ICLGThe International Comparative Legal Guide to: Shipping Law 2018 6th Edition A practical cross-border insight into shipping law

Published by Global Legal Group, with contributions from:

Akabogu & Associates Guantao Law Firm Peter Doraisamy LLC Ana Cristina Pimentel & Associados, HFW Q.E.D INTERLEX CONSULTING SRL Sociedade de Advogados, SP, RL Hill Dickinson LLP Rosicki, Grudziński & Co. Arias, Fábrega & Fábrega Ince & Co Middle East LLP Sabatino Pizzolante Abogados BLACK SEA LAW COMPANY Jensen Neugebauer Marítimos & Comerciales Clyde & Co LLP JIPYONG SSEK Legal Consultants Dardani Studio Legale Kegels & Co Stephenson Harwood Dingli & Dingli KOCH DUKEN BOËS ThomannFischer D. L. & F. DE SARAM Lee and Li, Attorneys-at-Law Tomasello & Weitz DQ Advocates LERINS & BCW Van Traa Advocaten N.V. Esenyel|Partners Lawyers & Consultants LEX NAVICUS CONCORDIA Vieira de Almeida | Guilherme Daniel & Associados Estudio Arca & Paoli Abogados LP LAW | LOPES PINTO ADVOGADOS Fernandes Hearn LLP ASSOCIADOS Vieira de Almeida | RLA – Sociedade de Advogados, RL Foley Gardere, Foley & Lardner LLP Meana Green Maura y Asociados SLP VUKIĆ & PARTNERS FRANCO & ABOGADOS ASOCIADOS (MGM&CO.) Wikborg Rein Advokatfirma AS FRANCO, DUARTE, MURILLO Mulla & Mulla & Craigie Blunt & Caroe ARREDONDO NASSAR ABOGADOS Yoshida & Partners Graham Thompson Noble Shipping Law Grossman, Cordova, Gilad & Co. Law Offices (GCG) The International Comparative Legal Guide to: Shipping Law 2018

General Chapters:

1 Key Recent Cases Considering Package/Unit Limitation under the Hague and Hague-Visby Rules – Ed Mills-Webb & Mark Tilley, Clyde & Co LLP 1 2 Industry Risks (Legal and Non-Legal) within the Offshore Energy Sector in Mexico – Daniel Aranda & Alejandro Gómez-Strozzi, Foley Gardere, Foley & Lardner LLP 6 3 The Changing Face of Maritime Law and Risk – Cyber, E-Commerce, Automation of Vessels – Contributing Editor Julian Clark & Beatrice Cameli, Hill Dickinson LLP 8 Ed Mills-Webb, Clyde & Co LLP 4 Legal and Regulatory Overview of Wet Shipping in – Emeka Akabogu & Sales Director Victor Onyegbado, Akabogu & Associates 14 Florjan Osmani 5 International Liability and Compensation Conventions: Panacea or Ideal? – Donald Chard, BIMCO 19 Account Director 6 Drafting a New Baltic Code – Mark Jackson, The Baltic Exchange 23 Oliver Smith Sales Support Manager Country Question and Answer Chapters: Toni Hayward Editor 7 Angola Vieira de Almeida | RLA – Sociedade de Advogados, RL: Nicholas Catlin João Afonso Fialho & José Miguel Oliveira 25 Senior Editors 8 Australia HFW: Hazel Brewer & Nic van der Reyden 31 Suzie Levy 9 Bahamas Graham Thompson: Michelle Pindling-Sands 37 Caroline Collingwood 10 Belgium Kegels & Co: André Kegels 42 CEO 11 Brazil LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS: Dror Levy Alessander Lopes Pinto & Patricia dos Anjos 50 Group Consulting Editor Alan Falach 12 Canada Fernandes Hearn LLP: James Manson 54 Publisher 13 Tomasello & Weitz: Leslie Tomasello Weitz 59 Rory Smith 14 China Guantao Law Firm: Shouzhi An & Frank Fulong Huang 63 Published by 15 Colombia FRANCO & ABOGADOS ASOCIADOS: Javier Franco 69 Global Legal Group Ltd. 16 Costa Rica NASSAR ABOGADOS: Tomás Nassar Pérez & 59 Tanner Street María Fernanda Redondo Rojas 73 London SE1 3PL, UK Tel: +44 20 7367 0720 17 Croatia VUKIĆ & PARTNERS: Gordan Stanković 79 Fax: +44 20 7407 5255 18 Denmark Jensen Neugebauer: Mads Poulsen 84 Email: [email protected] URL: www.glgroup.co.uk 19 Dominican Republic Q.E.D INTERLEX CONSULTING SRL: Luis Lucas Rodríguez Pérez 89 GLG Cover Design 20 France LERINS & BCW: Laurent Garrabos & Rémi Racine 94 F&F Studio Design 21 Germany KOCH DUKEN BOËS: Dr. Axel Boës & Henrike Koch 100 GLG Cover Image Source 22 Guatemala NASSAR ABOGADOS: Tomás Nassar Pérez 106 iStockphoto 23 Honduras NASSAR ABOGADOS: René Serrano & Jessy Aguilar 111 Printed by 24 Hong Kong Stephenson Harwood: Andrew Rigden Green & Evangeline Quek 117 Ashford Colour Press Ltd. July 2018 25 India Mulla & Mulla & Craigie Blunt & Caroe: Shardul Thacker 122 Copyright © 2018 26 Indonesia SSEK Legal Consultants: Dyah Soewito & Stephen Igor Warokka 129 Global Legal Group Ltd. 27 Ireland Noble Shipping Law: Helen Noble 134 All rights reserved No photocopying 28 Isle of Man DQ Advocates: Mark Dougherty & Kirsten Middleton 140 29 Israel Grossman, Cordova, Gilad & Co. Law Offices (GCG): Avi Cordova & ISBN 978-1-912509-21-8 Roy Gilad 145 ISSN 2052-5419 30 Italy Dardani Studio Legale: Marco Manzone & Lawrence Dardani 149 Strategic Partners 31 Japan Yoshida & Partners: Norio Nakamura & Taichi Hironaka 155 32 Korea JIPYONG: Choon-Won Lee & Dahee Kim 160 33 Malta Dingli & Dingli: Dr. Tonio Grech & Dr. Fleur Delia 166 34 Mexico FRANCO, DUARTE, MURILLO, ARREDONDO: Rafael Murillo 171 35 Mozambique Vieira de Almeida | Guilherme Daniel & Associados: João Afonso Fialho & José Miguel Oliveira 175 36 Netherlands Van Traa Advocaten N.V.: Vincent Pool & Jolien Kruit 180 37 Norway Wikborg Rein Advokatfirma AS: Gaute Gjelsten & Morten Lund Mathisen 187

Continued Overleaf

Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720

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

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Country Question and Answer Chapters: 38 Panama Arias, Fábrega & Fábrega: Jorge Loaiza III 193 39 Estudio Arca & Paoli Abogados: Francisco Arca Patiño & Carla Paoli Consigliere 204 40 Poland Rosicki, Grudziński & Co.: Maciej Grudziński & Piotr Rosicki 210 41 Portugal Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL: Ana Cristina Pimentel 216 42 Russia LEX NAVICUS CONCORDIA: Konstantin Krasnokutskiy 221 43 Singapore Peter Doraisamy LLC: Peter Doraisamy & Rafizah Gaffoor 227 44 Spain Meana Green Maura y Asociados SLP (MGM&CO.): Jaime Soroa & Edmund Sweetman 232 45 Sri Lanka D. L. & F. DE SARAM: Jivan Goonetilleke & Savantha De Saram 237 46 Switzerland ThomannFischer: Stephan Erbe 243 47 Taiwan Lee and Li, Attorneys-at-Law: Daniel T.H. Tsai & James Chang 247 48 Turkey Esenyel|Partners Lawyers & Consultants: Selcuk S. Esenyel 252 49 Ukraine BLACK SEA LAW COMPANY: Evgeniy Sukachev & Anastasiya Sukacheva 257 50 United Arab Emirates Ince & Co Middle East LLP: Mohamed El Hawawy & Sheridan Steiger 263 51 United Kingdom Clyde & Co LLP: Ed Mills-Webb 269 52 USA Foley Gardere, Foley & Lardner LLP: Peter A. McLauchlan & Anacarolina Estaba 274 53 Venezuela Sabatino Pizzolante Abogados Marítimos & Comerciales: José Alfredo Sabatino Pizzolante & Iván Darío Sabatino Pizzolante 284

EDITORIAL

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

Alan Falach LL.M. Group Consulting Editor Global Legal Group [email protected] Chapter 1

Key Recent Cases Considering

Package/Unit Limitation under Ed Mills-Webb the Hague and Hague-Visby Rules

Clyde & Co LLP Mark Tilley

For almost 20 years there has been no reported English Court judgment on the meaning of the carrier’s per package or unit The ‘Aqasia’ [2018] EWCA Civ 276 limitation under the and/or the Hague-Visby Rules. In this case, the claim arose from damage to a cargo of fish oil Now, very much as the saying goes with London buses, we have carried on board the m/v ‘Aquasia’ from Iceland to Norway. The had two such cases in quick succession, both of which have resulted carrier, as disponent owner, chartered the Vessel to the Cargo in leading judgments of the Court of Appeal being delivered in Interests by way of a evidenced by a Fixing Note dated 2018. Since the applicable carrier’s limitation and its interpretation/ 23 August 2013. The Fixing Note allowed the Parties to rely on the method of calculation will, in almost all cases, determine the like privileges, rights and immunities that are contained in sections maximum recoverable amount in any claim for loss and/or damage 2 and 5 of COGSA 1924. These sections contain the Hague Rules. to cargo carried by sea, it is obviously important to understand the Article IV Rule 5 of the Hague Rules provides as follows: current law on this critical issue and this article summarises the decisions in both cases. “Neither the carrier nor the shall in any event be or become liable for any loss or damage to or in connection The two recent cases on package limitation under Article IV Rule with goods in an amount exceeding [£100] per package or 5 are: unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the .” The ‘Aqasia’ [2018] EWCA Civ 276 The cargo was described in the charterparty as “2,000 tons cargo of fish oil in bulk, 5% mol chopt” and freight was described as a lump The Court was asked to consider whether the word “unit” in Article sum of NOK817,500. IV Rule 5 of the Hague Rules could be read to refer to a unit of measurement, such as a metric ton or kilogram, so as to extend the The cargo was loaded in Iceland and a clean bill of lading was application of the limitation to cargoes carried in bulk. issued by the Master, describing the cargo as 2,056,926 kg of fish oil in bulk, of which about 550,000 kg was loaded into tanks 1P, 2P This question has generated a number of articles from eminent and 5S (“the Subject Cargo”). academics and practitioners over the years and features in all leading texts on the carriage of goods. However, in the 92-year The Vessel sailed to Norway where a further cargo of fish oil was history of the Hague Rules, the question has never been answered loaded and co-mingled with the Subject Cargo. On arrival at the determinatively under English law until now. discharge port(s), it was discovered that 547,309 kg of the Subject Cargo was contaminated. The Cargo Interests claimed damages The case is significant commercially because the Hague Rules from the carrier for loss of and/or damage to the Subject Cargo in are still regularly applied as a result of their incorporation into the sum of USD367,836. sea , (as in this case) and bills of lading issued in and relating to cargoes loaded in non-Hague Visby Rules The carrier accepted liability for the damage but argued that they contracting states. Currently, the Hague Rules are in force in 68 were entitled to limit its liability under Article IV Rule 5 of the states, whereas the Hague-Visby Rules are in force in 29 states (15 Hague Rules to £100 per “unit”, the relevant “unit” being a metric states have enacted domestic legislation similar to the Hague-Visby ton of cargo damaged. If correct, the carrier’s liability would be Rules but they are not party to the Hague-Visby Rules). So issues limited to £54,730.90. The Cargo Interests contended that the word of limitation under the Hague Rules 1924 will still frequently arise. “unit” was intended to mean a physical unpackaged item of cargo and not a unit of measurement so that limitation could not apply to a bulk cargo. The ‘Maersk Tangier’ [2018] EWCA Civ 778 The Parties agreed to submit this issue to the High Court to be determined as a preliminary issue. In the High Court, the Judge held The Court of Appeal has issued a leading judgment (upholding the that the carrier was not entitled to limit its liability for a bulk cargo, decision of the Commercial Court) determining for the first time as the term “unit” in Article IV Rule 5 of the Hague Rules meant an under English law what constitutes a “unit” for the purposes of unpackaged physical item (such as a car or a boiler) and not a “unit limitation under Article IV Rule 5 of the Hague Rules and the Hague- of measurement”, such as a metric ton or kilogram. Visby Rules. The decision also provides important guidance on whether the Hague-Visby Rules can be compulsorily applicable even though the carrier issued a sea rather than a bill of lading.

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High Court Court of Appeal

The key findings in the High Court judgment were as follows: Before the Court of Appeal, the carrier argued: a. The language of the Hague Rules ■ that the Judge had failed to give effect to the intention of The Judge acknowledged that the word “package” related to a the Parties that the “package and unit” limitation, expressly incorporated into the , should apply in physical item and that the words “unit” and “package” together respect of the cargo envisaged in the contract, i.e. liquid fish and in the same context suggested that both terms were concerned oil; and with a physical item (or composite items) rather than to a unit of ■ that the Judge was wrong to conclude that the limitation measurement. of liability provision in the Hague Rules (applicable as an b. The Hague-Visby Rules International Convention and not just a ) The Judge held that the terms of the Hague-Visby Rules cannot affect does not apply to a cargo carried in bulk. the construction of the Hague Rules. That said, it was pointed out It was common ground between the parties that, as a matter of that Article IV Rule 5(c) of the Hague-Visby Rules strongly suggests ordinary language, “unit” can be both a reference to a physical item that the draftsmen considered that a “unit” constitutes a physical or a unit of measurement. However, in the context of the Hague item rather than a freight unit, otherwise it would be meaningless to Rules, the Court of Appeal held that “unit” means only a physical speak of the “number of packages or units enumerated in the bill of item of cargo and not a unit of measurement for, amongst others, the lading as packed in such article of transport”. following reasons: c. The Travaux Préparatoires to the Hague Rules 1. The term “package” in the Hague Rules clearly refers to a The Judge’s review of the Travaux Préparatoires led him to the packaged physical item and the terms “package” and “unit” conclusion that whilst concepts of weight and volume were discussed are used together and in the same context. This suggests that both terms are concerned with physical items, instead of units initially, they were abandoned and were never resurrected, whether of measurement. by the introduction of the word “unit” or otherwise. The Judge was also persuaded by the fact that in light of the economic situation in 2. Article III Rule 3(b) of the Hague Rules refers to “packages or pieces” as opposed to “quantity” or “weight”. The Court 1921–1924, the £100 limit would never have applied to bulk cargoes of Appeal held that “unit” was another term for “piece”. due to their low value per mt. These terms referred to physical items of cargo that were d. The 1936 United States Carriage of Goods by Sea Act incapable of being packaged or were simply not packaged. The Hague Rules wording was amended for the purposes of US The Court of Appeal noted that the Hague Rules refer to the COGSA so that the corresponding provision to Article IV Rule 5 weight of cargo, but not in the section applicable to limitation of liability. referred to “per package or customary freight unit”. This had the effect that the limitation provisions of US COGSA do apply to bulk 3. The Court of Appeal did not consider that the wide definition cargoes and meant that the US position did not offer any guidance of “goods” in Article I of the Hague Rules assists with the interpretation of the term “unit”. The carrier argued that the in considering the meaning of the words “per package or unit”, even wide definition of “goods” indicated that Article IV Rule 5 though owners argued that it did. in turn applied to bulk cargo. The Court of Appeal did not e. Authorities from other jurisdictions agree, as there are other provisions in the Hague Rules that The Judge recognised that there were authoritative decisions on this do not apply to bulk cargo. question in other jurisdictions. The Court specifically highlighted 4. If a dual meaning of “unit” is accepted, there is no guidance the decision of the Canada Supreme Court in Falconbridge, where in the Hague Rules to assist with how it should be applied, for the Court needed to decide whether a tractor and generator set example if the cargo is described in the contract of carriage constituted “units” for the purpose of limitation under Article IV with reference to both the number of physical items and weight. In this dispute, for example, the Subject Cargo is Rule 5 of the schedule to the Canadian Water Carriage of Goods described with reference to metric tons in the charterparty and Act 1936. The Court held that the word “unit” in Article IV Rule 5 kilograms in the bill of lading. The difficulties in adopting applied to a physical unit of goods and not a unit of measurement. this approach were held to favour the interpretation of “unit” It was considered that the word “unit” within the phrase “package as a physical item of cargo only. or unit” had been added to cover instances where a cargo had been It was also noted that, at the time that the Hague Rules were adopted packed up or made up for portability in a way that may not strictly in the 1920s, the price of bulk cargo was much below the value fall within the scope of the term “package” (for instance a car) but of £100 per tonne. The limitation provisions therefore would not this addition was not intended to extend the scope of Article IV Rule have been relevant to bulk cargo. In circumstances where Article 5 to bulk cargoes. IX of the Hague Rules, the “gold value clause”, is excluded from f. Commentaries and textbooks the contractual incorporation of the Hague Rules (it was excluded The Judge made specific reference to International Maritime in this dispute), limitation is £100, at today’s value, per “package Conventions Volume 1 (1st edition, 2014) by Professor Francesco or unit”. Today, the price of commodities often exceeds £100 per Berlingieri and to Professor Tetley in Marine Cargo Claims (4th metric ton and the effect of inflation has led to limitation arguments edition, 2008) in which he found the arguments that the term being raised by carriers of bulk cargoes. The Court of Appeal “unit” was used as a complement to “package” in the Hague Rules agreed with the first instance Judge’s comment that, if on its true compelling. construction, Article IV Rule 5 did not apply (and was not meant to apply) to bulk cargo, it was not acceptable to strain the language of the provision to make it apply to bulk cargo today.

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The Court of Appeal found support for this interpretation in the As a result of errors in transhipment, delivery of the three containers Travaux Préparatoires which covered the negotiations that led up was delayed and although it was initially envisaged that a bill of to the final text of the Hague Rules. It was found that reference to lading would be issued, instead, in order to avoid any further delay limitation by weight/volume or by freight was removed from the the parties subsequently agreed to the issue of three sea waybills, draft provision. The addition of the word “unit” was a late addition one for each of the three containers and each of which identified the to cover items shipped as single units and not packaged in any way, Respondent as . The cargo was described in the same way such as cars or boilers. The term was not intended to reintroduce in each sea waybill, for example, as follows: weight or volume limitation, which had been abandoned by that One container, said to contain 206 pcs frozen bluefin tuna loins stage in the negotiations. – 18,740.00 kg The carrier argued that US COGSA 1936, which limits liability by Upon delivery, the cargo in all three subject containers was found reference to “per package or per customary freight unit”, clarifies to have suffered damage allegedly due to reefer machinery failure. the limitation provision in the Hague Rules. The Court of Appeal Issues favoured the view that the addition of the words “per customary freight unit” was an amendment of the wording of the Hague Rules A hearing took place before the Commercial Court in 2017 to so as to change its application. Therefore, US COGSA 1936 did determine agreed preliminary issues and from that judgment three not support the carrier’s interpretation of the word “unit”. The new issues came to be considered by the Court of Appeal as follows: language in the Hague-Visby Rules was also held to be irrelevant. ■ Issue 1: Is the carrier’s liability limited pursuant to the Hague Rules or the Hague-Visby Rules? There is no English authority directly on this issue in the context of the Hague Rules prior to the decision of the High Court. Any ■ Issue 2: If the Hague Rules apply, are the relevant packages comments in the case law were strictly obiter (i.e. not binding) or units for the purposes of Article IV Rule 5, the containers or each individual piece of tuna? but they appeared to favour the construction that “unit” refers to an individual piece or pieces of cargo only and not to the unit of ■ Issue 3: If the Hague-Visby Rules apply, are the containers measurement of freight unit. deemed to be the relevant package or unit, or are the individual pieces of tuna packages or units “enumerated” in the relevant The Court of Appeal further held that the interpretation of the word transport document “as packed” in each container, for the “unit” as a physical unpackaged item is accepted by courts in other purposes of Article IV Rule 5(c)? common law jurisdictions and this interpretation is favoured by the majority of academic commentators and textbooks. Issue 1: Is the carrier’s liability limited pursuant to the Hague Rules or the Hague-Visby Rules? Conclusion The Appellant argued that because sea waybills had been issued Despite the carrier’s attempts to persuade the Court that it is instead of bills of lading, the Hague Rules applied contractually. commonly accepted in the shipping market that the package and The Respondent argued that the Hague-Visby Rules applied by force unit limitation of the Hague Rules applies to bulk cargo, the Court of law pursuant to the Carriage of Goods by Sea Act 1971 (“the of Appeal has not left any doubt in finding that the clear meaning Act”) because shipment was from Spain, a contracting state and, of “unit” is a physical unpackaged item of cargo and not a unit of although no bill of lading was ever issued, the contract of carriage measurement or a freight unit. Accordingly, Article IV Rule 5 of the was nevertheless “covered by a bill of lading” for the purposes of Hague Rules does not apply to bulk cargo. the Act and the Hague-Visby Rules Article 1(b)”. This was because In any event, the Court of Appeal also found that even if “unit” could when the contract was made the parties contemplated that a bill of be held to be a unit of measurement or freight unit, there was no lading would be issued and the Respondent was entitled to demand identifiable measurement or freight unit on the facts. This decision the issue of a bill of lading (see Pyrene v Scindia [1954] 2 QB 402 appears to be consistent with what we believe is a widely held view, as approved by the Court of Appeal in The ‘Happy Ranger’ [2002] that a carrier cannot limit its liability under the Hague Rules for loss 2 Lloyd’s rep 357 – both cases in which cargo was damaged during and/or damage to cargo carried in bulk. the loading operation and no bill of lading was issued). The consequence is that it is now settled, after 92 years of uncertainty, At first instance the judge followedPyrene and found that so long as that under English law shipowners will not be able to limit liability the terms of the contract require a bill of lading to be issued or the under the Hague Rules for loss and/or damage to bulk cargo. Respondent is entitled to demand one, it is immaterial whether a bill of lading is ever issued, or even whether a waybill is issued instead, and decided that the Hague-Visby Rules applied by force of law. The ‘Maersk Tangier’ [2018] EWCA Civ 778: Delivering the judgment of the Court of Appeal, Flaux LJ upheld the What is the situation regarding containerised decision of the Commercial Court, noting as follows: cargo under the Hague-Visby Rules? “In my judgment, in circumstances where the appellant expressly eschews any case of variation or waiver or estoppel, In this case, the Appellant agreed to carry the Respondent’s cargo of the fact that sea waybills were issued can make no difference deep frozen tuna, comprising 1,226 unpackaged pieces of tuna loin to the correct analysis. Because the contract of carriage weighing between about 20 kg and 75 kg each, stuffed into three of entitled the respondent to ask for the issue of a bill of lading the Appellant’s “super freezer” containers. The tuna pieces were on demand, the contract of carriage was from its inception one not wrapped or individually packed before being loaded onto the which was “covered by a bill of lading” within the meaning containers. of Article I(b) of the Hague-Visby Rules and a contract which “by implication provides for the issue of the bill of lading” It was common ground that the three containers were received by the within the meaning of section 1(4) of the 1971 Act.” Appellant pursuant to a contract or contracts of carriage containing Given its conclusion that the Hague-Visby Rules were compulsorily an implied term that the shippers were entitled to demand that a bill applicable, the Court of Appeal felt it appropriate to turn next to or bills of lading be issued by the Appellant. Issue 3.

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Flaux LJ decided that there is nothing in the wording of Article IV Issue 3: If the Hague-Visby Rules apply, are the containers Rule 5 of the Hague Rules which justifies the appellant’s argument deemed to be the relevant package or unit, or are the that where the cargo is stuffed in containers the cargo claimant must individual pieces of tuna “packages or units” enumerated in the relevant transport document as packed in each container, be able to show that the cargo could have been shipped “as is” break in each case for the purposes of Article IV Rule 5(c)? bulk without additional packaging. He objected to this argument on the basis that it was an attempt to Until the decision of the Commercial Court, there had been no revive the now discredited “functional economics” test, once used English case law authority on the meaning of Article IV Rule 5(c) by the US Courts to place the burden on the cargo claimant to show and the only guidance has been from the Full Federal Court of why the container should not be treated as the “package” in cases in Australia’s majority judgment in the El Greco case from 2004. In which the individual items inside were not “functional” or capable that case the Australian Court held that the expression “as packed” of shipment as they were. The US Courts abandoned the “functional as used in Article IV Rule 5(c) of the Hague-Visby Rules meant economics” test and their approach was endorsed by Phillips LJ in that individual items “enumerated in the bill of lading” will only the English Court of Appeal in The ‘River Gurara’ (1998). constitute the relevant “units” under Rule 5(a) (rather than the Since the decision at first instance, Flaux LJ had considered this container itself as a single unit) if it is clear from the bill of lading issue in a different context in the recent Court of Appeal decision description how those items are actually packed in the container. in The ‘Aqasia’. Although that case did not involve containerised At first instance the judge disagreed with the finding inEl Greco and cargo, Flaux LJ considered that his own analysis in that case of what decided that Article IV Rule 5(c) merely requires that the number of constitutes a “unit” under Article IV Rule 5 was inconsistent with units in a container is correctly stated on the bill of lading. As the the Appellant’s argument. As he noted in The ‘Aqasia’: sea waybills correctly stated that the containers were loaded with a “I consider that, in the context of the Rules, a ‘unit’ can number of pieces of tuna, the waybills therefore “enumerated” the be regarded as synonymous with a ‘piece’, they are both number of units for the purposes of Article IV Rule 5(c). descriptive of a physical item of cargo which is not a ‘package’, because, for example, it is incapable of being In the Court of Appeal Flaux LJ approved of the approach taken packaged or is not in fact packaged.” in the Commercial Court, which he noted was strongly supported by the French text of Article IV rule 5(c) which refers to the Flaux LJ recognised that the definition adopted by him in The enumeration of the number of packages or units being “included” in ‘Aqasia’ was “clearly wide enough” to encompass the frozen tuna the container, whereas the English wording is “as packed”. loins stuffed in the containers without further packaging. As he put it, “there is simply no warrant for concluding that each cannot be Flaux LJ agreed that to impose any additional, technical, linguistic a ‘unit’ within that definition unless hypothetically they could also requirement to describe how the items of cargo are packed inside have been carried break bulk without being packaged in some way”. the container, would not only give rise to uncertainty and anomalous results, but is also unrealistic and uncommercial. The decision confirms that the definition of “unit” in the Hague Rules and Hague-Visby Rules is the same and the large pieces of Flaux LJ noted that the majority decision in the El Greco had been tuna in this case were “units” for the purpose of both. criticised by academic commentators and in a number of leading texts and concluded as follows: “In my judgment, these criticisms of the majority judgment in Conclusion El Greco are justified and like the judge, I consider that the English courts should not follow the approach of the majority The decision of the Court of Appeal is a landmark decision that in that case. It seems to me that that approach places an upholds the judgment of the Commercial Court and confirms that impermissible gloss on Article IV rule 5(c) which is simply for the first time in English law we now have clear authority for the not justified by the wording of the provision. Accordingly, following: I consider that the judge was correct in the conclusion he reached that there was sufficient enumeration of the frozen ■ The Hague-Visby Rules will compulsorily apply when the tuna loins in the waybills that each loin was a separate contract of carriage requires the issue of a bill of lading and/ “unit” for the purposes of limitation under Article IV rule or entitles cargo interests to demand the issue of a bill of 5(c). It follows that the appeal must be dismissed in relation lading, even if (in the absence of any variation, waiver or to Issue 3.” estoppel) a sea waybill is in fact issued. ■ The definition of “unit” in the Hague Rules and Hague-Visby Rules is the same and the large pieces of tuna in this case Issue 2: If the Hague Rules apply, are the relevant packages were “units” for the purpose of both. or units for the purposes of Article IV, Rule 5 of the Hague Rules, the containers or each individual piece of tuna? ■ To qualify as a “package or unit enumerated in the bill of lading as packed in [a container]” (Article IV Rule 5(c) of the Hague-Visby Rules), it is sufficient that the physical items Given the finding that the Hague-Visby Rules applied compulsorily, of cargo are accurately stated in the bill of lading and there the question of what is a unit under the Hague Rules, did not is no additional requirement that the physical items must be apply. However, as in the Commercial Court, the Court of Appeal described “as packed”. also decided to consider the issue and once again upheld the first instance decision by confirming that the Hague Rules do not require any consideration of how the cargo could have been shipped if not containerised.

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Ed Mills-Webb Mark Tilley Clyde & Co LLP Clyde & Co LLP St Botolph Building St Botolph Building 138 Houndsditch 138 Houndsditch London, EC3A 7AR London, EC3A 7AR United Kingdom United Kingdom

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Ed advises clients on all issues relating to the international sale and Mark is a Professional Support Lawyer assisting the marine and movement of goods, finance, insurance and regulatory issues, with international trade teams at Clyde & Co. Mark’s experience of particular knowledge of commodity, charterparty and bill of lading shipping matters spans over 20 years, including as Partner at another disputes. City firm, and he has advised on a very wide range of shipping and trading disputes encompassing all forms of dispute resolution. He He has significant experience, both in the UK and abroad, of High writes regularly on shipping law issues for circulation to clients and for Court proceedings and arbitration work within the London Maritime external publication. Arbitrators Association, London Court of International Arbitration and International Chamber of Commerce. Ed also acts for a number of clients in the offshore sector and has advised on several significant energy projects in West Africa, including production sharing and farmout agreements. He also deals with vessel construction issues, including specialist offshore vessels and superyachts.

Now the largest shipping practice in the world, Clyde & Co has over 300 specialist marine lawyers based in trading hubs around the globe, on call and serving clients’ requirements in all time-zones at any time of day. We act for the heart of the maritime industry – shipbuilders, owners, charterers, salvors, financiers, port authorities and government, P&I Clubs and insurers – and clients across the broader trade commodities and energy sector. No other law firm can match Clyde & Co’s combined size of practice, in-depth industry knowledge, specialist shipping expertise and global reach – adding up to an unrivalled collective offering in the maritime industry. Wet or dry, contentious or non-contentious – our cradle-to-grave industry approach means that we stand alongside clients through the full corporate lifecycle; from establishment and commercial operations through to dispute resolution and corporate exit options.

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Industry Risks (Legal and

Non-Legal) within the Offshore Daniel Aranda Energy Sector in Mexico

Foley Gardere, Foley & Lardner LLP Alejandro Gómez-Strozzi

As discussed in the prior edition of this publication, as the Mexican 4) The lack of a qualified workforce in a non-friendly business energy market opened itself to embrace and foster direct participation market considering that, due to its recent expansion, far more of foreign investment in the Oil and Gas sector, new opportunities personnel are required than those required prior to the opening arose along with new challenges for its new players. These challenges of the sector to private investors. implied an early assessment of risk–reward while deciding where to 5) The usefulness of including specific provisions that consider allocate financial, technical and physical resources, since the offshore penalties during the time that it may take to lift a wrongful industry, though lucrative, also bears great risk for its participants. vessel arrest, or to into the daily rent an insurance for loss of profits, since vessel arrests are granted in an ex parte In summary, the risks referred to in the previous issue included the manner; however, the bond requested by the courts to impose following: the vessel arrest do not contemplate the daily rent of the 1) The Mexican Supreme Court of Justice criteria expanding vessel, nor the administrative burdens triggered by such arrest the scope of exposure for companies involved in the offshore (e.g., payment to the port authorities, etc.). industry by: Though the Regulations of the Navigation Law and Maritime (a) denying, in regard to platforms used for exploring Commerce have shed light and certainty on the incursion of or exploiting the subsoil, the possibility of including specialised vessels and naval artefacts related to the offshore Oil limitations to liability under the LLMC 1976, which in and Gas industry, by enabling their entry to the country without the that particular case prevented the owners of an Offshore need to flag them as Mexican for either 10 or 15 years depending Support Vessel from capping their liability when on whether they are being used for drilling or for offshore support, damaging a platform; the current international commercial conditions continue to pose a (b) enabling creditors and third parties, including moving-target challenge. The aforementioned regulations enable governmental agencies and NGOs, to request the piercing such vessels to remain in Mexican waters without being flagged of the corporate veil of the companies holding title to a vessel or naval artifact whenever it is suspected that the as Mexican, but do not exempt them from being subject to other relevant company – normally a special purpose vehicle provisions, such as those dealing with customs. This, in light of (SPV) – was being used for the sole purpose of limiting the recent possibility that the members of the North American Free the liability exposure of the ultimate beneficiaries with the Trade Agreement (NAFTA) may walk away from such treaty, poses intention of defrauding third parties due to insolvency of new factors to be considered in long-term bareboat or services the SPV; and agreements. (c) expanding the traditional concept of damages normally Along those lines, other challenges have become acute while others accepted in the Mexican legal tradition by resolving that have arisen during the course of the past year. Among such risks, non-pecuniary damages (pain and suffering and personal security concerns have continued to grow in the northern part of injury) are no longer subject to any statutory cap, and that Mexico as well as in Veracruz, which ultimately may impact the punitive damages may be awarded in favour of plaintiffs, thus opening a wide space for the development of personal deployment and retention of personnel as well as warehousing, injury claims. reparation and handling of highly specialised equipment, and ultimately will need to be factored into the economics of conducting 2) The need to provide an early assessment of the environmental conditions under which a contractual area is being either offshore activities in Mexico. Additionally, in light of the sudden received or relinquished, to set a baseline considering that growth of the offshore industry, foreigners will be forced, to a certain under the provisions of the Environmental Liability Law, extent, to negotiate or liaise with Mexican companies and providers, punitive and consequential damages have been admitted to the which could end in a better negotiation position considering party that causes damages to the environment, and that same the scarcity of such companies. Hence, early negotiations and have been opened for class actions that could be pursued by memorandums of understanding may become more relevant than either the local or federal environmental protection agencies, before. Moreover, foreign companies must consider the heavy as well as NGOs or populations that claim to have been compliance requirements and scrutiny to which companies are now affected by such. being subjected, as well as the international impact and exposure that 3) The suitability of revisiting the traditional labour and tax failure to comply with same may have compared with other markets structures used in the past to render services, in light of or projects. the new thresholds imposed by the Federal Labour Law to consider workers of a provider as independent; as well as Likewise, importation tariffs may become a concern in the immediate revisiting transfer pricing conditions while dealing with a market, considering the safeguarding measures being adopted by subsidiary. Mexico and the United States of America. The bilateral relationship

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between Mexico and the United States (and Canada as part of NAFTA renegotiation is overlapping with political calendars in both NAFTA) is literally being redefined at the time of going to print, with countries, creating a dangerous mix that may negatively impact the particular emphasis being given to steel and steel-related products offshore energy sector. – the backbone of the Oil and Gas industry. Mexico has imposed It is therefore clear that significant external challenges are present and retaliatory import tariffs on over 50 steel tariff lines imported from should be closely watched and laid down by industry participants, the United States, in response to the US Section 232 measure on so as not to increase the already “natural” risks that are inevitably global steel and aluminum imports. Further, Mexico has renewed present in our line of business. its ordinary (Most Favoured Nation) import duties, with an increase to over 180 tariff lines on global steel products. The ongoing

Daniel Aranda Alejandro Gómez-Strozzi Foley Gardere, Foley & Lardner LLP Foley Gardere, Foley & Lardner LLP Torre Esmeralda II Torre Esmeralda II Blvd. Manuel A. Camacho No. 36-1802 Blvd. Manuel A. Camacho No. 36-1802 Lomas de Chapultepec Lomas de Chapultepec Mexico City, 11000 Mexico City, 11000 Mexico Mexico

Tel: +52 55 5201 4518 Tel: +52 55 5284 8561 Email: [email protected] Email: [email protected] URL: www.foley.com URL: www.foley.com

Daniel Aranda is a bilingual, bicultural corporate and trial lawyer serving Alejandro Gómez-Strozzi focuses his practice on providing advisory and clients in the United States, Mexico and international energy, pipeline, consulting services related to international trade, antidumping, customs, banking and finance sectors. He also serves as leader of Foley foreign trade and Mexican administrative law. Gardere’s Energy and Government Procurement Practice in Mexico He has advised major multinational companies in the automotive, steel City and co-chairs its commercial litigation section. and consumer products sectors. He provides advice regarding available He represents foreign and domestic clients with all aspects of their foreign trade programmes, tax implications of foreign trade operations, energy business needs, including: representation before the Mexican implementation of free trade agreements entered into by Mexico, energy authorities (CRE, CNH, Ministry of Energy, Pemex and CFE); customs procedures, trade compliance and unfair trade practices. mergers and acquisitions; project development and finance transactions; Alejandro is the lead trade consultant of the Mexican associations and infrastructure and government procurement; divestitures and buyouts; confederations of pork, poultry and beef producers and provides advice strategic alliances and corporate reorganisations. in tariff and nontariff trade regulations and standardisation. He also Daniel also handles sophisticated contracts and business matters participates in the defence of their interests on national and international involving both domestic and cross-border deals. His financing work trade panels. focuses primarily on structuring, documenting and negotiating debt- Additionally, during President Vicente Fox’s administration (2000– related transactions. These include workouts representing developers, 2006), Alejandro was the undersecretary of economy in charge of lenders and borrowers on asset-based and unsecured lending. He has foreign investment, standards and trade Remedies. He also led the extensive experience representing clients facing conflicts of interest Mexican Investigative Authority regarding trade remedies (UPCI) in the between shareholders and negotiating cash-out mechanisms. Ministry of Economy.

