 1964 as a member of the board. Little did any of them know, that I, in 1997 would become the head of this venerable

association, which had played a significant part in the life of our family company. Writing this, my last leading article, I allow myself to look back over the last decade; it is a

both alarming and amusing occupation. During my first year, for example, the Club’s fledgling website was commissioned. We tend to forget that things we take for granted today, once had a

novelty value. Some drummed up threats proved to be illusionary. The obvious case in point was the ‘Mil-

lennium Bug’. It became one of the biggest non-events in modern times. We spent an incredible amount of time and money on the Y2K project to no obvious avail. I wonder what the global bill

added up to? Some other threats turned out to be all too real, including a severe downturn in world financial

markets. The pain of 2008 certainly echoes that of 1998. I find it difficult to hit upon an appropriate word for what we experience but it all amounts to the same thing, namely inappropriate practices on a scale capable of undermining markets around the world.

Underwriting practices in 1998 was described as inappropriate. As always, we refused to follow the market in its downward direction. It was a difficult period, which we used to prepare for the dawn of the new century. Things began to improve in 2000. We defended the Club’s financial strength with considerable success. Meanwhile, the wider market began its painful adjustment to the new market realities.

The Club’s results in 2001 were unsatisfactory, prompting a new strategy to balance premium income and claims costs. A major difficulty at the time was the poor state of the freight markets. Had we known what was coming, a shipping boom without precedent, we would have been more cheerful. The introduction of new internal disciplines, however, proved worthwhile and had a beneficial impact on the operation of the Club. We maintained our unbroken record of zero supplementary calls since 1990, but at the same time we had to face up to an environment of

lower investment returns. On the world stage, the 9/11 attacks had a profound impact. A new and powerful

threat to the existing world order had emerged. The expression ‘think the unthinkable’ had

received an ominous connotation. In these troubled times, The Swedish Club represents continuity and stability.

We celebrated our 130th anniversary in 2002, a year marked by new measures to restore the balance between premiums and claims. Global equity markets remained in the doldrums, however, and there was no quick fix. The 2002 terrorist attack on the VLCC Limburg off the coast of Yemen, offered a reminder, if one was needed, of the threat of 21st century extremism. In the same year, the Prestige broke up, causing catastrophic pollution along the Spanish coast and renewed calls for safer shipping.

A better year was in store for us in 2003. We saw a return to positive results, a major increase in free reserves and the restoration of balance between premium income and claims costs. The strategy was working! Unfortunately, however, a new and very serious problem was beginning to surface, namely the proliferation of costly major claims. No International Group club has managed to avoid this problem. During 2003, the Club introduced a new, team based organisation. We ended up with four teams focusing on specific geographic areas. The experience gained during the five years this new structure has been in place has confirmed that we made a correct move back then. One important argument was to develop closer relationships with our members. I believe that we have done just that!

The Club’s results in 2004 were boosted by higher than forecast investment returns. Financial markets improved and freight markets had strengthened. Major claims, however, continued to esca-late and ship owner liabilities kept on rising. These factors contributed to higher premiums and the pressure persists. Major navigational claims showed no signs of abating and the Club responded by boosting its investment in its Maritime Resource Management (MRM) training programme.

Throughout this period of turmoil, some things stayed the same. Back in 1999 I stated: “In the interest of mutuality, the Club must retain independence and control over its own destiny”. In 2006, our Board of Directors decided not to proceed with the proposed integration with Skuld. Our Board took the view that the Club’s future should rest in its own hands and that, in effect, means the hand of its members.

The almost twelve years at the helm of The Swedish Club has been a wonderful voyage. Former colleagues, friends and family have envied me for having been given the opportunity to work at the heart of Swedish shipping with the chance of further developing international relations, to be surrounded by talented, encouraging and loyal colleagues and enjoying the support of a board, conscious of its responsibility.

For me, the circle will close, when I, after exactly one hundred years of family involvement in The Swedish Club, hand over the reins to Lars Rhodin. He is a worthy successor and he deserves all the support, loyalty (and luck) that he can get.

I take this opportunity to thank you all for you unflinching support and dedication. It feels good to have been working with The Swedish Club and it will continue to feel good for the days to come.

Yours, as always,

The circle …is closed!

1

The Swedish Club is a mutual marine insurance

company, owned and controlled by its mem-

bers. The Club writes Hull & Machinery, War risks,

Protection & Indemnity, Loss of Hire, Freight

Demurrage & Defence insurance and any addi-

tional insurance required by shipowners.

www.swedishclub.com2

Leading article The circle is closed 3 Law UNCLOS and the release of vessels from detention 4-5 Renewals P&I and FD&D renewals 2008 / New Members / Basic Facts 5 Crewing It takes more to recruit than to retain 6-7 Competence Management and Self Sufficiency 8-9 The Mad and the Bad 10-11 Human Error Accidents due to human error are increasing in the Maritime Industry 12-13 Annual General Meeting Dimitri Dragazis, New Board Member: A future based on shipping clean energy around 14 & 20 Tugrul Tokgöz, New Board Member: Geden’s newbuilding programme continues to unfold 15 & 20 Peter Claesson, New Board Member: Stena AB and the art of managing risk 16 & 25 Koay Peng Yen, New Board Member: IMC enters a new phase of development 17 & 25 Håkan Friberg, AGM-speaker: ”Rapid evolution of new air pollution controls for ships” 18-19 & 21 Jörgen Oom, AGM-speaker: ”The road to success is under constant construction” 22-24 P&I Rough and ready justice: The application of the Interclub Agreement today 26-27 Transparency and exposure in P&I 28 The Swedish Club Academy Marine Insurance Course 2008 29 MRM The importance of ”the right culture” / Out and About with MRM / New MRM training providers 30-31 Salvage Environmental salvage. Salvors’ dream – P&I Clubs’ nightmare? 32-33 Club Information News from Asia 33 Legislation Is there a new cargo liability regime just around the corner? 34-35 The new Bunker Convention 36-37 Club Information News from Piraeus 37 Out and About 38-43 Staff News 43 Public Holidays 43 Club Information Club Calendar 44

Frans Malmros Managing Director

The Swedish Club Letter is published three

times a year and distributed free of charge to ves-

sels insured with us and to our members.

The Swedish Club Letter is an editorially inde-

pendent newsletter and opinions expressed by

external contributors are not necessarily those of

The Swedish Club. Articles herein are not inten-

ded to provide legal advice and the Club does

not accept responsibility for errors or omissions

or their consequences. For further information

regarding any issue raised herein, please contact

our head office in Göteborg.

Editorial Advisory Board Peter Andersson, Susanne Blomstrand,

Birgitta Hed, Lars Malm, Frans Malmros, Tord Nilsson, Lars Rhodin,

Carola Weidenholm

Production co-ordinator Susanne Blomstrand

PR-consultant TRS Public Relations Ltd., London

Layout Eliasson Information, Göteborg

Print PR Offset, Mölndal

© The Swedish Club. Articles or extracts may be quoted provided that The Swedish Club is credited as the source.

0806PR5200BCover photo: iStockPhoto

Head Office Sweden Visiting adress Gullbergs Strandgata 6 411 04 Göteborg

Postal adress P.O. Box 171 SE-401 22 Göteborg Sweden

Tel +46 31 638 400 Fax +46 31 156 711



Hong Kong Suite 6306, Central Plaza 18 Harbour Road, Wanchai Hong Kong

Tel +852 2598 6238 Fax +852 2845 9203


Emergency tel +852 2598 6464

Greece 5th Floor, 87 Akti Miaouli GR-185 38 Piraeus Greece

Tel +30 211 120 8400 Fax +30 210 452 5957



Japan Suzuyo Hamamatsucho Building 5F 2-1-16 Kaigan, Minato-Ku, Tokyo 105-0022 Japan

Tel +81 3 5442 5466 (24 hour tel) Fax +81 3 5442 5922


3

ContentThe Swedish Club Letter 2–2008 Leading ArticleThe Swedish Club Letter 2–2008

42

On April 9th our Greek office invited to the annual Member’s Lunch at the Marine Club in Pi-raeus. The turnout was as always very good and it was especially pleasing to note that all four of our Greek board directors attended the lunch. Various presentations were given during the lunch, of which one was “The way forward” by Deputy Managing Director Lars Rhodin, who will succeed our current Managing Director Frans Malmros on July 1st 2008.

The agenda was: Result & Development International Group issues – in particular certifiacation under the forthcoming Bunker Conven- tion Mechanical Failures The way forward

The resigning MD – Frans Malmros – also took the opportu-nity to thank all the attendees for their support and the good co-op-eration during the years.

Club evening in Hamburg – April 14th 2008

This yearly event at the Viehhauser Hafen Klub in Hamburg, attracts many of our members and brokers in the Ger-man market. Our guests are given a topical presentation followed by refreshments.

Mr Simon Chumas of Barlow Lyde & Gilbert spoke about a major P&I case in Odessa, which is now subject to arbitration in London.

Retirement reception

Spring Lunch in Piraeus

42

Out and AboutThe Swedish Club Letter 2–2008

Three Managing Directors gathered at the head o�ce.From left: the new Managing Director Lars Rhodin, Per Erik Hedborg, who was Managing Director of the Club between 1960-1979 and Frans Malm-ros who has been in charge from 1997 until now.

The Swedish Club sta� took the opportunity to hand over a small gift and to wish Frans Malmros a happy retire-ment during a reception held at the head o�ce on June 17th.

3

4

The Swedish Club Letter 2–2008 Law

4

Those of us studying law not so long ago were generally taught that international law operated on two separate and distinct levels: public and private. In 1994 the United Na-tions Convention on the Law of the Sea, 1982 (UNCLOS) came into force, changing all that forever. Today most states are party to UNC-LOS (155 in total), and it is anticipated that 3 notable exceptions, USA, Turkey and Liberia, will ratify before too long.

To the uninitiated UNCLOS may look like a public international law animal. Certainly the independent judicial body set up pursuant to it, the International Tribunal for the Law of the Sea (ITLOS), follows the practices of that paragon of public international law, the Inter-national Court of Justice. ITLOS also works closely with the UN, with which it has entered an agreement on cooperation and relationship. The state parties to UNCLOS pay the costs of ITLOS, including those of its magnificent new court building on the Elbe River in the Free and Hanseatic City of Hamburg, as well as those of its 21 judges each from a different member state. But scratching a little deeper beneath the surface reveals that UNCLOS/ ITLOS may serve the private sector as much as they serve public bodies.

Seek an order for Prompt ReleaseTo a large extent UNCLOS sets out to unify earlier attempts to balance conflicting rights of its member states relating to their uses of the seas. One such conflict is particularly per-tinent here: that between a coastal state and a flag state. Public bodies have historically pro-tected the rights of coastal states; but invari-ably it falls on private interests to assert and protect the rights of ocean going vessels.

Article 292 of UNCLOS makes available to flag states a new and novel form of relief to help in this conflict, namely the right to seek an order from ITLOS for the Prompt Release of their vessels. Essentially, they may now refer matters directly to ITLOS if their vessel has been detained by a coastal state for certain types of offences. The entire process is designed to be a discrete, “one-off”, event

unlikely to take more than a month from start to finish: preparing the application to ITLOS is very straightforward; the hearings generally last no more than a day or two; after which IT-LOS prescribes the terms, including amount, of any security to be posted as a condition for securing the prompt release of the vessel. Throughout ITLOS strives to avoid prejudg-ing the merits of any subsequent substantive proceedings held in the coastal state’s court in respect of the alleged offence.

This is all fine and dandy if you are con-fident of obtaining justice in the subsequent proceedings on the merits, but the fact that a flag state has had to ask ITLOS to intervene in the first place could be cause for concern that this will not necessarily be the case. In prac-tice, commercial interests behind a vessel may have to resign themselves to saying “goodbye”

to whatever security itlos determines must be provided to the coastal state.

But not necessarily:The first case brought before ITLOS was such an application for Prompt Release. In The M/V Saiga Case (Case No. 1), an application was made by flag state St. Vincent & The Gren-adines in 1997 after the coastal state, Guinea, had attacked the offshore bunkering ves-sel Saiga in the EEZ of neighbouring Sierra Leone, randomly fired gunshots at her injuring three crew members (one very seriously), and then escorted her back into Conakry before forcing her to discharge her cargo at gunpoint, all without even raising any charges. ITLOS duly prescribed terms upon which the vessel should be released.

Regrettably the vessel was not released; in-stead the master and crew continued to be held for some time – effectively as hostages – while the court of first instance in Guinea found the master guilty of customs offences and fined him sums in the order of USD 15 million, a decision upheld by its court of appeal in light-ening speed! They say that desperate times call for desperate measures, but the appropriate ap-plication before ITLOS was actually one for Provisional Measures seeking her immediate release, which was made at the outset of the second case before ITLOS, The M/V Saiga (No. 2) Case (Case No. 2).

To cut a long story short: the Saiga was eventually released a few days before ITLOS was due to render its decision on the applica-tion for Provisional Measures; in the subsequent substantive trial, after hearing full evidence, ITLOS determined that local customs officials had acted contrary to UNCLOS in seeking to

Nick Howe acted as Agent and Counsel for St. Vincent & the Grenadines bringing the two “SAIGA” cases to ITLOS, Case No’s 1 and 2.

from detention

Nick HowePartner

Howe & Keates, London

5

The Swedish Club Letter 2–2008 Renewals

55

P&I and FD&DRenewals

BASiC FACTSper June 1st 2008

Proctection & Indemnity (including Charterer’s Liability) Number of Vessels Entered 1,255 Average Age 11.4 GT (million) 38.1

Freight Demurrage & Defence Number of Vessels Entered 592 Average Age 9.9 GT (million) 21.3

Hull & Machinery Number of Vessels Entered 1,565 Average Age 11.1 GT (million) 60.4

Loss of Hire Number of Vessels Entered 450 Average Age 9.7 GT (million) 19.3

3 M – Merchant Marine Management, S.A. GreeceH&M

Tsakos Shipping and Trading S.A., GreeceLoss of Hire

Belezian Ship Management inc., PanamaP&I, FD&D

Trimex – TJ Shipping and Logistics FZE., UAELoss of Hire

Zega Shipping Ltd., MontenegroP&I, FD&D

NEW MEMBERS March1st – June 1st 2008

Lars RhodinDeputy Managing Director

apply their customs laws to bunkering opera-tions taking place within their EEZ outside of their territorial waters; and the government of Guinea was ordered to pay damages to a number of interests in the vessel, including owners, cargo owners, the master and crew members, which it eventually paid in full.