Foley & Lardner LLP looks beyond the law to focus on the constantly evolving demands facing our clients and their industries. With over 1,100 lawyers in 24 offices across the United States, Mexico, Europe, and Asia, Foley approaches client service by first understanding our clients’ priorities, objectives, and challenges. We work hard to understand our clients’ issues and forge long-term relationships with them to help achieve successful outcomes and solve their legal issues through practical business advice and cutting-edge legal insight. Our clients view us as trusted business advisors because we understand that great legal service is only valuable if it is relevant, practical and beneficial to their businesses. On April 1, 2018, Foley combined with Gardere, Wynne & Sewell LLP. Foley & Lardner LLP operates as “Foley Gardere” in Austin, Dallas, Denver, and Houston, and as “Foley Gardere Arena” in Mexico City through its subsidiary, Gardere, Arena y Asociados, S.C.

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The Changing Face of Maritime Law

and Risk – Cyber, E-Commerce, Julian Clark Automation of Vessels

Hill Dickinson LLP Beatrice Cameli

Introduction The Changing Face of the Maritime Industry

The global maritime industry is undergoing a technological Digitalisation, connectivity, automation, smart, cyber, AI and ML revolution that is changing how it has always been seen and are all words and abbreviations that are becoming more and more understood. Of course, this is an industry which has seen continued common in the shipping world. Stakeholders in the industry are and dramatic change since the very first vessels put to sea. becoming more familiar with these terms because they are either Developments in technology, operations, safety management, and catching up with the latest technologies in order, for example, to the needs and requirements of international global trade, have all make their fleets and operations more competitive, or they are had their part to play. However, what the industry is facing today is experiencing the challenges that innovation brings with it. unprecedented both in terms of advancement and effect. This “new” face of the maritime industry presents various aspects. All operators in the industry are facing ever-increasing pressure The most hotly debated ones will be considered in the following to leave behind what is perceived as the “traditional shipping paragraphs. approach”, to adopt mechanisms which (it is intended) will improve profitability, efficiency and operations in a world where almost Cyber everything is now managed and operated by digital means.

We are living in a time of increased and swift technological evolution, 90% of global world trade continues to be moved by sea. Currently the results of which are going to be revolutionary and create a whole there are in excess of 50,000 merchant trading, operated new playing field and wealth of opportunity – both for those involved from over 150 nations worldwide, employing in excess of one in the established areas of the sector, and also in areas that have not million seafarers. The Conference on Trade and traditionally been associated with maritime trade. Development (UNCTAD) and BIMCO, amongst others, have For centuries, the shipping industry has been open to change confirmed that 2018 is largely seeing a recovery in the shipping and innovation, albeit often at a slower pace than other transport markets, with a significant contribution towards total world trade industries. Today, however, advances in technology, and the figures. The combination of the value of the trading assets, the development of a new digitalised era, have made it impossible for commodities carried, the complexity of the transportation regime, shipping to continue doing business in the traditional way, and the and the high number of personnel involved in the industry, all make time has now come for the industry to catch up and adapt to the the marine sector an ideal target for cybercrime. current trends seen elsewhere. But what is cybercrime? In its most simple definition, cybercrime If technology, digitalisation and connectivity all seem to be a is a criminal activity that involves the Internet, a computer system, positive step forward for the marine industry and will present plenty or computer technology as a means of gaining criminal advantage. of opportunities, they do not come without challenges. Relying Shipping – like many other industries – has become more exposed more heavily on e-commerce, artificial intelligence (AI), machine to this type of attack due to the increased digitalisation that it has learning (ML) and digital control systems brings with it an increased undergone over recent years, combined with the lack of proper threat of hacking and other forms of cybercrime increasingly regulation and legal protection and scope of risk, which is even prevalent in the maritime sector, with the potential consequences today underestimated. In particular, certain of the operational and being progressively more wide-ranging and destructive. navigational systems that have been developed have made ships In this chapter, we will consider what is causing the maritime more vulnerable to cyber-attacks, due to their reliance on digital industry to change. Specifically, we will focus on: cyber-risk, means and connectivity to shoreside systems. Examples are: what it is and what can be done to mitigate the risks associated ■ Systems using global navigation satellites such as GPS which with it; e-commerce and its application to the shipping world with are able to pinpoint the vessel’s precise location and can be blockchain; and automation of vessels and the benefits and risks of accessed and altered to give incorrect position data – and moving to fully autonomous ships. possibly cause the crew wrongly to change course. We will also briefly look at the current legal framework, the ■ Electronic Chart Display & Information Systems (ECDIS) guidelines that have been issued by international bodies, and what providing electronic charts of ocean routes that, when given more needs to be done to ensure that the future of shipping is safe, false information, can cause the crew to believe they are on a correct course, when they are not, or to plot a wrong course. protected and keeps up with the latest technological developments.

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■ Automatic Identification Systems (AIS) allowing vessels and that never actually materialise? Unfortunately, the answer is that shoreside stations to monitor traffic, continuously broadcast we are now regularly experiencing real-life examples of these risks a ship’s location and access details which can be intercepted, in action. thereby providing incorrect information on a ship’s location, The Port of Antwerp identity or movements. In 2011, the Port of Antwerp was attacked after it introduced a new All of the above systems can be hacked from remote locations by electronic release system (ERS) for containerised cargo. This was relatively inexpensive and uncomplicated hardware readily available intended to replace the system in use at that time for the authorisation to those wishing to infiltrate the systems. The risk, however, is not of cargo release through delivery orders or release notes. A number restricted to access gained via completely external sources but by of carriers using the port decided to adopt this system which would the increased ease of infiltrating the systems, due to the huge range send computer-generated pin codes via email to cargo receivers or of potential access points for a cyber-attack. Think, for example, their agents, as well as the port terminal. of crew members, or other third parties who are allowed access to go on board vessels and who could infect systems, either However, a sophisticated criminal gang managed to break into the intentionally or innocently, via their own flash drives, laptops and system and attacked the port over a two-year period, starting in even mobile phones. Hackers can gain information by taking as 2011. Following an initial “staged” break-in, where Trojan RAT simple a step as plugging a phone cable into any one of the various malware was uploaded into certain PCs, the gang accessed data that onboard computers or access points. Once connected to the system, provided them with the location and security details of containers. or having downloaded a form of remote access technology (RAT), This, in turn, allowed them to smuggle drugs and weapons in the they are able to access significant amounts of potentially sensitive containers and extract them in Antwerp before the legitimate owners of the remaining cargo arrived to empty the containers. information which they can then use in order to gain a criminal advantage, be that by way of ransomware (effectively freezing It is estimated that significant amounts of contraband were moved systems and sending an electronic threat that unless a ransom is paid, through the terminal for a number of years before the authorities data will be permanently deleted), industrial espionage (the selling became aware of the system. Indeed, it was only due to the fact that of trade secrets), criminal advantage (the obtaining of confidential the criminals had operated so effectively without interruption for information so as to benefit from trade secrets and trading activities), such a prolonged period of time that they became confident enough or even as a means of international terrorism. to start to remove entire containers from the port. It was this loss of entire containers which alerted the authorities and eventually led to Who carries out these attacks? This in itself is another significant the discovery of the cyber-breach. problem. Cyber-attacks can be perpetrated by a wide range of individuals including criminals, terrorists and government Maersk NotPetya organisations, hackers, employees and ex-employees who are In 2017, the container line AP Moller Maersk announced that it had aggrieved or acting under duress, or simply experimenters who been hit by NotPetya, a ransomware attack that prevented people usually have no malicious intent; for example, young cyber- from accessing their data unless they paid $300 in bitcoin. This enthusiasts trying their hands at infiltrating and taking control of caused the company to shut down completely its booking systems, advanced systems. Such attacks can either be untargeted or targeted: which cost it in the region of $300 million in lost revenue. the former are normally less sophisticated and carried out on the Maersk should be congratulated by the entire industry, both for its assumption that by increasing the number of attacks, the criminals openness in publishing the details of the attack, which has led to will increase their chances of success; whilst the latter require more a significant increase in shipping corporations taking cyber-risk time and research, can be extremely sophisticated and often occur seriously and introducing risk-prevention measures, but also for the in multiple stages. speed with which it was able to deal with the incident due to its Cyber-risks change not only every day but every hour as new advanced and detailed cyber-protection regimes. strategies are developed by hackers and others to disrupt systems. However, even with this level of sophistication and protection It can therefore be seen how the maritime industry is particularly in place, the attack caused Maersk to replace 45,000 PCs, 4,000 exposed, due to the high number of access points for a cyber-attack, servers and 2,500 applications. the wide range of potential individuals involved, and the huge Oil Rigs potential damage that could result. In Mexico, an entire oil rig had to be shut down because its networks The risks to which the shipping industry is exposed can be split into had been accidentally infected with viruses that smart devices had two broad categories: caught as a result of employees visiting various online sites, together ■ Data breaches or intangible damage. These are often easily with the use of unauthorised flash drives. quantifiable and protectable, but nonetheless damaging. An Similarly, off the coast of Africa, the networks of another oil rig were example is “spear phishing” emails requesting payment allegedly hacked by a group of individuals who were simply testing or goods to be sent to what appears to be a similar and/or their hacking abilities. By tampering with ballast controls, the rig legitimate destination – or pirates who board ships, already was dangerously destabilised, resulting in its being completely shut knowing where the most valuable cargo is by accessing the down, with all drilling services suspended for over a week while the container and stowage information before boarding. incident was identified and fixed. ■ Physical damage causing physical damage and/or bodily AIS and Spoofing injury. There is a suggestion that, for example, GPS or ECDIS can be hacked to change the ship’s position so that a vessel There has been a considerable increase in evidence to suggest could be sailing down a channel avoiding a shallow area or significant infiltration of vessel-navigation systems with criminal underwater obstruction, but then runs aground when its crew intent. In 2016, over 280 vessels were forced to return to port, are not aware of its actual – much more precarious – position, reporting significant navigational errors, largely thought to be as a leading to physical damage or worse, personal injury. result of action taken by the North Korean government. Some examples of cyber-incidents In 2017, 20 ships in the Black Sea region were affected by AIS But are all these risks genuine – or simply another scare story in spoofing from land-based towers, resulting in them charting their an industry historically littered with prophecies of Armageddon position some 32 kilometres inland of their actual position. Jamming

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devices can be obtained for as little as US$100, and the ability to maximise the benefits that a full e-commerce platform can provide. spoof an AIS signal achievable with the use of a US$100 VHF set. One of the drivers behind the advancement of the incorporation of It is estimated that there are currently over 250,000 cell towers in e-commerce within the shipping sector has been the development Russia which are equipped with GNSS jamming devices. This has of “blockchain”. huge potential significance for the maritime industry. In 2017, a So what is blockchain and why is it having such an impact on trial carried out at Flamborough Head in the UK showed that the maritime and commodities trade? Blockchain is in effect a effect of such transmission systems was to create incorrect data on secured, decentralised and encrypted public ledger. It is an online ECDIS, AIS and Radar. In other words, all systems were affected. communication protocol where all parties to the transaction have There are considerable issues identified in relation to the security of access to the same information, and no single party can unilaterally AIS, not least as it operates without any authentication protocols or change such information without the consent of all the other encryption, and it is relatively easy to impersonate targets (ships). parties involved. Its application in the shipping industry could Even the most basic of jammers can now have a radius of over 30 well revolutionise the way in which the entire industry operates. kilometres. In a report published in 2017, it was estimated that a By bringing together blockchain technology and the increasing five-day loss of GNSS would cost the UK in excess of £149 million. development and utilisation of “smart” contracts, i.e. agreements written in a computer code that can be executed online to digitalise the supply chain, the savings in cost and enhanced efficiency in time Regulation and guidance could lead to a complete reorganisation of the sector. Indeed, it may lead to the shipping industry being affected and changed forever by Current legal precedents do not cater for the technological the first maritime “disruptors”. developments available to the shipping industry because, as yet, they The scope of potential in the shipping sector is immense. We have not needed to. operate in an industry where the processes have always been The industry is in need of more certainty, and current definitions and traditional, slow, document-heavy and reluctant to change. But terminology are being reconsidered to determine how and where the think about a maritime regime where everything from the process changes in technology fit into them. of issuing bills of lading, delivering letters of credit, entering into Leading shipping organisations such as BIMCO and the IMO, have charterparties or selling a ship, to facilitation of international trade, published guidelines, which are free to download, to help the industry development of new markets and streamlining of the provision of minimise the risk of cyber-attacks on ships. The incorporation of insurance solutions, can be fully digitalised? To date, operations in these guidelines into shipping companies’ working practices will the maritime sector have necessitated the involvement of a number soon become compulsory: IMO Resolution MSC.428(98) demands of parties, often middlemen, frequently resulting in an increased risk that cyber-risks should be properly addressed in existing safety- of error, additional cost, reduction in profit margin and increases management systems no later than the first annual verification of the in time-processing, which prolong the entire supply chain and can company’s Document of Compliance after 1 January 2021. Each regularly result in not only financial loss but potentially the whole company will therefore have to implement cyber-risk management collapse of a commercial transaction. plans and procedures identifying the roles and responsibilities of By intelligent utilisation of e-commerce solutions, a new era of all users ashore and on board the ships, and identifying the systems international and verifiable trust could be created, eliminating and data which, if disrupted, could cause risks to the vessel’s the need for a large number of the “middlemen” in the industry operations. The plans will also have to take into account the cyber- and leading to considerable improvements both in terms of time, threat, assess the risk, reduce the risk and develop contingency efficiency and cost. The World Economic Forum has said a 15 per plans. The difficulty remains, however, that legal, insurance and cent enhancement in world trade could be achieved if we remove regulatory regimes are struggling to keep pace with the advancing the friction of sharing information in the supply chain. That’s no developments in technology. surprise – the paper chase and associated costs of so many supply From an insurance point of view, the International Group of P&I chains have been well documented in recent times. Clubs covers P&I liabilities arising out of a cyber-attack, so long How could it help? The advantages of using blockchain include: as the attack in question does not constitute “terrorism” or another ■ reduced processing times; war risk defined – and excluded – in the Rules. Hull & Machinery ■ increased efficiency and reduced risk of errors; and cargo policies either exclude all liabilities arising from a cyber- attack via the Institute Cyber Attack Exclusion Clause (CL380), or ■ cyber-security, due to blockchain being completely encrypted and therefore allowing the transfer of information which are silent as to cover. This means that the companies and people cannot be tampered with by third parties; involved in managing insurance risk will have to look to bespoke and separate policies in order properly to manage cyber-risk. The ■ transparency in the transaction as all parties involved can see what is happening; insurance market will have to move to accommodate this demand, and is already developing a number of bespoke and innovative ■ direct relation between the parties without the need to use products for cyber-risks. intermediaries; and ■ cost-effectiveness of the entire transaction. Companies that can address cyber-risks at the highest level of management, and that are able to ensure that all personnel are Blockchain is by its nature cross-jurisdictional, which makes properly trained and fully cyber-aware, by implementing forms of identification of the appropriate governing law essential. Itis security that will be adequate to protect their businesses, are without also essentially a system that seeks to remove central control and doubt going to gain a significant competitive advantage. overregulation; however, it is clear that in order for the system effectively to become the main foundation for global economic world trade, steps must be taken to ensure adequate regulation, legal E-Commerce – and Blockchain protection and ultimately, how any disputes will be resolved. It is, therefore, very important in any e-commerce operation to ensure In the maritime industry, e-commerce has huge potential and that both exclusive governing law and jurisdiction clauses, as well many businesses are already modifying their systems in order to as dispute-resolution provisions, are in place in order for the parties

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to be clear on how to deal with situations where the platform fails, providers of P&I cover has already developed a bespoke policy or for some reason the chain is broken. for automated ships which is gaining regular attention from the The developing nature of the environment and the creation of new maritime marketplace. and advanced systems and crypto-currencies every day, combined Second, safety. While the introduction of automated ships may with an ever-changing international position in relation to the legality result in fewer casualties – if you believe the statistics that 80 and financial certainty of crypto-currencies, mean that considerable per cent-plus of casualties are caused by people-related faults or work will have to be undertaken until we have a fully verified and actions – a big question is, how will such vessels operate alongside acceptable e-commerce solution. We can anticipate that at some traditionally manned ships, where the propensity for human error point in the relatively near future, guidance will be provided by way remains prevalent? Furthermore, as we have identified above, of international convention concerning and introducing regulation wherever there is increased automation, there is also the increased into the operation of blockchain and other e-commerce solutions. risk of cyber-attack. Shipping is no different in this respect and Notwithstanding the challenges, many high-level organisations measures will have to be implemented to mitigate that risk. in the maritime world are already adopting blockchain solutions Third, casualty investigation. There has been a great deal of talk on in their business, customer regulation, insurance placing and regulation and safety, but little on (a) the kind of evidence that might commodities training. The realisation of the significant savings in be available following a casualty involving an automated ship, or cost are in themselves a justification for the continuing development (b) how you go about getting it. After all, there will be no shipboard and integration of such systems. This in turn means that there will crew to interview following an incident on a fully automated vessel. be a demand for a new breed of maritime professional. A legal, Casualty-investigation methods will therefore necessarily change. finance or insurance background will not be enough if not coupled We see that already happening in the current era, given the evidential with advanced technical ability, knowledge and understanding of probity of electronic data available from voyage data recorders this new way of doing business. and electronic charts, and how the courts generally tend to accord higher credibility to that evidence over any other. By working with shipping companies and their insurers to address these issues today, Automation of Vessels those providing support services to the industry are endeavouring to be ahead of the curve when they arise tomorrow. The prospect of automated ships sailing on our seas is no different So what other issues might arise with automation? One of the most to the inevitability of blockchain. The question is not if automated significant concerns that has been raised by many who oppose the ships will hove into view on our horizon, but when. development and introduction of automated vessels is the effect it The highest expression of automation of vessels is the introduction could have on the international seafaring community. There is no of the fully autonomous ship. The “YARA BIRKELAND” is the doubt that the advent of the automated ship will change the life of first fully autonomous, zero-emissions ship that has been designed the seafarer forever. However, there is no need to think that the and should be launched in 2019 to sail along the Norwegian coast. reduction of personnel at sea will reduce or restrict the employment She will be monitored from shore-based control centres. need and capacity within the industry. In fact, automation could The technology required is therefore already available and is being well lead to enhanced opportunity. Certainly, there could be an cultivated yet further still. A number of ports around the world are immediate improvement in working conditions which, in turn, could already operating autonomous smaller vessels in port management. lead to an increase in safety by a reduction in stress-related activities The only market barrier to their further introduction will be their caused by being away from families in a confined space, operating expense, and whether owners/operators are prepared to spend the long hours in isolated conditions. Properly regulated and with money for the initial hardware outlay. adequate training, remote operation of vessels could vastly reduce However, whilst automated ships will present considerable stress-related illness and the associated risk of error resulting in opportunities for the industry, they will also pose some challenges significant casualty. It would also create far greater opportunity for those who are physically impaired and currently unable to pursue a – three, in particular. career at sea and undertaking maritime operational and navigational First, regulation. In December 2017, the Danish Maritime Authority duties. The potential for eradicating discrimination, in terms of both reported to the IMO on the regulatory barriers to the introduction of sex and disability, can clearly be seen. automated ships. The report is 141 pages long, but its conclusions As the future is clearly closer than we think, let’s give further are succinctly clear: a substantial body of regulation and legislation thought to what the impact of autonomous ships would be on the (both national and international) will need reviewing and revising to shipping sector. We have identified below some further general take account of automated ships – not least UNCLOS, the Collision considerations as follows: Regulations (COLREGs), the ISM Code, STCW and a multitude of other conventions. One central and recurring theme is: how can ■ Automated vessels should be more efficient and cheaper to run. an automated ship (if we assume it is in fact a “ship” within the traditional meaning) adhere to the current regulatory framework? ■ There will be no need, or very little need, for crew as vessels The simple answer is, it can’t. What is needed therefore is a will mostly be unmanned. This could mean that the space normally used for accommodating the crew can instead be complete overhaul of that entire framework, and the insurance dedicated to cargo, thereby increasing a vessel’s capacity. field that supports and relies on it. No easy task, especially when you consider that the maritime industry – for all its innovation and ■ Unmanned ships could mean less chance of human error being committed; however, such errors could simply be longevity – is not renowned for ensuring that regulation keeps moving onshore – but balance against that the improvement pace with technology. Work is being undertaken by international of working conditions, supervision and enhanced training bodies to make sure that regulations are updated to accommodate which could result in a reduction in maritime casualties. automated ships. That is obviously to be welcomed, but there is no ■ Automated vessels could become less attractive to pirates, escaping that it will inevitably be a long process, and there remains who may find them more difficult to board, while the absence the possibility that automated ships will be in operation before the of crew on board greatly reduces the ability to obtain ransom legislation has been modernised. That will, of course, also present payments. However, the risk of cyber-piracy attacks could issues for insurers. Having said that, at least one of the leading increase.

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■ Given the level of technology on board, maintenance costs The field is developing every moment of every day. In terms of cyber- could increase, although these could be set off against savings risk, perhaps the most significant concern is what we do not currently in crew wages. know, and what is not currently being reported. ■ It may be far easier to make autonomous vessels The considerable speed with which the markets are adapting to such environmentally friendly. new technology is invigorating, and could well result in greater ■ There will be a whole new range of risks, many of which have opportunity, enhanced efficiency and increased profitability. We need yet to be identified, due to the digitalisation and technology to ensure, however, that our legal, insurance and regulatory regimes that will govern these ships. A thorough risk assessment will catch up with these developments. One significant factor in the therefore have to be carried out, and liability of manufacturers maritime field is how such innovations may impact on the traditional in a shipping context considered more fully. concept of . It was in 1926 that the case of F.C. Bradley ■ Different skills will be required from seafarers, as they will & Sons -v- Federal Steam Navigation (1926) 24 L1.L.Rep. 446 need to have an in-depth knowledge of IT, technology and provided us with the accepted definition of seaworthiness – the ship all the systems installed on board. However, greater diversity may well result. “must have that degree of fitness which an ordinary careful and prudent owner would require his vessel to have at the commencement ■ contracts will have to undergo great changes, of her voyage having regard to all the probable circumstances of especially in relation to the allocation of responsibility and builders’ exclusion-of-liability clauses, given that the vessels it”. This followed on from the earlier decision in Kopitoff -v- Wilson will mostly be controlled remotely by systems installed by the (1876) 1 QBD 377 – that a vessel must be “fit to meet and undergo the builders or other third parties. perils of sea and other incidental risks to which of necessity she must ■ Being fully dependent on the Internet could cause major issues be exposed in the course of a voyage”. if a vessel loses its connection during a major storm in the It is therefore accepted as a matter of English law that a ship is middle of the ocean, or if there is a terrorist attack on satellite seaworthy: “If she has that degree of fitness which the ordinary systems, or a major dispute between governments whereby careful owner would require his vessel to have at the commencement satellite access is restricted. One or two back-up plans will of the voyage having regard to all the probable consequences of it. therefore need to be in place and available. Would a prudent owner have required it should be made good before ■ Given the quick pace of technology development, for how sending to sea had he known of it?” This requirement extends beyond long will these types of ships be able to stay in service? physical fitness to: (i) sufficient, efficient and competent crew; and (ii) ■ Finally, serious consideration will have to be given to cyber- adequate and sufficient systems on board to address matters which risks. Having dealt with these above, it can be seen how fully may arise duirng the voyage by reference to the state of knowledge in automated vessels will be more exposed to cyber-attacks. the industry at the time. Currently, the shipping industry is not ready to defend itself from minor attacks, therefore, a lot needs to be done before But what is the degree of seaworthiness required in relation to an automated vessels can become “cyber-proof” and safely used. automated vessel, and how does the concept of seaworthiness apply where a maritime casualty arises as a result of a cyber-attack or some defect in the cyber-protections or firewalls of the vessel in question? Conclusion It is certainly the view of the author of this chapter that in the absence of being able to show positive steps taken in line with the It was Robert Kennedy who famously said, “we live in interesting implementation of cyber-risk management systems and protocols, an times”. Never has that been more true than today, and especially owner will face an uphill struggle in establishing seaworthiness. in the field of maritime technology, automation of vessels, and adaptation of e-commerce solutions.

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Julian Clark Beatrice Cameli Hill Dickinson LLP Hill Dickinson LLP The Broadgate Tower The Broadgate Tower 20 Primrose Street 20 Primrose Street London, EC2A 2EW London, EC2A 2EW United Kingdom United Kingdom

Tel: +44 207 280 9363 Tel: +44 20 7283 9033 Email: [email protected] Email: [email protected] URL: www.hilldickinson.com URL: www.hilldickinson.com

Julian Clark is the Global Head of Shipping for Hill Dickinson and Beatrice qualified as an English Solicitor in Hill Dickinson’s shipping has overall management responsibility for the shipping group both team in September 2016 after having trained with the firm. Beatrice in London and internationally. He was called to the Bar of England acts regularly on behalf of Protection and Indemnity (P&I) Clubs, and Wales in 1988 and has, since that time, been almost exclusively Underwriters, Owners, Charterers and Managers on a very wide range engaged in advising on maritime law matters and major incidents of dry shipping matters. In the past year she has been on two 3-month in the field. In 2011, having previously been a leading partner with secondments with two different International Group P&I Clubs where another internationally recognised law firm, he launched his own she was both assisting and handling P&I and freight, and boutique shipping law practice with two other colleagues, which soon defence (FD&D) matters. Specifically, Beatrice dealt with defending established itself as a leader in shipping transport and trade. He has cargo claims on behalf of Owners/Members and pursuing cargo claim advised a wide range of Owners, Charterers, Operators and Traders recovery under the Inter-Club Agreement. Both during her time at Hill in relation to a variety of matters ranging from piracy incidents in Dickinson and the secondments, Beatrice has dealt with charterparty the Gulf of Aden to major casualties and shipbuilding disputes. He disputes including off-hire claims, and demurrage, hull fouling, has also drafted a number of commercial documents, including the unsafe port, damage to hull and bunker disputes. terms and conditions for leading insurance facilities. He is a mediator accredited by the Centre for Effective Dispute Resolution (CEDR) and a supporting member of the London Maritime Arbitrators Association (LMAA), Baltic Exchange and Association of Average Adjusters.

Hill Dickinson LLP is a leading and award-winning international commercial law firm with more than 840 people, including 175 partners and legal directors. From offices in the UK, mainland Europe and Asia, the firm delivers advice and strategic guidance spanning the full legal spectrum. The firm acts as a trusted adviser to businesses, organisations and individuals across the globe and from a wide range of market sectors, advising on non- contentious advisory and transactional work through to all forms of commercial litigation and arbitration. The firm’s clients include multinational companies, major corporations, UK plcs, insurance companies, UK and foreign banks and financial institutions, public sector organisations, private individuals and professional bodies. As a full-service law firm, Hill Dickinson offers the full range of commercial legal services, from employment and property and construction to corporate, commercial and dispute resolution. The firm has notable strength, experience and presence in a number of market sectors, including marine, transportation and logistics, retail, insurance, health, international trade, education, and banking and financial services.