What can be learned from these experiences?

15 cases have been brought before ITLOS to date. 9 of these cases (60%) were appli-cations seeking the Prompt Release of vessels under Article 292. What can be learned from these experiences? The main thing is that the private interests in a vessel have to be able to present a common position behind the flag state. While 6 flag states have so far been pre-pared to make short and discrete Article 292 applications supporting those interests, St. Vincent & the Grenadines is the only state so far to have followed up with proceedings on the merits in the exceptional circumstances of the Saiga cases. However UNCLOS does not strictly limit access to ITLOS only to state parties, such that the possibility remains for others to bring proceedings with the consent of the state party in the future, including a P&I Club.

Nowadays P&I Clubs advise their mem-bers on matters relating to UNCLOS quite frequently. Recourse to ITLOS is not of course sought every day, but knowing that it is there and the circumstances in which it may be called upon are essential parts of their ar-moury to help best protect the interest of their members. More information about ITLOS can be found on its website at http://www.itlos.org/.

Protection & indemnity As in the past, P&I renewals provide for a busy season. This year was no exception.

Our board of directors had decided at its meeting at the end of November 2007 to levy a general increase of 15%, paying regard to in-dividual records and exposure going forward. Never before has the need to rate exposure been more apparent; large claims including pool claims hit shipowners in no predictable pattern. Moreover, in our experience claims with values in excess of USD 500,000 today represent more than 60% of the P&I pay-ments, and this does not include pool claims. Naturally, the frequency of claims in these high claim bands is low, hence the need to ad-dress exposure up front.

We are pleased to report that the Club came out well at renewals due to the strong support exhibited by members. The Club achieved a total increase on “renewed premium” mar-ginally short of the 15%. In this context, it is interesting to note that the vast majority of members enjoy good records, with about 50% of the membership with five year records below 20%. In other words, it is encouraging to see that members appreciate the necessity to rate exposure as a matter of sound underwriting principle. We are grateful for this understand-ing and the support at renewals.

In terms of tonnage, we added about 0.5 million GT, taking the mutual owners’ entry to 25.5 million GT. In addition, the Club gained almost 8 million GT of charterers’ entry as a

result of support from Asian members. Own-ers’ and charterers’ entries combined brings the book to a total entry today of 38 million GT.

The Club has experienced a healthy and stable development over the past year. There is, however, no room for complacency. We at the Club have to demonstrate that we can meet the service requirements of members entrust-ing their fleets with us. We shall do our best to meet these expectations.

Freight Demurrage & Defence As in the case of P&I, members showed a continued commitment to the Club at FD&D renewals. A 10% general increase had been de-cided by the board to cater, inter alia, for the legal cost increases experienced, not least in pounds sterling. We are equally pleased to re-port a robust outcome where, in fact, the gener-al increase was exceeded by some percentages.

The development in FD&D has been encouraging over the years. More and more members see the benefit of in-house advice and cost protection. Today we insure 566 ships or 20.3 million GT for defence risks. We have seen an increased need for this product, and we shall do our best to provide the services anticipated.

from detention

PHO

TO: STEFA

N ELIA

SSON

6

The Swedish Club Letter 2–2008 Crewing

6

It is common knowledge that it takes much more effort and resources to recruit some-one than it does to retain some-one, therefore why are shipping companies constantly seeking

innovative ways to recruit new seafarers?

4Could it be because of a continually expanding fleet size which requires new blood?

4Could it be because of an aging seafarer population lead-ing to a high number of retirements?

4Could it be because of the poor image that the shipping industry has, young men and women are not attracted to seagoing careers, and therefore, the pool of available offic-ers, is in fact reducing year on year?

4Could it be that many senior officers are taking up shore based positions thereby leaving large holes in the available seafaring pool?

4Could it be that “people are our greatest asset” is a hollow statement for many companies based on their resistance to employ cadets and to invest in upgrading training for their sea staff?

4Could it be because of the mercenary attitude of today’s seafarers, who appear to care little about loyalty and qual-ity and are only interested in chasing a higher salary before signing each new contract?

Or is it a combination or all of the above?

Leading to a wage warPoaching is a dirty word in today’s crew management indus-try, but it’s common place. Reputable companies that have spent many years developing pools of quality seafarers through training and offering a clear career path, find themselves hav-ing this pool depleted by other owners/managers who, by waving the allure of a higher monthly onboard wage in front of a seafarer, basically “buy” themselves a well trained and experienced seafarer.

This doesn’t have to happen too many times to cause an attitude shift within the company who are losing their good men, and it’s not long before the poaching of their people sets in motion similar practices, which in turn leads to a wage war. Higher and higher dollar amounts are traded and the seafarer in question sits on the sidelines like a spectator at the Wimbledon tennis final, watching his price increase until such time that he steps in and agrees a much inflated monthly wage.

Many owners/managers will tell you that a high priced officer doesn’t always relate to a high value officer.

Radical re-think regarding seafarer recruitment practices

Shortage of sea staff is causing a radical re-think with regards to seafarer recruitment practices. Recruiters are being forced to use whatever method produces results, from building up their own network of contacts, use of job posting websites, newspaper and magazine advertisements, word of mouth through wives of seafarers presently onboard, through to paying staff working in other manning agencies to provide them with the contact details of seafarers, and even as far as distributing leaflets outside churches after mass on Sunday. Different recruitment methods produce different results based on seafarer nationality, however in a tight manning market, none should be discounted.

Seafarers becoming more selective

Reputation has always been a key decision maker when se-lecting an employer, in a way, it still is. However, in today’s market, aside from terms and conditions, seafarers have be-come more selective and look at a broader range of issues such as career path, free upgrading training, age of the fleet, port state control inspection record, access to communication (i.e. free email, etc), vessel’s trading area and nationality of other seafarers onboard. Recruiters would be well advised to keep this in mind.

Areas of concernOther areas of concern for potential employers are falsified sea service records, pre-employment medical examinations carried out by substandard clinics and dubious character/background checks. Calling a previous employer for a character/back-ground check may result in you receiving negative feedback, whilst at the same time, the company that you enquired with is on another line, making the seafarer in question a lucrative offer as it’s clear that he’s “on the market”. On the other side of the coin, you may receive a glowing reference as the company that you’re calling are just happy to see the back of him.

To ensure that companies don’t fall foul of false informa-tion, clear recruitment procedures, guidelines and standards are required to be incorporated into the company’s quality management system. And to ensure that these are enforced day in and day out, regular audits of recruitment practices with large amounts of “random sampling” of cases needs to be undertaken.

John G WoodFleet Personnel Director

Wallem Shipmanagement Ltd, Hong Kong

It takes more to recruit than to retain

7


7

It’s all too easy for standards to fall when the pressure is on. You have an officer onboard who is nearing or has already end-ed his contracted tour of duty, he is demanding to be replaced otherwise he’ll contact the ITF or the Port State Control and because of the higher salaries being paid to officers these days, none of your loyal, long serving officer pool is willing to return as per your relief plan. You begin to get the picture…

Recruitment – nothing morethan risk assessment

Throughout Wallem Shipmanagement Ltd, our key to suc-cessful recruitment is “don’t bow to the pressure”. At the end of the day, recruitment is nothing more than a risk assessment. If you cannot place a tick in all of the boxes and evaluate the risk, then the answer has to be “no”.

We always bear in mind that “we’ll only get the quality of people onboard our ships that WE are prepared to accept”. Standards don’t move, we just have to screen more potential candidates until we find the right man for the job.

With this as a core philosophy, Wallem has entered into a number of sponsorship agreements with nautical colleges/uni-versities in countries from where we employ our seafarers, in order to ensure that we will always have a significant number of new officers entering our manpower pool year on year.

It is clear that traditional seafarer supply nations are strug-gling to meet the demand for seafarers and it’s also noticeable that many employers are turning to not so traditional seafarer supply nations, i.e. Indonesia, Myanmar, Vietnam, Montene-gro, Georgia, Bulgaria, etc in order to ensure continuity of supply.

Developing seafarer supply nations definitely have some-thing to offer, but like any new recruit serving for the first time in any company, regardless of rank, pre-joining briefing, familiarisation and training prior to that critical first seagoing placement are essential.

introduction to the company culture At Wallem, regardless of nationality, pre-joining briefing, fa-miliarisation and training includes an introduction into the company culture, values, safety/operational standards, man-agement expectations, etc.

For officers, this is then followed by a more detailed pro-gram of training in the company’s safety management system, onboard computer software, man management, commercial awareness and other skills that are required to be used onboard today’s merchant vessels. This “value added” training is car-ried out at any one of our three Wallem Maritime Training

Centres, strategically located in Mumbai India, Qingdao Chi-na and Manila Philippines or through our extensive network of manning agent’s offices.

Personal developmentis an ongoing process

Prior to departure each seafarer, regardless if new hire or ex-crew, is given a ship specific briefing, either by visiting one of our management offices worldwide, or via video conference with staff from our Technical and Safety departments or via the manning agent, using the handover notes from the seafarer about to be relieved so that important issues are discussed and clarified prior to joining, this also assists during the physical handover once onboard.

In addition to pre-joining briefing, familiarisation and training prior to joining their ship, Wallem invests heavily in onboard training and CBT (Computer Based Training) in order to ensure that a seafarer’s personal development is an ongoing process designed around the seafarer to enable him/her to achieve their career goals.

It takes more to recruit than to retainPH

OTO

: WA

LLEM

SH

IPM

AN

AG

EMEN

T

Your attitude determines your altitude.

88


In times of dwindling resources for crew managers, companies have to map out clearly their strategies on how they want to make sure they can man the vessels under their

management in the future. Companies have to address in their strategy very clearly quantity and quality.

To find new sources of seafarers seems to be almost impos-sible; companies have turned every stone in search for undis-covered riches. The once praised Chinese card has been tried and found by many not as rewarding as it promised to be. When even Chinese shipping companies start recruiting in the Philippines, the last one who believed in Chinese seafarers as the solution out of the manning crisis, must get his doubts.

Short term solutions

As a short term solution, there is always the possibility to poach officers from others and lure them with higher pay, thus con-tributing to the never ending monetary upward spiral of remu-neration. Lately fringe benefits to the salary package seem to make the rounds in terms of continuous pay, pension funds, housing funds, family funds, seniority awards etc, indicating very clearly that it has become a buyers’ market. The seafarer has the ultimate choice. Companies present themselves in the best of lights to attract seafarers. Marketing activities in the past mainly directed towards the shipowner/manager now dis-cover the seafarer as the target audience. Qualified seafarers have become the critical factor that determines the growth or decline of a shipping company.

What attractsand retains seafarers?

It is not surprising that in times like these, shipping companies rediscover the value of breeding their own officers, mapping out career plans for prospective officers, from the cadet stage to master and chief engineer. And in times of attractive freight rates money is available to finance such plans. But there are obstacles on the way and the sins of the past come back to haunt us, schools and academies do not produce enough qualified cadet material to satisfy demand, vessels are lacking berths to accommodate additional crew. Senior officers lack competence or inclination to support cadets and assess their competencies, administrative duties have burdened the officers to such an extent that they hardly find the time to address training on board.

For a prudent company it appears that there are no quick fixes in human resource management. When analysing what attracts and retains seafarers with a company it appears that ba-sic values like trust, consistency and job security are still rank-ing rather high. As a shipowner will only entrust his vessel to a master that also inspires trust, most seafarers look for a reliable partner whom they can trust. Once the basic benefit package is on a competitive level, we at Marlow believe that once the demand for trust, consistency and job security are satisfied the seafarer looks for career advancement, a dynamically growing company, attractive living and working conditions on board and company people that care for him, that support his career advancement with training, that understand him and com-municate with him, that listen to him and give him valuable advice be it in professional matters or private/family matters. At Marlow Navigation we are blessed with a team of people

Captain Walter WekenborgDirector, Training and Human Resources

Marlow Navigation Co. Ltd, Limassol

Competence Management

andSelf Sufficiency

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that realise the needs of the seafarer and our seafarers notice and honour this commitment.

Consistency and perseveranceare the keys

In order to keep it that way, we carefully look and listen for signs of disagreement or discontent and watch complaint levels as well as retention rates. The striving to improve our service is felt on board and ashore. We do not expect any sudden upwards shifts in retention rate, every percentage point has to be earned by hard work from the entire team. Consistency and persever-ance are the keys.

In order to secure quality and competence of crew, the Man-agement team supports the consistency with vision and a care-ful growth strategy facilitating the necessary investments into training infrastructure, seafarers’ training activities and career development both by the company itself as well as its clients. The company started a training fund to finance the training activities. This training fund, filled by voluntary contributions of the company’s clients has grown from a thin trickle of dollars to substantial amounts over the last ten years. Again consist-ency and perseverance are the keys, delivering added training value to the seafarers working on our clients’ vessels.

Provides for trainingin own facilities

Training activities are clearly designed to accelerate career ad-vancement and a competence management system provides guidance and checks at critical points that the required com-petence is achieved. The required competencies include statu-tory requirements as well as specific customer requirements and

company specific requirements. For competencies that are not part of the national curricula, the company provides training in its own training facilities and recruitment agencies.

A high level of self sufficiencyindicates a healthy crew manager

Once the quality requirements have been satisfied the strategy how to man the vessels under management in the future has to address self sufficiency – breeding as many qualified officers out of company’s rank and file as possibly needed. As a positive side effect we have seen that a higher self sufficiency ratio gives you higher retention rates. Cadets or ex-cadets and ex-trainees simply have the tendency to stay with the company. They have seen that the company invests in them and they pay it back in loyalty.

We believe that the self sufficiency ratio –given a steady en-vironment – is a performance indicator with more scope that requires more vision than the retention rate alone. The focus on self sufficiency includes careful planning of future demands, selection, retention, support and training, competence manage-ment and career counselling. A high level of self sufficiency could be considered as an indicator how healthy a crew manager is and how far the company is prepared to manage the human resource challenges of the future. Being to a large extent independent of available qualified officers in the recruitment market will benefit quality and competence levels, and is a concept that all stake-holders in the industry should appreciate, shipowners and seafar-ers, not to mention insurance companies.

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The training vessel M/V ”Emsstrom" in Leer, Germany.

10

Nigel Griffiths is a medical expert frequently used by The Swedish Club.