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Legal and Regulatory

Overview of Wet Cargo Emeka Akabogu Shipping in Nigeria

Akabogu & Associates Victor Onyegbado

Important highlights of these statutes include flag and port state Introduction administration, marine environmental management and regulation of coastal shipping. Shipping transport services are chiefly driven by the demand and supply of relevant cargoes. Wet cargo or liquid bulk shipping in Nigeria is therefore directly influenced by those wet cargoes Flag and port state administration and control typically associated with the country’s economy. In 2015, Nigeria’s exports were valued at $47.8bn. Crude oil topped NIMASA, through the Nigerian Office the list as Nigeria’s chief export commodity, accounting for 77.2% established by Section 28 (2) of the NIMASA Act 2007, maintains a of the total value; followed by petroleum gas, which accounted for Central Ship Registry as required by Section 16 (1) of the Merchant 15.5%. Nigeria’s most recent import figures also show that refined Shipping Act 2007 as well as a Special Register for Vessels and petroleum, representing 15.2% of the total volume, is the most Ship-owning Companies Engaged in Cabotage established by imported product in Nigeria; followed by wheat, which accounts for Section 22 of the Coastal and Inland Shipping (Cabotage) Act 2003. only 2.76% of the total. Only Nigerian citizens, bodies corporate established under and The above clearly indicates that the liquid bulk shipping trade in subject to Nigerian laws, having their principal place of business Nigeria is dominated by crude oil and petroleum products shipments in Nigeria, or such other persons as the Minister of Transport may respectively, as both categories of shipment are almost exclusively prescribe by regulations, are qualified to register Nigerian ships. done by sea. The significant part of liquid bulk shipments in Nigeria Acquisition of interest in ships by unqualified persons is prohibited, are thus occasioned by: with defaulters liable upon conviction to forfeiture of their interest. ■ crude oil exports; The outlined Ship Registry services are a core part of NIMASA’s ■ import of petroleum products/petrochemicals; and flag state administration duties, which is oversight of Nigerian- ■ lightering services. registered ships. As a result, it registers all kinds of vessels, including fixed/mobile platforms and oil rigs, as well as oil tankers. It also This article will, in its first part, explore in general the legal and implements and enforces safety standards under domestic laws or regulatory issues attendant to shipping wet cargo in Nigeria, and international conventions ratified by Nigeria on ships within the later discuss regulations and legal issues which have particular Nigerian Ship Registry. Under the Memorandum of Understanding bearing on crude oil and petroleum products transport by sea. on Port State Control for the West and Central African Region (generally referred to as the “Abuja MoU”), Nigeria has a port state Regulation of Wet Cargo Shipping in Nigeria responsibility to carry out inspections on a minimum of 15% of vessels calling at its ports, many of which are tanker vessels. The maritime industry in Nigeria is largely regulated by the Nigerian Maritime Administration and Safety Agency (“NIMASA”), the Marine environmental management Nigerian Shippers’ Council (“NSC”) and, to a limited extent, the Nigerian Ports Authority (“NPA”). Nigeria is a signatory to the International Convention for the Pursuant to its enabling legislation, NIMASA is charged with the Prevention of Pollution from Ships, 1973 as modified by the Protocol administration of maritime safety, maritime labour, seafarers’ of 1978 (MARPOL 73/78). MARPOL is one of the most important standards and security, as well as the promotion of commercial international conventions dealing with conservation of the marine shipping and cabotage activities, pollution prevention and control environment, and it subjects all ships flagged under the registries in the marine environment, and implementation of domesticated of its signatories to its requirements, regardless of where they sail. International Maritime Organization (“IMO”) and International The convention, along with eight others, is applicable in Nigeria Labour Organization (“ILO”) Conventions. The agency thus pursuant to Section 335 of the Merchant Shipping Act 2007. Other implements the key statutes around which merchant shipping in conventions not specifically listed, but which relate to pollution of Nigeria is organised, viz.: the marine environment, are also made applicable. ■ Nigerian Maritime Administration and Safety Agency Act Nigeria also has in force a full suite of regulations dealing with 2007. marine environmental management. The regulations are drawn from ■ Merchant Shipping Act 2007. provisions in various international conventions to which Nigeria ■ Coastal and Inland Shipping (Cabotage) Act 2003. is a party, but which had not previously been put into effect in the

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country. The regulations established a robust regulatory regime for which are party to MARPOL the right to deny such oil tankers the marine environment, with strong compliance responsibilities for entry to ports or offshore terminals under their jurisdiction. If this those affected, particularly in the maritime sector. Key regulations is not taken into consideration, legal issues and liabilities may arise that affect liquid bulk cargo include the Marine Environment (Sea against such ships, charterers and committed cargo interests. Protection Levy) Regulations 2012 and the Liability and Compensation Regulations 2012. Coastal shipping of wet cargo

Sea Protection Levy Regulations Due to logistical challenges and policy considerations, many large tankers are stationed offshore and accept smaller vessels to break- The Marine Environment (Sea Protection Levy) Regulations impose bulk and deliver to shore tanks. This has occasioned an active coastal a levy on all commercially operating vessels and oil installations in shipping market for the delivery of mainly liquid bulk petroleum Nigerian waters above 100 gross tons. The levy is payable on an products. The Coastal and Inland Shipping (Cabotage) Act was annual or per-call basis, depending on the nationality of the ship; enacted in 2003 to enhance indigenous participation in the maritime while the rates payable depend on whether the ship is carrying oil in sector. The Act focuses on the development of indigenous tonnage and bulk as cargo, and its storage capacity. The basis of the levy is the establishes a financing fund to bankroll domestic vessel acquisition. profile of the affected vessels as potential polluters. The law provides a relatively broad definition of the term ‘cabotage’, capturing the carriage of goods and services from one coastal point Liability and Compensation Regulations to another point in Nigeria, the carriage of goods and passengers in the exploration, exploitation or transportation of mineral or non- Victims of oil pollution have traditionally found it difficult to bring natural resources and the operation of a vessel or any other marine successful claims, due to the technical liability limitations in favour activity of a commercial nature – including towage, salvage and of shipowners. With claim processes largely structured by the dredging – in Nigerian waters in accordance with NIMASA. The traditional law of tort, claimants have the onerous task of proving Cabotage Act 2003 restricts cabotage shipping to: shipowner negligence. In addition, outright exclusions in favour of ■ vessels wholly owned by Nigerian citizens; shipowners make the burden heavier on claimants. ■ vessels wholly manned by Nigerian citizens; The Liability and Compensation Regulations give effect to the Civil ■ vessels registered by Nigerian citizens; and Liability Convention, providing greater clarity on the rights and ■ vessels built by Nigerian shipbuilders. obligations which exist between shipowner and pollution victim. It The Act also provides for a scheme of waivers and licences which imposes liability for oil pollution damage squarely on the registered may be granted by the Minister in appropriate circumstances. It owner of the ship from which the oil escapes or is discharged. This empowers an officer of NIMASA who has reasonable grounds to liability is strict in the sense that the claimant need demonstrate believe that a vessel has contravened the Act, to stop and board the only that it has suffered damage as a result of the spill; there is no vessel, detain the vessel, its officers or both; and with a warrant, need to prove that the shipowner was at fault. This would seem to search the vessel and seize anything found that the NIMASA officer facilitate prompt, equitable compensation payments to victims of oil has reasonable grounds to believe is evidence of contravention of pollution damage. Together with the Merchant Shipping (Prevention the Act. of Oil Pollution) Regulations, liability coverage is now effectively extended over ships which discharge oil. Liability actions are now likely to be easier to bring and claim upon, in relation to oil pollution. Economic regulation

The Nigerian Shippers’ Council is statutorily mandated to protect the Phase-out of single-hull tankers in Nigeria interests of shippers of all types of cargo and advise the government on freight rates, port charges and a range of other relevant roles. Under the IMO’s Revised Regulation 13G (now Regulation 20) of It has recently been confirmed as the economic regulator of the Annex 1 to MARPOL, flag administrations were required to phase ports, with an added role of regulating tariffs and charges amongst out Category 2 and 3 single-hull tankers by 2015. In view of the regulated service providers including ports, terminals, shipping difficulty in achieving wholesale fleet renewal, the IMO extended the companies and agencies. deadline for certain categories of tanker not engaged in international trade. NIMASA took advantage of this window to push back the final phase-out date for single-hull oil tankers to 31 December 2020. Legal and Regulatory Issues for Shipping According to the agency, this decision was intended to “sustain the Oil in Nigeria development of the Nigerian maritime industry and enhance the gains of the Cabotage Laws and Local Content Act”. As noted above, the bulk of Nigeria’s wet cargo shipments are Despite the extension, there will be no new registration of single- occasioned by import and export of petroleum products and crude hull tankers, whether newly built or second-hand. However, the oil respectively. Expectedly, these trades are substantially regulated, certificates of registered and operating single-hull vessels will be with different departments of the government of Nigeria involved at renewable for two years at first instance and subsequently for another different stages. two years, compared to the existing practice of renewal within five years. In addition, valid classification and statutory certificates Regulation of crude oil transport issued by the administration must be in force in favour of the tanker. From a risk assessment viewpoint, operators of single-hull tankers All oil and gas reserves in Nigeria are owned by its federal that wish to take advantage of the extension should ensure that such government, but mining licences and leases are granted to different tankers are limited at all times within Nigerian territory. This is oil companies for the exploration and production of crude oil. The because the further provisions of Regulation 20 give port states oil can, however, only be exported through designated oil terminals

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from where ocean tankers evacuate the cargoes. Nigeria’s Oil Terminal Dues Act thus prohibits the installation and operation of Import Permit oil terminals, except with the written approval of the Minister of Petroleum. The Act also provides for the levying and payment of All companies duly registered under the Corporate Affairs terminal dues by vessels evacuating crude oil at terminals in Nigeria. Commission (“CAC”) as providers of goods and services in the downstream sector of the Nigerian oil and gas industry are eligible The most serious concern of the Nigerian government in relation to to apply for an Import Permit of Petroleum Products, subject to the movement of crude oil in the last couple of years has been oil having access to appropriate storage facilities, which could be theft. In this regard, the Crude Oil (Transportation and Shipment) owned by or leased from third parties. An application for an Import Regulations were designed with the purpose of ensuring a clear trail Permit is made through the designated online portal. of all crude oil traversing the country. Except with prior authorisation, within the limits of operational practice or when loading from two An Import Permit shall have a duration of 90 days from the date or more terminals within Nigeria, no ship or tanker is allowed to of issue. All imported Petroleum Products must meet the National carry dead freight. Dead freight evidently makes ‘topping’ easier, Quality Standard specifications, as approved by the Department which facilitates the stealing of crude oil using the cover of lawful of Petroleum Resources (“DPR”). Each importer of petroleum trade. ‘Topping’, which refers to the additional loading of crude products shall be required to submit returns on the system on the oil in any available space on the ship after loading the nominated previous importation for which the permit was issued, and upload quantity at any designated terminal, is expressly prohibited and copies of all relevant and shipping documents, before any shall not be undertaken, demanded or received by any ship or tanker subsequent application for an Import Permit is approved. within or outside any loading terminal in Nigeria. The Regulations place a premium on verification of tank capacity Vessel arrival notification of ships by the appropriate government authority. False declaration of capacity or alteration of documentary information relating to Clearance of vessels for discharge at receiving facilities shall be duly capacity is deemed as non-compliance. Ballast tanks are required implemented upon the importer notifying the DPR at least seven to be used solely for carriage of ballast water, not crude oil, which days prior to the arrival of the vessel at a Nigerian port and providing should equally not be carried in any other tank or receptacle except the prescribed documents. A vessel laden with imported petroleum those designated and designed for that purpose. products shall only be allowed to discharge at the indicated jetty Documentation is crucial at all times, and no ship is allowed where: (i) there is evidence of an import permit for the product; (ii) to depart from a loading terminal without full documentation, the imported product has been fiscalised in the presence of a DPR particularly from the Nigerian Customs Service and other relevant official; (iii) a re-certification analysis of the product composite agencies of government. This ensures that the trail of the cargo sample is conducted in the presence of a DPR official and the result can be clearly seen and verified at all times. For the same reason, certified on-spec; and (iv) documents received from the vessel are loading or transhipment must be on clear authorisation and should not in conflict with those uploaded earlier by the importer of the not be outside locations approved for that purpose. product, and a Certificate of Quantity has been issued. Other regulations are also important in relation to marine environmental protection in the course of crude oil carriage. The Approved ports Merchant Shipping (Prevention of Oil Pollution) Regulations set out procedures and regulations to avoid pollution of the marine By Section 6 (1) of the Petroleum Regulations 1967, no petroleum environment, and include prohibiting or regulating discharge of oil shall be imported into Nigeria at any port other than a prescribed or oily mixtures into the sea, record-keeping for ship machinery and port, unless the consent in writing of the Director of Customs and cargo operations, amongst many others. Excise has been first obtained, and subject to such conditions as Adequate insurance cover is required at all times, in line with the he may specify. Any person desiring to import petroleum at a port provisions of the Merchant Shipping (Liability and Compensation) other than a prescribed port is required to apply to the Director of Regulations, while an incident response framework is provided for Customs and Excise in writing, stating the quantity and kind of under the Merchant Shipping (Oil Pollution Preparedness, Response petroleum which he desires to import. and Cooperation Convention) Regulations. Nigeria’s Pre-shipment By Section 8 of the Regulations, the master of such a ship Inspection of Exports Act also provides to the effect that all exports carrying petroleum shall, before entering a prescribed port, make from Nigeria (including crude oil exports) are to be subjected to a declaration to the pilot/boarding officer as to the quantity and inspection by pre-shipment inspection agents. Where crude oil is quality of petroleum carried by the ship. being transported within Nigeria, the relevant vessels must comply with the Coastal and Inland Shipping (Cabotage) Act provisions, in addition to similar rules under the Nigerian Content Management Dispute Situations and Resolution and Development Board Act. Sea transport of petroleum products and oil accounts for a third of global tanker trade and is usually formalised by contracts between Regulation of petroleum products importation shippers on the one hand, and carriers (ship-owners or charterers) on the other. These contracts, known as charterparties, are normally in The Guidelines for the Importation of Petroleum Products into standardised form and provide for the terms upon which cargoes (in Nigeria 2005 are made pursuant to Paragraph 4(1) of the Fourth this case, crude oil or refined petroleum products) are transported by Schedule to the Petroleum Act CAP P10 L.F.N. 2004, and are ship between production sites, refineries and points of consumption. intended to clearly define the regulatory requirements for the issuance Subject to relevant statutory provisions where available, as well as of Petroleum Products Importation Permit and the administration of to proven mercantile usages and customs, Nigerian law applies the Vessel Arrival Notification and cargo discharge at jetties. general principles of common law and equity in the construction

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of contractual terms, and will therefore generally enforce them as or the place where the bill of lading or other transport document stipulated by the parties. Some key points of note are relevant. was issued are in a contracting state. Thus, the Rules cover both inward and outward shipments of cargo and apply where there is a bill of lading or other shipping document. Conversely, Admiralty jurisdiction the Hague Rules apply only to bills of lading issued in any of the contracting states. As such, they apply only to outward movements Nigeria’s constitution vests exclusive original jurisdiction in all of cargo from Nigeria. Whereas the Hague Rules are notoriously admiralty matters on the Federal High Court. The court exercises skewed in favour of the shipowner or carrier, the first instance jurisdiction pursuant to the constitution and the establish a more balanced liability regime that is fair to all parties Admiralty Jurisdiction Act in all causes and matters relating to a concerned in a sea carriage transaction. As Nigeria is a party to proprietary interest in a ship or any maritime claim. Particularly, neither the Hague-Visby Rules nor the (which are the Federal High Court will have exclusive original jurisdiction in yet to come into force), these have no force of law in Nigeria. causes and matters relating to breach of maritime contracts or based on maritime torts connected with the carriage of oil or petroleum Due to their relatively conflicting provisions, the continued co- products by sea. existence of the Hague Rules and the Hamburg Rules has generated confusion and uncertainty among shippers, shipowners, carriers, cargo owners, underwriters and other key industry players who, without Foreign jurisdiction clauses a definite yardstick for deciding which of these regimes applies to their transaction, cannot properly assess their rights, liabilities and Section 20 of Nigeria’s Admiralty Jurisdiction Act has been obligations. interpreted by the Nigerian Supreme Court as being intolerant This controversy was unwittingly permitted by the United Nations of foreign jurisdiction clauses in contracts of . The Convention on the Carriage of Goods by Sea (Ratification and traditional view that a court may uphold a foreign jurisdiction clause Enforcement) Act 2005, which merely introduced the Hamburg in a contract of affreightment where the said choice of foreign law Rules as a schedule to the legislation without expressly repealing clause is “real, genuine, bona fide, legal, reasonable and not capricious and denouncing the Hague Rules, as required by Article 15 of the and absurd” appears to have been discarded by the supreme court in Hague Rules. Two recent first instance decisions of the Federal Jfs Investment Ltd. v. Brawal Line Ltd. & Ors (2010) LPELR-1610 High Court seem to suggest that the Hague Rules are still applicable (SC) when it held, per Adekeye, J.S.C. (p. 39, paras A–F), that: due to non-denouncement, as required by the tenor of the Hamburg “I cannot but take judicial notice by virtue of Section 74 of Rules. Nonetheless, the controversy remains, as denunciation of the the Evidence Act, Cap 112 Laws of the Federation of Nigeria Hague Rules was not made a pre-condition for the application of the 1990, that the Admiralty Jurisdiction Act 1991 has virtually Hamburg Rules, nor are there any express consequences set out for removed the element of courts’ discretion in deciding whether non-denunciation. or not to uphold a foreign jurisdictional clause. Section 20 of the Admiralty Jurisdiction Act 1991 thereof provides that - (1) The more sustainable position could be found in the premise set out Any agreement by any person or party to any cause, matter or by the Supreme Court in Leventis Technical Limited v. Petrojessica action which seeks to oust the jurisdiction of the court shall be Enterprises Limited (1999) 6 NWLR Pt 605, 45 where the court null and void if the place of performance, execution, delivery, posited that the Hague Rules may only apply to inbound carriage act or default takes place in Nigeria, OR (2) Any of the through the clause paramount. The clause paramount, for its part, parties reside in Nigeria or has resided in Nigeria OR (3) The will only be of relevance where there is no statutory enactment in payment is made or is to be made in Nigeria OR (4) Under the country of destination which is compulsorily applicable to the any convention for the time being in force to which Nigeria is transaction. In view of the subsequent enactment of the Hamburg a Party OR (5) In the opinion of the court, the cause, matter or Rules into law, the position could now be that the Hague Rules action should be adjudicated upon in Nigeria.” will not apply to bills of lading for carriage of petroleum products inbound to Nigeria. Liability regimes

Ship and cargo owners with an interest in Nigeria may be confronted Conclusion by a unique question in their quest for due diligence: in the event of As long as Nigeria remains a major producer of crude oil and damage or loss to cargo, which liability regime applies? The Hague importer of petroleum products, the market for shipping these Rules 1924 and the Hamburg Rules 1978 are concurrently in force cargoes will remain active, though the dynamics may change. The in Nigeria. The Hague Rules are one of the statutes inherited from country is currently considering a policy which will see crude oil the time of British rule, and apply as the Carriage of Goods by Sea sold on cost and freight terms, which will have an impact on the Act 2004. Conversely, the Hamburg Rules were domesticated in current fleet size. Market-led considerations are also ongoing Nigeria as the United Nations Convention on the Carriage of Goods for development of standard charterparty terms to govern coastal by Sea (Ratification and Enforcement) Act 2005. tanker contracts. Disputes arising from charterparties and bills of The Hamburg Rules apply to all carriage-by-sea contracts between lading remain a regular incident of carriage and the Nigerian legal two different states, provided that the ports of loading and discharge landscape has adequate remedies to deal with these.

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Emeka Akabogu Victor Onyegbado Akabogu & Associates Akabogu & Associates 15B Olajide George Street 15B Olajide George Street Lekki Scheme 1, Lekki Peninsula Lekki Scheme 1, Lekki Peninsula P. O. Box 53076 P. O. Box 53076 Ikoyi, Lagos Ikoyi, Lagos Nigeria Nigeria

Tel: +234 1453 5940 Tel: +234 1453 5940 Email: [email protected] Email: [email protected] URL: www.akabogulaw.com URL: www.akabogulaw.com

Emeka Akabogu is an expert in the field of maritime law and policy in Victor Onyegbado has vast experience with commercial transactions Nigeria, and is the Senior Partner at the law firm Akabogu & Associates. documentation and litigation; particularly those relating to marine cargo His book, Maritime Cabotage in Nigeria, was the first published work claims, carriage of goods by sea, international trade, on the subject in Nigeria, and is in addition to numerous published and subrogation. articles. In 2012 he drafted the regulations which constitute the Victor has advised government institutions, terminal operators, shipping current legal framework for marine environmental management in companies and various cargo interests on issues relating maritime Nigeria. Emeka holds an LL.M. from University College London and a claims litigation, charterparties, contract negotiations, regulatory policy Magister Juris from the IMO International Maritime Law Institute Malta. and modalities for doing business in Nigeria. He is a Fellow of the Chartered Institute of Shipping, and maintains memberships of the Nigerian Bar Association, Maritime Arbitrators Association of Nigeria, the Energy Institute, and the Chartered Institute of Arbitrators. He sits on the Board of Governors of the Centre for Petroleum Information and currently serves as the Honorary Secretary of the Nigerian Maritime Law Association.

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

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International Liability and Compensation Conventions: Panacea or Ideal?

BIMCO Donald Chard

It is worth noting that the question of personal fault had previously Introduction been decided in Lennard’s Carrying Co,i where ship and cargo had been lost following a fire. It was held by the House of Lords that Voltaire’s improbably optimistic Dr. Pangloss held that “all is for failure on the part of the company’s “directing mind”, Mr. Lennard, the best” and found equally implausible reasons to support his meant that the company was unable to claim exclusion from liability questionable logic. Few will give credence to his highly irrational thinking. for the resulting losses. Nonetheless, achieving the best should always be an objective. The The international regime was updated by the International shipping world raises many challenges of its own, not least in the Convention Relating to the Limitation of the Liability of Owners context of providing compensation in the aftermath of a maritime of Sea-Going Ships 1957. However, while the provisions were incident. This article will review international cooperation to applicable to charterers, managers and operators of a ship as well develop liability and compensation instruments, particularly in as the Master, crew and other servants of the owner, rights to limit relation to oil spills. It will examine the structure of internationally continued to be denied where a claim resulted from the “actual fault agreed liability and compensation regimes to determine whether the or privity of the owner”. At a time when owning interests were system stands up to scrutiny and provides a response to the need for often actively engaged in the day-to-day operation of their vessels, certainty and consistency to create the best of all possible worlds. owners’ “fault or privity” offered considerable scope for challenging As an international industry, it is important that shipowners are management actions in the aftermath of an incident giving rise to a exposed to the same liabilities wherever they are trading. This claim. The 1957 Convention did not secure sufficient ratifications is the position in many jurisdictions although there are important to come into force until May 1968. exceptions, particularly the USA. However, to the extent that States General limitation provisions were further reviewed a few years have accepted international treaty obligations imposing common later, leading to the International Convention on Limitation of underlying principles, rules, obligations and liabilities then, in Liability for Maritime Claims (LLMC) 1976. Limitation rights were theory, insurance, often provided by “Protection and Indemnity set out in a defined list including loss of life or personal injury and (P&I)” Clubs in the International Group of P&I Clubs, should loss of or damage to cargo and other property, together with certain cover the same eventualities wherever they may arise. This also other claims, but with a new right for States to exclude wreck and discourages “forum shopping” where litigants try to bring their case cargo removal from limitation. Oil pollution damage was expressly in a favourable jurisdiction often remote from the cause of action. excluded because, as explained below, this was separately covered under a new, specialist, self-standing regime. Evolution of Liability Provisions In a radical departure from past instruments, the problematic denial of limitation due to the “fault or privity of the owner” was replaced Liability provisions applicable to shipping have evolved over many by a new test. Under LLMC 1976, the right to limitation was lost years but particularly in the last half-century. Limitation in England only if the loss resulted from the “personal act or omission” of the can be traced back to the Responsibility of Shipowners Act 1733. person (i.e. shipowner as defined in LLMC 1976) claiming limitation This, however, was a somewhat blunt instrument because it limited and was “committed with the intent to cause such loss, or recklessly shipowners’ exposure to the value of the vessel and freight and was and with knowledge that such loss would probably result”. This of little benefit when a ship had been lost. A more realistic approach removed the previous uncertainty and scope for challenge in earlier came with the Merchant Shipping Act 1854 which introduced a instruments. Limitation was now likely to be broken only in the tonnage-related valuation. most extreme cases arising from the deliberate fault or default of It was to be another seventy-five years before the first international the directing mind. Such cases are extremely rare. The quid pro limitation instrument was agreed, although support was not quo for almost unbreakable limitation was the introduction of high universal, with the USA maintaining its own procedures. The compensation levels. International Convention for the Unification of Certain Rules to LLMC 1976 came into force in December 1986. Amendments were the Limitation of Liabilities of Owners of Sea-Going Ships 1924 introduced through a 1996 Protocol (LLMC 1996) which, inter alia, was drafted by the international private law organisation Comité raised compensation limits significantly. A further increase adopted Maritime International (CMI). Limitation was allowed for proved in April 2012 took effect from April 2015. acts or defaults of a Master, crew, pilot or any other person in the service of the vessel. Significantly, the right to limit was lost if the owner was at fault.

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extending the geographic coverage to a Contracting State’s exclusive Oil Pollution Compensation economic zone or equivalent area; and increased compensation in terms of the total to be made available together with a new minimum It is now necessary to step back in time to the point when the whole threshold level for smaller ships. concept of shipowner liability for oil pollution came to the fore as a result of the Torrey Canyon incident in March 1967. The vessel, a One of the most significant changes was the test for denying then super-tanker, carrying some 120,000 tons of oil, grounded on owners’ right to limit liability. As already explained, CLC 1969 the Seven Stones Reef between Land’s End and the Isles of Scilly. was predicated on the absence of owners’ “fault or privity”. The This was a new situation and, half a century later, we might question amended CLC introduced wording reflecting LLMC 1976 where the the British government’s attempts to control the resulting pollution. right was lost only if it was proved that pollution damage had resulted However, it soon became clear that existing provisions for limitation from owners’ “personal act or omission, committed with the intent and compensation were no longer suitable to respond to and meet the to cause such damage, or recklessly and with knowledge that such very large claims arising from a major incident. damage would probably result”. The bar was set at a very high level with only the direct actions, fault or connivance of the most senior New thinking was necessary. The International Maritime Organization management or “hands on” directing mind likely to come within the (IMO) (known until 1982 as the Inter-Governmental Maritime criteria for loss of limitation. As a result, CLC 1992 establishes a Consultative Organization – IMCO) responded quickly, setting up a trade-off between almost unbreakable limitation in return for strict specialist Legal Committee to look at the issues. liability and high levels of compensation. This resulted in the rapid development of a new two-tier instrument Parallel changes were made to the Fund Convention 1971. for compensating pollution damage from “persistent oil” in vessels Compensation was similarly enhanced. carrying oil in bulk as cargo or bunkers. The first tier, theInternational Convention on Civil Liability for Oil Pollution Damage (CLC) 1969, The entry into force mechanism in the 1984 Protocols updating CLC imposed “no-fault” strict liability on shipowners. Owners of ships and Fund Convention envisaged participation by the USA which carrying more than 2,000 tons of oil in bulk as cargo were required had remained outside the original regime. However, the subsequent to maintain compulsory insurance cover, normally provided through absence of US ratification and development of the US Oil Pollution a member of the International Group of P&I Clubs. However, Act 1990, meant that the Protocols would not come into effect. A liability attached to all vessels, regardless of size, with compensation further Diplomatic Conference was held in 1992 where revised graduated up to a maximum monetary figure. This was originally implementation provisions facilitated entry into force in May 1996. expressed in gold francs but, by a Protocol in 1976, this was changed The updated CLC 1992 provided threshold compensation, payable to the International Monetary Fund’s (IMF) “Special Drawing Right” by the shipowner, of SDR 3 million, for all vessels up to 5,000 gross (SDR).ii All claims would be channelled to the registered owner tons, and then increased by SDR 420 for each additional ton up to a (possibly a bank or financial institution) which had the right to take maximum of SDR 59.7 million.iii Claims exceeding the shipowner recourse action against the vessel’s operator. maximum were compensated by payments made from the Fund Convention 1992 where the maximum amount payable (including The CLC 1969 had limited geographic coverage in that it applied first tier shipowner compensation) was raised to SDR 135 million, to pollution damage only in the territory including the territorial regardless of vessel size. sea of a Contracting State and to preventive measures taken to prevent or minimise such damage. However, it also perpetuated the shortcoming of the 1957 Convention in that the right to limit was Adequacy of Compensation Limits lost if the incident occurred as a result of the actual fault or privity of the owner. That, however, was only a prelude to the next challenge when, While it was hoped that CLC 1969 would generally provide sufficient in December 1999, the tanker Erica foundered off the Brittany compensation to satisfy compensation claims, the ever-increasing coast. The incident called into question the adequacy of the then size of tankers meant that shipowner liability could be exceeded. compensation limits. The IMO Legal Committee moved quickly A novel approach was therefore taken with the development of a and, in October 2000, agreed a 50% increase in compensation to second tier, the International Convention on the Establishment of SDR 89.77 million and SDR 203 million respectively for CLC 1992 an International Fund for Compensation for Oil Pollution Damage and the Fund Convention 1992. 1971 (Fund Convention), to share liability with cargo interests in the However, restrictions within the provisions of the two Conventions most serious incidents. It would be funded by a levy on oil imports in precluded any further increase before 2011. This did not satisfy some Contracting States to provide additional compensation up to a further European States. The loss of the tanker Prestige off Cape Finisterre over-arching maximum figure. in November 2002 served only to exacerbate concerns. There was As with all international conventions, complex entry into force active talk about reopening the Conventions and suggestions for provisions meant that CLC 1969 did not take effect until June 1975 the creation of a regional European scheme to provide additional and the Fund Convention 1971 until October 1978. However, in compensation. recognition of the public outcry if adequate compensation was Proposals of this nature were unpalatable to the shipping industry as not available in response to a further incident, the shipping and they would undermine the carefully constructed system that, while oil industries set up their own interim compensation schemes: the not perfect, had nevertheless worked reasonably well over some Tanker Owners Voluntary Agreement Concerning Liability for thirty years. It was also likely that this would be the thin end of Oil Pollution (TOVALOP) and the parallel Contract Regarding a the wedge as different regimes, already present in the USA, would Supplement to Tanker Liability for Oil Pollution (CRISTAL). The emerge in Europe and then in other parts of the world. International schemes were designed to fill gaps in the international regime. They uniformity would be lost. Shipowners would be expected to were terminated in 1997. comply with a range of different requirements according to their Important modifications to CLC 1969 were agreed at a Diplomatic trading pattern while, in the event of an oil-spill incident, procedural Conference in 1984 which included broadening the scope to cover disputes and questions of applicable substantive law might create bunker and other oil spills from unladen as well as laden tankers; uncertainty and delay claimants’ compensation payments.

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However, the position was resolved through a new optional third later resumed with shipowners pressing the need to maintain shared tier of compensation. The Protocol of 2003 to the International liability through a two-tier instrument. Convention on the Establishment of an International Fund for New text was drafted over a period of years. The International Compensation for Oil Pollution Damage 1992 (Supplementary Convention on Liability and Compensation for Damage in connection Fund) provides additional payments of up to SDR 750 million when with the Carriage of Hazardous and Noxious Substances by Sea (HNS the first-tier shipowner limit and SDR 203 million in the second tier Convention) was adopted at a Diplomatic Conference in 1996. As Fund Convention 1992 have been exhausted. The availability of with the oil pollution instruments, it applied in the territory, territorial additional payments is particularly attractive to high-cost economies sea and exclusive economic zone of Contracting States. with many of the Contracting States in European Union or OECD The first tier defines hazardous and noxious substances. Strict liability Member States. is imposed on shipowners for loss of life and injury, as well as for As of May 2018, there are 137 Contracting States to CLC 1992, 114 property damage and contamination. Compensation and limitation to the Fund Convention 1992 and 31 to the Supplementary Fund. levels are set out, with shipowners required to maintain compulsory The figures account, respectively, for 98%, 95% and 17.5% of world insurance. Claimants may take direct action against the shipowner or tonnage. This means that it is almost impossible for a seagoing tanker insurer. to trade in most parts of the world without the necessary CLC 1992 In the event that shipowner liabilities are exceeded, additional certification and insurance cover. Separate arrangements applicable compensation is available through a second tier funded by a levy in the USA are beyond the scope of this article. on cargo importers. However, necessary compromises during the The third tier was developed on the basis that it would be funded by negotiation stage resulted in complex provisions for establishing and contributions from oil importers. However, in response to concerns collecting payments due. about the equitable sharing of liability between shipowners and In the years following adoption, it became clear from lack of support oil interests, the shipping industry agreed to voluntary, but legally that, without changes, HNS 1996 would never come into effect in major binding, arrangements to increase their payments. trading nations. The IMO Legal Committee formed a Focus Group Under the Small Tanker Oil Pollution Indemnification Agreement with a tightly defined mandate to develop legally-binding solutions. (STOPIA), the CLC 1992 threshold payment of SDR 4.5 million A package was devised and adopted at a Diplomatic Conference in (after the 50% increase in October 2000) for vessels up to 5,000 April 2010. gross tons has been raised to SDR 20 million, equivalent to a ship Despite all of the efforts taken, it is unfortunate that, some eight years of 29,548 gross tons, and applies in respect of ships entered in a later, HNS 2010 has been ratified by only three States: Canada; Norway; member of the International Group of P&I Clubs. A second scheme, and Turkey. It remains a long way from international implementation. the Tanker Oil Pollution Indemnification Agreement (TOPIA), In the meantime, compensation for a chemical-related incident is provides for shipowners to share 50% of the cost of Supplementary likely to be determined in accordance with LLMC 1996. Fund payments. STOPIA has been invoked. However, as the Supplementary Fund Bunker Oil Pollution has not yet been called upon, no payments have been made through TOPIA. There was a more positive experience with the next, and final, In general, the oil pollution compensation regime has worked pollution liability regime. While cargo and bunker spills from tankers reasonably well over the years. It is not, however, without are subject to CLC 1992, no internationally agreed provisions existed controversy. While CLC 1992 (as with CLC 1969) provides that for spills from non-tankers. However, bulk carriers and container no claim for pollution damage may be made against the shipowner ships often carry significant quantities of fuel, possibly in excess “otherwise than in accordance with this Convention”, some high- of the cargo capacity of a small tanker subject to the international profile incidents have nevertheless seen national courts trying regime. to circumvent or find ways to extend liabilities beyond those set Many States already had domestic legislation imposing strict liability out in the Conventions. Governments in Contracting States are for bunker spills. In the majority of cases, shipowners’ P&I cover likely to reject criticism by referring to the independence of their would respond in the event of a liability being established. However, judicial systems. Nevertheless, governments develop international unlike road transport, there is no mandatory requirement for conventions and so perhaps this is a question of how the treaties they shipowners to maintain third-party insurance other than in relation have accepted are incorporated into their national law. to international obligations under CLC 1992 and, in due course, the HNS Convention. Moreover, certificates issued for CLC apply only Hazardous and Noxious Substances to tank vessels and can be used only for the purposes of confirming compliance with insurance to respond to oil pollution liabilities. The CLC 1992 and Fund Convention 1992 address the polluting The position is beginning to change as States in a number of effects of oil spills in the sea and on shore. They do not respond to jurisdictions (including EU Member States through the Insurance the hazardous or noxious effects of oil or, indeed, any other chemicals. Directiveiv) move towards requiring a P&I Club certificate of entry However, with so many chemicals and substances traded and or other evidence of insurance cover, normally up to the maximum transported on a daily basis, it was agreed that a specialist instrument limits set out in LLMC 1996, as a condition of port entry. However, should be developed so that a regime would be in place when, rather there is no internationally agreed mechanism for establishing and than if, an incident occurred. confirming cover. As a result, governments have from time to time While it was thought that the principles in the oil pollution instruments encountered difficulties in recovering the costs of cleaning up bunker could be replicated for hazardous and noxious substances, work proved spills from owners of ships without any or inadequate insurance. more difficult than expected. Draft articles prepared by the IMO Work therefore began, through IMO, to develop a specialist Legal Committee in 1983 were rejected at a Diplomatic Conference instrument for bunker spills. This resulted in the International in 1984. The project was initially abandoned. However, in order to Convention on Civil Liability for Bunker Oil Pollution Damage discourage States from taking unilateral or regional action, work was 2001, known as the “Bunkers Convention”. It shares some common

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elements with CLC 1992 (and the HNS Convention) in relation to mandatory insurance and claimant rights to take direct action against Endnotes insurers. However, there are important differences as this is a single- i. Lennard’s Carrying Co v. Asiatic Petroleum Co Ltd (1915) tier instrument, with shipowners and their insurers responsible for All E.R. Rep. 280. any compensation payable. ii. The value of the SDR is based on a weighted basket of The Bunkers Convention applies to bunker oil pollution in a international currencies. Its value is calculated by IMF on a Contracting State’s territory, territorial sea or exclusive economic daily basis (other than holidays). zone. Strict liability is imposed on the shipowner. However, such iii. Exchange rate: May 1996 SDR 1 = USD 1.44104; May 2018 liability may be limited by reference to an applicable national or SDR 1 = USD 1.41858. international regime, with a non-binding recommendation that such iv. Directive 2009/20/EC of the European Parliament and of the limit should be by reference to a Contracting State’s ratification Council of 23 April 2009 on the Insurance of Shipowners for of LLMC 1996. The requirement for maintaining compulsory Maritime Claims (“Insurance Directive”). insurance applies to all seagoing vessels greater than 1,000 gross tons, thus representing a very significant proportion of the world fleet. Nevertheless, liability also attaches to smaller ships, although many can be expected to maintain P&I cover. The Bunkers Convention entered into force in November 2008. It now has 88 Contracting States, representing 92.5% of world tonnage. Donald Chard BIMCO Conclusion Bagsværdvej 161 2880 Bagsværd The conclusion to be drawn from this analysis is that considerable Denmark progress has been made in the development of oil pollution Tel: +45 44 36 68 00 compensation from tankers under CLC 1992, and from all other vessels Email: [email protected] under the more recent Bunkers Convention. The HNS Convention still URL: www.bimco.org has some way to go to secure acceptance. In answer to the opening question, despite some inconsistencies in the application of the internationally agreed liability and compensation Donald Chard is a Chartered Shipbroker and Fellow of the Chartered Institute of Arbitrators. After more than 38 years at the UK Chamber instruments, arrangements structured on worldwide uniformity are of Shipping, where he was Head of Legal & Documentary, he is now a more effective and efficient than a system of national or regional practising maritime arbitrator and Consultant with BIMCO’s Contracts regimes. So, while we might have yet to achieve the best of all worlds, and Clauses Department. this is the best one we have.