On December 7th 2005, a US Federal Sky Marshal shot dead Rigoberto Alpizar at Miami International Airport. Alpizar was a schizophrenic patient who had not taken his medication and was exhibiting psychotic symptoms. Having boarded the aircraft, he then made a run to get off the aircraft and was carrying a bag. Sky Marshals thought he had a bomb, and ignoring their instruction to get down, shot him dead.

From Transport Security Administration (TSA) and Department of Homeland Security (DHS) reports, this incident is the first time a U.S. federal air marshal has fired a weapon whilst on board a plane. It is also the first time an air marshal had used a firearm whilst on duty since 9/11. Six days after Alpizar was shot by air marshals, the U.S. government gave the organization expanded powers to “identify suspicious passengers.” The concept of identifying the “suspicious passengers” is a novel one. It sends out a message that ab-normal behaviour is a preclusion to air travel, but abnormal behaviour in itself is a culture criteria dependant concept, at times open to misinterpretation.

For example CNBC News reported an

Orthodox Jewish man was removed from an Air Canada Jazz flight in Montreal for pray-ing. The passenger was on a flight from Mon-treal to New York City on September 1st 2006 when the incident happened. The aircraft was heading toward the runway at Pierre Trudeau International Airport when eyewitnesses said the man began to pray. “He was clearly a Ha-sidic Jew,” said a passenger seated nearby and “He had some sort of cover over his head and was reading from a book.” So, from this we can deduce that interpretation is more inexact than medicine itself.

How does TSA/DHS intendto analyse behaviour?

One suggestion by TSA is the appointment of Behaviour Detection Officers, and they are part of several recent security upgrades, TSA’s Chief Administrator Kip Hawley told an aviation industry group in Washington last year. He described them as “a wonderful tool to be able to identify and do risk management prior to somebody coming into the airport or approaching the crowded checkpoint.” The officers are working in more than a dozen airports already and TSA hope to have 500 behaviour detection officers in place by the end of 2008.

At the heart of the new screening system is a theory that when people try to conceal their emotions, they reveal their feelings in flashes called “micro-expressions.” Fear and disgust are the key ones because they are associated with deception. Behaviour detection officers work in pairs. Typically, one officer sizes up

Increasingly P&I clubs are facing repatriation of crew disembarked for mental illness. In an age of heightened security in the wake of 9/11, transporting the mentally ill by air is no longer a simple mat-ter, as distinguishing between the mad (the mentally ill) and the bad (the potential terrorist) demands a judgement outside the domain of the average security agent at our airports, complicated by the fact that mental illness presents and manifests in many different ways.


10

The Mad …and the BadNigel Griffiths

Chairman of the Marine Advisory Medical Service

London & Singapore

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passengers openly while the other seems to be performing a routine security duty. A passenger who arouses suspicion, whether by micro-ex-pressions, social interaction or body language gets subtle but more serious scrutiny.

It is not in my remit to discuss the feasibil-ity of such a project, but it is certain that the psychiatric patient who presents at an airport will be at a considerably higher chance of being noticed, than at present.

Medically assisted repatriations

The Marine Advisory Medical Service is re-sponsible for medically assisted repatriations including mental illness cases. What can be done to minimise the potential problems as-sociated with air transportation? It is essen-tially the symptoms of hypomania and the psychotic disorders, such as schizophrenia, bi-polar depression (previously manic depres-sive psychosis), etc., which are of concern are contained. Notwithstanding depression with a history of delusional or suicidal behaviour is also of concern.

Symptoms must be minimised or obliter-ated prior to completion of the medical declaration to the airline, on the prescribed MEDIF form. This includes establishing the patient on a regime of antipsychotic medication, and if necessary the use of a depot (long acting injection given monthly, which has effect for a month or so) inject-able anti psychotic agent. In short, the pa-tient must be composed.

A MEDIF must be presented in all cases, which allows the airlines medical department the opportunity to reject transportation if they wish. Airlines and security personnel at airports must be aware that a psychiatric patient is being escorted. Any stigma felt by the patient, will be less than the distress felt by his family if he were mistaken to be a po-tential threat and shot dead.

When a patient has a history of mental ill-ness, it is important that a suitably qualified escort accompanies the patient. This may be insisted on by the airlines, as indeed may an additional security escort. In the wake of 9/11 airlines have become more focussed on the duration an individual escort can be responsible for a patient, and if a total jour-ney time exceeds 8 hours, a second escort may be required. The escort should either be a ‘nurse’ (with a specialist qualification in psychiatric nursing) or a doctor – as the title of both are protected by law, and not for example an ambulance man or paramedic, the qualification of whom is by no means universal worldwide. Anyone escorting a patient should have professional medical indemnity insurance at a minimum of two million US dollars, valid worldwide.

Escorts must carry more than sufficient medication to control the patient, includ-ing injectable drugs, which have a faster effect than oral medication. Restraint may be required, and can be insisted upon by the captain of the aircraft in accordance

with his absolute authority for the aircrafts integrity, vested in the Tokyo Convention. With careful planning, and experienced escorts the occurrence of adverse inflight incidents should be minimised.

Correspondents have been seen recom-mending ‘lay’ escorts to manage psychiatric patients. Such practice opens up enormous potential for legal issues to arise, and such correspondents are a liability to their prin-cipals.

Escorts must do a preflight assessment with a medical professional who is familiar with the patient, so that a full handover is given, and basic rapport established. Repatriation must be delayed if the escort considers the patient is not sufficiently composed, and measures taken to compose the patient. Copies of all medical records including compulsory detention orders (Sectioning papers) must be photocopied for continu-ity of care, with the patients consent.

Essential withforward planning

Forward planning is essential to the success of all medically assisted repatriations, but none more so than that of the mentally ill seafarer. Professionalism is paramount as the stressful journey through security at any international airport is set to increase, adding to an already existing anxiety state felt by the patient.


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The Mad …and the Bad

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The Swedish Club Letter 2–2008 Human Error

It is well known that human er-rors frequently cause accidents at sea. It is also known that accidents due to human error are increasing.

To understand more about this we must learn about how humans function; our shortcomings as well as our advantages. Technologically, the maritime business has shown impres-sive development over the past dec-ades, including increases in the size of ships, in speed, in the number of passengers and volumes of goods. The technology seems to be up to date – but are we?

Addressing the human side of shipping must be the most effective approach for increasing safety. For-tunately, such an approach is not bur-dened by any significant economical investments. It is relatively cheap – compared to other costs in this business – to select mariners carefully, to train and develop them and to build strong, professional and safety-minded teams. It could be worthwhile to look upon humans as “modules” in a sociotechno-logical system and to identify some of the capacities and drawbacks of these “mod-ules” in order to understand more.

Complacency and lack of Situation Awareness

We might start with the collision in the English Channel in 2002, where the Kariba made a steep starboard turn and collided with the container ves-sel Tricolor. The fact that the Kariba went out of her way to ram the Tricolor amidships and sink her was a disastrous human error, as were the following two col-lisions with the wreck by other ships. The subsequent and numerous near misses are also significant. In spite of all possible precautions and extensive series of warning systems by every possible means, hundreds of mariners on numerous ships’ bridges were involved at close quarters, each and every one as a result of hu-

man error.Besides other sen-

sitive domains of hu-man error, such as team

situation awareness, leader-ship, communication, coopera-

tion and effects of stress, this accident can serve as an illustration of two of our other human shortcomings: Lack of Situation Awareness and Compla-cency.

Situation Awareness means “knowing what is

going on around you”Situation awareness is the ability to read a situation correctly and anticipate how it might develop.

It is dependent on capacities such as at-tention, perception, memory, anticipation and decision-making and therefore subject to individual differences. For a mariner, ca-

pacities like these are particularly essential. Without proper situation awareness, one

might run into a well buoyed wreck or make a steep turn and unknowingly

collide with another overtaking ves-sel.

Tests of suitability would benefitthe maritime industry

Most people accept the fact that we humans differ and that the differences manifest themselves in different behaviour. We are not equally talented; we have dif-ferent character traits as well as different sets of ca-pacities. Habitually attentive individuals with undis-torted, objective perception, with effective working memory and decision-making capacity constitute the best choice as operators of a ship, or for that matter, for being in charge of any other safety-critical trans-port system.

All knowledge about situation awareness supports the idea of carefully selecting those individuals re-sponsible for the safe journey of a vessel. The methods for accomplishing such a selection exist in the form of psychological tests, or a combination of tests and ship simulators for those who are already trained. Using such methods makes it possible to rule out those indi-viduals who have difficulties in maintaining a reliable

Accidents due to Human rror are increasing in the Maritime Industry

The technologyseems to beup to date– but are we?

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AGM

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The Swedish Club Letter 2–2008 Human Error

Accidents due to Human rror are increasing in the Maritime Industry

level of situation awareness. As in the case of civil avia-tion, the maritime business would also benefit from tests of suitability, and the impact of human error at sea could be dramatically reduced.

The Situation Awareness was out of touch with reality

The maritime industry should avoid placing ships in the hands of individuals with difficulties in maintain-ing good situation awareness, i.e. people who have an inadequate capacity for simultaneous tasks, those who are easily distracted or who are disorganised, ha-bitually absent-minded people, individuals who are easily bored, those with psychological problems, individuals lacking ener-gy, habitually lazy indi-viduals, nervous people, easily stressed people as well as individuals who overestimate themselves.

This accident investigation (Kariba/Tricolor) concluded that the situation awareness on the vari-ous bridges “was out of touch with reality” and that many mariners were unable to grasp the situation in its entirety, to prevent a close-quarters situation from developing, let alone get out of one. The commission also mentioned “sloppy watch-keeping” as a contrib-uting cause. Of course no one is sloppy or careless or makes human errors on purpose, but we might under-stand more about this by looking at an unfortunate drawback of experience.

Complacency – a state of mindMost people would agree that the more experienced a person is, the better and safer that person’s perform-ance. This is, however, not a universal truth. Experi-ence might make a person safer, but it is not inevitably so.

We normally define experience as the length of time a person has been at sea, but we should also em-phasise what sort of experience. The very substance of a person’s experience. Accidents and critical incidents do not occur regularly in most officers’ lives and one-sided experiences may therefore insidiously lull an of-ficer into a false sense of safety, because our experience might tell us that the job is routine-like and foreseea-ble. Completing numerous uneventful watches might bring the illusion that there is not a great presence of

risk in shipping and the psychological conclusion is therefore that it is safe. An illusionary feeling we call “complacency” might build up.

No one chooses to be complacentComplacency is an unconcerned attitude, where in-dividuals behave and think in a routine-like mode, anticipating an ordinary development of the present situation. Complacency has a tendency to grow in situations where the frequency of novel events is low, while we keep vigilant and alert in situations where the frequency of new events is high. This is in line with the general observation that our mental system

needs continuous stimu-lation from changes in the environment to maintain alertness.

No one chooses to be complacent; it is a feeling that imperceptibly might

affect even normally responsible and judicious mari-ners, making them ill-prepared to meet challenging, unusual or unexpected situations. Complacency im-pairs our situation awareness, which might lead to that we become surprised by changes in the environ-ment and that we fail to understand, act too late or not at all.

Means to counteract complacencyThere are means to counteract complacency, one of which is to become aware of it. The reason for this seemingly trivial step is that it is impossible to gain control over something that is not conscious. There-fore we have to label it, make ourselves aware of it and to constantly remind ourselves of it as a negative side-effect of routine and length of experience.

Human beings are not perfectly designed and do not function as straight and logically as comput-ers. We humans are sometimes victims of our own dynamic mental processes and human functioning follows a logic of its own. We are not able to change our basic condition, but we can select appropriate per-sonalities for sensitive tasks and we can organise so that errors stand a chance to be detected before they materialise into accidents.

Bengt Schager, M.Sc., is a mari-time psychologist and has been working as a consultant for the shipping industry for the past twenty years. He is the author of a recently published book, “Human Error in the Maritime Industry. How to Understand Detect and Cope.” This book, so far the only one that covers human error in shipping, is the result of a project promoted by The Swedish Club among others. For further information please contact Bengt Schager, [email protected]

The book “Human Error in the Maritime Industry” can be or-dered at www.breakwater.se

Bengt SchagerSenior Partner

Marine Profile Sweden AB, Halmstad, Sweden

1414

The Swedish Club Letter 2–2008 AGM

A future based on shipping clean energy around

Latsis’ interests span shipping, banking, oil refining, aviation, property and construction. John S. Latsis acquired his first ship in 1938. Today, the Group remains an active shipping player, special-izing in the transportation of clean products and gases.

Latsco (London) Ltd, established in 2006, now operates a fleet of four product carriers and four very large LPG (Liquefied Petro-leum Gas) carriers (two newbuildings delivered this year) and a third to be delivered shortly. The company plans to further develop its participation in the clean products and gas sectors, transporting environmentally friendly energy to clients of long standing.

Dimitri Dragazis heads a modern corporation headquartered in London, with technical management in Piraeus. All strategic com-mercial and investment decisions are taken in London. Tonnage Tax changes in the recent past contributed to the formation of Latsco (London) Ltd: “We have been in London since the mid-1950s and all our key activities are focused in London. This strategic centre is indispensable to our business. London’s Square Mile is a one-stop shop for everything maritime, including chartering, sale and pur-chase and insurance. It has a wealth of expertise that cannot easily be found elsewhere in the world.”

Milestones in the Group’s development include the decision in 1995 to develop a fully corporate structure, this process was largely completed by 2000. At that stage, John S. Latsis shipping had com-mitted to a future founded on the ocean transportation of clean energy. The crude carriers were sold, including what were the big-gest built vessels in the world. At that point, the UK Government began to consult on plans to reinforce London’s position as the leading international shipping centre. Dragazis believes this was a highly successful endeavour: “We have always had an affinity with London, its rich maritime traditions and unrivalled expertise. The Tonnage Tax package was the icing on the cake. It is a very effective solution, provided it can be defended from EU interference.”

The Group’s LPG focus has a firm foundation in past experi-ence, John S Latsis shipping has been active in gas transportation

since the 1970s. Dimitri Dra-gazis said: “Given our focus on environmental issues, we see a good future in this area. We have also looked at LNG (Liquefied Natural Gas) but we are inherently conserva-tive as a business and regard this sector as somewhat boom or bust. Nothing is ruled out but we are mindful of the lack of elasticity in the LNG busi-ness.”