BIMCO is the world’s largest international shipping association, with more than 2,200 members globally. We provide a wide range of services to our global membership – which includes shipowners, operators, managers, brokers and agents. BIMCO is also recognised worldwide for the clarity, consistency and certainty of its standard maritime contracts. Our aim is to produce flexible commercial agreements that are fair to both parties. We work with industry experts to produce modern contracts tailored to specific trades and activities. Our world-recognised contracts are widely used and this familiarity provides greater certainty of the likely commercial outcome – helping members manage contractual risk. (Information courtesy of David Souden: All in the Same Boat: The Story of BIMCO.)

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Drafting a New Baltic Code

The Baltic Exchange Mark Jackson

The New Baltic Code is based on the following principles: Drafting a New Baltic Code Integrity of Markets This April, the Baltic Exchange announced that it will be introducing Market Participants shall act to uphold the integrity of a modernised code of conduct for shipowners, charterers and Principle 1 the physical freight and freight derivative markets and shipbrokers using the physical shipping and freight derivatives avoid any action or omission that may adversely affect markets. The move follows a detailed review of the current these markets or bring the Baltic Exchange and its arrangements led by law firm Norton Rose Fulbright with oversight membership into disrepute. by the Baltic Exchange Council and the Baltic Membership Council. Fairness and Competition The Baltic Exchange is a membership organisation with a long Principle 2 Market Participants shall treat their customers fairly, history stretching back to the 18th century. Its members may compete compete fairly and avoid anti-competitive agreements in the shipping markets, but the code of conduct encapsulated in the and practices. motto “our word our bond” has long ensured the smooth functioning Ethical Business Practice of the global bulk shipping markets. A primitive version of the Market Participants shall do business in an ethical Baltic Code was first introduced in 1823, when a set of rules were Principle 3 manner, eschew corrupt practices and comply at all put together and an admissions procedure was devised, signifying times with applicable laws on money laundering, the beginning of the modern Baltic market. sanctions and tax evasion. Today the Baltic Code underpins the activity of 640 companies Good Market Conduct active in the dry bulk and tanker markets. Behind the original Market Participants shall comply with applicable development of the Code was the need to demonstrate a certain laws in respect of their activities in the freight and Principle 4 level of integrity in order to become a Baltic Exchange broker. freight derivative markets, maintain authorisations and permissions to undertake regulated activities and The original Code was established as a means to combat reckless devote due skill, oversight and resources to these gambling in the market and to provide some form of regulation; it activities. was put together by a committee of senior coffee house regulars. Today, although the basic principle of the Code is the same, it has Accurate and Credible Benchmarks grown to become a standard for the shipping industry establishing Members contributing data to the Baltic Exchange benchmarks shall comply at all times with applicable required standards with regard to ethics and market practice. law and the Baltic Exchange Guide to Market Times and business practices continue to evolve and the New Principle 5 Benchmarks. Market Participants using these products Baltic Code has been drafted to bring together a set of principles shall comply with applicable laws and terms and conditions under which the Baltic Exchange provides and business practices which will be applicable not only to Baltic these products and at all times respect the rights of the Exchange members, but also the wider market. There is a greater Baltic Exchange in respect of these products. focus on fairness & competition, anti-bribery & corruption and benchmarking-related issues than before. The New Baltic Code contains detailed examples of good and bad The backdrop to these changes is the heightened political and practices and includes new sections covering competitive activity regulatory scrutiny that has been placed on the commodity markets and ‘know your counterparty’ procedures. since the 2007–2009 global financial crisis. By introducing this new The New Baltic Code is currently being reviewed by the Baltic code of conduct, the Baltic Exchange wants to preserve confidence Exchange Council and will be published later this year. in and the integrity of the physical freight and freight derivatives markets, eliminate poor practices and raise standards across the entire market, as well as increase the attractiveness of doing business New Escrow Service for Vessel Sales with Baltic Exchange members. The New Baltic Code will be binding on members of the Baltic The Baltic Exchange has launched an Escrow Service for its Exchange and members will be expected to promote compliance members to hold deposits for ship sale transactions. Baltic amongst all Market Participants. Members of the Baltic Exchange Exchange members can now take advantage of the Exchange’s will be expected to refrain from doing business with counterparties trusted position in the marketplace when undertaking the sale or who deliberately refuse to adhere to the principles and good practice purchase of a vessel. standards set out in the New Baltic Code.

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The paid-for service is available for use in transactions where the buyer of the vessel is a Baltic Exchange member. The service is Mark Jackson likely to be extended to disputes-related payments. The Baltic Exchange St Mary Axe The Escrow Service is run by the Baltic Exchange’s Asia office in London EC3A 8BH Singapore and will be subject to the Singapore Exchange’s (“SGX”) United Kingdom detailed compliance and money laundering procedures. OCBC Tel: +44 20 7283 9300 Bank will be providing the joint deposit account. Email: [email protected] Headed up by the Baltic Exchange’s Head of Asia-Pacific, Chris URL: www.balticexchange.com Jones, a sale & purchase broker with over 40 years of experience, the service will initially be offered from Singapore with a view to further expansion to other Asian shipping centres. Mark Jackson was appointed the Chief Executive Officer of the Baltic Exchange in January 2017. He had previously been a director of the Having the Baltic Exchange provide this service solves the problem Baltic Exchange and served as its Chairman from 2009 to 2012. The as to where the deposit should be held in a vessel transaction. Buyer London-headquartered Baltic Exchange is an international provider of and seller alike can be certain that the Baltic Exchange will apply its benchmark rates for the bulk shipping industry and its 650 shipowning, and company members adhere to a code of high standards of compliance as well as have a full understanding of conduct. It was acquired by the Singapore Exchange (“SGX”) in 2016 the complexities of any maritime transaction. and Mark is focused on building its London presence and broadening its This service has been designed to support the many sale & purchase Asia footprint. brokers who are Baltic members and are currently expected to He was previously a director of dry bulk shipowner and operator A.M. provide this service to clients. It will allow them to undertake the Nomikos & Son (UK) Ltd and the Chief Commercial Officer for the highest level of due diligence and compliance checks, reduce the Athens-based A.M. Nomikos Group. Mark has over 35 years of shipping industry experience and started his shipping career in 1981 in Sydney, administrative burden of organising a client escrow account and Australia. After 18 years working as a shipbroker in Sydney, Hong Kong, allow them to focus on adding value to the transaction. New York and London, he joined A.M. Nomikos (UK) in 1998. The service costs US$ 5,000 per side.

The Baltic Exchange is the world’s only independent source of maritime market information for the trading and settlement of physical and derivative contracts. Its international community of over 640 members encompasses the majority of world shipping interests and commits to a code of business conduct overseen by the Baltic. Baltic Exchange members are responsible for a large proportion of all dry cargo and tanker fixtures, as well as the sale and purchase of merchant vessels. In November 2016, the Baltic Exchange was acquired by the Singapore Exchange (“SGX”), bringing together complementary strengths of Singapore and London, two of the world’s most important maritime centres.

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Angola João Afonso Fialho

Vieira de Almeida | RLA – Sociedade de Advogados, RL José Miguel Oliveira

At a domestic level, one must consider the relevant provisions of the 1 Marine Casualty Law, the Environmental Law (Law No. 5/98 of 19 June 1998) and its ancillary regulations and related statutes. 1.1 In the event of a collision, grounding or other major (iii) Salvage / casualty, what are the key provisions that will impact Salvage is governed by the 1910 Salvage Convention and, where upon the liability and response of interested parties? applicable, the provisions named in the Merchant Navy Law (Article In particular, the relevant law / conventions in force in relation to: 81 et seq.) and in the Commercial Code (Article 676 et seq.). General average is governed by the provisions of the Commercial (i) Collision Code (Article 634 et seq.). The following international conventions are enforceable in Angola: (iv) Wreck removal ■ 1910 International Convention for the Unification of Certain Angola is not a signatory of the Nairobi International Convention Rules of Law Related to Collision Between Vessels; on the Removal of Wrecks, 2007. The removal of wrecks must be ■ 1952 International Convention for the Unification of Certain dealt with in light of the domestic law, namely the Merchant Navy Rules concerning Civil Jurisdiction in Matters of Collision; Law, the Environmental Law and ancillary statutes and regulations. ■ 1952 International Convention for the Unification of Certain (v) Limitation of liability Rules relating to Penal Jurisdiction in Matters of Collision or Angola is not a signatory of the Convention on Limitation other Incidents of Navigation; and of Liability for Maritime Claims. Conversely, both the 1924 ■ 1972 International Regulations for Preventing Collisions at International Convention for the Unification of Certain Rules Sea (“COLREGS”), as amended in 1981. relating to the Limitation of the Liability of Owners of Seagoing The above conventions are supplemented by domestic regulation, Vessels and the 1957 International Convention relating to the notably Article 73 et seq. of Law No. 27/12 of 28 August 2012 (the Limitation of the Liability of Owners of Seagoing Vessels are “Merchant Navy Law”) and Article 664 et seq. of the Commercial applicable. Furthermore, it is important to note that domestic law Code. provides some special rules in respect of the limitation and sharing (ii) Pollution of liability (e.g., where collision was caused due to fault or wilful The following international conventions and relevant protocols have misconduct of the crew, damages will be computed and shared been adopted by Angola: between owners pro rata to the severity of each crew party’s fault, and that if it is not possible to determine which vessel caused the ■ 1969 International Convention Relating to Intervention on the accident, all intervening vessels shall be jointly liable for damages High Seas in Cases of Oil Pollution Casualties, as amended in 1973 and 1991; and losses arising therefrom). ■ 1973 International Convention for the Prevention of Pollution (vi) The limitation fund from Vessels (“MARPOL 73/78”) and Annexes I/II, III, IV The limitation fund can be established in any way admitted in the and V; law and is dependent on the filing of a proper application before the ■ 1990 International Convention on Oil Pollution Preparedness, relevant court. The application must identify/list: Response and Cooperation (“OPRC 90”); ■ the occurrence and damages; ■ 1992 Protocol to Amend the 1969 International Convention ■ the amount of the limitation fund; on Civil Liability for Oil Pollution Damage (“CLC 1969”); ■ how the fund will be established; ■ 1992 Protocol to Amend the International Convention on the ■ the amount of the reserve; and Establishment of an International Fund for Compensation for Oil Pollution Damage (“FUND”); ■ the known creditors and the amount of their claims. ■ 1996 International Convention on Liability and Compensation The application must be filed along with the vessel’s documents for Damage in Connection with the Carriage of Hazardous supporting the calculation of the amount of the fund (e.g., a tonnage and Noxious Substances by Sea; and certificate). ■ 1996 Protocol to Amend the 1972 Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, which regulates environmental protection.

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1.2 What are the authorities’ powers of investigation / 3 Claims casualty response in the event of a collision, grounding or other major casualty? 3.1 What are the key provisions applicable to the resolution of maritime passenger claims? The Port and Maritime Institute of Angola (“IMPA”), in its role as the Maritime Authority, is the governmental body in charge Angola is not a party to the Athens Convention relating to the of investigating and responding to any maritime casualty. In Carriage of Passengers and their Luggage by Sea. Generally, performing its duties, the IMPA is assisted by the Harbourmaster carriage of passengers is governed by the Angolan Commercial and with jurisdiction over the area where the casualty took place. In Civil Codes and the Consumer Law, in addition to the individual Angola case of (eventual) environmental damage, environment authorities terms of the contract of carriage. Carrier’s liability is mostly fault- may also be called to act, notably the Ministry of Environment. based. In the event of delays, unexpected changes of route, damages or loss of carriage, passengers are entitled to claim compensation 2 Cargo Claims for losses and damage caused by an action attributed to the carrier, regardless of its wilful misconduct.

2.1 What are the international conventions and national laws relevant to marine cargo claims? 4 Arrest and Security

The 1924 International Convention for the Unification of Certain 4.1 What are the options available to a party seeking to Rules of Law relating to Bills of Lading, also known as the Hague obtain security for a maritime claim against a vessel Rules, applies. Under the Hague Rules, the carrier is liable vis-à-vis owner and the applicable procedure? the consignee in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods. Contracts of carriage are Angola is a party to the 1952 Convention for the Unification of therefore governed by the terms of the Hague Rules and the 1888 Certain Rules relating to the Arrest of Seagoing Vessels (“1952 Commercial Code (Article 538 et seq.), in the absence of detailed Convention”). Under the 1952 Convention, any person alleging that provisions set out in the relevant contract. it holds a maritime claim is entitled to seek the arrest of a ship. A It is important to note that if the shipment (i.e., loading and place of “maritime claim” is deemed to be a claim arising out of one or more destination) takes place between two countries party to the Hague of the situations named under Article 1.1 of the 1952 Convention. Rules, these rules shall apply. However, if the country of destination Outside the scope of the 1952 Convention, i.e., for the purposes of the goods is not a signatory to the Hague Rules, then the applicable of obtaining security for an unlisted maritime claim (e.g., arrest law would be determined by Angolan courts in accordance with the for a ship sale claim, unpaid insurance premiums, protection and lex rei sitae principle. indemnity (“P&I”) dues, amongst others) or to seek the arrest of a vessel sailing under the flag of a non-contracting state, the claimant 2.2 What are the key principles applicable to cargo claims must make use of the provisions of the Angolan Code of Civil brought against the carrier? Procedure (“CPC”). In this case, and aside from the jurisdiction issue that needs to be properly assessed, in addition to providing As a general principle, any party to a contract of carriage who holds evidence on the likelihood of its right/credit, the claimant shall an interest over the cargo and can demonstrate that it has suffered also produce evidence that there is a risk that the debtor/arrestor losses or damages arising from the carrier’s actions and/or omissions may remove or conceal the ship (security for the claim) or that the is entitled to sue for losses or damages. ship may depreciate in such a way that, at the time that the final The rights to sue under a contract of carriage assist (1) the shipper, judgment is handed down in the main proceedings, the ship is no and (2) the rightful holder of the bill of lading. In this respect, it is longer available or has substantially decreased in value. noteworthy that when in the presence of a: (i) straight bill of lading, Before ordering the arrest, the arrestee is granted the opportunity the right to bring a claim remains with the named consignee; (ii) to oppose/challenge the arrest application. Please note, however, order bill of lading, only the latest endorsee is eligible to sue; and that if the arrest application is properly filed and duly documented, (iii) bill of lading to bearer, it is up to the rightful holder at a given the court may order the detention of the vessel before summoning moment to sue. the arrestee or granting the arrestee the chance to oppose the Rights under a contract of carriage may be validly transferred to arrest application. The arrestee has 10 days to oppose the arrest third parties either by way of assignment of contractual position application/order. or subrogation of rights (which is typically the case when insurers With the arrest in place, the claimant is required to file the initial indemnify cargo interests and then seek reimbursement from the claim for the main proceedings, of which the injunction will form carrier), as long as the relevant rules provided in the Civil Code an integral part, within 30 days as of the arrest order. During the are met. proceedings, the parties are free to settle by agreement and withdraw the claim. If the main claim should be filed with a foreign court, then the judge dealing with the arrest application must set out the 2.3 In what circumstances may the carrier establish period within which the claimant must commence proceedings on claims against the shipper relating to misdeclaration of cargo? the merits in the appropriate jurisdiction. The defendant is entitled to post a security before the relevant court in the amount of the claim In light of Article 3.5 of the Hague Rules, the shipper shall brought by the claimant, and seek the release of the vessel pending indemnify the carrier against all loss, damages and expenses arising foreclosure and auction. or resulting from inaccuracies regarding the information (marks, number, quantity and weight) on the cargo to be transported.

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4.2 Is it possible for a bunker supplier (whether physical 6 Procedure and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) A claim arising from a bunker supply may be considered as a national courts (including any specialised maritime or maritime claim under Article 1.k of the 1952 Convention. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution. 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of over cargo, what The Angolan judicial system foresees three categories of courts: (i) Angola options are available? the Supreme Court, which is the higher body in the hierarchy of the Angolan courts; (ii) the Courts of Appeal; and (iii) the District Assets (e.g., bunkers) belonging to the arrestee may be subject to Courts. Courts of Appeal have jurisdiction to review and revise the arrest, provided that it is possible to establish ownership in respect District Court’s contested decisions. Likewise, the Supreme Court thereof. In addition, the carrier is entitled to exercise a possessory has a corresponding power as regards contested decisions rendered over cargo. In this respect, please be advised that pursuant to by the Courts of Appeal. District Courts have jurisdiction over the Angolan law, a lien is only enforceable by operation of the law and areas in which they are established and can be divided and organised not merely by contract. By way of illustration, Article 755 of the by expertise under the so-called Rooms of Expertise. Existing since Civil Code provides that any debts resulting from shipping services 1997, the Room of Expertise for Maritime Issues has jurisdiction entitle the carrier/creditor to retain goods in its possession until the over any maritime dispute submitted to its jurisdiction, including, to full discharge of those debts. name a few, disputes on shipbuilding and repair contracts, purchase and sale agreements, charterparties and bills of lading, precautionary measures against ships and their cargo, etc. 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of In general, Angolan courts will find themselves competent to rule on undertaking. claims where the parties in dispute and the claim itself have a close connection/link to Angola. Typically, cash deposits (at the court’s order) and bank guarantees With regard to legal procedures before national courts, these can be are the most effective forms of security. Letters of undertaking generally described as follows: (“LoUs”) are acceptable in very limited situations and their ■ Proceedings commence with the filing of an initial written acceptance is always dependent on the other party’s agreement. complaint before the court. In addition to listing the facts and arguments sustaining the claim, the claimant is required to list its witnesses and request the other evidence proceedings, 5 Evidence such as inspections or surveys. ■ Service is made by the clerks, in person. Shipping agents represent owners’/disponent owners’/managers’ interests and 5.1 What steps can be taken (and when) to preserve or can receive documentation on their behalf. obtain access to evidence in relation to maritime claims including any available procedures for the ■ Generally, the defendant has 30 days to challenge and oppose preservation of physical evidence, examination of the claim. If it fails to present its defence, the facts presented witnesses or pre-action disclosure? by the claimant are deemed proven (exceptions apply). ■ With the opposition lodged, the judge will summon the Whenever there is a serious risk of loss, concealment or dissipation parties and will try to resolve the dispute amicably or, that of property or documents, as well as when it becomes impossible or not being possible, prepare the final hearing. almost impossible to obtain testimony or certain evidence by way ■ At the final hearing, the witness will be examined and cross- of inspection, parties are free to start an action and file a motion examined by the lawyers representing each party, and the requiring it to be enlisted by the court or taken prior to the hearing. judge may intervene whenever it is deemed necessary. At The relevant motion can be lodged whenever deemed suitable, the end, lawyers are required to issue their final arguments verbally. the applicant always being required to provide due grounds for its request. ■ The judge will then prepare and issue the judgment which, depending on the amount of the claim, can entail an appeal. As to the duration of maritime proceedings, as with any other 5.2 What are the general disclosure obligations in court legal proceedings in Angola, this is highly unpredictable. In our proceedings? experience, excluding arrests and any other interim measures, it should not be expected to take less than one to two years, as it As a general rule, it is up to the parties to establish the object of their depends on several variables, such as the court’s current caseload. claim/proceedings and the judge cannot go beyond the limits of the claim as put forward by the parties. In addition, parties have the As to arbitration, the primary domestic source of law is Law No. burden of presenting the facts of their interest and produce evidence 16/03 of 25 July 2003 (the Voluntary Arbitration Law or “VAL”). in respect thereof. The court will take into account the evidence The VAL governs both domestic and international arbitration. produced/requested by the parties, but it is not limited to same. In According to the VAL, arbitration will be of an international nature fact, the court is also allowed to request and compel the parties to when international trade interests are at stake, in particular when: disclose all evidence deemed necessary to the discovery of the truth the parties to the arbitration agreement have business domiciles and/or to the best resolution of the dispute. in different countries at the time of the agreement’s execution;

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the place of performance of a substantial part of the obligations merits/grounds of the judgment, but a simple re-examination of the resulting from the legal relationship from which the dispute arises is relevant judgment and additional judicial procedure requirements. situated outside the countries where companies have their business The process must begin with the filing by the interested party of an domiciles; or the parties have expressly agreed that the scope of the application to that effect with the Angolan Supreme Court. In order arbitration agreement is connected with more than one state. for the foreign decision to be recognised by the Supreme Court, the The general rule under the VAL is that parties are free to submit following set of requirements must be met: their disputes to arbitration, with the exception of disputes that fall ■ There are no doubts that the judgment is authentic and its under state courts’ exclusive jurisdiction and disputes that relate to content understandable. inalienable or non-negotiable rights. As such, disputes relating to ■ It must constitute a final decision (not subject to appeal) in the country in which it was rendered.

Angola the following issues, inter alia, may be submitted to arbitration: commercial and corporate law; maritime and shipping matters; ■ The decision must have been rendered by the relevant court securities transactions; and intra-company disputes. according to the Angolan conflict-of-law rules. The arbitration agreement may consist of either an arbitration clause ■ There is no case pending before or decided by an Angolan or a submission agreement. The arbitration clause concerns potential court, except if it was the foreign court which prevented the future disputes arising from a given contractual or extra-contractual jurisdiction of the Angolan court. relationship, whereas the submission agreement arises from existing ■ The defendant was served proper notice of the claim in disputes, whether or not they have already been submitted to a state accordance with the law of the country in which the judgment court. The VAL treats both types of arbitration agreement on an was rendered, except in cases where, under Angolan law, there is no need to notify the defendant, or in cases where the equal footing. judgment is passed against the defendant because there was Subject to any special law requiring a more solemn form, the no opposition. arbitration agreements must be made in writing. An arbitration ■ The judgment is not contrary to the public policy principles agreement is considered to be in writing if documented either in of the Angolan state. a written instrument signed by the parties or in correspondence ■ The decision rendered against the Angolan citizen/company exchanged between them. The VAL allows arbitration agreements does not conflict with Angolan private law, in cases where this to be incorporated in a contractual document that is not signed by law could be applicable according to the Angolan conflict-of- both parties simply by reference to general terms and conditions on law rules. another contract. After the application is filed, the court must serve notice of same on In addition to the VAL, Law No. 12/16 of 12 August 2016 sets the defendant. Once notice is served, the defendant may oppose the forth the rules applicable to the establishment and organisation exequatur if any of the above requirements are not met. of mediation and conciliation procedures, as alternative dispute If the defendant opposes the exequatur, the applicant may reply to mechanisms. With the enactment of this statute, disputes in civil, the defendant’s arguments. Afterwards, the case follows various commercial (including maritime), employment, family and criminal procedural steps until the decision is made on whether to grant the matters can now be submitted to mediation, provided that they exequatur. The losing party may still appeal against the court’s concern waivable rights. decision.

6.2 Highlight any notable pros and cons related to your 7.2 Summarise the key provisions and applicable jurisdiction that any potential party should bear in procedures affecting the recognition and enforcement mind. of arbitration awards.

Angola’s legal framework on shipping and maritime matters is fairly Angola has recently acceded to the 1958 New York Convention, by complete and follows the international industry standards (please means of Resolution 38/16 of 12 August 2016. Angolan courts are refer to question 8.1 below). Nevertheless, despite the efforts of now required to give effect prima facie to an arbitration agreement the Angolan Government and the achievements reached in the past and award rendered in another signatory country to the New York decade, the country needs to continue developing its infrastructure Convention. Where the arbitral award was not granted by another (courts, registries, notaries, public administration, etc.) and support contracting state, to be enforceable it must have previously been the training and qualification of its citizens. Although proceedings reviewed and confirmed by Angola’s Supreme Court (see question may drag over long periods of time (years), Angola benefits 7.1 above). nowadays from a very capable community of judges, lawyers and other legal professionals. 8 Updates and Developments 7 Foreign Judgments and Awards 8.1 Describe any other issues not considered above that may be worthy of note, together with any current 7.1 Summarise the key provisions and applicable trends or likely future developments that may be of procedures affecting the recognition and enforcement interest. of foreign judgments. Since its independence in 1975, Angola has been steadily revising Article 1094 of the CPC sets out that any judgment awarded by a its laws and regulations, at the same time as ratifying and adhering foreign court is, as a rule, subject to review and confirmation by the to a number of international treaties and conventions. In this Supreme Court in order to be valid and enforceable locally (i.e., to respect, it is worth mentioning that a number of pivotal conventions obtain the “exequatur”). on maritime and shipping-related matters applicable in the country The review and confirmation of foreign decisions under the Angolan date from the time when Angola was still a Portuguese overseas CPC is mostly formal and should not involve a review on the territory (e.g., the 1952 Arrest Convention). In fact, although after

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its independence Angola has not specifically adhered to the treaties/ Decree No. 54/14 of 28 February 2014, which approved the rules conventions to which Portugal was already a party, as formally applicable to merchants wishing to be engaged in the provision of required under the Vienna Convention on Succession of Treaties, cabotage and/or international transportation of goods and passengers it is commonly accepted that the treaties ratified by Portugal and (this statute limits the provision of cabotage to Angolan citizens). extended to Angola over time still apply in light of Articles 58 In the last couple of years a new set of maritime legislation has and 59 of the Angolan Constitution, approved immediately after been passed by the Angolan Government, most of which is directed the country’s independence, which provided for the survival of towards matters of safety and transparency in the carrying out of any (Portuguese) laws and regulations in force at the time of maritime activities, including new regulations on seafarers and independence, as long as these did not conflict with the letter and maritime personnel (Presidential Decree No. 78/16 of 14 April 2016), the spirit of the Constitution.

maximum safety capacity of vessels and ships (Presidential Decree Angola Over the past few years, a number of key statutes have been No. 79/16 of 14 April 2016), search and rescue at sea (Presidential approved, the most relevant of which being the Merchant Navy Law. Decree No. 89/16 of 21 April 2016), and prevention of terrorism The Merchant Navy Law is a landmark achievement in terms of associated with activities at sea (Law No. 19/17 of 25 August 2017). shipping and maritime legislation, as this is the first statute that seeks Angola has also recently adhered to the Basel Convention on the to regulate all maritime and port activities in a consistent manner, Transboundary Movement of Hazardous Wastes and their Disposal, governing matters related to navigational, technical and security and to the African Charter of the African Union, rules, registration duties and procedures for national and foreign which reveals Angola’s drive to elevate the national maritime sector vessels, licensing and other requirements applicable to marine and to international standards. port-related activities, to name a few. In addition, in view of its impact on the local industry, it is worth noting, in particular, some of the most important statutes on maritime Acknowledgment matters that have been passed by the Angolan Government in recent The authors would like to thank Ângela Viana and Marcelo Mendes years (a clear sign of the attention that the Government is paying to Mateus for their assistance in preparing this chapter. Ângela (axv@ the sector), notably: (i) Presidential Decree No. 50/14 of 27 February vda.pt) is a senior associate at VdA and dual-qualified to practise in 2014, which approved the regulations applicable to the provision of Angola and Portugal, and Marcelo ([email protected]) is services; (ii) Presidential Decree No. 51/14, also an associate at RLA – Sociedade de Advogados, RL (the exclusive of 27 February 2014, which approved the regulations applicable to Angolan member of VdA Legal Partners). the carrying out of ship-management services; and (iii) Presidential

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João Afonso Fialho José Miguel Oliveira Vieira de Almeida Vieira de Almeida Rua Dom Luís I, 28 Rua Dom Luís I, 28 1200-151 Lisbon 1200-151 Lisbon Portugal Portugal

Tel: +351 21 311 3400 Tel: +351 21 311 3400 Fax: +351 21 311 3406 Fax: +351 21 311 3406 Email: [email protected] Email: [email protected] URL: www.vda.pt URL: www.vda.pt Angola João Afonso Fialho joined VdA in 2015. He is head partner of VdA’s José Miguel Oliveira joined VdA in 2015. He is a managing associate Oil & Gas practice. of VdA’s Oil & Gas practice. Before joining the firm, he worked for six years at Miranda Correia Amendoeira. In 2008, he was seconded With more than 20 years of practice in the transport sector, his to the Corporate and Commercial Law Department at Eversheds experience in shipping includes contracts in international transport, International LLP’s London office. From 2002 to 2008 he worked at providing advice, in particular, to owners, charterers, P&I Clubs and Barrocas Sarmento Neves. port operators, as well as commodities traders and various industry brokers. João advises on most legal matters relating to the shipping Over the years he has amassed extensive experience within the industry, including the bunkering sector, as well as assistance and international shipping industry, particularly across African jurisdictions, salvage at sea, , customs and maritime litigation. where he has been particularly active in assisting all sorts of industry players, from owners, charterers, P&I Clubs, shipbrokers, João also has an extensive track record with construction contracts and ship managers, ship agents, freight forwarders, port operators and ship acquisition, charterparties, bills of lading, ship finance, mortgages , to commodities traders on all types of wet and dry shipping and insurance. matters. In addition, he provides regular advice on regulatory matters He has particular expertise in shipping activities associated with the oil to oil companies and service providers to the offshore oil & gas industry, & gas sector, including wreck removal and environmentally sensitive notably in respect of the use and employment of rigs, FPSOs, support issues. and multipurpose vessels. He also holds a deep knowledge of the bunkering industry, having assisted major players in the setting up of their local structures, securing licences and deals (cargo and bunkering contracts). José is dual-qualified (Portugal and Angola) and his regular presence in Angola and Mozambique allows him to have an in-depth understanding of the local and neighbouring industries and the respective legal environments.

With over 40 years in the making, Vieira de Almeida (VdA) is a leading firm, notable for cutting-edge innovation and top-quality legal advice. A profound business know-how coupled with a highly specialised cross-sector legal practice enable the firm to effectively meet the increasingly complex challenges faced by clients, notably in the aerospace, distribution, economy of the sea, green economy, energy, finance, real estate, industry, infrastructure, healthcare, public, professional services, information technology, emerging technologies, telecoms, third, transport and tourism sectors. VdA offers robust solutions based on consistent standards of excellence, ethics and professionalism. The recognition of VdA as a leading provider of legal services is shared with our team and clients and is frequently acknowledged by the major law publications, professional organisations and research institutions. VdA has consistently and consecutively received the industry’s most prestigious awards and nominations. Through VdA Legal Partners, clients have access to a team of lawyers across 12 jurisdictions, ensuring wide sectoral coverage, including all African members of the Community of Portuguese-Speaking Countries (CPLP), and several francophone African countries, as well as Timor-Leste. Angola – Cabo Verde – Chad – Congo – Democratic Republic of the Congo – Equatorial – Gabon – Guinea-Bissau – Mozambique Portugal – São Tomé and Príncipe – Timor-Leste

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Australia Hazel Brewer

HFW Nic van der Reyden

(iii) Salvage / general average 1 Marine Casualty Salvage In Australia, a claim in respect of salvage is a general maritime 1.1 In the event of a collision, grounding or other major claim in admiralty. A salvor has a common law possessory lien and casualty, what are the key provisions that will impact a on the salved property. A salvor also has a right of upon the liability and response of interested parties? In particular, the relevant law / conventions in force in action in personam against the owners of the salved property. relation to: Australia has adopted certain articles of the International Convention on Salvage 1989. A person who renders a service that successfully (i) Collision saves or helps to save maritime property (being a vessel, , Damage caused by collision is actionable in Australia as a general freight or cargo) from danger, is entitled to a “salvage reward” maritime claim. Liability is determined according to the general assessed by the court and up to the value of the property or interest principles of negligence. An Australian court will apportion liability in the property salved. between colliding vessels according to their degree of fault. General average The International Regulations for Preventing Collisions at Sea 1972 In Australia, a claim in respect of general average is a general (COLREGs) are generally given effect in Australia and a ship’s maritime claim in admiralty. Parties to shipping contracts in breach of the COLREGs would be highly persuasive in determining Australia are free to adopt the York-Antwerp Rules. liability for negligence. (iv) Wreck removal (ii) Pollution The Navigation Act 2012 (Cth) (Navigation Act) grants the Australia is a signatory to a number of international conventions on Australian Maritime Safety Authority (AMSA) broad powers in marine pollution. These conventions are given effect, in varying respect of wrecks. AMSA’s powers extend to wrecks of Australian- forms and degrees, in domestic legislation. registered vessels wherever located, and wrecks of foreign vessels The International Convention for the Prevention of Pollution from located in the territorial sea of Australia. Ships 1973 (MARPOL Convention) is given effect in Australia A master or owner of a wreck must notify AMSA of the vessel’s by the Protection of the Sea (Prevention of Pollution from Ships) details, location and nature and quantity of cargo and oil on board Act 1983 (Cth), which creates a range of offences (including strict the vessel. AMSA may require the owner of a wreck to remove or liability offences) for breach of the MARPOL Convention. mark it within a certain period, and may itself mark, remove, sink, Select provisions of the International Convention on Civil Liability for or destroy the wreck and recover from the owner of the wreck any Oil Pollution Damage 1992 (Civil Liability Convention) are given expenses incurred by AMSA in doing so. effect in Australia by the Protection of the Sea (Civil Liability) Act (v) Limitation of liability 1981 (Cth). The Civil Liability Convention gives rise to a presumption of strict liability of an owner for pollution damage caused by oil cargo The Convention on Limitation of Liability for Maritime Claims which has escaped or been discharged from their vessel. 1976, as amended by the 1996 Protocol and the further amendments of 2012 (Limitation Convention) has the force of law in Australia The International Convention on the Establishment of an International by operation of the Limitation of Liability for Maritime Claims Act Fund for Oil Pollution Damage 1992 (Fund Convention) is given 1989 (Cth) (Limitation Act). effect in Australia by the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), and operates to compensate A shipowner, charterer, manager, operator or salvor of a sea-going victims in circumstances where an owner’s liability is insufficient, vessel may be entitled to limit liability with respect to certain including by reason of limitation, to compensate the entirety of the maritime claims but not with respect to: loss caused by a spill. (a) claims concerning the raising, removal, destruction or the Select provisions of the International Convention on Civil Liability rendering harmless of a ship that is sunk, wrecked, stranded for Bunker Oil Pollution Damage 2001 (Bunker Oil Convention) or abandoned, including anything that is or has been on board are given effect by the Protection of the Sea (Oil Pollution such a vessel; and Compensation Funds) Act 1993 (Cth), and operate to compensate (b) claims concerning the removal, destruction or the rendering victims in circumstances where an owner’s liability is insufficient, harmless of the cargo of the vessel. including by reason of limitation, to compensate the entirety of the In 2012, the International Maritime Organization (IMO) announced loss caused by a spill. new limits which entered into force on 8 June 2015 under a ‘tacit

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acceptance procedure’. These increased limits apply in Australia. A marine cargo claim can be brought by any of the following: To illustrate the significance of the substantial limitation increase, (a) by a lawful holder of a BOL; examples of previous and new limits for property claims are set out (b) in case of a Sea Waybill, by the person to whom delivery of in the table below: the goods is to be made by the carrier in accordance with the contract; and Approximate Approximate current Bulk carriers and limits for property limits for property (c) in case of a ship’s , by the person to whom their gross tonnage claim under 1996 claim under new delivery of the goods is to be made in accordance with the Protocol (in US$) limits (in US$) order. COGSA provides that Australian law applies compulsorily to Handysize of 1,000 1,450,000 2,187,929 outbound shipments, such that any jurisdiction or arbitration clause Australia Panamax of 35,000 19,850,750 29,974,636 contained in a sea carriage document seeking to oust Australian law or jurisdiction is deemed invalid. Similarly, clauses purporting to Capesize of 160,000 61,150,000 92,330,633 oust the jurisdiction of Australian courts on inbound voyages will also be invalid; however, Australian law will not necessarily apply It is expected that the current limits will be revisited in 2020, with compulsorily. at least a further three years to elapse before any new limits may come into force. A voyage charterparty does not constitute a sea carriage document for the purposes of COGSA. Accordingly, parties to a voyage (vi) The limitation fund charterparty may be able to rely on foreign law and jurisdiction The Federal Court of Australia has held that the constitution of a clauses for international shipments originating in Australia (refer to Limitation Fund under the Limitation Act must be by cash deposit question 8.1 below). into court (Barde SA v Abb Power Systems [1995] FCA 1602). The time limit to bring a cargo claim under COGSA is one year from delivery of cargo or from the date when it should have been 1.2 What are the authorities’ powers of investigation / delivered. The same one-year time limit applies to actions brought casualty response in the event of a collision, grounding in tort by a party to the contract of carriage. This period may be or other major casualty? extended by agreement. Under COGSA, unless the nature and value of the goods have been The Marine Safety (Domestic) Commercial Vessel National Law declared by the shipper before shipment and inserted into the sea- Act 2012 (Cth) (National Law Act) implements an agreement by carriage document, the carrier’s liability will be limited to 666.67 the Commonwealth, State and Territory governments to introduce units of account per package or unit; or two units of account per a single national law to regulate the safety of domestic commercial kilogram of gross weight of the goods lost or damaged, whichever vessels. is higher. Under the National Law Act, AMSA is invested with powers of investigation (including entry, search, seizure and detention) as the single national regulator, but is permitted to delegate certain 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration functions to, among others, existing State maritime safety agencies. of cargo? The Transport Safety Investigation Act 2003 (Cth) invests a separate body, the Australian Transport Safety Bureau (ATSB), with marine The Australian modified version of the Hague-Visby Rules provides: investigatory powers in relation to marine navigation conducted ■ Article 3 rule 5: the shipper shall indemnify the carrier against in the course of trade or commerce with other countries or among all loss, damage and expenses arising from inaccuracies given the States. The ATSB has wide powers to compel production of at the time of shipment as to the marks, number quantity and documents and interview witnesses. weight of cargo. ■ Article 4 rule 6: the shipper shall be liable for all damages 2 Cargo Claims and expenses arising directly or indirectly from the shipment of dangerous goods where the carrier has not consented with knowledge of the nature and character of the goods. 2.1 What are the international conventions and national laws relevant to marine cargo claims? 3 Passenger Claims In Australia, marine cargo liability is governed by the Carriage of Goods by Sea Act 1991 (Cth) (COGSA), which incorporates a 3.1 What are the key provisions applicable to the modified version of the Hague-Visby Rules. resolution of maritime passenger claims? Every State also has its respective version of the ‘sea-carriage documents’ legislation, which governs the rights under a sea- Australia is not a party to the Athens Convention relating to the carriage document, such as a Bill of Lading (BOL), and is relevant Carriage of Passengers and their Luggage by Sea 1974. in establishing title to sue. A shipowner is obliged to report to AMSA any incident that involves the death or serious injury of a person, including a passenger, and 2.2 What are the key principles applicable to cargo claims it is an offence to fail to do so. Passenger claims for loss of life or brought against the carrier? personal injury are subject to a limitation of liability in the amount of 175,000 units of account multiplied by the number of passengers A claimant does not need to be the owner of the cargo in order to the ship’s certificate authorises it to carry. bring a marine cargo claim in Australia.

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Claims for death or personal injury sustained as a consequence of a defect in a ship or its equipment, or arising out of an act or omission 4.2 Is it possible for a bunker supplier (whether physical of the shipowner (or any person for whose actions the shipowner or and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? charterer is vicariously liable) are general maritime claims for the purposes of federal admiralty jurisdiction. Alternatively, claims for loss of life or personal injury may be brought in Australian State Yes, if the bunker supplier asserts that the owner of the vessel to whom courts. the bunkers were supplied is the party liable to pay for the bunkers and that party is the owner of the vessel being arrested. Bunkers on board a ship cannot be arrested independently of the vessel. 4 Arrest and Security

4.3 Where security is sought from a party other than the Australia vessel owner (or demise charterer) for a maritime 4.1 What are the options available to a party seeking to claim, including exercise of liens over cargo, what obtain security for a maritime claim against a vessel options are available? owner and the applicable procedure?

Australia is an ‘arrest-friendly’ jurisdiction, where ships can be Whilst not strictly security, a claimant may be able to obtain a arrested quickly and efficiently. Whilst Australia is not a signatory Freezing Order (Mareva Injunction) which operates to preserve to the international conventions on ship arrest, the Admiralty Act assets in the jurisdiction by restraining a party from removing the 1988 (Cth) (Admiralty Act) largely gives effect to the regime of the assets in order to defeat a court judgment. Brussels Convention. The Admiralty Act permits the arrest of a ship in three categories of claim: 4.4 In relation to maritime claims, what form of security is (a) Maritime liens, which include: liens for salvage; damage acceptable; for example, bank guarantee, P&I letter of done by a ship; master’s and crew’s wages; and master’s undertaking. disbursements. (b) Proprietary maritime claims, which include: claims A vessel will be released from arrest if the vessel owner pays into concerning possession of, title to and mortgages over ships; court an amount equivalent to the value of the claim or the value of as well as existing judgments given against a ship (including the vessel, whichever is less. Alternatively, security such as a bank by foreign courts). guarantee or letter of indemnity from an international group P&I (c) General maritime claims, which include: claims in respect Club should normally be acceptable. of materials or services supplied to a vessel for its operation or maintenance; damage done by the vessel; personal injury; loss or damage to goods carried on the vessel; salvage; 5 Evidence general average; towage; pilotage; harbour charges; insurance premiums; wages; and more. 5.1 What steps can be taken (and when) to preserve or Proceedings commenced on maritime liens or proprietary maritime obtain access to evidence in relation to maritime claims can only be commenced as an action in rem against the vessel claims including any available procedures for the to which the lien/proprietary maritime claim relates. preservation of physical evidence, examination of Proceedings commenced in relation to a general maritime claim can witnesses or pre-action disclosure? be commenced as an action in rem against either: (a) a vessel to which the claim relates, provided that the person Anton Piller orders allow a court to permit a party to access and who would be liable for the claim: preserve physical and documentary evidence. Such applications may be made at any time, and for urgent applications, before (i) was the owner or charterer or in possession or control of the vessel at the time the claim came into existence; and proceedings are commenced. An application for the preservation of evidence can be made ex parte in cases of extreme urgency where (ii) remains the owner or demise charterer of the vessel at the there is a real chance of the dissipation or destruction of the evidence time proceedings are commenced; or without court intervention. (b) a surrogate (sistership) vessel, provided that the person who would be liable for the claim: Pre-action disclosure may be available in limited circumstances to (i) was the owner or charterer or in possession or control of determine whether to commence proceedings against a party giving the vessel to which the claim relates at the time the claim disclosure; or the identity of a potential defendant. came into existence; and Once proceedings are commenced, a party can seek leave to issue (ii) is the current owner of the surrogate vessel at the time subpoenas to third parties, requiring them to produce documents proceedings are commenced. relevant to specific issues. A party seeking to arrest a vessel must commence substantive in There is no property in a witness. If a witness refuses to co-operate, rem proceedings against the vessel itself (not its owner) by filing an the only mechanism for compelling co-operation is to issue a Admiralty Writ in the Federal Court of Australia. subpoena requiring the witness to give evidence at trial. Commonly, an arrest application is filed at the same time as the Admiralty Writ and must be supported by an Affidavit setting out 5.2 What are the general disclosure obligations in court the particulars of the claim. If the Registrar is satisfied, the warrant proceedings? will often be issued within hours of filing the application. The warrant is then forwarded to the Federal Court’s Admiralty Marshal All parties to proceedings are under a continuing obligation to disclose who carries out the arrest by serving the warrant on the vessel and all documents in their possession, power, custody or control which are taking custody of such vessel. relevant to matters in issue in the proceedings, subject to privilege.

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Australian courts take a practical approach to the scope of what While there is no provision for maritime-specific arbitration under must be disclosed. It is now fairly common for a court to order Australian law, parties may agree to resolve their disputes pursuant parties to agree upon the categories of documents to be disclosed. to the arbitration rules and procedures of the Australian Maritime and Transport Arbitration Commission (AMTAC). Those rules are intended to supplement the UNCITRAL Model Law. 6 Procedure There is also legislative provision for domestic arbitration in Australia; however, due to the large number of foreign participants 6.1 Describe the typical procedure and timescale in the Australian shipping industry, there is unlikely to be any applicable to maritime claims conducted through: i) significant amount of domestic maritime arbitration. Mediation national courts (including any specialised maritime or is frequently used as a means of alternative dispute resolution in Australia commercial courts); ii) arbitration (including specialist Australia, including in shipping cases, and court case management arbitral bodies); and iii) mediation / alternative dispute procedures often require parties to attempt mediation prior to the resolution. final hearing of a dispute. i) National Courts Maritime litigation in Australia is commonly conducted in the 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in Federal Court of Australia, which exercises admiralty jurisdiction mind. pursuant to the Admiralty Act. ■ Federal Court proceedings are commenced by filing an Positives originating application, with a ‘genuine steps’ statement (which sets out steps taken to resolve the dispute). ■ Specialist knowledge by way of a dedicated panel of Federal Court Judges that deal with admiralty and maritime matters. ■ The court will set a return date for the first directions hearing. The applicant must serve a copy of the originating application ■ Cases involving the arrest of vessels are dealt with quickly on the respondent at least five days before the return date. and efficiently. ■ The respondent must file a defence within 28 days of service ■ Judges’ case management ensures that proceedings are of the originating application. closely monitored by way of directions hearings, ensuring the litigation remains on track and that there are no unnecessary ■ Parties then exchange evidence by providing each other with delays. discoverable documents relevant to the issues which are the subject of the proceedings. This process can take several ■ Right of Appeal. months. Negatives ■ The Federal Court Rules 2011 (Cth) (Federal Court Rules) ■ Different rules and legislation may apply in different States 5.04(3) item 20, provide that early in the proceedings, the and Territories. parties should address the Court as to whether any or all ■ Litigation costs generally. evidence in chief is to be given orally (perhaps with outlines of evidence, at least on non-critical issues) or by affidavit evidence or both. Evidence is commonly filed in court by 7 Foreign Judgments and Awards way of affidavit. However, outlines of evidence and the giving of oral evidence are becoming common practice. ■ It usually takes between 12 and 18 months from commencement 7.1 Summarise the key provisions and applicable of proceedings to the final hearing. procedures affecting the recognition and enforcement ■ The successful party is usually entitled to recover their costs of foreign judgments. on a party/party basis, which is around 50% to 60% of a party’s costs. Australia has reciprocal arrangements for the recognition of ■ Assisted Dispute Resolution (ADR), such as mediation judgments from superior courts in 34 countries and specified inferior or arbitration, is not compulsory; however, the courts will courts in five countries. These arrangements are given effect by the consider whether the parties may be assisted by a referral to Foreign Judgments Act 1991 (Cth) (Foreign Judgments Act). ADR to resolve some or all of the issues in dispute. The A judgment creditor may apply to an Australian court (ordinarily the Federal Court of Australia Act 1976 (Cth) and the Federal Supreme Court of the State or Territory where the judgment is to be Court Rules provide the basis for referrals of matters by the enforced) within six years of the date of a foreign judgment to have court to ADR. that judgment registered under the Foreign Judgments Act. Once ■ The Federal Court has extensive supervisory jurisdiction under the judgment is registered, it can be enforced as if it were a judgment the International Arbitration Act 1974 (Cth) (IAA). Each made by an Australian court. registry of the Federal Court has an arbitration co-ordinating Judge who is generally responsible for the management of If the judgment is given by a court which falls outside of the Foreign matters under the IAA. Admiralty matters are generally referred Judgments Act, it cannot be enforced in Australia directly. However, to the relevant Admiralty Convening Judge in each Registry. the judgment creditor can commence proceedings in an Australian ii) Arbitration; and iii) mediation / alternative dispute court for a liquidated sum relying on the foreign judgment. resolution Maritime arbitration in Australia is usually conducted pursuant to 7.2 Summarise the key provisions and applicable the applicable State’s domestic arbitration act (where both parties are procedures affecting the recognition and enforcement Australian and the matter involves issues connected with Australia), of arbitration awards. or under the IAA, which regulates commercial arbitration in Australia between parties with places of business in different contracting Australia is a signatory to the New York Convention, which is States. The IAA gives effect to the most recent version of the given effect in Australia pursuant to the IAA. A foreign award to UNCITRAL Model Law on International Commercial Arbitration. which the New York Convention applies can be enforced as if it

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were a judgment of an Australian court, unless there is a reason not Recently under the current regime, the Fair Work Ombudsman to enforce the award (e.g. the subject matter of the dispute could commenced proceedings against Transpetrol, a Norwegian vessel not have been referred to arbitration in Australia or enforcing owner in Fair Work Ombudsman v Transpetrol TM As (Registration the award would be contrary to public policy). In particular, an Number 884 423 082) [2017] FCA 311. Australian court may refuse to enforce a foreign arbitral award if It was alleged Transpetrol underpaid foreign crew members between the award itself, or the underlying agreement, would be invalid 2013 and 2015, while the MV “Turmoil” was engaged in coastal under Australian law, notwithstanding that it is valid under the law trading within the meaning of the Coastal Trading Act, as applied governing the substantive dispute. The party must apply to a court by Division 3, Part 1-3 of the Fair Work Regulations 2009 (Cth) for enforcement of the award. (Fair Work Regulations) and the provisions under the Fair Work Act 2009 (Cth) (Fair Work Act). Australia 8 Updates and Developments Rares J held that Transpetrol breached section 45 of the Fair Work Act in failing to pay the crew members their entitlements. Without admitting liability, Transpetrol agreed to pay the crew just over 8.1 Describe any other issues not considered above that A$250,000 and was liable to pay a pecuniary penalty under section may be worthy of note, together with any current 546 of the Fair Work Act. Under the current regime, a relevant ship trends or likely future developments that may be of must sail at least two voyages under a temporary licence before interest. the employer ship’s crew will become subject to the operation of the Coastal Trading Act. In this case, the vessel had completed Biosecurity two initial voyages under the same temporary licence within the The International Ballast Water Convention (IBWC) entered into preceding 12 months of 10 voyages in question and extended the force on 8 September 2017, the provisions of which are enacted operation of the Coastal Trading Act on each of the 10 voyages. in Australia under the Biosecurity Amendment (Ballast Water and Change to visa requirements for offtank tankers at Australian Other Measures) Act 2017 (Ballast Water Act). Ballast water is offshore facilities taken on board by vessels to maintain stability on a voyage, but Migration legislation applicable to vessels supporting offshore can spread invasive aquatic species that could damage marine resource activities, such as pipelay vessels, is now being applied environments, affect biodiversity and devastate fishing industries. to crew on offtake tankers. All crew on board vessels loading at The purpose of the convention is to require ships to manage their floating production storage and offloading facilities (FPSOs) and ballast water and to remove, render harmless or avoid the uptake or other offshore facilities are now required to hold a temporary discharge of aquatic organisms and pathogens within ballast water working visa prior to the vessel berthing at the offshore facility. and sediments. The change only affects vessels loading at offshore oil terminals. It The Ballast Water Act regulates both Australian and foreign vessels. will affect the ability to fix vessels to load at offshore facilities However, offences under the Ballast Water Act will apply to at short notice, given the time frames to issue temporary working visas. Australian vessels regardless of whether or not they are in Australian The changes do not affect vessels calling at Australian mainland waters. The Ballast Water Act will only apply to foreign vessels ports, whose crew will still be required to hold Maritime Crew Visas. when they are in Australian waters. General average – Offshore Marine Services Alliance Pty Ltd v Accordingly, to comply with the Ballast Water Act, Australian Leighton Contractors Pty Ltd [2017] FCA 333 vessels must have a ballast water management plan and certificate The Federal Court had to consider a novel claim recently, in which it (unless granted an exemption) whether in or outside Australian seas. held that liability to contribute to general average loss only attaches to Foreign vessels require such a plan and certificate only if they are in cargo owners and those contractually liable to contribute, as opposed to Australian seas. The applicable penalty for non-compliance is 200 those who merely bear some contractual risk. By way of background, penalty units. ‘general average’ refers to the obligation upon parties to a marine There are also various reporting requirements for vessels disposing voyage to contribute to loss arising from an extraordinary sacrifice or of sediment in Australian territorial seas for purposes relating to expenditure, made to preserve property in danger during the voyage. safety, accident or pollution. Sediment must also be disposed of to Various cargo was loaded onto a barge, for a voyage to Barrow a sediment reception facility. Failure to comply is a strict liability Island, Western Australia, for use in construction and drilling works. offence. Offshore Marine Services Alliance Pty Ltd (Offshore Marine) was Powers are also granted to biosecurity officers to secure a vessel, the owner and operator of the barge. It had a contract with Chevron conduct inspections, take samples and make directions. Australia Pty Ltd (Chevron) to transport cargo to Barrow Island. Coastal trading / cabotage Two days into the voyage, the barge grounded. There was imminent The Government introduced the Coastal Trading (Revitalising danger the barge would break up and sink, and therefore the cargo Australian Shipping) Amendment Bill 2017 into Parliament on 13 was in immediate peril. Offshore Marine incurred significant costs September 2017. It seeks to amend the Coastal Trading (Revitalising to rescue the barge and cargo. Australian Shipping) Act 2012 (Cth) (Coastal Trading Act). Key Offshore Marine claimed general average from Leighton Contractors changes proposed include: Pty Ltd (Leighton) and Thiess Pty Ltd (Thiess), in proportion to (a) the removal of the five-voyage minimum requirement to the value of each party’s cargo. However, Leighton and Thiess apply for a temporary licence; and denied liability on the basis that they were not the owners of their (b) amendments to the definition of ‘coastal trading’ to include respective . Offshore Marine contended that Leighton ships engaged in dry-docking or engaged in voyages between and Thiess were liable and relied upon the terms of its contract with ports and other defined places in Australian waters such as Chevron, which provided that Leighton and Thiess were responsible offshore installations. for the care, custody, control and safekeeping of the cargo until it was accepted by Chevron. In other words, Offshore Marine argued At the time of writing, the Bill has been referred to a Committee that Leighton and Thiess should be liable to contribute in general with the Senate for review. average, if they were ‘on risk’ during the voyage.

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McKerracher held that Leighton and Thiess were not liable to pay AMSA has exercised its power to ban vessels (for up to 12 months) general average and emphasised that liability for general average that repeatedly arrive at Australian ports with serious structural or only attaches to an owner of cargo or a party that is liable to pay operational deficiencies resulting in detentions, and has prosecuted general average under a contract (such as a BOL). An underlying ships for polluting Australian waters. Vessel owners need to ensure reason for this decision was that if general average liability was to their vessels remain in compliance with all relevant regulations to extend to parties merely ‘on risk’, it would be difficult to determine avoid delays and other cost implications. the proportion of each party’s liability to contribute. Enforcement of vessel safety Acknowledgment Australia has a rigorous system of port state control. Figures The authors wish to thank Kirsten James and Evangeline Yeo for currently available from AMSA indicate that in 2017, 3,128 foreign Australia their contributions to this chapter. ships were inspected, 7,194.40 deficiencies were found and 165 foreign ships were detained (around 5.3% of all inspected vessels).

Hazel Brewer Nic van der Reyden HFW HFW Level 15, Brookfield Place – Tower 2 Level 3A, 1 Bligh Street 123 Saint Georges Terrace Sydney NSW 2000 Perth WA 6000 Australia Australia Tel: +61 2 9320 4600 Tel: +61 8 9422 4700 Email: [email protected] Email: [email protected] URL: www.hfw.com URL: www.hfw.com

Hazel specialises in shipping, offshore, marine insurance and Nic specialises in shipping litigation and dispute resolution, acting international trade matters. for shipowners, charterers, resource companies and P&I Clubs. His work involves the full range of charterparty, COA, Bill of Lading and Hazel advises extensively on a broad range of contracts and issues ship building disputes. He also has particular experience in relation to arising under charterparties, contracts of affreightment, bills of lading, P&I matters, logistics, marine insurance, regulatory matters including transhipment contracts, pilotage, towage, and carriage issues relating compliance with the IMSBC Code, SOLAS, investigating casualties to bulk and containerised commodities including iron ore, copper and and pollution incidents, and ship sale and purchase transactions. nickel concentrates, as well as bulk liquid and gas cargoes. Nic is recognised in legal directories, including Chambers Asia-Pacific Her offshore oil and gas practice includes negotiating and advising (ranked), The Legal 500 (recommended) and Doyles Guide (leading on contracts, as well as handling contentious matters arising under lawyers), and is described by clients as “a very good communicator contracts for drilling units; seismic, geotech, accommodation and other who is able to explain the more technical concepts in a way a layman offshore services vessels. can understand” (Chambers Australia, 2017). He is also described She also advises on regulatory issues (AMSA/NOPSEMA) and on as having “extremely good industry knowledge” and is rated for his pollution and environmental issues. “excellent client focus and support” (The Legal 500 Asia Pacific, 2017). Hazel acts in dispute resolution, litigation and domestic and Nic is qualified to practise in Australia, England & Wales and South international mediations and arbitrations including ICC, LMAA, SIAC Africa. and the Resolution Institute. She brings a commercial and pragmatic approach to managing contracts, negotiations and disputes effectively for her clients.

HFW is widely recognised as the world’s leading provider of legal services to the maritime and supply chain sectors. The partners in HFW Australia’s Shipping team collectively have in excess of 100 years’ experience servicing the maritime and logistics sectors, and our capability here is augmented by HFW’s global team, which provides unsurpassed depth of experience with more than 200 lawyers worldwide specialising in maritime, transport and trade law issues. We are able to call upon a network of expert lawyers to assist in other jurisdictions, providing a seamless one-stop service to our clients. The clients we represent include: shipowners and operators of all classes of ships; logistics companies; mining, energy and agribusiness companies; commodities traders; port and terminal operators; banks and financiers; P&I Clubs; and other sector insurers. We have a strong understanding of the key commercial issues in the sector, and the capacity to deliver effective, solutions-focused advice.

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Bahamas

Graham Thompson Michelle Pindling-Sands

performed. Claims for salvage or contribution in general average are 1 Marine Casualty not subject to limitation. (iv) Wreck removal 1.1 In the event of a collision, grounding or other major The Bahamas acceded to the Nairobi International Convention on casualty, what are the key provisions that will impact the Removal of Wrecks. It is a requirement to remove or have upon the liability and response of interested parties? removed any wrecks in The Bahamas territorial sea and exclusive In particular, the relevant law / conventions in force in relation to: economic zone. Any person in possession of any wreck in The Bahamas must deliver (i) Collision the wreck to the wreck receiver. Failure to deliver the wreck is an The Bahamas is party to the International Regulations for Preventing offence and liable to a fine on summary conviction not exceeding Collisions at Sea 1972 (“COLREGS”) which were implemented twice the value of the wreck and forfeiture of any claim or right to by the Merchant Shipping Act, 1976 (“MSA”) and apply to all salvage. Bahamian ships and other ships while in The Bahamas. An owner or Any ship with a gross tonnage of over 300 tons shall not leave or master of a ship is guilty of an offence if it operates a ship in breach enter a port in The Bahamas and a Bahamian ship shall not leave or of the COLREGS. enter a port of any state unless it has wreck removal insurance cover (ii) Pollution or other financial security to cover their liability for costs involved in the location, marking and removal of wrecks. A claim for wreck ■ The Merchant Shipping (Oil Pollution) Act, 1978 implements removal constitutes a maritime lien. the International Convention for the Prevention of Pollution from Ships, 1973 as amended by the Protocols of 1978 and (v) Limitation of liability 1995 (“MARPOL”), and provides for criminal liability for The Bahamas ratified the Convention on Limitation of Liability the discharge of oil from a vessel in Bahamian waters and by for Maritime Claims, 1976 (“Limitation Convention”) and the Bahamian registered ships anywhere in the world. Convention relating to the Carriage of Passengers and their Luggage ■ The Bahamas is also party to the International Convention On by Sea, 1974 and 1976 Protocol, which were implemented by the Civil Liability For Oil Pollution Damage, 1992 (“Liability Merchant Shipping (Maritime Claims Limitation of Liability) Act, Convention”) and the International Convention on the 1989 (“Limitation Act”). Establishment of an International Fund for Compensation Fund for Oil Pollution Damage, 1992 (“Fund Convention”) Claims in respect of death, personal injury, loss of or damage to which were also implemented by the Merchant Shipping (Oil property occurring on board or in direct connection with the operation Pollution) Act and have the force of law. Any ship carrying, in of a ship are subject to limitation. bulk, cargo of more than 2,000 tons of persistent hydrocarbon (vi) The limitation fund mineral oil is required to have in force insurance cover or other security satisfying the requirements of Article VII of Pursuant to the Limitation Act, a limitation fund consisting of the Liability Convention. The failure to carry such insurance cash deposited into court or a guarantee may be established by any results in criminal liability for the master and owner. person alleged to be liable in respect of legal proceedings instituted ■ The Bahamas has also acceded to the International Convention in respect of claims subject to limitation. relating to Intervention on the High Seas in cases of Oil Pollution Casualties, 1969 and to the International Convention 1.2 What are the authorities’ powers of investigation / on Civil Liability for Bunker Oil Pollution Damage (“Bunkers casualty response in the event of a collision, grounding Convention”). or other major casualty? (iii) Salvage / general average The key provisions relating to wrecks and salvage are governed by Pursuant to Part VI of the MSA, the owner or master of the ship Part VI of the MSA. The Minister with responsibility for maritime is required to report to the Bahamas Maritime Authority, by the affairs may appoint a receiver of wreck whose duty is to preserve fastest means available, any accident occasioning loss of life or any the wreck. By section 279(1)(a) MSA, a lien securing a claim for serious injury to any person or damage affecting the seaworthiness salvage, wreck removal and contribution in general average takes of a Bahamian ship. The Minister responsible for maritime affairs priority over all other maritime liens which have attached to a ship has the power to cause a preliminary inquiry to be held or a formal prior to the time when the operations giving rise to the said liens were investigation to be conducted by the Wreck Commissioner with

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respect to any casualty consisting of loss of life or damage done to or its equivalence in another currency if the nature or value of such or by a Bahamian ship or a ship in Bahamian waters. The Wreck goods has not been declared by the shipper in the Bill of Lading Commissioner, upon holding a formal investigation, has the power before shipment. While this declaration in the Bill of Lading is to cancel or suspend any certificate or licence issued to any master, prima facie evidence, it is however not binding or conclusive on the mate or engineer, who has the right to appeal to the Supreme Court carrier. Further, a carrier or ship will not be held liable where the any such suspension or cancellation. Where an inquiry or formal nature or value of the goods has been knowingly misstated by the investigation has been held and either new evidence comes to light shipper in the Bill of Lading. The carrier will be compensated for or there is suspicion that a miscarriage of justice may have occurred, all losses caused by the shipper as a result. the Minister has the power to order a rehearing of the case. The Section 207 of the MSA waives all liability against the carrier or Minister also has the power to re-issue any certificate or licence or ship in cases of misdeclaration or failure to properly mark dangerous Bahamas reduce any suspension time. cargo. In these instances, the cargo may be either thrown overboard with neither the master nor the owner of the ship subjected to any 2 Cargo Claims civil or criminal liability, or forfeited or disposed of by court order. Further, in the common-law principles of breach of contract or tort, the shipper will be under strict liability if it ships goods without 2.1 What are the international conventions and national giving notice to the carrier of the character of the goods; specifically, laws relevant to marine cargo claims? goods which are liable to delay or cause damage to the vessel or other cargo shipped on it. Consequently, the shipper may be liable The MSA and the Carriage of Goods by Sea Act, 1926 (“COGSA”) for all the losses resulting from any delays or damages in the govern marine cargo claims. The Bahamas, subject to certain shipment of goods, whether the shipper knew or did not know, as modification, has implemented in local legislation content from the the Bill of Lading holder relied on statements in the Bill of Lading International Convention for the Unification of Certain Rules of Law that turned out to be untrue. relating to Bills of Lading (“Hague Rules”). The Bahamas is also a party to the International Convention Relating to the Arrest of Seagoing Ships, 1952, Brussels (“Brussels 3 Passenger Claims Convention”) where, among other things, loss of or damage to goods, including baggage, constitutes a maritime claim which may give rise 3.1 What are the key provisions applicable to the to the arrest of a ship. resolution of maritime passenger claims?