Latsis’ shipping strategic direction is in the hands of Dimitri Dragazis. He joined John S. Latsis’ shipping department in the mid-1960s and was Managing Director of John S. Latsis (London) Ltd during 1979-2006. He then became Managing Director of a newly constituted entity, Latsco (London) Ltd. His appoint-ment to the Club’s Board adds to an impressive list of industry affiliations, including membership of INTER-TANKO’s Council and the national committees of a number of classification societies.

New Board Member

9 continues on page 20

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Beyond his responsibilities as Geden’s Managing Director, Tugrul Tokgöz is also a member of the Board of Cukurova Hold-ings and a number of other Group companies. Geden’s current fleet includes Aframax crude carriers, product/chemical tankers and Capesize, Supramax and Handymax bulk carriers, all with an average age of 3.5 years.

Geden’s activities are dominated by the massive newbuilding programme. A total of 136 contracts have been placed with major yards in the Far East region. This represents a commitment of some USD 7 billion. These orders include twelve 115,000 DWT Aframax tankers. Other orders include ten 156,000 DWT Suezmax tankers (the first two expected in the second half of this year) and eight Capesize bulk carriers.

Tugrul Tokgöz explained the background to this extensive newbuilding programme: “We planned to order a total of around 30 vessels at the beginning. When the programme commenced in 2000 we envisaged an operating fleet of some 25-30 bulk carriers and tankers by 2010, but we now expect to operate around 75 ships by that date. The growth is extraordinary. It is a response to mar-ket developments; we sold vessels under construction at very good prices and continued to order.”

This expansion imposes heavy burdens. As Tugrul wryly ob-served: “I haven’t had a holiday lately! I travel a great deal, especially to the Far East. Ten Korean and Chinese yards are building our new ships. I have grown accustomed to the food in Korea and China but the term ‘chinese food’ tends to mean very different things in differ-ent parts of the world. Travelling is also required in connection with other business areas, including chartering and finance. Typically, I spend half of each month abroad.”

The sheer size of this newbuilding programme underlines

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Geden’s newbuilding programme continues to unfold

Tugrul Tokgöz is Managing Director and Board Member of Geden Lines of Istanbul. During the Club’s June AGM he was confirmed as a new mem-ber of The Swedish Club’s Board. Geden Lines, established in 1975, was restructured under a Maltese umbrella in 2003. It operates a young fleet of over 20 vessels (due to expand to 30 ships by the end of the year and 70 by end-2010). The Swedish Club has covered Geden’s Hull (25% share) and ancillary insurances since 1985. This relationship has deepened over the years to include charterers’ liability, loss of hire and loss of anticipated profit. During last year Geden began to enter vessels for P&I and FD&D. The Club now covers eight Geden vessels for these risks.

New Board Member


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Peter Claesson obtained a Bachelors Degree from Gothen-burg School of Economics in 1989. More recently, he enjoyed an entirely new learning experience, as a participant in Harvard Business School’s Advanced Management Program: “I spent eight weeks at Harvard in 2006. I can say it was nothing like going back to school! Harvard offered a splendid intellectual environ-ment – a continuous round of speeches and lectures by some very prominent people. It was stimulating and extremely enjoyable. It gave me a much deeper appreciation of general business, beyond the boundaries of finance.”

When Peter Claesson joined Trelleborg in the early 1990s, this Swedish listed company was a vigorous conglomerate, with min-ing the primary activity. Peter says: “On returning from Harvard, having spent 15 years with Trelleborg, I was in discussions con-cerning my next career step. Things had changed over the years. Trelleborg had evolved into a stable business. When the offer came from Stena, it reminded me of Trelleborg in earlier times. The owner is an entrepreneur, the organisation dynamic and the busi-ness environment volatile.

“When this opportunity arose in the Summer of 2007 I had never considered shipping as an option for my future. It soon be-came clear, however, that the key quality for Stena’s Director of Finance is the ability to manage risk and that is my particular strength. Stena offered more opportunity to apply this skill and, therefore, I took the job.”

Stena’s financial operations can involve extremely large sums. The investment portfolio alone totals EUR 1 billion. Successful management is a demanding task. Peter Claesson said: “Fortu-nately, we have an owner willing to participate in an active manner and this helps with prompt, timely decision-making.”

During his first few months with Stena Peter Claesson has

Stena AB and the art of managing risk


Peter Claesson is new to the shipping business. He joined Stena AB as Director of Finance in January of this year. This followed a distinguished career in banking and finance, firstly with Götabanken and later with Trelleborg. His current role includes responsibility for managing Stena’s funding needs, both in the short and longer term. His unit, business area Finance, is also charged with contributing to Stena’s profitability through effective financial management and trading. Peter Claesson’s concerns include the management of financial risks relating to currency, interest rates and oil markets, on behalf of all business areas. He was appointed to The Swedish Club’s Board at the June AGM.

New Board Member

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IMC Corp Group is now highly diversified, yet maritime activities remain at the heart of its business. The full spectrum of activities range from dry bulk and chemicals shipping to the min-erals and ore supply chain and mining operations in Australia.

Koay Peng Yen said: “We operate 36 dry bulk carriers and have 14 newbuildings due for delivery in the period to 2011. We also have the Aurora Tankers chemicals fleet, with 15 vessels. Aurora recently relocated from Kuala Lumpur to Singapore, in line with IMC’s strategy to cluster its businesses at the headquarters loca-tion. Four new chemical tankers are set for delivery in the 2009-11 period, together with four more coastal tankers. We have also established a joint venture to develop participation in the Chinese coastal trade in chemicals.

“A third business area is represented by our two shiprepair yards, one in Thailand and another in China. We are now busy establishing a further three yards in China and all should be op-erational by 2010. They consist of a newbuilding facility, a repair yard and a yard specialising in offshore conversion.”

IMC Corp Group is active in the offshore oil and gas sector. In 2000 IMC opened an offshore engineering yard in Thailand – a joint venture with Chevron. There is also an offshore-related engineering business. Koay Peng Yen said: “We have grown our capabilities in the offshore engineering service known as EPIC: Engineering, Procurement, Installation and Commissioning. Significantly, IMC Corp Group is a co-owner of a new FPSO (Floating Production Storage and Offloading) now operating in Australian waters. Other joint ventures include supply vessel and offshore support operations.

“We are also growing our consumer logistics activities. This is a very distinct business sector embracing freight-forwarding, trucking and warehousing – centered largely on container move-ments.”

IMC enters a new phase of development

In 1949 Frank Tsao moved to Hong Kong and bought his first ship and in 1966 he established International Maritime Carriers (IMC). Koay Peng Yen became CEO of IMC Corp Group in July 2007, having spent the previous 18 years in senior positions with NOL/APL. He joined IMC in 2006, to spearhead the restructuring of the businesses, to form IMC Corp Group. This initia-tive consolidated all Group shipping-related businesses under a single management. Today, IMC Corp Group is an Asia-focused integrated maritime and industrial solutions provider. It has diversified interests in dry bulk shipping, industrial logistics, chemicals transportation, shipbuilding and shiprepair, offshore assets and services and consumer logistics. IMC has been a member of The Swedish Club since 1992. Currently, it has 20 vessels entered with the Club for P&I. Koay Peng Yen became a member of the Club’s Board at the June AGM.

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”Rapid evolution of new air pollution controls

for ships”

Global shipping faces a huge com-pliance bill for new regulations to reduce atmospheric emissions.

Annex VI of the International Mari-time Organization’s MARPOL Convention already addresses air pollution from ships.

Adopted in 1997, Annex VI took effect in May 2005. It sets limits on sulphur oxide (SOx) and nitrogen oxide (NOx). Fresh initia-tives, however, were taken only two months after Annex VI’s entry into force. IMO’s Marine Environment Pro-tection Committee decided to review the Annex and the NOx Technical Code, to take account of advancing technology and the need to secure further emission reductions.

IMO is also developing a package to cut greenhouse gas emissions from ships. This may include a CO2 Emission Indexing Scheme, establish-ment of a CO2 emission baseline and recognition of a mix of technical, op-erational and market-based options to reduce CO2.

During The Swedish Club’s June AGM Håkan Friberg, Managing Direc-tor of The Swedish Shipowners’ Asso-ciation (SSA), presented his thoughts on the air pollution challenge now facing international shipping.

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Håkan Friberg, Managing Director of The Swedish Shipowners’ Association (Sveriges Redareförening), Göteborg since 2001. He was one of the two speakers at The Swedish Club’s Members’ Day and the subject was ”Air emissions – a challenge for the shipping industry”.

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”Rapid evolution of new air pollution controls

for ships”

Håkan Friberg, Managing Director of The Swedish Shipowners’ Association (Sveriges Redareförening), Göteborg since 2001. He was one of the two speakers at The Swedish Club’s Members’ Day and the subject was ”Air emissions – a challenge for the shipping industry”.

Control of air pollution from ships is now a significant issue, given the growing prominence of climate change concerns and a new-found de-termination to achieve meaningful reductions in CO

2 emissions. No-one knows whether ships ac-

count for 1.5% or 3% of total CO2 emissions.

Regardless of the answer, there is no doubt that shipping will be required to contribute to CO

2

reduction.Any solution for shipping needs to be insti-

tuted and administered under the auspices of the IMO. The Swedish Shipowners’ Association op-poses regional solutions. We want an interna-tional solution based on an Emissions Trading System, or ETS. We believe in a strategy based on incentives, rather than the imposition of more tax on fuel. In our view the ETS is the easiest, cheapest way of reducing emissions.

The Swedish Government takes the ETS concept seriously, as does the European Com-mission. The SSA organised a pan-European project to explore the workings of an ETS. We focused on practical questions – including mechanisms for measuring both shipping traf-fic and emissions. In our view an ETS for ship-related emissions should be global and “open”, in the sense that it involves both shipping and land-based industry.

The recent adoption of tough emission re-duction targets has forced some reconsideration of ETS concepts. It might be possible to develop a viable scheme for NOx and CO

2, but a SOx

ETS would be impractical at a level of 0.1% – the ECA target for 2015. As for the IMO, it is likely that the target will be 0.5% by 2025 (possibly 2020).

There can be no doubt that such targets present major challenges to shipowners, engine manufacturers and refiners. Yet the SSA sup-ports the IMO work. We need an IMO solution that is global and offers the certainty of known targets and timeframes.

Uncertainty still surrounds the issue of emis-sion reduction. Options include slow speed, more efficient engines and alternative fuels. It is also important to factor the wider picture into decision-making. For example, a transition to natural gas could cut CO

2 emissions by up to


2020


Dimitri Dragazis enjoys living in the UK, in the Sussex countryside: “I married an English lady, we have three children and a wonderful grandchild, Harry. After many years in the business, his work still offers great satisfaction: “I get a good feeling when a customer records his appreciation of good service. That sort of validation is so important. For example, one of our LPG carriers was time-chartered to an oil major for two consecutive years and attracted the accolades. This was the best of approval rat-

ings – very satisfying. It has absolutely nothing to do with ego. Validation at this level really means something and is good for business.”

“Our reputation depends on continued spending on maintenance and, most importantly, employing good people. We have an extraor-dinarily high retention rate amongst our captains, senior officers and other sea staff. Many have stayed with us since their cadet days. We continue to train cadets. It makes good sense, especially at a time when there are special challenges associated with finding sufficient seafarers of high quality. In the final analysis our only real assets are our people and good name.”

Latsco (London) Ltd looks forward to fleet expansion: “We will not jump in and buy at the top of the market. We will not join the stampede. Instead, we will invest at a time when prices reflect realistic expectations of future earnings. That’s why we have made no buying decisions over the past two years.”

The soaring price of oil and deep-seated global economic uncertain-ties must be factored into any future vision. Dimitri Dragazis said: “We have seen the beginning of peak oil. It is not so much a matter of quantity at present, but, rather, the type, where it is and who has access to it. The critical factors are China and India, with over two billion people now experiencing industrialisation. This will continue to exert pressure on energy prices.

“The era of cheap oil is over. High future energy costs will pose great difficulties and push the oil majors into a sharper focus on alternative energy forms. Thirty years on we will remain in an energy environment characterised by tight demand and high prices. Hydrocarbons will con-tinue to play a central role in our lives. There will be no escaping that fact.”

The Latsis association with The Swedish Club spans more than 20 years. The first ship to be placed with the Club was the King Alexander, entered for both P&I and H&M. Dimitri Dragazis recalled: “We pur-chased a number of ULCCs from Swedish companies during the early 1980’s. The Swedish Club’s good reputation prompted me to spend a week in Goteborg, to see for myself. I liked what I saw. I put all our vessels with the Club, for P&I and 100% Hull. This continues to the present day, although Hull has been reduced.

“Over the years, this relationship has grown and we are now very close. We appreciate the strong support we receive from the Club, in-cluding special seminars for captains and senior officers. The Club has an enormous capacity to help its members in areas such as familiariza-tion with new regulatory requirements. The Swedish Club really is an extension of our own Insurance Department. I particularly like the easy access. I can always talk to the people who make the decisions. We have our differences from time to time, of course, but the relationship is solid and friendly.”

Dimitri Dragazis brings to the Board his 40 years’ experience in shipping, in all its many aspects – including insurance: “I hope to share this knowledge and, at the same time, focus on selection of the right members. This is a crucial factor in the Club’s future.”

With a hectic schedule the business, inevitably, occupies most of Dimitri’s time: “I play golf, badly and not very often. The travel commit-ments, I’m afraid, are very demanding. This business is so competitive that personal involvement remains critical. Shipping really is a people business.”

Geden’s confidence in future prospects in the global market. Tugrul Tokgöz commented: “Everyone grew accustomed to a world in which a handful of developed countries – such as the USA, Japan, Singapore and Korea – drove the world economy. Perhaps one billion people were the ‘spenders’. Now we have a new reality – a world with two billion additional ‘spenders’, in China and India.”

Geden faces real challenges when managing this expansion – not least the sourcing of suffi-

cient numbers of seafarers. Traditionally, Geden vessels were manned by Turkish nationals, but things have changed: “During 2007 we opened an office in India to recruit seafarers. We now have Indian crews on some of our product tankers. More recently, in the second quarter of this year, we began to employ Russian seafarers for our Ice Class ships. We intend to take further action to gain access to additional good quality seafarers.”