2.2 What are the key principles applicable to cargo claims The Bahamas is a party to the Athens Convention relating to the brought against the carrier? Carriage of Passengers and their Luggage by Sea (1974 and 1976 Protocols) and the Limitation Convention, both of which were Under the COGSA, the Hague Rules have mandatory effect in implemented by the Limitation Act referred to in question 1.1 above. relation to and in connection with the carriage of goods by sea in The liability for passenger claims, including incidents causing ships carrying goods from any port in The Bahamas to any other personal injury, death, loss of or damage to luggage is limited. port whether in or outside The Bahamas, therefore, unless the Bill Any action for damages arising out of personal injury or death of of Lading stipulates otherwise, the Hague Rules apply. a passenger, or for the loss of or damage to luggage, shall be time- Section 251 of the MSA, subject to certain exceptions, provides for barred after a period of two years. the division of liability such that if by the fault of two or two more The Athens Convention applies to passengers whether or not there vessels, damage or loss is caused to one or more of those vessels is a contract of carriage and mandates that passenger ships have or their cargo or freight or to any property on board, the liability to financial security for the purpose of satisfying any liability in respect make good the damage or loss shall be in proportion to the degree of death or personal injury. in which each vessel was at fault. If it is not possible to ascertain degrees of fault, then the liability will be apportioned equally. Section 258 of the MSA imposes a time limit for bringing actions 4 Arrest and Security under the MSA such that proceedings must be commenced within one year after the commission of the offence or after the cause of 4.1 What are the options available to a party seeking to action arises, as the case may be. obtain security for a maritime claim against a vessel owner and the applicable procedure? 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration The Supreme Court Act, 1981 (“SCA”) governs the procedure to of cargo? arrest a ship under Bahamian law. Section 8 sets out a number of claims that may be brought against a ship, including but not limited A carrier may establish claims against a shipper relating to to claims in respect of: a mortgage of a charge or share in a ship; misdeclaration of cargo according to the Hague Rules (as contained injury or loss of life; damage to goods; damage done by a ship; in the Schedule of the COGSA). Under Article 3 the shipper is salvage; wreck removal; contribution in general average; and other obligated to indemnify the carrier against all loss, damages and maritime liens. expenses arising or resulting from inaccuracies regarding the marks/ The action to arrest a ship is commenced by a writ of summons after labelling, number, quantity and weight as furnished by him on the inspection of the caveat book to ascertain whether the owner of the cargo to be transported. ship has entered a caveat against the arrest of the ship. In the event Article 4 (5) of the Hague Rules limits the liability of a carrier or that no such caveat has been entered, the legal representative of the ship. A carrier or ship will only become liable for the loss of or owner must be contacted to advise him of the claim and to secure damage to goods exceeding a specified sum per package or unit, his undertaking that an appearance would be entered and that an

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acceptable bond or guarantee from a bank or financial institution would be put in place. If no caveat has been entered, a summons 5.2 What are the general disclosure obligations in court is filed in the Supreme Court Registry, together with a praecipe for proceedings? a Warrant of Arrest and an affidavit in support filed in the Supreme Court. An application is then made to the Supreme Court for the The parties to an action are under a strict duty to disclose all non- issuance of a Warrant of Arrest. Upon an undertaking being given privileged documents in their possession relating to the action, to the court to pay the expenses of the Admiralty Marshal, the court including all documents intended to be relied upon at trial. The court will issue the warrant of arrest to be executed by the Admiralty has the discretion to direct the timeframe within which documents Marshal on the vessel and master. The ship will remain in the must be disclosed during Case Management. The duty of disclosure custody of the Admiralty Marshal, subject to the owner obtaining a is ongoing and failure to disclose all relevant documents will release from the court. provide grounds for the opposing party to make an application for Bahamas specific discovery. An action in rem may also be brought in The Bahamas against a sister ship, where the person liable on the claim was the owner or charterer of the ship when the cause of action arose and the person 6 Procedure liable was the beneficial owner of or demise charterer of the other ship when the action was brought. 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) 4.2 Is it possible for a bunker supplier (whether physical national courts (including any specialised maritime or and/or contractual) to arrest a vessel for a claim commercial courts); ii) arbitration (including specialist relating to bunkers supplied by them to that vessel? arbitral bodies); and iii) mediation / alternative dispute resolution. Yes. Section 8 of the SCA confers jurisdiction on the to hear and determine any claim for goods or materials National courts supplied to a ship for its operation or maintenance. The Bahamian judicial system consists of the Magistrates’ Courts, the Supreme Court and the Court of Appeal. The final appeal is 4.3 Where security is sought from a party other than the the Judicial Committee of the Privy Council in London, England. vessel owner (or demise charterer) for a maritime The Judicial Committee of the Privy Council serves as the ultimate claim, including exercise of liens over cargo, what Court of Appeal in all matters where appeal is permissible. options are available? A Magistrate has jurisdiction to investigate all charges of indictable offences, try all summary offences and to hear and determine any Section 277 of the MSA sets out the claims that can be secured by civil case with a limit on the value of the property in dispute or maritime liens which are then enforceable against a vessel by arrest. the sum not exceeding BS$5,000.00, unless a statute provides Maritime liens include: unpaid seamen wages and other sums due; jurisdiction in relation to a higher amount, as is the case in a number unpaid port, canal, other waterway dues and any other outstanding of regulatory statutes. fees payable; loss of life and personal injury claims against the Under Section 110 of the MSA, claims instituted on behalf of a shipowner; tort claims against the owner (demise or other charterer, seaman for the recovery of wages are first heard by a Magistrate, manager or operator of the ship); and claims for salvage, wreck except where it is for the recovery of wages, and: removal and contribution in general average. (a) the owner of the ship is insolvent; (b) the ship is under arrest or is sold by the authority of the 4.4 In relation to maritime claims, what form of security is Supreme Court; acceptable; for example, bank guarantee, P&I letter of undertaking. (c) a Magistrate’s Court refers the claim to the Supreme Court; or (d) neither the owner nor the master resides in or within 20 miles A bond or guarantee from a bank or financial institution would be of the place where the seaman or apprentice is discharged or put ashore. acceptable forms of security for the release of a vessel. Section 8 of the SCA confers jurisdiction for admiralty matters on the Supreme Court. Proceedings with respect to commercial 5 Evidence claims are commenced in the Supreme Court by virtue of a Writ of Summons wherein the nature of the claim is outlined. Preliminary issues may be dealt with by virtue of interlocutory applications. The 5.1 What steps can be taken (and when) to preserve or timeline from filing of the Writ of Summons to completion of trial, obtain access to evidence in relation to maritime and obtaining a written ruling, would be approximately 12 to 18 claims including any available procedures for the preservation of physical evidence, examination of months. witnesses or pre-action disclosure? Arbitration Arbitrations locally are governed by the Arbitration Act, 2009 Documentary evidence in admiralty proceedings can be preserved implemented in accordance internationally with the New York by the usual applications available under civil litigation procedure Convention on Arbitration. Parties may agree on timelines and (discovery, interim injunctions, witness statements, and affidavits) arbitration procedures or choose to adopt the timelines and arbitration which are available to an applicant as part of a pre-action protocol procedures prescribed under institutional rules. or during the course of litigation. Admiralty matters also have the benefit of relief which is only available in admiralty matters for the Mediation / alternative dispute resolution preservation of goods, such as a Warrant of Arrest. The procedure There has been a recent surge in support for the usage of mediation for the litigation of admiralty claims in The Bahamas is set out in and other forms of alternative dispute resolution at every stage of Order 67 of the Rules of the Supreme Court, 1978. proceedings, resulting in significant growth in the number of attorneys

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that are being trained as certified mediators. An ADR Group has ■ the judgment was not obtained by fraud; been established, dedicated to training and providing for all forms of ■ the enforcement of the judgment would not be contrary to the dispute resolution. public policy of The Bahamas; ■ the correct procedures under the laws of The Bahamas are 6.2 Highlight any notable pros and cons related to your duly complied with; jurisdiction that any potential party should bear in mind. ■ the judgment is not inconsistent with a prior Bahamian judgment in respect of the same matter; and Bahamian jurisprudence is based on English common law. ■ enforcement proceedings are instituted within six years after Decisions of English appellate courts (especially the Supreme Court the date of the judgment. of the United Kingdom and the Court of Appeal of England and The judgment creditor may apply within 12 months of the judgment Bahamas Wales), although technically not binding in The Bahamas, are and date, and it is at the discretion of the Bahamian court whether to have always been given great deference and respect by Bahamian register and enforce such judgment. These judgments include courts. The same applies to decisions of other common-law based arbitrational awards which were enforceable in the jurisdiction in Commonwealth jurisdictions. English and other Commonwealth which they were made. The application is made ex parte and notice country decisions are routinely followed by Bahamian courts as of the application is not made to the judgment debtor until the order a matter of tradition and practice in the absence of any Bahamian granting registration is made. The judgment debtor may challenge judicial authority to the contrary. the registration of the foreign judgment. If the challenge fails, the Unfortunately, the Supreme Court, on its civil side, only has two foreign judgment is then registered as a recognisable and enforceable judges sitting in New Providence and one sitting in Grand Bahama, judgment in The Bahamas. resulting in significant delays for trial dates and interim applications. For those countries which fall outside the scope of the Reciprocal However, due to the nature of , and the accruing Enforcement of Judgments Act, a common-law action would have to expenses of the Admiralty Marshall, security and wharfage, once a be commenced in order to enforce the judgment. Warrant of Arrest is issued, the issuing judge tends to make every effort to set aside time in the calendar to accommodate the matter. 7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement 7 Foreign Judgments and Awards of arbitration awards.

The Bahamas is a signatory to the Convention on the Recognition and 7.1 Summarise the key provisions and applicable Enforcement of Foreign Arbitral Awards (“New York Convention”) procedures affecting the recognition and enforcement and, pursuant to the Arbitration (Foreign Arbitral Awards) Act, of foreign judgments. 2009, the courts of The Bahamas will recognise as valid and enforce an arbitral award. The Bahamas Reciprocal Enforcement of Judgments Act, 1924 (“Reciprocal Enforcement of Judgments Act”) allows for a judgment obtained in a superior court outside of The Bahamas to 8 Updates and Developments be registered or otherwise given recognition by the Supreme Court of The Bahamas. For countries that are party to this arrangement, a 8.1 Describe any other issues not considered above that Bahamian court will recognise and enforce any final and conclusive may be worthy of note, together with any current trends judgment provided that: or likely future developments that may be of interest. ■ such courts did not contravene the rules of natural justice of The Bahamas; As arbitration is a common method of dispute resolution in shipping ■ the foreign court had proper jurisdiction over the parties cases, the present government has indicated that it is set to table subject to such judgment; the International Commercial Arbitration Bill, 2018 which will ■ the judgment is for a debt or definite sum of money other than facilitate commercial dispute resolution hearings in The Bahamas by a sum payable in respect of taxes or charges of a like nature or incorporating the United Nations model law known as UNCITRAL in respect of a fine or penalty; into its provisions. ■ such courts did not contravene the rules of natural justice of The Bahamas;

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Michelle Pindling-Sands Graham Thompson Sassoon House Shirley St. & Victoria Avenue P.O. Box N-272 Nassau, New Providence The Bahamas

Tel: +1 242 322 4130 Email: [email protected] URL: www.grahamthompson.com

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

Established in New Providence in 1950, and serving a client base that is both domestic and international, the top-ranked Graham Thompson Attorneys is a highly regarded Bahamian law firm with expertise in: admiralty & maritime; banking and financial; corporate & commercial; employment & labour; immigration & naturalisation; insurance; litigation & dispute resolution; private client, trusts and estates; and real estate & development law. Founded by Peter Graham CMG and Bernard Thompson, the firm has played a leading role in shaping both the political and legal landscapes of The Bahamas. Public service and leadership in public service remains a distinguished tradition of the firm. The Graham Thompson family includes former attorneys general, cabinet ministers, justices and other leading roles including chairmanships of public boards, councils and special commissions. Graham Thompson operates four offices: Nassau and Lyford Cay in New Providence; Freeport, Grand Bahama; and Providenciales, the Turks and Caicos Islands.

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Belgium

Kegels & Co André Kegels

local authorities, with each of them having separate legislative 1 Marine Casualty powers and the resulting ever-changing legislation, is solved by the existence of the Maritime Salvage and Coordination Centre (“The 1.1 In the event of a collision, grounding or other major MRCC”), which manages the incident for all authorities concerned. casualty, what are the key provisions that will impact ii) Pollution upon the liability and response of interested parties? ■ The International Convention Relating to Intervention on the In particular, the relevant law / conventions in force in High Seas in Cases of Oil Pollution Casualties, 29th November relation to: 1969 and Protocol to the Convention, 2nd November 1973 (“The Intervention Convention”). i) Collision ■ The International Convention for the Prevention of Pollution The location of the incident, the type of vessels and the persons of the Sea by Oil, 12th May 1954 as amended (“OILPOL”). involved determine the applicable rules. A collision between sea- ■ The International Convention for the Prevention of Pollution going vessels on the high seas will be subject to different rules from a from Ships, 2nd November 1973 and Protocol to the collision between barges or sea-going vessels on internal waterways. Convention, 17th February 1978 (“MARPOL 73/78”). Specific rules which derogate from the COLREGS apply on rivers ■ The 1982 United Nations Convention on the Law of the Sea, and canals. This is often disregarded by foreign legal practioners. 10th December 1982 (“The Montego Bay Convention” or The following conventions and regulations are applicable in “UNCLAS”). Belgium: ■ The 1992 Protocol to the International Convention on Civil th ■ The International Convention for the Unification of certain Liability for Oil Pollution Damage, 27 November 1992, as rules of Law with respect to Collision between vessels, amended in 2000 (“The CLC 1992”). Brussels, 23rd September 1910 (“The 1910 Collision ■ The 1992 Protocol to the International Convention on the Convention”). Establishment of an International Fund for Compensation for th ■ The International Convention on certain rules concerning Oil Pollution Damage, 27 November 1992, as amended in Civil Jurisdiction in Matters of Collision, Brussels, 11th May 2000 (“The 1992 Fund Convention”). 1952 (“The 1952 Brussels Civil Jurisdiction Convention”). ■ The International Convention on Civil Liability for Bunker rd ■ The International Convention for the unification of certain Oil Pollution Damage, London, 3 March 2001 (“The 2001 rules relating to Penal Jurisdiction in Matters of Collision, Bunker Oil Convention”). Brussels, 10th May 1952 (“The 1952 Brussels Penal ■ The 2003 Protocol Establishing a Supplementary Fund (“The Jurisdiction Convention”). 2003 Supplementary Fund”). ■ The International Regulations for Preventing Collisions at ■ EU Directive 2005/35, O.J. L255/11, 30th September 2005 as Sea, 1972 as amended from time to time (“The COLREGS”). amended, has been implemented into Belgian law by various ■ The International Convention for the Safety of Life at Sea, Acts. 1974 as amended (“SOLAS”) and its annexes. ■ The Belgian Statute of 20th January 1999 on the Protection ■ EU Regulation 864/2007, 11th July 2007 (“Rome II”). of the Marine Environment in the Sea-areas under Belgian Jurisdiction, as amended (“The Marine Protection Act”). ■ Various local navigation regulations regarding the territorial This Statute implements various International Treaties and EU sea, the ports, the rivers and canals (“The Local Navigation Directives. It holds criminal liability provisions, reverses the Regulations”). Burden of Proof and authorises authorities to intervene in case The above list is not complete but contains the most essential of incidents threatening the (marine or other) environment. provisions. Once it comes to determining liability, other provisions Substantial fines and possible incarceration are provided for. may be relevant. As an example, please refer to the International ■ The Belgian Statute of 6th April 1995 for the Avoidance of Convention on Standards of Training, Certification and Watchkeeping Pollution by Vessels, as amended (“The Discharging of for Seafarers, 1978, the International Safety Management Code, the Polluting Substances Act”). This Statute also implements International Ship and Port Facility Security Code, etc. various International Treaties and EU Directives. It holds criminal liability provisions, reverses the Burden of Proof Also, if refuge is needed as per the EU Directive 2002/59 (as and authorises authorities to arrest vessels which are not in amended), various legal provisions empowering authorities to take compliance. Substantial fines and possible incarceration are all necessary measures, inclusive of indicating a place of refuge, also provided for. are applicable. The cooperation between Federal, Regional and

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■ Various legal instruments, by the Federal State and the ■ against the LLMC 1996 property fund set up by that party (if Regions, each within their authority in the implementation of possible); Directive 2009/98 EC on Waste (“The Waste Directive”). ■ against a separate Wreck Removal Limitation Fund to be set ■ The International Convention for the Control and Management up by that party (if possible); or of Ships’ Ballast Water and Sediments 2004 (“The Ballast ■ if no limitation for wreck removal whatsoever can be invoked Water Management Convention”), which entered into force by the liable party other than the owner of a sea-going vessel. in Belgium on 8th September 2017. (v) Limitation of liability The above list is by no means exhaustive. Only the most relevant Applicable regime laws, treaties and conventions have been listed. One should also st remember that international legislation, whether originating from Limitation of liability in Belgium has been ruled since 1 December the International Maritime Organization (“IMO”) or the European 1989 by the London Convention regime. Belgium Union, obliges Belgium to enact these provisions regularly. Usually For sea-going vessels, the following legislation is applicable: the Belgian authorities do so by amending the above local legislation. 1. The Convention on Limitation of Liability for Maritime Claims, iii) Salvage / general average dated 19th November 1976 (“The LLMC Convention”). ■ The 1989 London Salvage Convention has been fully enacted 2. The Protocol of 1996 dated 2nd May 1996 (“The 1996 “as is” in Belgium. Protocol”). ■ If the contract provides for specific G/A rules, they may be 3. The 2015 Leg 5(99) IMO resolution raising the amounts applied. If not, the Belgian Maritime Code provides for (“The Imo Resolution”). G/A rules, which are similar to an older version of the York/ 4. The Belgian Code of Commerce (Book II – Maritime Code – Antwerp Rules. Title II, Chapter I, art. 46 and following of the Maritime Code). iv) Wreck removal For non-sea-going vessels, a specific limitation regime is applicable. The 2007 Nairobi Convention on wreck removal has been applicable Limitation of liability can be invoked in Belgium without setting up th since 17 April 2017. The effect will be limited, however, as a limitation. This is useful in circumstances where there is only one Belgium has its own wreck removal legislation. claim arising out of an incident. Under that legislation, it is the duty of the owner (a definition which At the level of jurisdiction and opposability of the Limitation includes the owner, charterer (be it a time charterer or a voyage Fund, the Brussels Convention on Jurisdiction regime should also charterer) or operator) to remove the wreck and its contents when be considered. This regime is determined by the 1968 Treaty on demanded by the authorities to do so. Jurisdiction, the Lugano Conventions and EU Regulation 1215/2012. Case law as to the relationship between the obligation to remove the Proceedings wreck and the right to limit liability has been developing in recent years. A Limitation Fund is set up in two stages. Both stages can be dealt with within a few days. Sea-going vessels First, a person who is (potentially) liable requests authorisation The owner, charterer (be it a time charterer or a voyage charterer) or operator of a previously sea-going vessel can set up a Fund for from the Court to set up a fund and indicates the amount of security Wreck Removal. This fund is separate from the LLMC Overall to be issued. Unless a cash payment is proposed, the identity of Limitation Fund. In January 2017, the Supreme Court ruled that the guarantor must be acceptable to the Court. The Court Order once a wreck removal fund is set up for a sea-going vessel the determines the period within which the amounts must be paid or authorities are no longer entitled to demand the owner, charterer or secured. A fund administrator is appointed. operator to remove the wreck at the owner’s expense. Secondly, and as soon as the amount of the fund has been paid, Interior barges the Fund administrator will draft a report and present it to the Court, which will then, in a second decision, find that a fund was The owner, charterer (be it a time charterer or a voyage charterer) constituted. or operator of an interior barge can benefit from the Belgian Overall Limitation Fund. The Overall Limitation Fund for barges is set up A distinction needs to be made between the regime for sea-going with principles similar to the LLMC but with lower thresholds, vessels and interior barges. and with the possibility to set up limitations within that one fund, (vi) LLMC Limitation Fund for sea-going vessels not only for oil pollution and wreck removal, but also for all other The LLMC will apply but Belgium has issued reservations as per claims as per art. 2 LLMC. A Court of Appeal ruled that, at an art. 18 LLMC. One cannot limit liability for sea-going vessels in interlocutory stage and provisionally only, the existence of an overall Belgium under the LLMC regime for: limitation set up for a sunken barge does not stop the authorities from ordering the owner to remove the wreck. This decision was not ■ Claims in respect of the raising, removal, destruction or annulled by the Supreme Court. The non-annulment of that Court of the rendering harmless of a ship which is sunk, wrecked, stranded, or abandoned, including anything that is or has Appeal decision may well have been due to the specificities of the been on board of such ship. particular case and, consequently, not be standing law. This view is strengthened by a later decision of the same Supreme Court ruling, ■ Claims in respect of the removal, destruction or the rendering in a case on the merits, that the owner of a barge is entitled to limit harmless of the cargo of the ship. liability for wreck removal. Limitation for these claims may be possible under other legal An allegedly liable party who is the owner of a vessel can also set provisions such as the Belgian wreck removal legislation referred up a wreck removal fund. But this fund is, in principle, only for to above. claims of the authorities. (vii) Belgian overall Limitation Fund for interior barges What about recovery or recourse claims for wreck removal by the For non-sea-going vessels, one Limitation Fund can be set up for all owner of the wreck against another responsible person? It may claims arising out of an incident. This fund therefore also covers depend on the exact cause of action as to how a claim against a pollution and wreck removal liabilities. liable party other than the owner is to be brought:

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Maritime Code. This is an amendment to the Hague-Visby regime 1.2 What are the authorities’ powers of investigation / which only applies on all carriage “from” a convention state. But casualty response in the event of a collision, grounding beware: this mandatory application applies in favour of the third- or other major casualty? party bearer of the Bill of Lading only (see further). The application of art. 91 of the Belgian Maritime Code is not A distinction is to be made between Informative Authorities, mandatory on carriage which is: Administrative Authorities, the Public Prosecutor and Judicial Authorities, and the Court Surveyors appointed at the request of a ■ not from a Hague-Visby state or not to a Belgian port; or party having an interest. ■ by way of a non-negotiable document (such as a sea waybill). ■ The investigative authorities (“FOSO”/“OFEAN”) have the If Belgian law applies on such carriage (by virtue of contract (for

Belgium task of collecting evidence in order to advise how to avoid a example, an applicable clause in the Bill of Lading or by application th similar incident in the future. EU Directive 2009/18, O.J, 28 of Rules of International Private Law)) the Hague or Hague-Visby May 2009, obliges Member States to set up such a body. Convention applies, if given force of law or enacted in the country FOSO has authority for marine casualties and incidents of loading. whenever at least one of the following criteria is met: For the sake of completeness, we should refer briefly to the ■ A Belgian flagged vessel was involved, irrespective of the carriage of goods over the interior waterways, where different location of the casualty. legal provisions apply; and in international carriage, International ■ The casualty occurred within the Belgian territorial sea Conventions such as the Budapest Convention on the Contract for or Belgian internal waters, irrespective of the flag of the the Carriage of Goods by Inland Waterway (“The CMNI”) apply. ship. The CMNI contains provisions regarding liabilities as well as ■ A substantial Belgian interest was involved, irrespective exonerations and limitations thereof. of the location of the casualty or the flag of the ship. FOSO can investigate such cases, including the hearing of witnesses, without anyone being able to hamper their efforts. 2.2 What are the key principles applicable to cargo claims FOSO can detain ships and any objects involved in an incident. brought against the carrier? It may also destroy objects for public health and safety reasons. Removing any object involved in an incident without the (i) Who to sue permission of FOSO is prohibited. Findings of FOSO are for a A cargo claim can be brought not only against the carrier under the different purpose from that of the findings of others. A recent Bill of Lading but also against the owner of the vessel even if the incident in Belgian waters had FOSO and a Court Surveyor owner is not the contractual carrier. The owner is considered liable analyse the same facts. A comparison of FOSO findings with in rem for losses or damages to the cargo. The owner’s liability, those of the Court Surveyor indicated that the Court Surveyors had carried out a more in-depth investigation. which is in rem, is to be determined as if he were the contractual carrier. The claim can also be brought against both the carrier and ■ The Administrative Authorities can, within their jurisdiction, decide what happens in case of maritime incidents. They the owner, who are jointly liable towards the cargo claimants for can investigate, impose securities (P&I letters or bank loss and damage. guarantees), direct the vessel in one way or another, prohibit (ii) Title to sue passage, impose conditions on passage, etc. Findings by In principle, only the holder of the Bill of Lading has title to sue. If their investigators are presumed correct unless the contrary the Bill of Lading is held by an agent for an undisclosed principal, is proven. These findings may be used to initiate criminal which is the standard situation in Belgium whenever a freight proceedings. forwarder presents the Bill of Lading to the carrier, it is only the ■ The Public Prosecutor and the Judicial Authorities can, agent who has title to sue. within their Jurisdiction, undertake any kind of action inclusive of incarceration in respect of persons presumed to (iii) The relationship between the holder of the Bill of Lading have committed a crime. Here also the location of the alleged and the carrier crime and its consequences on the Belgian territory are of In some countries, the receiver under a Bill of Lading acquires the importance to determine the authority. rights of the shipper. In other countries, the receiver’s rights and ■ The Court Surveyor is appointed by the Court at the request of obligations are derived from the title issued by the carrier only, a party having an interest in determining specific facts. He/she i.e. the Bill of Lading and its Terms of Carriage without any rights is not appointed by a party but by the Court and his/her mission under the initial contract of affreightment having transferred to the is to inform the Court as to the facts. Every step taken is to be receiver. defended and all parties to the Court surveying proceedings must be invited. The Court Surveyor remains under the order The Belgian Supreme Court (Cour de Cassation) has, on many and control of the Court who appointed him/her. occasions, confirmed that the third-party holder of a Bill of Lading does not acquire the rights from the shipper. The holder derives his rights against the carrier independently and directly out of the Bill 2 Cargo Claims of Lading. The holder accedes to the Bill of Lading under the terms set out therein only. Consequently: ■ As between the Carrier and the shipper, charterer or the one 2.1 What are the international conventions and national laws relevant to marine cargo claims? who concluded the Contract of Carriage, such Contract of Carriage will apply. This may be as per the Terms of Carriage in the Bill of Lading, but if the Charter party provides Belgium adhered to the Hague-Visby rules with the SDR protocol. conflicting terms, these Charter party terms will prevail. The The rules are incorporated in art. 91 of the Belgian Maritime Code. protection given by the Hague-Visby rules does not apply in The application of art. 91 of the Belgian Maritime Code is principle. mandatory for all carriage under a negotiated Bill of Lading from ■ As between the Carrier and the receiver who is a third-party and to a Belgian port. Note the addition of “and to” in the Belgian holder of the Bill of Lading, the Bill of Lading terms only will

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apply. Here there is an important correction: the terms are not fault, neglect or act of the shipper, his agents or his servants is to be opposable to the third-party holder if they conflict with art. proven by the one who suffered damages. 91 of the Belgian Maritime Code (Hague-Visby rules). Art. If the goods are uncharacteristically dangerous without the carrier 91 of the Belgian Maritime Code (Hague-Visby rules) then applies mandatorily if a negotiable Bill of Lading is issued to being made aware of such fact, the shipper is liable under art. 4.6 of cover the transport of goods from or to a Belgian port. the Hague-Visby rules. Such liability may well be objective. (iv) The Terms of Carriage (Bill of Lading terms) Goods subject to sanctions A choice-of-law clause contained in the Bill of Lading does not alter A distinction is to be made between sanctions that were imposed the mandatory application of art. 91 of the Belgian Maritime Code prior to sailing and those imposed after sailing. If the sanctions (Hague-Visby rules). Those rules are applicable irrespective of the preceded the sailing, the contract is annulled. If they are imposed

Law chosen in the Bill of Lading. after the sailing, the vessel with the cargo is obliged to return the Belgium A foreign jurisdiction or arbitration clause is in conflict with the freight and payment will be due for a one-way trip. The Contract of protection given by art. 91 of the Belgian Maritime Code (Hague- Carriage may provide for a different regime. Visby rules) and can therefore not be opposed to the third-party holder of the Bill of Lading unless it is established that the foreign 3 Passenger Claims Court/Tribunal would give the same protection as a Belgian Court. A demise or Identity of Carrier clause equals an exoneration of liability by the carrier, is therefore contrary to the Belgian Maritime Code 3.1 What are the key provisions applicable to the (Hague-Visby rules) and cannot be opposed by the third-party holder resolution of maritime passenger claims? of the Bill of Lading. It can be opposed to the shipper or charterer. An “unknown or similar” clause is valid only if it is a special clause Passenger rights are determined by the normal rules of contract. and under the conditions set out in art. 3 of the Hague-Visby rules. Passengers also benefit from the protection instituted by EU (v) Incorporation of Charter party provisions into the Bill of Regulations and the Athens Convention, as amended by the 2002 Lading Protocol. Some Belgian legislation is also relevant. The following Incorporation towards third-party holder of the Bill of Lading apply: Referral to a Charter party in the Bill of Lading results in ■ The Maritime Code (arts. 165 to 178). incorporation of those terms insofar as the terms are: ■ The Athens Convention relating to the Carriage of Passengers ■ not in conflict with art. 91 of the Maritime Code (Hague- and their Luggage by Sea, 1974 (“The Athens Convention” Visby rules) or other rules of a protective nature; and or PAL 1974). ■ in favour of the third-party holder of the Bill of Lading. ■ The 2002 Protocol to PAL 1974 (“The PAL Protocol 2002”) as from 23rd April 2014 (but see application by virtue of In applying those principles, the Antwerp Court of Appeal accepted Regulation (EU) No 392/2009). in May 2017 that a carrier is bound by a referral in the Bill of Lading ■ Regulation (EU) No 392/2009, 23rd April 2009, on the liability to an identifiable Charter party. Now that the Charter party referred of carriers of passengers by sea in the event of accidents. to provided in a permanent seaworthiness warranty the carrier lost Note that this Regulation reinforces the PAL Protocol 2002, its due diligence defence under the Hague-Visby rules. Clauses in which was already applicable. Also Belgian legislation (Act the Charter party which were contrary to the Hague-Visby rules of 13th January 2012 and Royal Decree of 13th June 2012) (such as the arbitration clause) could be disregarded by the cargo incorporating the Regulation. interests. ■ Regulation (EU) No 1177/2010, 24th November 2010, Incorporation towards the holder of the Bill of Lading who is not a concerning rights when travelling by sea and inland third party waterways, amending Regulation (EC) 2006/2004. Also nd Referral to a Charter party in the Bill of Lading results in Belgian legislation (Act of 22 June 2016) incorporating the incorporation of those terms insofar as the terms are not in conflict Regulation. with rules of a protective nature. ■ The Belgian Statute Law on Travel Contracts, B.S., 1st April 1994, as amended (“The Travel Contracts Act”). A Court of Appeal ruled in 2018 that when the shipper and receiver are the same person, he is not a third-party holder of the Bill of Lading, and therefore the Bill of Lading terms incorporating the Charter party 4 Arrest and Security inclusive of its Arbitration clause are opposable to the receiver who presented the Bill of Lading to the Carrier for delivery of the goods. (vi) Claims in tort 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel Cargo claims against a shipowner who did not issue the Bill of owner and the applicable procedure? Lading are dealt with as per the above principles based upon the in rem liability of the shipowner. (i) Arrest of a sea-going vessel Belgium adhered to the International Convention for the Unification 2.3 In what circumstances may the carrier establish of Certain Rules Relating to the Arrest of Sea-going Vessels, 10th claims against the shipper relating to misdeclaration May 1952 (“The 1952 Arrest Convention”). of cargo? One may arrest a sea-going vessel for maritime claims only. These are the claims as listed in art. 1.1 of the 1952 Arrest Convention. Uncharacteristically dangerous cargo In such a maritime claim, the arrest may concern: The shipper has the obligation to deliver the goods contractually agreed and must take all precautions to avoid the goods damaging ■ any ship owned by the debtor of the claim; and the vessel or other goods, or harming the interests of another party. ■ the vessel in respect of which the maritime claim arose, even if the debtor of the claim is not the owner of the arrested vessel The shipper is liable for all consequences of misdeclaring goods. A (example: arrest of a vessel for claims against a charterer of

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that vessel). In September 2016, the Belgian Supreme Court (iv) Sister ships, associated ships, piercing of the corporate veil decided that if such arrest includes deliveries such as bunkers Sister ships are those where all the shares in the vessel (not all of the made to the vessel, the order must have been placed by the shares in the corporations which own separate vessels) belong to the owner, the charterer or by someone else but attributable to the same physical or legal person. Sister ships can be arrested if they owner or the charterer. belong to the debtor of the claim. (ii) Arrest of other assets There is no such thing under Belgian law as a right to arrest just on There may be a possibility to arrest other assets such as bunkers on the basis of beneficial ownership. board the vessel or funds in the hands of third parties such as the ports- agent of the debtor. These arrest possibilities exist even if one does not In order to arrest the assets of one for claims against another, one must have a maritime claim as per art. 1.1 of the 1952 Arrest Convention. either pierce the corporate veil, prove collusion or establish fraud. In

Belgium order to come to such a finding Belgian case-law applies factors which are similar to the ‘alter-ego’ relationship findings in US case-law. 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking. In September 2016, the Belgian Supreme Court decided that if an arrest includes deliveries such as bunkers made to the vessel the order must have been placed by the owner, the charterer or by Arrest someone else but attributable to the owner or the charterer. Case An authorisation to arrest a vessel must be obtained from an Arrest law since then seems to generally accept that, with deliveries (such Judge. This is a specialised Judge within the Court of First Instance. as bunkers) to a vessel, there is an apparent authority from the owner An ex parte request indicating the parties, the facts and the claim or the charterer so that, unless the supplier explicitly indicates not is presented to the Judge, together with the evidence. The arrestor to consider the owner or the charterer as the debtor, the order is must allege a maritime claim. attributable to such owner or charterer. If an arrest authorisation is obtained, the order is to be served by a Court bailiff to the master of the vessel and to the debtor of the 4.3 Where security is sought from a party other than the claim. vessel owner (or demise charterer) for a maritime The most time-consuming part of an arrest is the analysis of the file claim, including exercise of liens over cargo, what options are available? and the preparing of the arrest papers. Obtaining the order itself and having it served usually only takes a few hours. (i) Claims relating to a vessel: arrest of the “guilty” sea- Release from arrest going vessel Once arrested, the vessel can only be released by agreement between In a maritime claim, the arrest may concern: the parties or by Court order. ■ any ship owned by the debtor of the claim; and A Court order ordering release usually means that the case was ■ the vessel in respect of which the maritime claim arose, even brought in Court again, all parties to the conflict were heard and the if the debtor of the claim is not the owner of the arrested Judge ordered the release. vessel (for example, arrest of a vessel for maritime claims Arrest proceedings do not initiate the case on the merits itself. against a time or voyage charterer of that vessel). Separate proceedings in Belgium or elsewhere must be initiated to A sea-going vessel is considered to be the guarantee for all maritime that effect. claims related to it, irrespective of the identity of the debtor of the Security claim. If the debtor of the maritime claim is a person other than the owner, the vessel can still be arrested. In other words, even if the An agreement is reached usually when adequate security is given. owner is not the debtor and is not bound personally, his vessel serves The security is to be given by a first-class bank within the as a guarantee for maritime claims in this respect. jurisdiction, unless parties agree on an alternative. (ii) Arrest of other assets The security is to guarantee the claim. If the vessel is arrested for There may be possibilities to arrest other assets such as bunkers on a claim against someone other than the owner, it is that claim which board the vessel or funds in the hands of third parties such as the must be secured. An owner cannot release his vessel from an arrest ports-agent of the debtor or of a bank. These arrest possibilities by having a bank issue a guarantee securing claims against the exist even if one does not have a maritime claim as per art. 1.1 of the owner when the claim is against the charterer. The bank guarantee 1952 Arrest Convention. is to secure claims against the charterer. (iii) Lien on cargo When receiving goods, it is sufficient to believe that the party 5 Evidence presenting the goods is the owner thereof or is entitled to conclude contracts in respect of such goods which may give rise to a lien. 5.1 What steps can be taken (and when) to preserve or Owners of cargo carried by sea will have difficulty avoiding a lien obtain access to evidence in relation to maritime because carriers in general tend to believe that the party which claims including any available procedures for the delivers the goods for carriage is entitled to conclude contracts in preservation of physical evidence, examination of respect of such goods, even if such party is not the owner of the witnesses or pre-action disclosure? goods in question. This principle does not alter the rights of holders of Bills of Lading. Any party having an interest can ask the President of the Commercial If a party is a holder of a freight prepaid Bill of Lading, a lien on the Court to appoint a Court Surveyor with a mission to determine the cargo is in principle not possible. causes and circumstances of the incident and determine the extent

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of the damages. In case of cargo claims or utmost necessity, this appoints the Court Surveyors provides that the final Survey report can be requested by way of an ex parte application. The most time- must be filed within a few months of the appointment. consuming part of the application is the analysis of the file and Proceedings on the merits begin or proceed once all of the evidence the preparation of the application. Obtaining the order itself and is available. It takes about 10 months between start-up and decision having it served usually only takes a few hours. Even if there is if there are only two parties to the proceedings. One should add two an exclusive foreign Arbitration or Jurisdiction clause, the Belgian months per additional party. Courts have authority to appoint a Court Surveyor, including under Interlocutory proceedings in transport and maritime matters usually the 1958 New York Convention (Arbitration) regime or the Brussels do not take as long. Depending on the specific circumstances, a I bis regime (Regulation No 1215/2012) on condition that the Court judgment is obtained within a few hours of issuing the writ when no Survey is to be executed at least partially in Belgium. Two Court

real defence or an unreasonable defence is put up, to a few weeks in Belgium decisions of 2015 clearly confirm this. heavily contested claims. The Court Survey is a defended action. This means that any party (ii) Proceedings: the Courts having a conflicting interest must be invited at any step of the Court Survey if one wants the Survey to be opposable to that party. An Transport and maritime matters are brought before a maritime and invited party is entitled to bring his own private surveyors and legal transport chamber of the Commercial Court. Such Court consists counsel. of one full-time professional Judge and two lay Judges who in their professional life usually work within a field of shipping, transport or The Court Surveyor usually proceeds immediately with the necessary marine insurance. At Appeal level there is a specialised Maritime fact-finding. In maritime incidents the experience is that the first Chamber with the Court of Appeal. investigative steps are taken by the appointed Court Surveyor within a few hours of being appointed. This is an advantage for those who All arrest matters are brought before the Arrest Judge. For urgent wish to be aware of the facts as soon as possible. A Court Survey arrest matters, out-of-Court office hours are available. is a defended action and all parties will obtain the same factual (iii) Proceedings: the stages information at the same time. Writs are served by a Court bailiff. The writ will indicate the parties The Court Surveyor is appointed by the Court and remains under the to the proceedings, the essential facts, the reasons for liability, the Court’s control. The Court Surveyor’s duty is to the Court and thus date on which to appear, the Court before which to appear and the not to any of the parties to the incident. This results in an objective claim (usually in that order). “fact-finding report” which constitutes a factual basis for a Belgian If the defendant does not appear on the date indicated in the writ, a or foreign Court. default judgment may be obtained by the claimant at the hearing. If the defendant appears, the Court will invite the parties to give 5.2 What are the general disclosure obligations in court their idea of the time schedule and, within a few weeks, issue an proceedings? order holding specific dates for exchange of written submissions and a date for a hearing. Quite often, parties mutually agree on a Belgian law does not have a general obligation to disclose all schedule and the Court will then confirm such schedule. available evidence within Court proceedings. Every party must (iv) Proceedings: the costs prove its case on the basis of the evidence it presents. If another party The losing party pays the legal costs of the proceedings, with the can prove that it is likely that someone holds relevant evidence, it exception of the lawyers’ fees, which remain for the account of the may ask the Judge to order the submitting of such evidence. In order party who instructed the lawyer. to obtain such an order from the Court, one must establish that the The legal costs of the proceedings are in essence the cost of the writ evidence exists, that the party who is asked to surrender the evidence and service thereof, of the Court Surveyor, the Court and a symbolic has it in its possession, and that the evidence is relevant to the case. Indemnification for Proceedings (“IfP”) calculated on the basis of the amount claimed. This IfP varies from €82.50 for low amounts 6 Procedure claimed in easy matters to €33,000 for complicated proceedings in claims of over €1,000,000. This IfP can be considered as a part of the lawyers’ costs. 6.1 Describe the typical procedure and timescale A tax of 3% on the costs is due by the losing defendant (no tax is due applicable to maritime claims conducted through: i) national courts (including any specialised maritime or on damages under €12,500). commercial courts); ii) arbitration (including specialist (v) Proceedings: the interests arbitral bodies); and iii) mediation / alternative dispute Interest is set by law on a yearly basis where the calculation is based resolution. on the average Euribor of the preceding year + 2%. For the year 2018, it is 2%. (i) Proceedings: timing (vi) Arbitration A distinction needs to be made between fact-finding proceedings and proceedings on the merits. There is very little arbitration in maritime incidents. Most arbitration is in marine insurance. Arbitration is usually on an ad hoc basis. Fact-finding proceedings depend to a large extent on the complexity (vii) Mediation of the case. A collision matter resulting in a wreck removal by a specialised salvor which takes over a year will take longer than Other than counsels trying to come to a settlement, mediation is straightforward cargo damage due to leaking hatch covers. Due not commonly used in purely Belgian maritime disputes. In multi- to the fact that Court surveying proceedings are a defended action jurisdictional disputes where the same facts give rise to disputes in parties are perfectly well aware of the evidence being collected various jurisdictions and tribunals, there is a tendency to mediate. by the Court Surveyor. Nowadays, the Court Order that initially

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■ The Belgian Judicial Code. 6.2 Highlight any notable pros and cons related to your ■ The Belgian Code on International Private Law. jurisdiction that any potential party should bear in mind. A foreign decision is recognised without the need to initiate Pros: proceedings. If the decision needs to be enforced, an ex parte application to the Court asking for the decision to be declared ■ a mature maritime market holding a cluster of expertise enforceable in Belgium needs to be filed. including: ■ a maritime Bar with over 200 years of experience (established in 1810); 7.2 Summarise the key provisions and applicable ■ various specialised maritime lower Courts exclusively procedures affecting the recognition and enforcement Belgium dealing with shipping and transport matters (maritime of arbitration awards. chambers within the Courts of commerce); ■ The Convention on the Recognition and Enforcement of ■ a specialised maritime and transport Chamber before the Foreign Arbitral Awards (“The 1958 New York Convention”). Court of Appeal; ■ The Belgian Judicial Code. ■ highly specialised marine surveyors, working exclusively for the Courts and appointed to give an independent report ■ The European Convention on International Commercial on facts in a defended action; and Arbitration, Geneva, 21st April 1961 (“The Geneva Arbitration Convention”). ■ language flexibility of the majority of maritime parties where a minimum of three languages (up to five) are If an award is to be enforced, an ex parte application to the Court spoken, enabling swift and cheap usage of evidence in asking for the award to be declared enforceable in Belgium needs Court in their original language; to be filed. ■ swift Court procedures (about one year) for normal marine work. This has changed substantially in recent years; ■ extended case law on almost any point of shipping law, 8 Updates and Developments enabling reasonable predictions for those who are in the know; and 8.1 Describe any other issues not considered above that ■ lawyers’ fees are low in comparison to most other may be worthy of note, together with any current jurisdictions. trends or likely future developments that may be of Cons: interest. ■ the losing party should be aware that a 3% tax will be due on the amount of damages they owe; and The reader should be aware that a new Belgian Maritime Code has been drafted. It is now going through the usual process prior to being ■ lawyers’ fees are not recoverable by the winning party. An IfP is due (see question 6.1, part (iv)). presented to Parliament. At present, is being reviewed by the Supreme Administrative Court (“Raad van State”). Once enacted, such Code may have profound consequences on the answers given above. 7 Foreign Judgments and Awards

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

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

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André Kegels Kegels & Co Mechelsesteenweg 196 2018 Antwerp Belgium

Tel: +32 3 257 1771 Fax: +32 3 257 1474 Email: [email protected] URL: www.kegels-co.com Belgium André Kegels read law at Leuven Law School. After his training at the Brussels Bar, he worked in the UK with an English law firm and some marine insurers. In the late 1980s he joined the Antwerp Bar where he has been practising maritime, transport and trade law ever since. Since 1997 he has been the head of Kegels & Co, a niche maritime and ITC law firm which has its roots in centuries of this type of legal work. Among his publications, the Dutch “Law on Salvage” and “European principles regarding Maritime Law” are commonly referred to by Courts and scholars. His English and French publications concern all aspects of maritime and transport law. He is also a regular speaker at international conferences and is a guest lecturer at universities, mainly on the topic of ship arrest law. For further information, readers are invited to search the web, where they will find many publications by different members of the firm.

The Belgium-based Kegels & Co law firm handles commercial law matters and particularly matters related to the maritime, transport and logistics industries, international trade and related customs, as well as banking and insurance matters. Its lawyers practise in the Belgian Courts or in arbitration proceedings in Dutch, French and English. German is also used for communication. The members of the firm lecture on many occasions at national and international conferences and at various universities and law schools in Belgium and abroad on subjects related to their areas of practice and specialisation. Its members are also associated with various international organisations including the International Bar Association (“The IBA”), the Comité Maritime International (“The CMI”), the International Association for the Philosophy of Law and Social Philosophy (“The IVR”) and others. Younger members of the firm are typically associated with the International Association of Young Lawyers (“The AIJA”) and the Young CMI. Various members of the firm write on a regular basis on the aspects of the law in which they are specialised.

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Brazil Alessander Lopes Pinto

LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS Patricia dos Anjos

provides measures on the control, prevention and control of pollution 1 Marine Casualty by oil, adding to the legal system the regulations of MARPOL 73/78 and CLC. Decree n. 195/98 is a recent version of Decree n. 265 1.1 In the event of a collision, grounding or other major of July 31, 1972, which regulates the Port Captaincies, a military casualty, what are the key provisions that will impact agent whose purpose is to contribute to the safety of navigation, upon the liability and response of interested parties? safeguarding human life at sea and preventing water pollution. Law In particular, the relevant law / conventions in force in n. 12.305/2010 provides for the national solid waste policy. relation to: As for international conventions, the International Convention on Civil Liability for Oil Pollution Damage, Brussels, 1969 (“CLC/69”) (i) Collision was ratified by Brazil and internally approved through the enactment Brazil has adopted the International Convention for the Unification of the Decrees n. 74/1976, 79.437/1977 and 83.540/1979; and the of Certain Rules of Law with Respect to Collision Between Vessels International Convention for the Prevention of Pollution from Ships, and Protocol of Signature, Brussels, of 23 September 1910 (the known as MARPOL 73/78, was created in 1973 as amended by the 1910 Collision Convention), through the enactment of the Brazilian Protocol of 1978 and entered into force on 1983. Brazil has also ratified Decree n. 10.773/1914. and internalised in its legal system: the UNCLOS – United Nations The Convention on the International Regulations for Preventing Convention on the Law of the Sea, which was promulgated by Decree Collisions at Sea of 1972 (“COLREG 72” or “RIPEAM” as it is n. 1.530/1995; the OPCR – International Convention on Oil Pollution known in Brazil) has also been adopted through the enactment of the Preparedness, Response and Co-operation, which was enacted by Brazilian Decree n. 80.068/1977. Decree n. 2.870/1988; and the Convention on the Prevention of Marine Brazilian Commercial Code provides for damages caused by a Pollution by Dumping of Wastes and Other Matter, 1972 (“LC-72”), vessel collision in its Title XI, from Articles 749 to Article 752. although Brazil has not ratified its 1996 Protocol. In this sense, Article 749 establishes liability for damage caused (iii) Salvage / general average to a ship and her cargo resulting from a collision if such collision Brazil is a signatory party and has ratified the International results from failure to comply with the port regulations, malpractice, Convention on Salvage from IMO, of 1989, which was enacted by or negligence of the master or the crew. The damages shall be the Brazilian Legislative Decree n. 263/2009. estimated by arbitrators. As for national regulations, Brazilian Law n. 7.203/84 applies in It is worth mentioning that the Brazilian Civil Code also provides this regard. for liability and for obligation to repair/indemnify, although its (iv) Wreck removal provisions are generic in scope and not as specific as the Commercial Wreck removal in Brazil is governed by Brazilian Law n. Code provisions mentioned above. 7.542/1986. This law provides for, among other stipulations, the (ii) Pollution liability of the person responsible for the asset for the compensation Regarding internal rules on pollution, the provisions follow the of removal costs if totally or partially made by the Brazilian Maritime principles established in the Brazilian Federal Constitution and the Authority, as well as on the joint liability of the risk insurer of the main ones to be mentioned are provided by: Law n. 6.938/1981, wreck removal. Unremoved wreck assets are incorporated into the which provides for the National Environmental Policy, structured Federal Government domain after 5 (five) years of the loss, as there in guiding principles for the inspection, preservation, improvement is a legal presumption of ownership waiver. and recovery of environmental quality, and institutes the National (v) Limitation of liability System of the Environment; Law n. 9605/1998 and its Decree n. Brazil is a signatory party to the Convention on Limitation of 3.179/1999, which provide for Environmental Crimes and for Liability for Maritime Claims of 1976, but it should be mentioned criminal and administrative sanctions derived from conduct that that the Brazilian Civil Code provides that the indemnity shall be damages the environment; and Law n. 9.966/2000, known as the measured by the extent of damage. “Oil Law”, alongside Decree n. 4.136/2002, which establish the basic principles to be followed in the movement of oil and other (vi) The limitation fund harmful substances in organised ports, port facilities, platforms and A limitation fund has not been established in Brazil. ships sailing in waters under national jurisdiction. In addition, it

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the cargo carrier for loss of cargo, as well as for lack or decrease 1.2 What are the authorities’ powers of investigation / of content or damages to the cargo, is 1 (one) year from the date of casualty response in the event of a collision, grounding completion of the unloading of the respective cargo. or other major casualty? Although the majority of Court decisions stand for the 1 (one)-year time limit mentioned above, it is worth mentioning that there are The Brazilian Maritime Authority through its captaincies, stations Court decisions in cargo claims either accepting the application of and agencies, has powers of investigation/casualty response in the the time limit of 3 (three) years established in the Brazilian Civil event of a collision, grounding or other major casualty. Depending Code or the time limit of 5 (five) years established at the Brazilian on the extension of the event, the federal police may be involved in Consumer Code. an investigation. Brazil In addition, in the event of environmental pollution resulting from a collision, grounding or other casualty, the Environmental 2.3 In what circumstances may the carrier establish Authorities will be involved in the situation. claims against the shipper relating to misdeclaration of cargo?

2 Cargo Claims The shippers shall be liable for any damages which may result if, without the carrier’s knowledge and consent, they introduce goods on the ship, whose exit or entry is prohibited in Brazil, and any other 2.1 What are the international conventions and national illegal act they carry out at the time of loading or unloading, as per laws relevant to marine cargo claims? provisions of Article 599 of the Commercial Code. Article 745 of Civil Code establishes that in the event of inaccurate Brazil is not a signatory party to the main international conventions information or false description of the cargo, the carrier shall be that provide for the liability of carriers, such as the Hague Rules, indemnified for the loss suffered, and the respective lawsuit shall be the Hague-Visby Rules, the Hamburg Rules or the Convention on filed within a period of 120 (one hundred and twenty) days, counting Limitation of Liability for Maritime Claims, 1976. from that act, under penalty of peremption. The Brazilian Civil Code provides that carrier’s liability will be limited to the value of the cargo and Decree-law n. 116/1967 also provides for liabilities in the cargo transport at Brazilian ports. The 3 Passenger Claims limitation clause or exclusion of liability clause is established in the Bill of Lading (“BL”), but such clauses are cautiously analysed by Courts as the BL is mainly deemed by Brazilian Courts as an 3.1 What are the key provisions applicable to the resolution of maritime passenger claims? instrument that was not the subject of free negotiations between the parties. Contractual fraud by the carrier, the vessel seaworthiness and her adequacy, and proper transport of the cargo are topics Maritime passenger claims in Brazil are mainly regulated by the addressed by Courts should those clauses be considered regular, provisions established by the Civil Code and the Consumer Code, but Court decisions vary according to the specific case, even though as Brazil has not ratified international conventions on the carriage there is the precedent n. 161 from the Supreme Federal Court of passengers. (“STF”) which states that in a transport contract this is ineffective in The passenger ticket is considered evidence of the transport contract. the non-indemnifying clause. As for the passengers travelling free of charge, such as visitors and/ or clandestine migrants, the carrier’s liability may be extended on a non-contractual basis. 2.2 What are the key principles applicable to cargo claims brought against the carrier? 4 Arrest and Security It is possible to file a cargo claim based either on contractual or extra-contractual liabilities for cargo damages and loss as, according to the Brazil Civil Code provisions, there is an obligation to repair 4.1 What are the options available to a party seeking to (civil redress) the damages caused to someone. It must be mentioned obtain security for a maritime claim against a vessel owner and the applicable procedure? that there are some exculpatory hypothesis exceptions to this rule. According to Decree-law n. 116/67, which provides for the A party seeking to obtain security for a maritime claim against operations inherent in the transportation of goods by water in a vessel owner may arrest its vessel. An arrest is a typical Brazilian ports, delimiting liabilities and dealing with loss and precautionary measure, preventive and provisional, which seeks to damages, a cargo survey at its unloading is a mandatory evidence eliminate the danger of legal damage capable of jeopardising the to a claim for cargo damage. This disposition is also ratified by the foreclosure of a credit. Code of Civil Procedure, where this Decree-law is not applicable. After the filing of an arrest request, if all requirements established It should be mentioned that the Brazilian Courts consider that the mainly in the Commercial Code and Code of Civil Procedure are liability of the carrier that results from a contract relates to the duty met, there will be a Court order to arrest the vessel, and notice will to transport the cargo from a point to another, without loss or any be given to the defendant on this matter. There will also be a notice damages. issued to the respective Port Captaincy where the vessel is located The Commercial Code provides for the obligations concerning the informing about the arrest, thus preventing that the vessel sail away seaworthiness of the ship and her compatibility to be able to carry from Brazilian jurisdictional waters. a cargo. If this vessel owner is a Brazilian company or person, established According to Brazilian law, specifically Article 8 of Decree n. in Brazil, a pledge of its bank account may also be applicable, or 116/67, the limitation period for cargo claims to be brought against a pledge over the pecuniary results from the operation of a vessel.

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4.2 Is it possible for a bunker supplier (whether physical 6 Procedure and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) As per Brazilian law and the International Convention for the national courts (including any specialised maritime or Unification of Certain Rules on vessels’ immunity, Brussels, 1926, commercial courts); ii) arbitration (including specialist bunkers supplied to a vessel can be the object of a maritime claim. arbitral bodies); and iii) mediation / alternative dispute If all requirements are met, the party holding the credit / maritime resolution. lien shall be entitled to arrest the vessel (arrest in rem). Brazil In Brazil, maritime claims are litigated in the Civil Courts and governed by the procedural rules introduced with the enactment of 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime the Code of Civil Procedure. claim, including exercise of liens over cargo, what Although there is a Maritime Court in Brazil, whose jurisdiction options are available? covers the entire national territory, it is an autonomous organ of the Ministry of the Navy, and its attributions are related to judging A security sought from a party other than the vessel owner (or accidents and facts of maritime, fluvial and lake navigation, as well demise charterer) for a maritime claim, as mentioned above, may as registry functions. be an arrest against the vessel. Lien over cargo may be applicable As for Arbitration, there are specialised arbitration bodies within when there is a default in the freight payment to the carrier or due to Brazil, including in the maritime context. Arbitration in Brazil is the payment of declared general average expenses, as per Article 7º ruled by Law n. 9.307/1996 and it establishes a time limit of six of Decree-Law n. 116/1967. months from the date of the establishment of the arbitration for an arbitration decision to be rendered, if nothing to the contrary 4.4 In relation to maritime claims, what form of security is has been agreed by the parties. Arbitration is instituted once the acceptable; for example, bank guarantee, P&I letter of arbitrator(s) accepts the appointment. Arbitration shall follow the undertaking. procedure established by the parties to the arbitration agreement, which may refer to the rules of an institutional arbitration body or Usually, several forms of security are acceptable to be submitted specialised entity, and the parties may also delegate to the arbitrator in maritime claims in Brazil: letter of undertaking issued by P&I himself or to the arbitral tribunal the procedure. club; bank guarantees; cash deposit; and insurance companies’ Mediation is not common in Brazil yet, but its incidence is guarantees. increasing, including in the maritime context.

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

5.1 What steps can be taken (and when) to preserve or As per Brazilian law provisions, a Brazilian or foreign plaintiff who obtain access to evidence in relation to maritime resides outside Brazil or who ceases to reside in the country during claims including any available procedures for the preservation of physical evidence, examination of the course of the proceedings shall provide sufficient security for the witnesses or pre-action disclosure? payment of the costs and attorney’s fees of the opposing party in the lawsuits, if the plaintiff does not have real property in Brazil that According to the provisions of the Brazilian Civil Procedure Code, assures them payment. There are some exceptions to this rule; for an interested party may request a judicial decision in order to example, when there is an exemption provided for in an international preserve or obtain access to evidence during or before a claim is agreement or treaty of which Brazil is a party, or in the counterclaim. brought to the Court. In this last case, an autonomous suit shall be filed according to Articles 381 to 383 of the Civil Procedure Code 7 Foreign Judgments and Awards provided that: (i) there is a fear that it will become impossible or very difficult to verify certain facts pending the lawsuit; (ii) the evidence to be produced is capable of facilitating settlement or other 7.1 Summarise the key provisions and applicable appropriate means of solution of conflict by the parties themselves; procedures affecting the recognition and enforcement and (iii) prior knowledge of the facts may justify or avoid the filing of foreign judgments. of a suit. Brazil has not ratified international conventions regarding enforcement of foreign judgments, with the exception of the Las Leñas Protocol, 5.2 What are the general disclosure obligations in court proceedings? through the enactment of the Decree n. 6.891/2009. The foreign judicial decision will not be effective in Brazil if it is Although the Code of Civil Procedure provides in its Article 378 not ratified by the Superior Court of Justice (“STJ”). The procedure that the collaboration of the parties to clarify the truth is a duty, it is for the ratification of a foreign judgment follows the Internal Rules up to the plaintiff to prove the constitutive facts of his/her right and of the STJ and the ratification must be requested by a lawyer by a it is up to the defendant to prove the facts impeding, modifying and petition addressed to the president appellate judge of the STJ. If extinguishing the right of the plaintiff. In some specific situations this request contains all the procedural documents and there is no there may be a reversal of the burden of proof in a legal, conventional dispute from third parties, there will be a decision, approving or not or judicial manner. the foreign judgment. If approved, the lawyer must proceed with its enforcement/execution.

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7.2 Summarise the key provisions and applicable 8 Updates and Developments procedures affecting the recognition and enforcement of arbitration awards. 8.1 Describe any other issues not considered above that may be worthy of note, together with any current trends As for recognition and enforcement of foreign arbitration awards, or likely future developments that may be of interest. a similar procedure to the foreign judgment procedure mentioned above is established, as the ratification of such award must be There is a bill – PL 1572/2011– to establish a new Commercial provided by the STJ. Code in Brazil. As mentioned above, maritime law is one of the

provisions of this Code. This bill is currently under assessment by Brazil the Brazilian National Congress.

Alessander Lopes Pinto Patricia dos Anjos LP LAW | LOPES PINTO ADVOGADOS LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS ASSOCIADOS Rua México, nº 168, 3rd floor Rua México, nº 168, 3rd floor Centro, CEP: 20031 143 Centro, CEP: 20031 143 Rio de Janeiro, RJ Rio de Janeiro, RJ Brazil Brazil

Tel: +55 21 2532 7202 Tel: +55 21 2532 7202 Email: [email protected] Email: [email protected] URL: www.lplaw.com.br URL: www.lplaw.com.br

Alessander Lopes Pinto is a Senior Partner at LP LAW | LOPES Patricia dos Anjos is an Associate Lawyer at LP LAW | LOPES PINTO PINTO ADVOGADOS ASSOCIADOS, specialised in Business Law ADVOGADOS ASSOCIADOS, with experience of working at and with and Maritime Law with a postgraduate qualification from the University shipping companies, oil companies, shipyards, port terminals, among of Southampton. He represents several worldwide ship-owners and other entities. Patricia has provided legal assistance to national and foreign companies with business in Brazil, having wide experience international companies with regard to maritime, marine, administrative/ in setting up joint ventures and the establishment of foreign entities regulatory, commercial and contractual law. in Brazil. Alessander is an offshore and cabotage navigation local Patricia is a member of the Brazilian Maritime Law Association (ABDM), regulations expert, working on charter parties, arbitrage, vessel arrest as well as the Women’s International Shipping & Trading Association and practice at the Admiralty Court. A former Attorney at the National (WISTA). Waterway Transportation Agency (ANTAQ), Alessander is member of the Brazilian Maritime Law Association and former vice-president for Brazil of the Ibero-American Maritime Law Institute (IIDM) (2016–2018).

LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS is a Firm that combines experience and dynamism, focusing on the specialisation of each of its partners, associates and professionals in their areas of expertise, with direct contact between the main partners and the Firm’s clients. The Firm stands out in the legal scene with outstanding performance in the shipping and offshore oil and gas areas, and significant expertise in shipping, regulatory, litigation and corporate matters. The firm acts for Brazilian and foreign ship-owners, charterers, the offshore oil and gas industry, port terminals and shipyards. Labour claims related to seafarers are also an important area of the firm, including immigration services related to work permits and visas for crewmembers of foreign vessels and oil platforms operating in Brazil. The constant search for quality through the highest standard of excellence in the legal assistance and services offered, makes LP LAW | LOPES PINTO ADVOGADOS ASSOCIADOS a unique and personalised law firm.

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Canada

Fernandes Hearn LLP James Manson

(ii) Pollution 1 Marine Casualty Canada is signatory to several international conventions dealing with pollution: 1.1 In the event of a collision, grounding or other major ■ The International Convention for the Prevention of Pollution casualty, what are the key provisions that will impact from Ships – Annexes I–III (“MARPOL”). upon the liability and response of interested parties? In particular, the relevant law / conventions in force in ■ The International Convention on Civil Liability for Oil relation to: Pollution Damage, 1992, as amended by the Resolution of 2000 (the “Civil Liability Convention”). (i) Collision ■ The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Canada has enacted collision regulations (the Collision Regulations, Damage, 1992 as amended by the Resolution of 2000 (the C.R.C., c. 1416) under the Canada Shipping Act, 2001, S.C. 2001, “Fund Convention”). c. 26 (the “Canada Shipping Act”). These regulations implement ■ The Protocol of 2003 to the Fund Convention as amended by the so-called “COLREGS”, i.e. the International Regulations for the Resolution of 2000 (“Supplementary Fund Protocol”). Preventing Collisions at Sea, 1972. There are certain Canadian ■ The International Convention on Civil Liability for Bunker modifications. In addition, Canada has enacted supplementary Oil Pollution Damage, 2001 (“Bunker Convention”). regulations particular to specific bodies of inland water, such as ■ The United Nations Convention on the Law of the Sea. the Burlington Canal Regulations, SOR/89-222 and the St Clair & Detroit River Navigation Safety Regulations, SOR/84-335. Breach ■ The International Convention on the Control of Harmful Anti-fouling Systems on Ships, 2001. of the Collision Regulations or other similar regulations would likely give rise to liability on the part of the offending ship. ■ The International Convention for the Control and Management of Ships’ Ballast Water and Sediments, 2004. In Canada, mariners have a general obligation to render assistance at sea, pursuant to various international conventions such as the Canada has enacted federal legislation and regulations giving effect SOLAS Convention and the United Nations Convention on Law of to the above conventions, and imposing penalties, sanctions and the Sea. In addition, sections 131 and 132 of the Canada Shipping reporting requirements. Some of the important legislation includes Act provide that masters of vessels in Canadian waters must the Canada Shipping Act; the Arctic Waters Pollution Prevention render such assistance as they are able. Section 148 of the Canada Act, R.S.C. 1985, c. A-12; the Canadian Environmental Protection Shipping Act specifically provides that in the event of a collision, Act, 1999, S.C. 1999, c. 33; the Transportation of Dangerous Goods the master in charge of each vessel is under an obligation to render Act, S.C. 1994, c. 34; and the Fisheries Act, R.S.C. 1995, c. F-14. such assistance as may be necessary to the other vessel to save them Important regulations include the Vessel Pollution and Dangerous from any danger caused by the collision, and to stay by the other Chemicals Regulations, SOR/2012-69; the Cargo, Fumigation vessel until its master has determined that no further assistance is and Tackle Regulations, SOR/2007-128; the Ballast Water Control required. Failure to comply with these provisions could result in a and Management Regulations, SOR/2011-237; and the Response fine of up to $1 million or imprisonment for up to 18 months. Organizations and Oil Handling Facilities Regulations, SOR/95-405. (iii) Salvage / general average Collisions must also be reported to the Canadian Transportation Safety Board, pursuant to the Transportation Safety Board Section 142(1) of the Canada Shipping Act implements the Regulations, SOR/2014-37, and also to the Chief of Marine International Convention on Salvage, 1989 into Canadian law. Casualty Investigations at the Department of Transport, pursuant to Canada reserves the right not to apply its provisions when the the Shipping Casualties Reporting Regulations, SOR/85-514. property involved is maritime cultural property of prehistoric, archaeologic or historic interest and is situated on the seabed. In Canada, Part II of the Marine Liability Act, S.C. 2001, c. 6 (the “Marine Liability Act”) provides for the apportionment of liability Under section 22(2)(j) of the Federal Courts Act, R.S.C. 1985, c. for damages caused by two or more persons or ships. Such liability F-7 (the “Federal Courts Act”), the Federal Court has jurisdiction is generally apportioned according to the degree to which they are over salvage actions in Canada. respectively at fault or negligent. If the court cannot determine With respect to general average, section 65 of Canada’s Marine different degrees of fault or neglect, their liability is deemed to be Insurance Act, S.C. 1993, c. 22, provides for general average claims, equal. Claims for contribution and indemnity by one party against and also that claimants can claim directly from maritime insurers. another are permitted.

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Under section 22(2)(q) of the Federal Courts Act, the Federal Court charged with investigating marine occurrences such as collisions, has jurisdiction over general average actions in Canada. groundings and other such events. The Canadian Transportation (iv) Wreck removal Accident Investigation and Safety Board Act, S.C. 1989, c. 3 and the Transportation Safety Board Regulations, SOR/2014-37 give Part VII of the Canada Shipping Act deals with wrecks and wreck the CTSB broad powers in the course of an investigation to compel removal in Canada. Under these provisions, a person finding a wreck or bringing a wreck into Canada must report the wreck to a interviews, gather/seize documents, examine a ship, etc. The CTSB “receiver of wreck”, who will then attempt to determine the wreck’s can issue summonses and apply to a justice of the peace for a warrant owner, and otherwise deal with the wreck, including its destruction to compel compliance. or disposition. The person who reported the wreck is entitled to a Other authorities, such as police, Transport Canada Inspectors, Fisheries Canada Officers, etc. may also have jurisdiction depending salvage award, which could be the wreck itself, or all or part of the Canada proceeds of disposition. on the situation. Section 15(1) of the Navigation Protection Act, R.S.C. 1985, c. N-22, also provides that if a vessel casualty becomes a wreck, then the person in charge of the vessel must mark the wreck. The Federal government 2 Cargo Claims may also direct the removal and sale of the wreck and recover its expenses with respect to the wreck from the proceeds of sale. 2.1 What are the international conventions and national Canada has reserved the right not to extend the limitation provisions laws relevant to marine cargo claims? of the Convention on Limitation of Liability for Maritime Claims, 1976 (“LLMC”) to wreck removals, although currently such As mentioned above, Canada has enacted the Hague-Visby Rules provisions are in force. pursuant to section 43 of the Marine Liability Act. The Hague-Visby (v) Limitation of liability Rules apply as set out in Article X of those rules. In addition, section The LLMC has been implemented in Canada pursuant to section 26 43(2) of the Marine Liability Act provides that the Hague-Visby Rules of the Marine Liability Act. In addition, Canada has enacted further also apply to contracts for the carriage of goods by water from one limits of liability in respect of ships of less than 300 gross tonnage. place to another in Canada, either directly or by way of a place outside Those limits are also found in sections 28 and 29 of the Marine Canada, unless there is no bill of lading and the contract stipulates that Liability Act: the Hague-Visby Rules do not apply. (a) with respect to passengers (whether or not under a contract Section 46 of the Marine Liability Act also provides that a claimant of carriage), the greater of 2 million SDRs or 175,000 SDRs may commence proceedings in Canada notwithstanding the existence multiplied by the number of persons the ship is authorised to of a jurisdiction or arbitration clause in the contract for carriage; carry or does carry; however, such a proceeding may still be stayed on forum non (b) in all other cases, $1 million in respect of claims for loss of conveniens grounds. life or personal injury; and Section 22(2)(f) of the Federal Courts Act gives the Federal Court (c) in all other cases, $500,000 in respect of any other claims. jurisdiction over marine cargo claims. Section 30 of the Marine Liability Act also provides that the maximum liability of an owner or a dock, canal or port for loss 2.2 What are the key principles applicable to cargo claims caused to a ship, or its cargo or other property on board, is the greater brought against the carrier? of $2 million or the amount calculated by multiplying $1,000 by the number of tons of the gross tonnage of the largest ship that is at the The key principles are as set out in the Hague-Visby Rules. First, time of the loss, or had been within a period of five years before that under Article III, a carrier is bound, before and at the beginning of time, within the area of the dock, canal or port over which the owner a voyage, to exercise due diligence to make the ship seaworthy; had control or management. properly equip, man and supply the ship; and make the holds and Canada has also implemented the Athens Convention Relating to the other such parts of the ship fit and safe for the reception, carriage and Carriage of Passengers and their Luggage by Sea, 1974, as amended preservation of cargo. A carrier is bound to properly and carefully by the Protocol of 1990 (the “Athens Convention”); the International load, handle, stow, carry, keep, care for and discharge the cargo. A Convention for the Unification of Certain Rules of Law relating to carrier must also issue a bill of lading on demand of the shipper. Bills of Lading, concluded at Brussels on August 25, 1924, in the Protocol concluded at Brussels on February 23, 1968, and in the In addition to its obligations, under Article IV a carrier is vested additional Protocol concluded at Brussels on December 21, 1979 with certain rights and immunities. First, neither the carrier nor (the “Hague-Visby Rules”); and the International Convention on the ship shall be liable for loss or damage arising or resulting from Civil Liability for Oil Pollution Damage which provide additional unseaworthiness, unless caused by want of due diligence on the limitations on liability with respect to passenger and luggage claims, carrier’s part. Second, a carrier enjoys the benefit of certain “carrier’s cargo claims, and claims involving oil pollution. defences” as set out at Article IV(2), relating to such things as fire, (vi) The limitation fund acts of war, acts of God, defective packing, inherent vice, etc. Section 32 of the Marine Liability Act provides that the Federal If none of the “carrier’s defences” apply, then the carrier will usually Court has exclusive jurisdiction in Canada with respect to any be prima facie liable for loss of damage to cargo. However, the limits matter relating to the constitution and distribution of a limitation set out in the Hague-Visby Rules will then apply to assist the carrier fund under Articles 11 to 13 of the LLMC. (subject to the supplemental limitation provisions referred to above).