Other challenges include the credit crunch: “Naturally, it will be more difficult to find banks with an appetite for large-scale newbuilding

projects. This could develop into a major industry problem if the credit crunch is prolonged.”

Tugrul Tokgöz studied management and worked for Deloitte Tou-che before moving to Cukurora, one of Turkey’s largest conglomerates. During 1993 he entered the shipping side of the business with no prior knowledge of the industry: “The move was made on the understanding that I would be offered an alternative if I didn’t take to shipping, but I was happy and stayed put.

“I have always enjoyed the international dimension of shipping and – at that stage, at least –travelling was still a novelty. I still find the busi-ness stimulating but my enthusiasm for travelling has worn thin. There isn’t enough time for golf and sailing!”

Commenting on his appointment to The Swedish Club’s Board, Tu-grul Tokgöz said: “I am honoured. I look forward to playing my part. Geden has had a long-standing relationship with the Club and long may this continue. We believe in loyalty. We don’t change our insurers and brokers easily. Our entire fleet is with The Swedish Club for Hull cover and a number of the vessels are entered for P&I and FD&D.”

9 continued from page 14


”We appreciate the strongsupport we receive from the Club”

”Geden has a long-standing relationship with the Club and long may this continue”

Tugrul Tokgöz, new Board member of The Swedish Club.

Dimitri Dragazis, new Board member of The Swedish Club.

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40% and SOx/NOx emissions by more than 90%.

The shipping/CO2 debate is be-

coming more intense. The matter was discussed at length recently, during a special meeting of the International Chamber of Shipping. The ICS is de-veloping two alternative proposals: an ETS system for CO

2 and, secondly, a

fuel levy. The ICS will not back one op-tion or the other until the IMO takes crucial decisions on targets and timeta-bles. These IMO decisions will almost certainly be taken over the coming 12 months. As stated above, we favour an ETS-based solution. We don’t see how a tax on bunkers can work at the global level. An ETS system is more practical.

Meanwhile, the IMO continues with its important work in this area. The agency hopes to have CO

2 reduction

proposals ready for the October 2008 MEPC meeting. The outcome should provide industry with all-important guidance on regulatory requirements. This meeting should set the scene for firm IMO decisions by mid-2009. Un-fortunately, there is also a danger that the EU will come forward with a re-gional solution.

As for the industry, we are all aware of the need to reduce atmospheric emis-sions, but there are some sharp differ-ences of opinion on how best to achieve these aims. For example, some countries support the slow speed solution. Others take a different view. On a positive note, we at least have options and there are ways forward.

We need low emission solutions for future newbuildings. We need emission reduction solutions for ships in service and the current round of newbuildings – ships for delivery over the next three or four years and with operational lives likely to span over two decades. Viable retrofit packages for SOx/NOx and CO

2 are essential. Unfortunately, en-

gine manufacturers and refiners have been very slow to pick up this challenge. It is time they faced up to the new reali-ties!

In the case of CO2, we may well see

an IMO target requiring a 20% reduc-tion by 2020. Whatever happens, de-velopments on this front will set a very tough future agenda for shipping.

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Are you a walking Version 1.0 in your job or have you developed your skills since you started? We tend to focus on whether we have followed the sal-ary trends for our line of business and if we haven’t, we get disappointed. But have you ever asked yourself whether you made progress in your job year by year and offer the com-pany new competence? That was one of the questions the speaker Jörgen Oom brought up during his two hour performance at this year's Members' Day.

Jörgen Oom held his first seminar in 1981 when the hot topic of the time was service management and costumer focus. Today it has shifted to something he calls

RMA, by which he means Right Mental Attitude. The quintessence can be summa-rised as: we all have to take our own respon-sibility, dare to try new ways and always act in the best interests of the team.

Most corporations today have laid down core values – distinct words that should summarise how the company looks at their business and how they want the co-workers to think. But you can’t stop there and then expect the staff to accept and act according to these. They have to be followed up and the signals from the management must be clear. It is like with children: they don’t do what you say, they do what you do.

Even Ronaldo needs a team so as to be the best

Motivation is core to make people grow and pull the same way. “If the mentality in a company is not to endorse and encour-age people to think and act by themselves and allow them to make mistakes, you get staff who do as little as possible as they con-stantly are afraid of taking initiative,” says Jörgen.

He tells us about a company that wanted to emphasise the courage to come up with new ideas and the importance of trying new

The road to successis under constant construction

Age: 59 years. Background: psychologist concentrating

on communication and attitude impact – and hypnosis!

Occupation: speaker in mental training and teamwork.

He held his first seminar in 1981 when costumer focus

and service management was a big trend in the Western

Jörgen Oom – the short version

Carola WeidenholmPR Co-ordinator

Public Relations


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The road to successis under constant construction

world. He has spread his motivation concept to almost

200 companies in more than 30 countries. Awards: in

2007 he was appointed Speaker of the Year by the Swedish

business magazine “Dagens Industri”. Current: speaker

on the subject “If it’s to be – it’s up to me” at The Swed-

ish Club’s Members’ Day. Tip of the day: the best crash

course in how to become happy is to be grateful! Favourite

book: “Mio my Mio” by Astrid Lindgren, because it’s all

about conquering difficulties and fears. Website: www.

peakmotivation.com

PHOTO: JONAS AHLSéN

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ways. They established an award for the most instructive failure of the year, which may be one way of telling people that the manage-ment wants them to be pro-active.

According to Jörgen, we can learn a lot from the field of sports and mental training. It is rarely the team with the strongest players that wins the game; it is the team with the right mental approach, where the members fight for the group, encourage and help each other out.

As no-one can be on top of everything, it is important to learn where your own limitations are. It’s a good thing to bring in help from others and that’s what the team is there for.

“Just suppose that we invite the best football player in the word – let’s say Ronaldo – to play in your hometown arena. Would you like to go there to see him play? Probably! But it will not be much of a game with just him; he needs other team-members to pass him the ball and to whom he make passes, someone else has to run in the right direction at the right time and others have to defend his goal, otherwise he can’t score or win any games. That means that without the supplementing team and without a joint goal, it’s hard to develop and become the best,” Jörgen explains.

Don’t waste time sawing sawdust It’s also essential that you influence your environment in a positive way. Take for instance a football team sitting on the bus on their way to a game. Suddenly one of the players starts to talk about the fact that they have lost the last six games and now two of their best players are injured as well. How do you think the rest of the team reacts? Of course they demand him to stop, as it affects them all in an adverse way.

Instead of airing your negative energy, you should ask yourself: “What did I do today to contribute to a good atmosphere at work?” is Jörgen’s advice.

Many people choose another way of dealing with change and chal-lenges.

A manager in a company once told Jörgen that he was frustrated that some people on the staff tend to be “sawing sawdust”, meaning that they dwell on old things that went wrong instead of looking forward.

“This is like saying that you once got lost in Barcelona and quit look-

ing for your way back,” Jörgen explains. We have to focus on the things we can influence and we have to look forward. Just because something was wrong in the past it doesn’t mean that we have to stop looking for a new and better way forward.”

Change equals stress for most of us, but it is the only way to evolve the operation and stay competitive. But don’t worry; sometimes it only takes a small effort to make a big difference. Jörgen gives a clear example: “take two people; one of them eats an apple and the other one a Snick-ers bar every day at three o’clock. After 20 years there will be a certain difference in what they look like, but instead of seeing the real reason for the effect and taking responsibility for our actions, we tend to blame our bad metabolism or our genes.”

You have to think in different ways and look for other angles to come up with new solutions – and everyone has to do their part. You can’t expect others to do that work, as the only person you can actually change is yourself.

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1. 3W: We Want to Win 2. Make everyone interested in the results and celebrate victories 3. Create respect and trust 4. Implement the thesis: the whole is greater than its parts 5. 3P: Proud People Perform 6. Think that more difficult = more fun 7. Make strategy and tactics the concern of all 8. It must be okay to make mistakes as it’s the only way to find new solutions 9. Have internal pep talks 10. Attitudes to working time 11. Feedback improves people 12. 3T: Train the Team Together

12 lessons from team sports


“The word im-possible cannot be used about the future – only about the past”

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formed a picture of the Group and its place within the international shipping community: “Stena has a reputation for good performance and maintaining its assets to the highest standards. Stena also has a very dis-tinct culture, driven largely by decentralised decision-making. Everyone is empowered to take decisions but, at the same time, they are also fully accountable for those decisions.”

The recent unprecedented surge in oil prices is a challenge for all businesses, including Stena. At the same time, Peter Claesson points to the opportunities: “Higher oil prices have an adverse impact on ferry operations, but a positive influence in the drilling sector. Stena’s wide spread of businesses represent a natural hedge in a high oil price trading environment.

“There are real opportunities in terms of market differentiation. Ste-na faces new challenges in times of financial and economic turbulence, but not to the same degree as experienced by most other players. History suggests that Stena is extremely resilient during adverse economic condi-tions. We seem to thrive on challenge!”

Looking at Stena’s operations, Peter Claesson added: “Stena Line is making excellent progress. Stena Line experienced one of the worst years in its history in 2000. It responded by creating a new business model. Stena Line achieved record profits in 2007. This represents a remarkable turnaround, reinforced by a SEK 13 billion investment programme for new vessels and port facilities. This spans the period 2000-2011.

“As for the tankers, the fleet has enjoyed a number of extremely good years. We have seen a downturn of late and we foresee challenging conditions throughout 2008-2009, but followed by recovery in 2010 onwards. Should market conditions deteriorate beyond expectation, we

are well positioned to take action to reduce our exposure. As for Concordia, the fleet is locked in until 2012 and, therefore, its results have a high level of predictability. Much the same can be said of Stena’s ex-tensive real estate operations.”

Stena’s investment programme con-tinues to unfold. Stena Line has two su-perferries and two ropax vessels scheduled for delivery in 2010-2011. Peter Claesson adds: “Other significant orders include four new drilling vessels. The first was delivered in late 2007 and is now working offshore Brazil. The second will be delivered this Summer and the third in July 2009. The fourth in the series will join the fleet in the final quarter of 2011.”

Peter Claesson is a family man. He and his wife have two young children – both daughters – aged 18 months and three. He said: “I am outnumbered and they definitely help sharpen up my negotiating skills. They don’t take no for an answer!” Peter used to play football in the Swedish Premier League. Now he takes his exercise cycling to the office – a 44 km round trip.

Commenting on his appointment to The Swedish Club’s Board, he said: “I look forward to being involved in this side of the business. At the personal level, it is a wonderful opportunity to develop new relationships in what is still, to me, a new industry.”

IMC Corp Group’s forward vision is focused on financial and cul-tural sustainability. Koay Peng Yen reflected: “Naturally, our businesses must be profitable but our activities must also reflect appropriate value systems and a culture of ‘active citizenship’. This means fostering positive relationships with all stakeholders and respecting sustainable goals. It requires strict compliance with international and national regulations and the application of best practice reflecting social imperatives.

“IMC Corp Group concentrates on being a high performance and people focused organisation. The focus on people applies to our own team – the IMC community – and the wider community of partners, clients and society at large. We expect our businesses to be proactive in positive community development. This is reflected in the Group’s commitment to non-profit activities and its support for the vital role of NGOs. There is also the work of the Tsao Foundation and the East-West Group.”

Koay Peng Yen had no early intention to enter the world of shipping and logistics: “I think people, once engaged, tend to enjoy this business. It is dynamic and the issues are always unique. Shipping has an almost addictive power.”

IMC is a different experience from NOL/APL: “Both groups have their strengths. APL, of course, is a global organisation concentrating on container transportation and logistics. IMC, in contrast, is more diversi-

fied. It is also privately-owned. This injects its own character – marked by a very high degree of flexibility, with fast response to changing business conditions.”

These qualities are at a premium, given the deep uncertainties now surrounding the world’s financial, energy and economic frameworks. Koay Peng Yen commented: “No one will be insulated from these de-velopments. The question everyone must ask is: ‘How close am I to the fire?’ The problems within the US economy must have an impact regardless of industry. Those who prosper over the next few years will be the ones who are adaptable and nimble.”

Koay Peng Yen is looking forward to playing his part in the work of The Swedish Club’s Board. “It is a privilege. The Board members have wide experience and are very capable individuals. IMC’s relation-ship with the Club, of course, goes back some years. I am following in the footsteps of Peter Chew, who served on the Club’s Board for many years.”

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”I look forwardto playing my part”


”A wonderful opportunity to develop newrelationships in what is still, to me, a new industry”

Koay Peng Yen, new Board member of The Swedish Club.

Peter Claesson, new Board member of The Swedish Club.

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The Swedish Club Letter 2–2008

26

P&I

The Interclub Agreement (ICA) is a formula for the ap-portionment between owners and charterers of liability for cargo claims. In its original form it was simply an agreement between the International Group of P&I Clubs and was therefore not binding on owners or charterers, although it was generally ex-pected that they would follow their club’s recommendations to settle in accordance with its terms.

Today the ICA will usually be incorpo-rated as a rider clause to the NYPE char-terparty and therefore apply as a matter of contract. Accordingly the interpretation of the ICA is being increasingly scrutinised by owners and charterers and, it would appear, that there are an increasing number of disputes under the agreement as to how liability is to be apportioned. In some cases at least, the ICA is therefore not the quick and inexpensive mechanism for resolving claims that was originally intended.

In this article, we consider the test for apportionment of li-ability under the ICA and the circumstances in which an ICA claimant is able to obtain security for his claim. For present pur-poses we have assumed that the owners will be the ICA claimant, although this is not always the case.

ApportionmentAs set out below, the ICA apportions liability according to the category into which the cargo claim falls. There are four cat-egories:

Category ApportionmentUnseaworthiness/error in navigation (8(a)) 100% to owners

Loading, stowage anddischarge (8(b)) 100% to charterers

Shortage (8(c)) usually 50/50

Any other cause (8(d)) usually 50/50

How is the cargo claimto be categorised?

One aspect of this question was answered by the English Court in the Kamilla where it was confirmed that, for the purposes of the ICA apportionment, cargo claims are to be categorised by reference to the concept of proximate cause of the loss. If unsea-worthiness was “a” proximate cause (it did not have to be the only proximate cause), the claim was within 8(a). In this respect the court’s decision was not surprising. What was surprising to many owners was the application of the decision to the facts with court finding that the owners were unable to make any recovery from charterers in circumstances where the unreasonable actions of the cargo receivers had significantly increased the extent of the loss.

The Kamilla has had a significant impact on the current set-tlements being achieved by owners. We therefore consider in some detail how the court applied the ICA test to the facts of the case, and the wider impact of the decision on ICA claims.

The KamillaThe Kamilla carried a cargo of lentils to Algeria. On the assumed facts she was unseaworthy but only in a very minor respect in that the hatchcovers for no. 2 hold were not watertight resulting in a

small volume of seawater ingress which damaged approximately 1% of the cargo, worth USD 9,000.

The cargo receivers reacted very strongly to this relatively mi-nor damage, rejecting the entire cargo and (through the relevant authorities) obtaining a ban on its import and the arrest of the vessel. On the assumed facts, as a consequence of the cargo receiv-ers’ unreasonable actions, the owners suffered a much greater loss

of USD 380,000.The owners accepted that they

were responsible for the USD 9,000 loss, but not for the balance of loss of USD 371,000, on the basis that it was not “due to” unseaworthiness, but to

the conduct of the cargo receivers for whom the charterers were responsible.

The court held that, on the assumed facts and the findings of the arbitrators unseaworthiness was a proximate cause of the whole loss, despite the unreasonable conduct of the cargo inter-ests, because it was not unprecedented for the cargo receivers to do these things. Liability was therefore 100% for the account of the owners under ica paragraph 8 (a).

This is a result which many owners will find surprising and unfair. It should however be stressed that the ICA provides a me-chanical or “rough and ready” apportionment formula designed to reduce litigation and therefore lawyer’s fees. Fairness is not a criterion for its operation and, in that respect, it is similar to the “knock for knock” arrangements seen in the oil and gas industry. As such the Kamilla decision is probably correct and unlikely to be overturned.

impact of the KamillaA consequence of the decision is that where there is some unsea-worthiness on the part of the vessel, charterers invariably argue that owners are not entitled to make any recovery from them under the ica. This is not always correct and we explain below how liability may be apportioned in these circumstances:

1. Where the unseaworthiness is not a proximate cause of the cargo loss, it is not relevant for the purposes of apportion-ment.

2. Where the unseaworthiness is the only proximate cause of the cargo loss, liability will be 100% for the owners.

3. The Kamilla left open the issue of apportionment when there are two (or more) proximate causes, each (or all) coming within different paragraphs of the ICA which provide for different apportionments. Where the proximate cause of part of the cargo loss is unseaworthiness and the balance of the cargo loss is due to another proximate cause, both causes are relevant for the purposes of apportionment. Where the contribution of each cause to the cargo loss can be quanti-fied, liability will probably be apportioned as if they were two separate cargo claims. For instance where the cargo claim is partly for mould damage due to unseaworthiness and partly for shortage due to theft by stevedores, owners will be 100% responsible for the mould damage and charterers will be 100% responsible for the shortage. Where, however, the contribution of each cause to the cargo loss cannot be quanti-fied, liability will probably be apportioned equally between

Jeb ClulowAssociate Director

Barlow Lyde & Gilbert LLP, London

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the application of the

owners and charterers, though whether and quite how this result can be achieved remains uncertain.

If the Kamilla facts were decided today under the current 1996 ICA wording (the case was in fact decided under the old 1984 ICA wording) it is possible that the actions of the cargo receivers may have been found to be a proximate cause falling within ICA paragraph 8 (d). In those circumstances the owners may have been able to obtain a 50% or even a 100% contribution from charterers (if the test of “clear and irrefutable evidence” is satisfied).

Obtaining securityIt is particularly important to obtain security for ICA claims which generally take longer to finalise as they are dependant on the underlying cargo claim being first set-tled and paid. During this extended period the charter-ers’ financial position may change with the result that the owners’ right to claim an indemnity under the ICA may be prejudiced or even lost altogether.

Unfortunately under English law, until the cargo claim has been settled, the ICA indemnity claim is not yet “ripe” and it is therefore not possible to obtain security in the United Kingdom and indeed most countries whose legal systems are based on English law.

In certain European countries security may be obtained for ICA claims which are not yet “ripe”. However, the most promising jurisdiction in which to obtain security is cur-rently the US where the “Rule B” provisions enable a claim-ant to attach US dollar funds being cleared through New York. As most charterers receive at least some payments in US dollars, this is a reliable method of obtaining security.

There are conflicting decisions in New York as to whether security can be obtained for ICA claims which are not yet “ripe”. Whether security can be obtained will, we understand, depend in part on which judge is allocated to the case. However, if the cargo claim is relatively advanced and/or if security has been provided to cargo interests and/or if the local court has already made adverse determina-tions on liability or quantum there will be an increased chance of obtaining the necessary attachment.

SummaryIn summary, it is our experience that owners and charterers increasingly take an adversarial approach to claims for a contribution under the ICA.

Where there is unseaworthiness on the part of the vessel, charterers may rely on the Kamilla to resist a claim by the owners for a contribution. Unsea-worthiness will not necessarily preclude an ICA recovery and consideration must therefore be given to whether it was causative of the loss, whether there were other causes at play and whether the loss can be allocated between the different causes.

It is particularly important for security to be obtained for ICA claims. Although there are difficulties in obtaining security prior to the cargo claim being concluded, the highly effective “Rule B” remains an option, particu-larly where the ICA claimant can demonstrate that it is likely that it will be liable.

P&I

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and exposure in P&I Transparency is not only a word in fashion. Transparency in P&I is a concept here to stay. It is of vital importance for the industry to understand the liabilities facing the shipowners today, and how they affect the P&I insurance, let alone those liabilities coming tomorrow. P&I is somewhat “in transition”. The overall claim frequency is down whereas severity is up. The unprecedented number of pool claims in 2006 and 2007 presents a new landscape. P&I clubs must address the expo-sure up-front.

Transparency in legislativedevelopment

New legislations extend current liability regimes. The exist-ence of new and increased liabilities is often discussed. P&I clubs have however, been less successful in illustrating the ef-fect of new regimes in terms of exposure. Traditionally, under-writing in P&I has been reactive. Premiums have been asked for whenever liabilities have materialised by way of claims, not up-front. This approach has to change. The exposure is present already from the beginning and then at all times. Solvency requirements and predictability in premium rating make it essential to rate exposure immediately. Failure to do so will come at a price. Consistency in pricing and stability will be jeopardised.

Transparency in liability inflationLiability inflation is a fact within the current liability frame-work. It now runs at a pace of more than 5%. As a result, claims today will be 5% more expensive in a year’s time, without being added in numbers. Conversely, an increase in premium at renewals of less than 5% should be regarded as a reduction from the P&I clubs’ point of view. Inflationary compensation only brings the clubs back to “square one”. Ap-preciation in commodity prices, higher cost of repatriation and higher medical expenses are but a few reasons driving the inflation.

P&I clubs should be more “transparent” in explaining the inflationary phenomenon.

The exposure is different, enhanced and yet very apparent. Collision liability in terms of RDC cover represents perhaps the prime example of inflationary drivers; the buoyant freight market hits back. Reduced yard capacity, much higher steel prices in combination with today’s healthy freight levels, make those claims very costly. Clubs ought to illustrate the exposure

to liability inflation in more detail. Claim inflation is a fact, it does not run away and it must be addressed in time.

Transparency in pool claimsAt this juncture, pool claims run at unprecedented levels. Nothing indicates that the trend seen in 2006 has abated. 2007 looks as serious as 2006, if not worse.

Pool claims hit randomly. Even the best operator may face a major casualty. Many times there is no one to blame, nor is the casualty the result of poor management. Yet they do occur. Insurance is in place for the unexpected events and in such cases, to address the consequences.

The overall frequency of pool claims is low but when they hit they have a severe impact on the shipowners and the clubs. The mutual system is there to protect and to defray the cost. Never has the mutual regime been of more benefit than now or been the subject of such in-depth scrutiny, for that matter, as it is today. Transparency is required as to how losses are allo-cated, to underpin the system. We all want a fair treatment.

Transparency in pricingAdequate pricing of risk is fundamental to a sustainable P&I operation. Records is just but one component in the assess-ment; exposure is equally important.

The mounting financial consequences of maritime casual-ties require a comprehensive analysis of how the risk is shared and paid for in the mutual system.

Records, abatement, pool claims and group reinsurance cost have to be considered in the rating process. The P&I sys-tem is designed to spread the risk and to absorb the liabilities in a most efficient way financially. Further transparency in this respect is required to give the shipowners comfort with regard to the value provided and the fairness in pricing. We all want a fair deal.

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The Swedish Club Letter 2–2008 P&I

Lars RhodinDeputy Managing Director

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Mrs Sonja Cordes of W-O Shipping receives her certificate from Lars A. Malm.

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On a lovely spring week in early May, The Marine In-surance Course was held at the Club’s Göteborg head office for the eight consecutive year.

During the five-day course, Club employees, all experts in their respective areas, gave presentations covering the ma-jor aspects of Marine Insurance, such as Protection & In-demnity, Hull & Machinery, Freight Demurrage & Defence as well as underwriting, re-insurance and loss prevention.

31 participants, representing members, brokers and re-insurance companies from eleven different countries, at-tended the course and all contributed in making the course not only about learning, but also about interesting discus-sions and net-working.

The dates for next Marine Insurance Course are yet to be decided. Keep a lookout on our website for more infor-mation!

Marine Insurance Course 2008

The Swedish Club Letter 2–2008 The Swedish Club Academy

The MIC class of 2008 gathered outside The Swedish Club head office.

Enjoying the summer evening on the bridge at Vargö.

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Discussions concerning personal injury claims with workshop leader Birgitta Hed.

A boat trip to Vargö and dinner at Stjärnviks Värdshus became the grand finale of the Marine Insur-ance Course 2008.

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MRMThe Swedish Club Letter 2–2008

The importanceof ”the right culture” With recent statistics (DNV statistics re-leased February 20th 2008) indicating that a ship is now twice as likely to be involved in a serious accident than was the case only five years ago, there are reasons for concern. In addition, the statistics reveal that the cost per accident has

doubled. Given these figures, the total cost of serious accidents today is four times greater than it was five years ago. Who will pay the price?

Cultural changeAn increased number of ships, commercial pressure and a shortage of well-trained and ex-perienced crew are all considered to be factors contributing to this trend. “Human error”, however, still remains the major factor. Typical “errors” are lack of teamwork and communica-tion, stress, fatigue, com placency and a failure to utilise available resources - errors often rooted in unsafe attitudes. The good news is things don’t have to be like this. The current frequency of incidents and acci dents is neither a natural part of shipping operations nor something we have to accept and live with. What is needed, however, is a cultural change.

Extensive programmeIn 1996 and 1997, Star Cruises, a member of the Club since the start of their operations in 1993, was struck by two severe accidents – a collision and a fire. These incidents sparked an extensive programme to combat the recurrence of these kinds of accidents. Much time was spent on care-ful selection of mariners. An in-house training centre was established and a pilot/co-pilot sys-tem was introduced on the bridge where “closed

loop” communication, procedures, passage planning, briefings, de-briefings and an open atmosphere in which any doubtful decision can be challenged, all became important ingredients. A close cooperation between ship and shore en-sured that everyone was involved in the process and stayed motivated and committed.

A performance hard to beatIn 2002, the author of this article was invited on board by Star Cruises to experience what they boldly claimed to be “the best resource manage-ment performance in the world“. It was a safe journey and I was able to give my colleagues a favourable report upon my return to the office. The visit also resulted in an article in the Club’s newsletter No. 3-2002, which concluded, “Yes, this performance will be hard to beat”. (The newsletter can be found on our website www.swedishclub.com/Publications).

Not a coincidenceNow, six years later, a benchmarking study was carried out in connection with a series of MRM courses carried out for another cruise line. The results of the claims analysis showed that cruise ships, in general, did not perform better than the average for all other ships, such as bulkers, container ships, general cargo ships and tankers. The big difference, surprisingly or not, appeared when Star Cruises was separated from the two other major cruise lines insured by the Club. Since 1998, Star Cruises has not reported any navigational claim to the Club. In other words, no collision, no grounding and no contact claim. We do not view this as a coincidence. Hard and dedicated work with everyone “on board” has created a culture that produces results far dif-ferent from the gloomy news in recent media re-ports. These are good tidings indeed and should encourage all ship-owners and safety promoters in our industry.

Information meetingat head officeOn April 24th 2008, The Swedish Club invited members and training provid-ers to its head office in Göteborg to present the MRM training concept and describe the effects of training. The Club intends to conduct similar meetings in other parts of the world.

IMO MSC meetingin LondonIn co-operation with the Interna-tional Federation of Shipmasters’ Associations (IFSMA), the Club’s MRM Manager, Martin Hernqvist, was invited to give a presentation of Maritime Resource Management at the IMO Maritime Safety Commit-tee meeting in London. The presenta-tion took place on May 7th 2008 and was met with a great deal of interest amongst the delegates. Naturally, we strongly support the work that has been initiated at the IMO to highlight resource management issues.

Martin HernqvistMRM Manager

Maritime Resource Management

A benchmarking study revealed the major improvements brought about by the establishment of a genuine safety culture.

Collision Contact Grounding

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The Swedish Club Letter 2–2008 MRM

New MRM training providersSyDväST MARiTiMEFinlandSydväst Maritime has conducted BRM courses since 1994, and was one of the first maritime training establishments to offer resource management training. Like many other training providers, Sydväst Maritime supports widening the target group through the Maritime Resource Management con-cept.

Sydväst Maritime was founded in 1813 and trains master mariners and marine en-gineers at its university of applied sciences, and watch-keeping officers and engineers at its vocational institute. Sydväst Maritime also offers a wide range of short courses. The MRM agreement was signed in Octo-ber 2007.

THORESEN TRAiNiNG CENTER ThailandIn March 2008, an MRM training agree-ment was been signed with Thoresen & Co (Bangkok) Ltd. Thoresen made major investments in 2005 when they established the Thoresen Training Center located in the same building as their head office in Bangkok. The training centre is staffed by nine people, and equipped with two train-ing rooms (50 and 100 seats), two computer training rooms (12 and 30 seats) and a 50-seat dining room.

Thoresen started their operations in Hong Kong in 1904 and currently owns and operates some 45 general cargo ships and bulk carriers.

NAviSPEC MARiNE SERviCESDubai, U.A.E.In May 2008, the Club signed an MRM training agreement with Navispec Marine Services L.L.C. of Dubai. In addition to training, Navispec will provide consulting and engineering services, technical exper-tise and assistance to clients in the maritime and offshore sectors. Navispec will be our 28th MRM training partner and our first in the Gulf region.

This agreement will give us the oppor-tunity to again work with Captain Rizvi of Navispec who once conducted MRM courses at one of our first MRM training partners, the Wallem Maritime Training Centre in Karachi.

Out and about with MRM

Presentation at Constanta Maritime UniversityOn May 23rd 2008, the Club’s MRM Manager, Martin Hernqvist, gave a presentation on MRM at Constanta Maritime University in Romania. With the manning crisis high on the agenda in most parts of the world, Constanta Maritime University has quadrupled the number of its maritime students over the last five years.

Seminar for Dünya ShippingSafety initiatives are often most appreciated by those who seem to need them least. A good example of this was a request from our Turkish member Dünya Shipping for a half-day MRM seminar at their offices in Istanbul. Both seagoing personnel and shore-based managers and staff attended the seminar on May 21st 2008. Since MRM is very much about establishing and safeguarding a genuine safety culture within the company, MRM seminars for people ashore are something that we encourage and promote.

SalvageThe Swedish Club Letter 2–2008

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The International Salvage Union (ISU) has over the past two years been advocating its idea of introducing compensation for prevent-ing damage to the environment in connection with salvage operations.

They argue that over the years they have salved vessels carrying millions of tons of oil and other environmentally hazardous sub-stances which, they imply, have by their actions been prevented from ending up in the environ-ment. According to their statistics, they have since 1994 recovered more than 13 million tons of oil and other pollutants. The P&I side does not accept the argument that, had the salvors not intervened, this would have been released into the environment. For instance, refloating a fully laden VLCC which has grounded in mud in a sheltered non-tidal position does not mean that the salvors have prevented the spillage of 200,000-300,000 tons of crude oil.

They also say that over the last few years the P&I underwriters have spent hundreds of mil-lions of dollars on clean-up operations on shore lines. The salvors reason that, if environmen-tal salvage had been in place, they would have been able to prevent some of the environmental damage and consequently save clean-up costs for the P&I clubs.

The P&I clubs state that the Internation-al Convention on Salvage 1989, the Lloyd’s Standard Form of Salvage Agreement (Lloyd’s Open Form) and the SCOPIC provisions al-ready provide the salvors with compensation for protecting the environment, and by signing

a Lloyd’s Open Form the salvors undertake not only to try to salve the property but also to “use their best endeavours to prevent or minimise damage to the environment”. The 1989 Salvage Convention includes in Article 13 and 14 pro-visions for the salvors to be compensated for preventing damage to the environment.

In other words, clubs take the position that salvors are already today encouraged and ad-equately remunerated for preventing damage to the environment.

The clubs have difficulties in accepting the argument that if environmental salvage com-pensation had been in place, clean-up costs could have been saved. If this is the case, then the P&I clubs argue that the salvors have been in breach of their obligation to “prevent or min-imise damage to the environment”. The salvors’ argument is that with environmental salvage awards they would have earned more money that would have led to greater investments in salvage equipment, which in turn would have promoted enhanced salvage readiness.

A few years ago the salvors embarked on a crusade of trying to argue for compensation for having prevented the shipowners from costs arising from liabilities they might have faced as a consequence of a grounding or from any other

ship casualty situation that led to a salvage op-eration. This was, however, unsuccessful as it was turned down in litigation. The P&I clubs now feel that the environmental salvage issue is yet another attempt to pursue the same issue under a new heading.

The clubs point out that, if this way of thinking had been adopted by contractors in other businesses, endless legal battles could be the result. For example if someone calls out a plumber to stop and rectify a water leak in a house, he would not only pay the plumber for their time, effort and materials but would also be faced with a huge claim from the plumber for aborting serious and costly water damage to the house that would have been likely to result had the plumber not acted promptly.

The salvors are hoping for a revision of the 1989 Salvage Convention that will take envi-ronmental salvage into account at some time in the near future and in the meantime they would like to see a revised version of Lloyd’s Open Form to include provisions for environ-mental salvage to be introduced, hopefully by 2010.

Representatives of the ISU, The Interna-tional Group of P&I Clubs, property under-writers and shipowners have formed a commit-tee to deal with the issue. The group is chaired by Lloyd’s appeal arbitrator Mr John Reeder.

We will most probably have reason to revert with updates on this delicate issue.

ENVIRONMENTAL SALVAGESalvors’ dream – P&I Clubs’ nightmare?

Örjan KarlssonClaims ManagerTeam Göteborg I


ENVIRONMENTAL SALVAGE

Mr Wu Poh-hsiung, The Chairman of the Kuomintang or KMT just completed his 4-day visit to mainland China, meeting his counterpart, Mr Hu Jin-tao, the leader of China’s Communist Party, in Beijing. The visit was officially between the two parties, China’s Communist Party and the KMT. His visit came just a few days after Kuomintang’s Mr Ma Ying-jeou became the new “President of Taiwan” or “Republic of China” (ROC) on 20th May. His first stop was in Nanjing, which was the Capital city of the Kuomintang-ruled Republic of China more than 60 years ago. He paid his respects to the Memorial of Doctor Sun Yat-sen, the first Prime Minister of ROC and the founder of the KMT.

In early June the Chairman of Taiwan’s Straits Foun-dation visited Beijing to resume Cross-Straits talks after more than nine years of suspension. All these high level visits aim to improve Cross-Straits relations. The Tai-wan Straits Foundation will have the specific short term task of starting direct air links between the two sides of the Strait in July 2008, and of increasing the number of

mainland tourists to Taiwan to 3,000 per day from the current 1,000 per day, as promised by Mr Ma Ying-jeou to the people of Taiwan during his presidential election campaign. In his inauguration speech Mr Ma, called for building trust and confidence and making peace between the two sides of the Straits. It is not difficult to predict improved Cross-Straits relations in the near future and increased economic activity.

Hong Kong’s economy to a certain extent may be affected adversely in the short run as transit passengers and incoming flights are bound to diminish, as well as cargo movements through the port. In the longer run, however, it may benefit from increased overall economic activity in the region.

Newsfrom

Asia

Slow current moving through the Taiwan Strait

Ruizong WangManaging Director

The Swedish Club Hong Kong Ltd.

Salvors’ dream – P&I Clubs’ nightmare?

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Salvage News from Asia

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Is there a new cargo liability regime just around the corner?

Anders LeissnerFD&D Manager

Team Göteborg III

It has probably escaped few readers that for some time the United Nations Commission on International Trade Law (UNCITRAL), and the vast majority of the states of the international maritime community, have been involved in negotiations for the purpose of creating a new cargo liability regime, which is intended to replace the Hague-Visby Rules, the Hamburg Rules and the US COGSA. The Draft Convention has now reached its final form, and the next stage in the process is for the UNCITRAL Commission formally to render their ap-proval. If they do so, the Draft Convention is expected

to be passed to the UN General Assembly for adoption in November 2008. If the Draft Convention comes into force, which at the time of this article seems to be a real-istic assumption, there can be no doubt that shipowners will see an increase in the cost of cargo liability claims.

Following the adoption of a convention concerning electronic commerce in 1996, UNCITRAL was request-ed to review the possibility of establishing uniform rules regarding carriage of goods by sea, which would replace existing cargo liability regimes such as the Hague-Visby and the Hamburg Rules. UNCITRAL subsequently ap-proached the Comité Maritime International (CMI) to assist in preparing the groundwork for a new convention. Since 2002, UNCITRAL’s Working Group III, consist-ing of representatives from all UNCITRAL’s 60 member states, has met twice a year for deliberations. The Inter-national Group of P&I Clubs has been actively involved in this process, and has worked in close cooperation with

The Swedish Club Letter 2–2008 Legislation

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”Maritime plus“ The full name of the Draft Convention is “Conven-tion on Contracts for the International Carriage of Goods wholly or partly by Sea”. It was initially intended to be a multi-modal convention, i.e. a convention which should apply door to door. But that did not materialise. Instead, the Draft Convention will only apply to land transportation if no other legal instrument is applicable. Hence, it has come to be described as a “Maritime-plus” convention. However, the carrier’s period of responsibility begins when the goods are received for carriage, and ends when the goods are de-livered, which is similar to the period in the Hague-Visby Rules. It is only under limited circumstances (for instance if the contract says so) that the carrier will be responsible for goods pre-loading and post- discharge.

Scope of ApplicationEssentially, the scope of the Draft Convention extends to contracts of carriage used in liner transportation although certain volume contracts are excluded. Regarding non-liner contracts of carriage, the Draft Convention applies if there is a transport document which evidences the contract of carriage and is a receipt of the goods, i.e. a bill of lading is-sued pursuant to a charter party. This reflects the position

under the Hague-Visby Rules. The Draft Convention does not apply to charter parties or contracts for the use of or space on a ship.

Maritime performing partyThe Draft Convention introduces the concept of “Mari-time performing parties” who are parties other than the contracting carrier who performs any part of the sea leg or provides services ancilliary to the sea leg such as stevedores and terminals. This is different to the Hague-Visby Rules which in essence only apply to the contracting carrier. The maritime performing parties are responsible for their own activities but the carrier is liable for the whole of the per-formance of the contract of carriage and is also jointly and severally liable for the performance of Maritime perform-ing parties vis à vis cargo owners. Hence, carriers will need to review their contractual rights of recourse against the Maritime performing parties with whom they deal in order to safeguard their interests.

Electronic commerceThe Draft Convention is applicable to electronic trading and puts electronic bills of lading (which are processed in an approved manner) on equal footing as paper bills of lad-ing. This is different to the Hague-Visby Rules, which only apply if a paper bill of lading exists.

Carrier’s obligationsUnder the Draft Convention, the carrier is under a duty to exercise due diligence to make the vessel seaworthy before, at the beginning and throughout the entire voyage. This

MAIN fEATuRESof the Draft Convention

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Is there a new cargo liability regime just around the corner?


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Legislation

the International Chamber of Shipping and BIMCO, advocating the industry’s position at the meetings of the UNCITRAL working groups. The overall strategy for the Industry Group has been to emphasise the impor-tance of freedom to contract, a realistic allocation of risk between ship and cargo, limiting mandatory application, as well as resisting the imposition of greater liability on the carrier. With these objectives in mind, the Industry Group is probably partly, but not entirely, satisfied with the final wording of the Draft Convention.

It is fairly clear that the central objective of the Draft Convention is to provide a modern regime for mari-time transportation that fits in with and supplements regimes governing land transportation, enabling goods to be transported door-to-door under provisions that are consistent with each other. It is, of course, premature to say whether that goal will be achieved in the event the Draft Convention becomes reality. However, one

advantage of the Draft Convention in this respect is the “Maritime-plus” feature i.e. it adheres to the concept of network liability, whereby liability and the applicable limits of liability for loss and damage to the goods oc-curring before or after the sea leg will be determined by any uni-modal convention compulsorily applicable to the relevant mode of transport where the loss or damage occurs e.g. CMR.

Any reader who wants to know more about the Draft Convention and related work is referred to the

homepage of UNCITRAL, www.uncitral.org

is stricter compared to the Hague-Visby Rules, where the duty is limited to the period before and at the beginning of the voyage. The carrier’s obligation to properly load, care for and deliver goods is the same as under the Hague-Visby Rules.

Carrier’s liabilitiesThe carrier’s liabilities remain fault-based as in the Hague-Visby Rules and there is a similar list of exclusions. How-ever, there are two important differences:

4 The exclusion of the nautical fault defence has dis-appeared i.e. the carrier is liable for error in navigation, pilotage or management of the vessel. There is, conse-quently, no defence for a carrier in the event of a ground-ing or collision caused by nautical fault.

4 The Draft Convention provides that the carrier is li-able for financial losses following delayed delivery of goods if a delivery time has been agreed. This provision may be problematic for the carriers (and their insurers), since it has been argued that the agreement does not need to be explicit, but can be implied.

In addition, the limits for the carrier’s liability are greater compared to the Hague-Visby Rules; 875 SDR per package or 3 SDR per kilo instead of 666,7 and 2 SDR.

Shipper’s liabilityThe Hague-Visby Rules contain a fairly brief provision saying that the shipper is liable for his and his agents’ and servants’ actions, faults or neglect. The Draft Convention

entails a similar liability for the shipper but it contains more comprehensive provisions as to the shipper’s specific du-ties regarding inter alia packing of the goods and handling instructions.

Time for suitThe claimant has two years from the day of delivery of the goods to file suit. This is one year longer than under the Hague-Visby Rules.

Jurisdiction and arbitrationJurisdiction and arbitration provisions relating to claims are included in the Draft Convention. Such provisions are contained in the Hamburg Rules but not in the Hague-Visby Rules. However, these provisions, which list several applicable forums in the claimant’s choice, will only apply if the ratifying state declares that they should be included, i.e.. in the absence of a positive statement that the jurisdic-tion and arbitration provisions should be included, they will not form part of the convention. It is not expected that EU states will opt in to these provisions but some sources say the United States may do so if they ratify the convention.

Entry into forceThe convention will enter into force 12 months after 20 states have ratified it. It is worth noting that approximately 90 states have ratified the Hague-Visby Rules and 30 states the Hamburg Rules. The general understanding is that if the convention is to have any real impact it will need to be ratified by a large number of states, preferably including the US.

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The new Bunker ConventionThe last significant loophole in the international regime for compensating victims of oil spills from ships is set to be closed with the coming into force on November 21st 2008 of an international treaty covering liability and compensation for pollution damage caused by oil spills , when oil is carried as fuel in ships’ bunkers. Current regimes covering oil spills do not include bunker oil spills from vessels other than tankers.

Recognition of the problems that can be caused by spills of heavy bunker fuel from non-tankers led to the adoption of the International Convention on Civil Li-ability for Bunker Oil Pollution Damage at a Diplomatic Conference in March 2001.

The Bunker Spills Convention enters into force on November 21st 2008, one year after the date on which 18 states, including five states with ships whose combined gross tonnage is not less than one million GT, have rati-fied it*.

The convention was adopted to ensure that adequate compensation is promptly available to persons who are required to clean up, or who suffer damage caused by oil spills, when carried as fuel in ships. It provides a free-standing instrument covering pollution damage only.

The convention is modelled on the International Convention on Civil Liability for Oil Pollution Dam-age, 1969 (the CLC). As with that convention, a key requirement in the Bunker Convention is the need for the registered owner of a vessel to maintain compulsory insurance cover.

Definition of shipownerThe convention will make the shipowner, defined broad-ly so as to include the owner, registered owner, bareboat charterer, manager and operator of a ship, liable. The

parties who fall within this definition of shipowner are jointly and severally liable to pay compensation for pol-lution damage;

…loss or damage caused outside the ship by contami-nation resulting from the escape or discharge of bunker oil from the ship, wherever such escape or discharge may occur, provided that compensation for impairment of the environ-ment other than loss of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken; and … the costs of preventative measures and further loss or damage caused by preventative measures…

Strict liabilityAs is the case with the CLC, liability for pollution damage under the Bunker Convention is strict. Nevertheless, no liability for pollution damage attaches to the shipowner if he can establish that the damage resulted from an act of war, was wholly caused by an act or omission with the intent to cause damage by a third party or by negligence or other wrongful act of any authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.

Compulsory insurance to cover liability When the convention is in force, ships over 1,000 gross tonnage of any type, registered in a state party or calling a port in a state party to the convention will be required to carry a certificate on board certifying that the ship has insurance or other financial security, such as a guarantee issued by a bank or similar financial institution to cover the liability of the registered owner for pollution damage to an amount equal to the limits of liability under the ap-plicable national or international limitation regime.

Direct action against the insurerAnother key provision is the requirement for direct action – this will allow a claim for compensation for pollution damage to be brought directly against an insurer.

Limits of liability The right of limit of liability is based on the Conven-tion on Liability for Maritime Claims 1976, LLMC, as amended. Consequently the location of any incident will

“With the entry into force of this Convention, the Organi-zation has now in place all the elements of a liability and compensation regime for damage caused by the sea car-riage of oils, whether as cargo or as fuel.”

IMO Secretary-General Efthimios E. Mitropoulos

* Bahamas, Bulgaria, Croatia, Cyprus, Estonia, Germany, Greece, Iceland, Jamaica, Latvia, Lithuania, Luxembourg, Norway, Poland, Samoa, Sierra Leone, Singapore, Slovenia, Spain, Tonga, United Kingdom.

It has been estimated that, on average, the amount of bunkers carried in non-tankers is around 14 million tonnes at any given time – compared with approximately 130 million tonnes of oil is carried as cargo on the world’s seas. Some bulk carriers and container ships carry more oil as bunkers than coastal tankers carry as cargo. Oil Spill Intelligence Report data has confirmed that even for larger spills the number of non-tanker vessel spills was significantly greater than the number of tanker spills. (Source: www.imo.org)

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The new Bunker Convention KEy fEATuRES 4 A broad definition of shipowner4 Strict liability4 Compulsory insurance to cover liability4 Direct action against the insurer4 Limits of liability based on 1976 LLMC convention as amended

Newsfrom

Piraeus

Things are moving the right way

Clas RydénGeneral Manager

The Swedish Club Greece

dictate the applicable limits of liability and, equally, the rules which deprive the shipowner of his right to limit. The convention makes it clear, however, that even where a shipowner loses the right to limit, the person provid-ing insurance/financial security will still be entitled to limit liability to an amount equal to the amount of the insurance or other financial security required to be maintained.

Limit of liability under the 1996 LLMC Proto-col which entered into force in 2004:

For claims for loss of life or personal injury for ships not exceeding 2,000 gross tonnage the limit is 2 million SDR (Special Drawing Rights) (USD 3,232.050, EUR 2,082,000), as per SDR rates June 2008

• For each ton from 2,001 to 30,000 tons, 800 SDR (USD 1,293, EUR 833)

• For each ton from 30,001 to 70,000 tons, 600 SDR (USD 970, EUR 576)

• For each ton in excess of 70,000, 400 SDR (USD 647, EUR 416).

For property claims for ships not exceeding 2,000 gross tonnage the limit is 1 million SDR (USD 1,616,400 EUR 1,041,000).



• For each ton in excess of 70,000, 200 SDR (USD 323 EUR 208)

Further information about the Bunker Convention and the certification requirements can be found in our P&I Circular No 2468/2008 dated April 29th 2008 Entry into force of the Bunker Convention – certification requirements and issuance of Blue Cards and State certificates” (www.swedishclub.com)

Daniel ErikssonSenior Claims Executive

Team Göteborg I

News from Piraeus

So, we can put the bi-annual shipping exhibition Posi-donia behind us. It has, as usual, been a great event. For most of us it started the week before with various receptions and the sailing regatta Posidonia Cup. The event has grown to a record 64 entries in four different classes. The Swedish Club participated in the standard division this year with 24 entries. We ended up 12th and it was nice to see that FKAB Marine Design (a Swedish Company) came first followed by our Member, Costamare in second place.

At this year’s Posidonia, a lot of attention was drawn to the environment. Even though shipping contributes with a little above 4% of the total emissions of CO

2, one should

note that 90% of goods and raw materials are transported world wide by ships.

The ISO 14001 environmental management standard was promoted during the week. The big classification so-cieties contributed by encouraging owners to implement various schemes. Germanischer Lloyd has introduced a CO

2

– index where owners can check their GL classed vessels online. Costamare has entered five large container vessels which will be the first worldwide to operate in full compli-ance. This is one step forward to consistently reduce CO

2

emissions and part of looking after our environment.Helmepa is doing its part as well and promoting their

motto for 2008 “Let’s change habits… …not the cli-mate”.

The Swedish Club’s previous deputy chairman and founder of Costamare, Captain Vassilis C. Constantako-poulos has always been a dedicated supporter of Helmepa. He was the chairman of Helmepa 1996 – 2000. Today, be-ing a grandfather and even more concerned about the envi-ronment, Captain Vassilis has been re-elected as chairman of Helmepa.

Last but not least, we are very pleased to announce that we will strengthen our team in Piraeus with a senior claims manager. His name is John Owen and we shall be happy to introduce him to our members in Greece, Italy and the Middle East after the summer.

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AGM / Out and AboutThe Swedish Club Letter 2–2008

AGM Informal DinnerThe dinner for “Early Arriv-als” was held on Wednesday June 11th. About 200 guests enjoyed the traditional sea-food buffet and the seaview at Långedrags Värdshus. In the same house the Swedish Sea Rescue Society have their new office.

Steam… …and sail cruise

Simon Chumas, Barlow Lyde & Gilbert in vivid conversation with Harry Gelsing, SCUA Rotterdam.

The new board member Dimitri Dragazis, Latsco (London) enjoying his company at the table.

Enjoying the seafood and good company. From left: The Club’s board member Gustaf Grönberg of Star Cruises, Lars Rhodin (TSC), Anna-Karin Lönnstad Dalemo (TSC) and Andrew Gordon of Seascope Insurance Service Ltd.

Kathy and Frans Malmros arriving to the dinner for ”Early Arrivals”.

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The Swedish Club Letter 2–2008 AGM / Out and About

The cruising this year started with a trip with the old steamship Bohuslän and then three sailing ships waited to take the guests, who so preferred, on a sailing tour around the beautiful archipelago of Göteborg.

Steam… …and sail cruise

Further photos from AGM can be found on our website www.swedishclub.com/Out and About

Sweden wins important Cup! For the 12th consecutive year the Mutual Cup was played in conjunction with our Annual General Meeting. Energy and will-power was high at the same time as muscles and knees got sore. The day before Sweden beat Greece 2-0 in the European Championship and Team Sweden gave a repeat performance of that game by defeating Team International with the same result!

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Mr Robert Knutzen of RK Offshore Management in Singapore had the honour to hold the speech of thanks after the AGM Dinner.

Mrs Christiane E. Oldendorff was one of the distinguished guests who attended the AGM Dinner.

AGM / Out and AboutThe Swedish Club Letter 2–2008

AGM DinnerPhotos from the festitivities surrounding the AGM Dinner on June 12th held at the Banquet Hall, Elite Park Avenue Hotel.

The Swedish Club Silver Medal was given to Frans Malmros by the Club’s Chairman Mr Lennart Simonsson during the AGM Dinner.

Proud winner of The Swedish Club Grand ClassicWe congratulate Sune Johansson of Fairwater Marine AB, Göteborg who won this year’s Swedish Club Grand Classic at Delsjö GK.

A proud Frans Malmros showing The Swedish Club Silver Medal awarded to him at the AGM Dinner.

Further photos from AGM can be found on our websitewww.swedishclub.com/Out and About

The Swedish saxophonist and singer Emma Essinger entertained during the dinner.

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Lars Rhodin, newly appointed Managing Director of The SwedishClub, was still ”fit as a fiddle” by the end of race.

Great fun during the race had Martin Sjöholm from Transbulk 1904 AB, Göteborg…

…and so had Jörg Erdtmann from NSB - Niederelbe Schiffahrts-gesellschaft in Buxtehude.

The Swedish Club Letter 2–2008 Out and About

“Göteborgsvarvet” – the Göteborg Half Marathon

Pain is temporary – Pride is forever! 44 members, business partners and employees of the Club, took on the challenge of the 29th “Göteborgsvarvet” on May 17th, a half marathon over two bridges and through the city centre. Over the years the Göteborg Half Marathon has grown into one of the greatest long distance races in the world, with a new record entry in 2008 of 45,375 runners!

Everyone in The Swedish Club Team who finally made it to the start-ing line also finished, loudly cheered on by a small but eager support team. The fastest was Marc-Michael Meier of NSB who completed the course in an impressive 1 hour 26 minutes, which resulted in the 611th place overall. The NSB team also won the Club’s own competition for having estimated their individual finishing times most accurately. Seldom has the beer and wine tasted so good as at the dinner at Språkcaféet that evening, co-hosted by Transbulk, and everyone agreed with Lars Rhodin that “Pain is temporary – Pride is forever!”

The Swedish Club Team was represented by runners from the following companies: Advokatfirman Vinge KB Cobelfin NV Conti Reederei Eversheds LLP Holman Fenwick & Willan Junge & Co Versicherungsmakler GmbH Mays Brown Solicitors NSB - Niederelbe Schiffahrtsgesellschaft mbH & Co KG The Swedish Club Transbulk 1904 AB

Annica Börjesson, Claims Executive, TSC had no problem finishing the race. "Piece of cake! Anybody wants to challenge us next year?" says Annica!

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On April 9th our Greek office invited to the annual Member’s Lunch at the Marine Club in Pi-raeus. The turnout was as always very good and it was especially pleasing to note that all four of our Greek board directors attended the lunch. Various presentations were given during the lunch, of which one was “The way forward” by Deputy Managing Director Lars Rhodin, who will succeed our current Managing Director Frans Malmros on July 1st 2008.

The agenda was: Result & Development International Group issues – in particular certifiacation under the forthcoming Bunker Conven- tion Mechanical Failures The way forward

The resigning MD – Frans Malmros – also took the opportu-nity to thank all the attendees for their support and the good co-op-eration during the years.

Club evening in Hamburg – April 14th 2008

This yearly event at the Viehhauser Hafen Klub in Hamburg, attracts many of our members and brokers in the Ger-man market. Our guests are given a topical presentation followed by refreshments.

Mr Simon Chumas of Barlow Lyde & Gilbert spoke about a major P&I case in Odessa, which is now subject to arbitration in London.

Retirement reception

Spring Lunch in Piraeus

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Out and AboutThe Swedish Club Letter 2–2008

Three Managing Directors gathered at the head office.From left: the new Managing Director Lars Rhodin, Per Erik Hedborg, who was Managing Director of the Club between 1960-1979 and Frans Malm-ros who has been in charge from 1997 until now.

The Swedish Club staff took the opportunity to hand over a small gift and to wish Frans Malmros a happy retire-ment during a reception held at the head office on June 17th.

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STAFF NEWS

Lars Rhodin, will succeed Frans Malm-ros as Managing Director of the Club on July 1st 2008. A more detailed profile on Lars Rhodin can be found in The Swedish Club Letter 1-2008.

Bruce Hung, joined our Hong Kong of-fice on May 26th 2008 as Claims Manager. Bruce has more than 20 year’s experience of claims related work and a seagoing background. Prior to joining the Club, Bruce served as a Senior Claims Executive with the UK P&I Club during 1997-2008 and as a Claims Manager with the insur-ance broker Andrew Liu & Co in Hong Kong.

Eva van Heek Lilljegren, has accepted permanent employment from July 1st 2008 as PA to the Club’s new Managing Director Lars Rhodin.

Frans Malmros, the Club’s Managing Director since 1997 retired on June 30th 2008 after almost 12 years of dedicated service to the Club and its members. Frans has made a very valuable contribution to the Club and its growth and is well-known and respected throughout the shipping in-dustry. We wish him a happy retirement and all the best in the future to both him and his wife Kathy.

Jing Liu, Claims Manager in Team Asia, has resigned after 11 years of dedicated services to the Club. We wish her all the best in her future career.

Nautical students to India with help from The Swedish ClubOn February 24th 20 keen students, from the Masters Mariner’s Programme at Chalmers, arrived in Mumbai (Bombay) for 10 days of visits to the Samundra Institute of Maritime Studies, the shipowning company K-Line, the Wärtsilä factory and the largest new constructions’ yard in India – the Cochin Shipyard. This shipyard does not usually allocate a lot of time to study visits but when they saw the impressive list of sponsors, they made an exception for this group.

“We have been enriched with new perspectives and knowledge from this jour-ney, and the involvement from the companies we visited have been great. There-fore we want to thank The Swedish Club for their contribution that made this trip possible”, says David Palm, student at Chalmers Masters Mariner’s Program.

The Swedish Club Letter 2–2008 Out and About / Staff News

PUBLiC HOLiDAySwhen The Swedish Club offices are closed July – October 2008

Head office SwedenEmergency tel +46 31 151 328November 1st All Saint’s Day

GreeceEmergency tel +30 6944 530 856August 10th Assumption DayOctober 28th National Anniversary

Hong KongEmergency tel +852 2598 6464July 1st The day following Hong Kong Special Administrative Region Establishment DaySeptember 15th The day following Chinese MidAutumn FestivalOctober 1st National DayOctober 7th Chung Yeung Festival

Japan24 hour tel +81 3 5442 5466July 21st Marine DaySeptember 15th Respect for the Elderly DaySeptember 23rd Automnal Equinox Day October 13th Health and Sports Day

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CLUB CALENDAR

October 9th 2008Board Meeting in Munich

December 4th 2008Board Meeting in London

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