1.2 What are the authorities’ powers of investigation / 2.3 In what circumstances may the carrier establish claims casualty response in the event of a collision, grounding against the shipper relating to misdeclaration of cargo? or other major casualty? Under Article III(5) of the Hague-Visby Rules, the shipper is deemed The Canadian Transportation Safety Board (“CTSB”) is the body to guarantee the accuracy of the description of the cargo, and the

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shipper must indemnify the carrier for all loss, damage and expense arising from inaccuracies in such particulars. Thus, a carrier would 4.3 Where security is sought from a party other than the be entitled to bring an action against the shipper in the Federal vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what Court. In cases where the shipper is not located in Canada, it may options are available? be possible to arrest the cargo itself, although it would seem that this would only be possible if at the time the cause of action arose, the In respect of arrested cargo, the Federal Courts Rules provide that cargo was still the property of the shipper and not the consignee. arrested property may released in exchange for certain forms of bail, including: (a) a bank guaranty; (b) a bond from a surety company 3 Passenger Claims licensed to do business in Canada or furnish security bonds in the

Canada part of Canada where the bond is executed; or (c) a bail bond. The Federal Courts Rules also provide that the parties can agree on 3.1 What are the key provisions applicable to the another form of bail. This often happens; in such cases, the parties resolution of maritime passenger claims? usually agree on a letter of undertaking from a P&I Club.

As mentioned above, the Athens Convention has been implemented Otherwise, litigants are generally not able to obtain security from into Canadian law by virtue of section 37 of the Marine Liability Act. other parties in Canada. It is possible to seek a Mareva injunction, The Athens Convention applies whether or not there is a contract of which has the effect of freezing a party’s assets where the plaintiff carriage in existence between the carrier and a passenger. can establish a serious risk of the defendant removing or dissipating its assets from Canada – however, such injunctions are rarely However, the Athens Convention does not apply to “adventure granted. tourism activities”, as defined in section 37.1(1) of the Marine Liability Act. In such cases, the common law of Canada would apply; liability could accordingly be limited or excluded by contract. 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking. 4 Arrest and Security The Federal Courts Rules provide that an arrested vessel may released in exchange for certain forms of bail, including: (a) a bank 4.1 What are the options available to a party seeking to guaranty; (b) a bond from a surety company licensed to do business obtain security for a maritime claim against a vessel owner and the applicable procedure? in Canada or furnish security bonds in the part of Canada where the bond is executed; or (c) a bail bond. A party seeking to obtain security in respect of a maritime claim The Federal Courts Rules also provide that the parties can agree on against a vessel owner will normally arrest the vessel in the Federal another form of bail. This often happens; in such cases, the parties Court. Arrest procedures are fairly straightforward and cost-effective. usually agree on a letter of undertaking from a P&I Club. Moreover, usually it is enough to simply “threaten” to arrest a vessel, whereupon the owner will provide an acceptable alternative form of 5 Evidence security (usually a letter of undertaking from a P&I Club). The arrest procedure itself is done on a fairly expedited basis. All that is required is to file a Statement of Claim in the Federal Court, 5.1 What steps can be taken (and when) to preserve or thereby commencing the action, along with a document known as obtain access to evidence in relation to maritime an “Affidavit to Lead Warrant”, which contains a sworn statement claims including any available procedures for the preservation of physical evidence, examination of concerning the nature of the action, the basis for invoking the Court’s witnesses or pre-action disclosure? jurisdiction and other details as set out in the Federal Courts Rules, SOR/98-106 (the “Federal Courts Rules”). These documents are Once an action has been commenced, a party can move to preserve presented to the Federal Court Registry, whereupon a warrant is evidence, inspect property or examine non-parties under oath. Such issued immediately – there is no need for a hearing before a judge. a motion would be brought in the normal course, on the basis of Note that other than in the case of a valid maritime lien, it is only affidavit evidence. Such requests are governed by the rules of possible to arrest a vessel in rem if the owner of the vessel is also court in a given jurisdiction, and any tests or factors that have been liable for the claim in personam. developed by the relevant jurisprudence. The Federal Court does consider pre-action motions; however, such 4.2 Is it possible for a bunker supplier (whether physical motions are rare. In truly urgent cases, it is possible for a litigant and/or contractual) to arrest a vessel for a claim to apply to the Court on an ex parte basis for an interim injunction, relating to bunkers supplied by them to that vessel? seeking what is known as an “Anton Piller” order. Such an order provides for the execution of a warrant and seizure of evidence Yes; in such cases the bunker supplier may have a maritime claim from an opposing party. Normally, the party requesting such against the vessel and its owner pursuant to section 22(2)(n) of the extraordinary relief would give an undertaking to pay the target Federal Courts Act. Such a claim, however, would be extinguished litigant damages resulting from the improper use of this mechanism. if the vessel changes hands after the cause of action arises but It would similarly be theoretically possible for a litigant to move, before the proceeding is commenced. On the other hand, the bunker either pre-action or immediately upon commencement of an action, supplier who provides bunkers to a foreign vessel might have a valid for an order compelling certain witnesses to be examined under oath. maritime lien against the foreign vessel pursuant to section 139(2) of It would be quite rare, however, for the Court to make such orders. the Marine Liability Act. If so, such a lien would enjoy priority over In the same vein, usually a litigant is only obligated to produce one other unsecured marine claims that may exist, and the claimant could witness to be examined for discovery. arrest the vessel whether or not the owner was liable in personam.

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Usually it takes much less time, but significantly more money, to 5.2 What are the general disclosure obligations in court arbitrate a matter privately in Canada than it would take to litigate proceedings? the matter in the courts. Mediation is also highly encouraged in Canada. In maritime Generally speaking, all superior courts in Canada, including the matters, the Federal Court offers free judicial resolution conference Federal Court, impose broad disclosure obligations on litigants in services, where a case management judge or prothonotary will court actions. provide mediation services to the parties. Other jurisdictions in Litigants in the Federal Court are obligated to disclose, to the best of Canada require litigants to participate in a mandatory mediation their ability, all documents in their possession, power or control that session before they can proceed to trial. are relevant to the issues raised in the action. The word “document” Canada is broadly construed to include photographs, recordings, electronic information, etc. 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind. Litigants must list all such documents in a document called an “affidavit of documents” and swear or solemnly affirm that they have Compared with other jurisdictions, vessel arrests in Canada are quite made appropriate searches and have disclosed all relevant documents. straightforward and cost-efficient. Usually, as long as the relevant These documents are then produced to the other litigants in advance information is provided to counsel at the outset for inclusion in the of oral examinations for discovery. Affidavit to Lead Warrant, a vessel can be arrested on the same day, In addition, litigants must list all documents over which a recognised or even less. form of privilege is asserted over a document. Litigants must also list That said, the court system in Canada is often plagued by systemic all documents that once were in their possession, power or control, delays, due to a lack of judicial resources. Delays in the Federal but are no longer. Court are not as pronounced as those in the provincial superior courts. The documentary disclosure process is ongoing; a litigant who Either way, litigants should be aware that in Canada it often takes discovers additional relevant documents must prepare a supplementary years to deal with a court proceeding from beginning to end. affidavit of documents and disclose any such documents. Foreign litigants should also be aware that in all of the common Similar mechanisms and procedures exist in the superior courts of law jurisdictions in Canada, the losing party is usually made to each of Canada’s provinces. pay a significant portion of the winning party’s legal costs and disbursements. This is often a disincentive to litigants from advancing spurious claims. 6 Procedure One feature in the Federal Court worth noting is the Court’s ability to offer free dispute-resolution services. This feature, when properly used, can be of great benefit to litigants. 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or 7 Foreign Judgments and Awards commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution. 7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement Maritime claims are generally litigated in the Federal Court. of foreign judgments. Provincial superior courts also have jurisdiction to hear admiralty cases; however, generally speaking, Federal Court judges have more Absent public policy or natural justice concerns, Canadian courts experience in such matters. will generally recognise and enforce foreign judgments. With Procedures in the Federal Court are similar to other judicial respect to maritime judgments, a litigant holding a foreign judgment proceedings throughout the common law jurisdictions. A proceeding may commence an action on the judgment in any of the provincial is commenced by issuing a Statement of Claim and serving it on superior courts or the Federal Court. Alternatively, where reciprocal the defendant, who will then serve and file a Statement of Defence. enforcement of judgments legislation is in place, the litigant can Documentary discovery then follows; each party will serve its Affidavit simply apply to have the judgment registered in accordance with of Documents. Each party then produces a witness who will attend that legislation. to give testimony under oath about the facts and issues raised in the Canada is a party to the Convention between Canada and the United pleadings, and answer questions about the documentary productions. Kingdom of Great Britain and Northern Ireland Providing for the Once the discovery process is complete, the parties will then list the Reciprocal Recognition and Enforcement of Judgments in Civil and matter for trial. Often, the Court will require the parties to participate Commercial Matters. There are also reciprocal arrangements for in a settlement conference or formal mediation process before trial. the enforcement of judgments between most Canadian common law provinces and a few other states such as parts of Australia, some of Usually, the litigation process in Canada is quite lengthy due to the United States, etc. significant backlogs and lack of judicial resources; an action could take several years to get to trial. Foreign judgments made under the Civil Liability Convention, the Fund Convention, the Supplementary Fund Protocol and the Bunker Appeals from trial in the Federal Court are heard by the Federal Convention may be registered in the Federal Court pursuant to Court of Appeal; further appeals (with leave) to the Supreme Court section 82 of the Marine Liability Act. of Canada are possible, but leave is rarely granted. Enforcement mechanisms are governed by statutes and rules of court Arbitration is possible in Canada and is encouraged by the courts. particular to each Canadian jurisdiction – they include methods Litigants may have arbitral awards enforced in Canadian courts. The by which judgment creditors may examine judgment debtors to Association of Maritime Arbitrators of Canada and the Vancouver determine the extent and whereabouts of their assets, commence Maritime Arbitrators Association are recognised arbitration entities garnishment procedures, obtain writs of seizure and sale, etc. in Canada.

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The legislation, if adopted, will also bring the Nairobi International 7.2 Summarise the key provisions and applicable Convention on the Removal of Wrecks, 2007 into force under procedures affecting the recognition and enforcement Canadian law. of arbitration awards.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 has been implemented in Canada pursuant to the United Nations Foreign Arbitral Awards Convention Act, R.S.C. James Manson nd 1985, c. 16 (2 Supp.), and by similar legislation in each province. Fernandes Hearn LLP Once recognised, arbitral awards may be enforced according to Suite 700, 155 University Avenue

Canada Toronto, Ontario, M5H 3B7 the provisions and procedures in place in each of the Canadian Canada jurisdictions. Tel: +1 416 203 9820 Email: [email protected] 8 Updates and Developments URL: www.fernandeshearn.com

8.1 Describe any other issues not considered above that James Manson joined Fernandes Hearn LLP in 2014. He has may be worthy of note, together with any current represented clients in Canada, the United States and Europe in the superior courts in jurisdictions across Canada, including the Federal trends or likely future developments that may be of Court. interest. James’s practice is devoted to civil and commercial litigation, focusing on all aspects of transportation law, including maritime law. Along with many other nations, Canada has not yet adopted the proposed Rotterdam Rules. Originally from Winnipeg, Manitoba, James has lived and worked in several cities throughout Canada and around the world. He In 2017, the Canadian government introduced the Wrecked, attended law school at Queen’s University, where he was placed on Abandoned or Hazardous Vessels Act. This legislation has not the Dean’s Honour List. He also obtained a Bachelor of Arts from yet been enacted. The legislation, if it becomes law, will require McGill University, majoring in political science and Mandarin language studies, and a Bachelor of Music (Performance) from the University shipowners to deal proactively with wrecked, abandoned or hazardous of Manitoba. vessels in Canadian waters. It will prohibit vessel abandonment, James is conversant in both French and Mandarin. increase owner responsibility and liability for hazardous vessels and wrecks, including costs for clean-up and removal, and enable the James is a member of several industry associations, including the Canadian Maritime Law Association, the Maritime Law Association of Government of Canada to take action on hazardous vessels before the United States, and the Canadian Board of Marine Underwriters. they become more costly.

Fernandes Hearn LLP is a boutique law firm based in Toronto, Canada. Comprised of 12 lawyers, the firm provides specialised legal services throughout Canada to domestic and international clients, primarily in the transportation and maritime law spheres. The firm’s lawyers have a unique “best of the Canadian legal market” familiarity with the maritime, rail and intermodal transportation and logistics regulatory regimes, and offer a broad spectrum of services, including regulatory, commercial, transactional, and litigation. The firm recognises that clients wish to engage with entrepreneurial, knowledgeable and successful legal advisors, and build meaningful relationships with trusted advisors. Fernandes Hearn LLP can help clients achieve that goal by offering representation by a team of lawyers who are regarded by their peers and key players within the transportation industry as being at the very top of their game.

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Chile

Tomasello & Weitz Leslie Tomasello Weitz

■ Value of enquiries and investigations performed by the 1 Marine Casualty Chilean Maritime Authority: in determining the civil liability of the parties involved in a collision, the facts established as decisive causes in the final resolution pronounced in the 1.1 In the event of a collision, grounding or other major administrative summary enquiry initiated by the Chilean casualty, what are the key provisions that will impact Maritime Authority are held to be true unless there is upon the liability and response of interested parties? evidence to the contrary. In all other cases, the final resolution In particular, the relevant law / conventions in force in relation to: pronounced in the administrative summary enquiry will be considered in the civil proceedings as an expert’s opinion. (i) Collision ■ Subsequent sinking: if, after being involved in a collision, a vessel sinks during the course of its navigation to the port or Liability for a collision is determined by the following rules: place of destination, its loss is deemed a consequence of the ■ Fortuitous or doubtful collision: if a collision between two collision, unless there is evidence to the contrary. or more ships occurs owing to circumstances beyond their ■ Chile is a State Party to the Convention on the International control or to an unavoidable accident, or if there are doubts Regulations for Preventing Collisions at Sea 1972 (COLREGS). about the originating cause of the accident, the damages are individually borne by each victim. (ii) Pollution ■ Collision attributable to unilateral fault or negligence: if the Since February 2001, the most important legal development in collision is the result of wilful intent or fault of the captain, Chilean maritime law was the ratification of the 1992 Protocol to pilot or members of the crew of a vessel, all the damages are the International Convention of Civil Liability for Oil Pollution borne by the vessel’s owner. Damage (CLC 1969). As a result, for marine pollution incidents ■ “Both to blame” collision: if the collision could be blamed that have occurred on or after July 16, 2003, the 1992 Protocol (CLC on, or is the fault of two or more vessels, the total amount of 1992) applies. For any contamination other than “oil”, as defined in damages is borne by the owners of each vessel in proportion the CLC 1992, that is being “carried in bulk as cargo”, Chile applies to the blame assigned by the court which hears the first action the provisions contained in the Law of Navigation (Decree Law N° for loss and damages. 2222). These provisions are essentially comprised of the original ■ Collision and towage: as a general rule, both the tug and the text of the CLC 1969 with some amendments. tow are liable to third parties for their own neglect in towing On March 25, 2015, Chile incorporated the amendments to the 1992 pursuant to the towage provisions set forth under the Code of Commerce. However, in the case of a collision with another Protocol adopted in October 2000, thereby increasing the limitation vessel not involved in the manoeuvre, the following rules amounts. apply: (i) if the control of the towage was being handled (iii) Salvage / general average by the tug, the convoy will be considered a single unit of The Chilean regulation of salvage services is inspired by the 1981 transport for the purposes of third-party liability; or (ii) if the Montreal Conference Draft, which later became the Convention on control of the manoeuvre was being handled by the tow, this vessel (i.e. the tow) is liable. Salvage 1989. ■ Liability relating to death or injuries resulting from a collision: With regard to general average, normally the same is regulated by the responsible parties are jointly liable for the payment of the parties’ agreement in the respective contract. However, for those indemnities to third parties for death or injuries resulting from rare occasions when the norms contained in Book III of the Code of the collision, notwithstanding the right of each one to file a Commerce apply, the same incorporates the alphabetical rules of the claim against the other for any payment made in excess of the York-Antwerp Rules 1974. share or proportion of blame. Regarding damage to cargo, (iv) Wreck removal there is no joint liability between the vessels at fault and each owner must pay the damages related to the cargo damaged in If a wreck occurs within Chilean territorial waters and it results in a its own vessel in accordance with what is established by law danger or hindrance to navigation, fishing activities, preservation of the or under the respective charterparties or carriage of goods by environment or other shore-based activities, the Maritime Authority sea contracts. If, by application of this rule or due to direct will order the proprietor, owner or vessel operator to take appropriate actions from the owners of the cargo transported in the other measures for the purpose of commencing, at his cost, the immediate vessel(s) that collided, an owner or carrier pays a bigger signalling, removal or extraction of the remains, until conclusion, proportion than the percentage of blame assigned to its vessel, within the time limit fixed for this purpose by the Maritime Authority. it then has the right to claim an indemnity against the owner of the other vessel(s) for the excess paid. If the proprietor, owner or operator does not commence or conclude

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the work within the prescribed time limit, the wreck shall be deemed fines and/or suspensions. Naturally, the result of such an enquiry to have been abandoned and the proprietors, owners or operator shall will have an impact on civil liability arising from the same casualty. be liable to a fine of up to 2,000 gold pesos per net registered tonne of In determining the civil liability of the parties involved in a collision, the vessel, or up to a maximum of 50,000 gold pesos in other cases. the facts established as decisive causes of it in the final resolution The Maritime Authority will also be empowered to proceed with the pronounced in the administrative summary enquiry commenced by removal and to dispose of or sell the vessel, her cargo and remains, the Chilean Maritime Authority will be held to be true unless there by means of a public or private tender. If the wreck does not become is evidence to the contrary. a danger or hindrance for the above-mentioned activities, the time In all other cases, the final resolution pronounced in the administrative limit for the removal would be of one year. The removal shall be summary enquiry will be considered in the civil proceeding as an

Chile carried out under the terms which the Maritime Authority may point expert’s opinion. out. Upon expiry of the aforementioned time limit, the vessel shall be considered as abandoned and shall then pass to the dominion of the State. As of February 2018, vessels which are sinking, drifting and/ 2 Cargo Claims or in an unseaworthy condition may also be considered abandoned. The same may occur in case of vessels with no crew or with an unregulated crew. 2.1 What are the international conventions and national laws relevant to marine cargo claims? (v) Limitation of liability Although Chile has neither ratified nor acceded to any of the Chile is a State Party to the 1978 Hamburg Rules. In fact, Chile international limitation conventions, the Chilean Code of Commerce incorporated them into the Code of Commerce even before they has taken its provisions from both the 1957 Brussels Convention came into force internationally on November 1, 1992. However, and the 1976 London Convention. The Chilean system essentially regard must be given to the fact that the Chilean enactment of the follows the 1957 Convention but, as far as the amount of limitation is Rules is not identical to the international text of the same. concerned, it follows the 1976 Convention. Chile has not incorporated the Protocol of 1996 to the 1976 London Convention. (vi) The limitation fund 2.2 What are the key principles applicable to cargo claims brought against the carrier? In (v) above, we have indicated that the Chilean system follows the 1976 Limitation Convention regarding the amount of limitation. Under Article 984 of the Code of Commerce (equivalent to Article Regarding tonnage limitation, the vessel owner (or other persons 5 of the Hamburg Rules), the carrier will be considered liable for entitled to limit liability) does not necessarily have to set up a loss resulting from loss of or damage to the goods, as well as from limitation fund. However, when a decision is made to do so, the delay in delivery, if the occurrence which caused the loss, damage request has to be presented before the Tribunal indicated in Article or delay took place when goods were in his charge as defined in 1211 of the Code of Commerce. The petition will have to comply Article 982 of the Code of Commerce (equivalent to Article 4 of the with a number of requirements set out in Articles 1210 to 1219 of Hamburg Rules), unless the carrier proves that he, his servants or the Code of Commerce. Chiefly among them, the petition will have agents took all measures that could reasonably be required to avoid to provide details of the incident, the amount of the limitation fund the occurrence and its consequences (equivalent to Article 5 of the and the amount of money or other guarantee to set up the fund. Hamburg Rules). Normally, limitation funds are set up on the basis of Letters of Undertaking issued by the corresponding Protection and Indemnity The burden of proof of “all the measures reasonably required to (P&I) Club in which the vessel involved in the incident is entered. avoid the occurrence and its consequences” lies on the carrier and The petition has to include a list of creditors. The main effect of would be the same as Article 4.2 (q) of the Hague Rules. Among the limitation fund is that any person having a claim against the the measures reasonably required are those of making the vessel fund is barred from exercising any rights against other assets of the seaworthy and of properly and carefully loading, stowing, carrying, party seeking to limit, and if any ship or other property of the party keeping, caring for and discharging the goods carried. The duty to seeking to limit has already been arrested, it must be released. make the vessel seaworthy lies on the carrier throughout the voyage. Finally, the carrier not only has to prove that he acted as a reasonable In the event of pollution, the corresponding limitation fund will need carrier but also has to identify the occurrence that caused the loss, to be set up according to the CLC 1992 or the Law of Navigation damage or delay. (which, as indicated above, essentially comprises the original text of the CLC 1969 with some amendments) separately, that is to say, in addition to any tonnage limitation fund that may be set up. One of 2.3 In what circumstances may the carrier establish the main differences between the tonnage limitation fund described claims against the shipper relating to misdeclaration above and any eventual pollution limitation fund, is that the person of cargo? entitled to limit liability resulting from pollution has to set up the fund no later than when answering the first lawsuit. The shipper is liable for loss sustained by the carrier or the actual carrier, or for damage sustained by the ship, if such loss or damage was caused by the fault or neglect of the shipper, his servants or 1.2 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding agents. As a general rule, the shipper, his servants or agents have or other major casualty? a “several” liability for loss or damage arising from their fault or neglect. This liability is unlimited. In the case of dangerous goods, In the event of a casualty, the Chilean Maritime Authority will Article 1013 of the Code of Commerce (equivalent to Article 13 of appoint a Maritime Prosecutor who will conduct an administrative the Hamburg Rules) declares that the shipper must mark or label summary enquiry (locally referred to as the “ISA”), which will dangerous goods as such. In addition, the shipper must inform the aim to establish the cause of the casualty as well as the responsible carrier of the dangerous nature of the goods and, if necessary, the parties. This enquiry determines the administrative liabilities which precautions to be taken. If the shipper fails to do so and the carrier or may be involved, and may result in sanctions which are normally actual carrier does not otherwise have knowledge of their dangerous

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nature, Article 1013 of the Code of Commerce details the different consequences that such failure will generate for the shipper. In 4.4 In relation to maritime claims, what form of security is short, the shipper will be liable to the carrier or any actual carrier acceptable; for example, bank guarantee, P&I letter of undertaking. for the loss resulting from the shipment of such goods and they may at any time be unloaded, destroyed or rendered innocuous, as the circumstances may require, without payment of compensation. Normally the only condition to lift the arrest of a vessel is to present the exact guarantee (nature and amount) requested in the petition to arrest. These guarantees will be a Bank Guarantee or equivalent. 3 Passenger Claims LOUs can be presented, and are accepted by the Tribunals, if they have been agreed with the arresting party to be an acceptable Chile guarantee. The presentation of an LOU as an alternative guarantee 3.1 What are the key provisions applicable to the without the arresting party’s consent will normally result in the court resolution of maritime passenger claims? submitting the situation to the arresting party, who will have three working days to consider their decision. The Chilean regulation regarding passenger claims arises from the Athens Convention 1974 including only its Protocol of 1976. However, regard must be given to the fact that Chile is not a State Party 5 Evidence to this Convention. Nevertheless, its provisions were incorporated into the Chilean Code of Commerce. 5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime 4 Arrest and Security claims including any available procedures for the preservation of physical evidence, examination of witnesses or pre-action disclosure? 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel Article 1208 of the Code of Commerce establishes a fact-finding owner and the applicable procedure? inspection procedure, which may be requested to the duty Civil Court with jurisdiction over the place where the inspection will take place. The list of privileged credits (i.e. credits which enjoy a special status This procedure allows the interested party to request an inspection or and may be deemed to be statutory liens) is contained in Articles survey to take place before the commencement of the proceedings. 844 to 846 of the Code of Commerce. The creditor or titleholder This request will be granted when the facts are likely to disappear and of a listed privileged credit may request the duty Civil Court of the may involve the vessel, her cargo or other fact likely to disappear. port where the vessel presently is or is expected to arrive, to place In addition, Article 1209 of the Code of Commerce establishes an the vessel under arrest. evidentiary prejudicial measure, which allows the interested parties, Chile has neither ratified nor acceded to any of the International when they agree to do so, to carry out evidentiary measures requested Conventions regulating the arrest of ships. However, according to in court or prejudicial measures in an out-of-court stage, provided the “travaux préparatoires” of Book III of the Code of Commerce, that the attorneys of the interested parties are in attendance. the drafting committee took into consideration the International Conventions of 1926 and 1967 on maritime liens and mortgages. In 5.2 What are the general disclosure obligations in court any event, the grounds for arrest are found in Book III of the Code proceedings? of Commerce. In addition to ship arrest, under the Code of Civil Procedure it is Generally speaking, this matter is governed by the norms contained in possible to obtain a court ruling ordering the retention of goods. the Code of Civil Procedure. When a court issues an order to exhibit The retention (in this case, of a vessel) requires (if requested as a documentation, the party against which that order has been granted prejudicial measure) counter-security from the petitioning party as must attend to it. Failure or refusal to exhibit the documentation well as evidence for the petition to be granted. In addition, only a requested not only makes that party lose its right to produce such vessel under the ownership of the debtor may be retained. documents later on in the trial, but also grants the Judge the power to order the arrest of the person not complying with the order. According to Article 1206 of the Code of Commerce, the arbitrator has the power 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim to accept, when a party has requested it, any other means of evidence relating to bunkers supplied by them to that vessel? along with the general ones accepted by the Code of Civil Procedure. He may also, at any time, summon the parties in order to recognise Yes, a bunker supplier may arrest a vessel for a claim relating to documentation or argue any objections that they have made. bunkers supplied by them to that vessel invoking privileged credits listed in Article 846 Nos. 2 and 4. 6 Procedure

4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime 6.1 Describe the typical procedure and timescale claim, including exercise of liens over cargo, what applicable to maritime claims conducted through: i) options are available? national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute Ship arrest is an in rem precautionary measure. Normally, it is resolution. exercised as a prejudicial precautionary measure. As a result, a ship may be arrested in order to exercise a privileged credit irrespective According to Article 1203 of the Code of Commerce, all maritime of the debtor. matters are subject to compulsory arbitration in the first instance.

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The arbitrator’s decision will be subject to appeal, which will be decided by the higher ordinary courts in Chile – that is to say, the 7.2 Summarise the key provisions and applicable Courts of Appeal and the Supreme Court – in the event of cassation procedures affecting the recognition and enforcement of arbitration awards. recourses. The parties may submit their disputes to mediation, which is not The situation regarding the recognition and enforcement of arbitration compulsory. awards is largely the same as that described in question 7.1; however, regard must be given to the provisions of the Convention on the 6.2 Highlight any notable pros and cons related to your Recognition and Enforcement of Foreign Arbitral Awards of 1958 jurisdiction that any potential party should bear in (the New York Convention). When the foreign award has been Chile mind. issued in a State Party to this Convention, its provisions will apply together with the norms of Law N° 19,971 (“Ley sobre Arbitraje While the procedure before the arbitrator will be subject to the Commercial Internacional”), which complements the norms of the ordinary rules applicable to ordinary proceedings under the Chilean New York Convention. Chile is also a State Party to the “Convención Code of Civil Procedure, the parties may, by common agreement, Interamericana sobre Arbitraje Comercial e Internacional”. modify these rules. 8 Updates and Developments 7 Foreign Judgments and Awards

8.1 Describe any other issues not considered above that 7.1 Summarise the key provisions and applicable may be worthy of note, together with any current trends procedures affecting the recognition and enforcement or likely future developments that may be of interest. of foreign judgments. No particular trends or developments are anticipated. According to the relevant provisions of the Chilean Code of Civil Procedure, the recognition and enforcement of foreign judgments require the obtainment of an exequatur from the Supreme Court of Chile. The exequatur is a formal authorisation that has to be granted Leslie Tomasello Weitz by the Supreme Court of Chile before any foreign judgment can be Tomasello & Weitz Nueva Tajamar 555 enforced in Chile. If there is no special treaty with the country where Office 201 the judgment was handed down – in which case the enforcement Las Condes will be regulated by it – the recognition and enforcement of foreign Santiago Chile judgments is governed by the principle of reciprocity. The normal procedure may be summarised as follows: Tel: +56 2 2361 1070 (a) The judgment has to be legalised and translated by the official Email: [email protected] URL: www.tomasello.cl translator of the Minister of Foreign Affairs. Afterwards, the translated and legalised copy of the judgment has to be filed Qualifications and professional background: before the Supreme Court either by the party concerned or ■■ LL.B. (Universidad de Valparaíso) obtained on May 2, 1994. by an attorney with sufficient faculties (Power of Attorney). Alternatively to the legalisation of the document, the same ■■ LL.M. (University of Southampton) obtained on May 28, 1996. may be apostilled. ■■ Postgraduate course in Economy and Finance for Lawyers from (b) The court will notify the party against whom the judgment the Universidad de Chile (2005). will be enforced who, in turn, will have 15 working days to ■■ Professor of Maritime Law with the Law Faculty of the Universidad express his or her views. de Valparaíso from 1997 until the present. (c) Then, the Court Prosecutor will express his opinion. ■■ Editor of the Anuario de Derecho Comercial y Marítimo de la Facultad Furthermore, a period of proof could be opened if the court de Derecho y Ciencias Sociales de la Universidad de Valparaíso. requires it. ■■ Languages: Spanish; English. (d) Finally, if the exequatur is granted, the enforcement will be ■■ Specialises in Maritime Law, International Trade and Corporate entrusted to the Tribunal which would have decided the case matters. if the dispute had been tried in Chile.

Tomasello & Weitz is one of the most prestigious maritime law firms in Chile. Its origins trace back to 1967 when Leslie Tomasello Hart and Gloria Weitz Bravo began their professional practice. In its present form, Tomasello & Weitz is a firm that, in addition to its significant experience in the field of shipping, is able to advise its clients on a wide range of legal, commercial, financial and real estate matters. Seven lawyers and their complete supporting personnel comprise the firm. With offices in Santiago, Valparaíso and Puerto Montt, Tomasello & Weitz has structured a network of lawyers in order to provide legal assistance in the main ports of Chile.

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China Shouzhi An

Guantao Law Firm Frank Fulong Huang

Compensation Liability for Maritime Claims; and c) Chapter IX of 1 Marine Casualty Maritime Procedure Law of PRC.

1.1 In the event of a collision, grounding or other major 1.2 What are the authorities’ powers of investigation / casualty, what are the key provisions that will impact casualty response in the event of a collision, grounding upon the liability and response of interested parties? or other major casualty? In particular, the relevant law / conventions in force in relation to: The Maritime Safety Administration (“MSA”) is the authority that is responsible for the investigation of maritime accidents which (i) Collision happen in Chinese waters. Its powers of investigation include: The key provisions include: a) Chapter VIII of the Maritime Code a) questioning the persons concerned; of the People’s Republic of China (“PRC”), which stipulates how to distribute liabilities to parties in different situations; and b) Provisions b) demanding the persons under investigation to provide written material and a testimonial form; of the Supreme People’s Court on Several Issues Concerning Trial of Disputes. c) demanding the parties involved to provide logbooks, engine room logs, wheel-bell records, radio operation logs, course (ii) Pollution records, charts, data of the vessel, functions of the navigation China is a contracting country to the International Convention on equipment and instruments and other necessary original Civil Liability for Oil Pollution Damage (“CLC”), 1969 and 1992. papers and materials; The key provisions include: a) provisions of CLC 1969 and 1992; d) examining certificates of the vessels, installations and and b) provisions of the Supreme People’s Court on Several Issues the relevant equipment and certificates of the personnel, Concerning Trial of Dispute Cases over Compensation for Ship- and verifying seaworthiness of the vessels and technical sourced Oil Pollution. conditions of the installations before the accident; (iii) Salvage / general average e) examining the damage to the vessels, installations and goods and ascertaining casualties of personnel; and The key provisions include Chapters IX and X of the Maritime Code of PRC. f) surveying the scene of the accident and collecting relevant material evidence. During the investigation, the harbour (iv) Wreck removal superintendence administration may use recording, The key provisions include: a) Article 207 (4) and the second photographing and video equipment, and may resort to other paragraph in that Article of the PRC Maritime Code; b) Article 9 means of investigation permitted by law. of the Provisions by the PRC Supreme Court on Several Issues The MSA shall, according to the investigations of maritime traffic Concerning Trial of Dispute Cases over Ship Collisions; c) Article 17 accidents, compile the Report on Findings Concerning Maritime of the Several Provisions of the Supreme People’s Court Concerning Accidents, in which the causes of accidents shall be ascertained and Trial on Dispute Cases Related to Limitation of Compensation the responsibility of the persons concerned shall be determined. Liability for Maritime Claims; and d) Article 20 of the Provisions of the Supreme People’s Court on Several Issues Concerning Trial of Dispute Cases over Compensation for Ship-sourced Oil Pollution. 2 Cargo Claims (v) Limitation of liability The key provisions include: a) Chapter XI of the Maritime Code 2.1 What are the international conventions and national of PRC; and b) Several Provisions of the Supreme People’s Court laws relevant to marine cargo claims? Concerning Trial on Dispute Cases Related to Limitation of Compensation Liability for Maritime Claims. The laws relevant to marine cargo claims in China mainly include: (vi) The limitation fund (1) the Maritime Code of PRC; and (2) the Maritime Procedure Law The key provisions include: a) Chapter XI of the Maritime Code of PRC. Neither the Hague-Visby Rules nor the Hamburg Rules are of PRC; b) Several Provisions of the Supreme People’s Court applicable in China, but most of the Hague-Visby rules and some of Concerning Trial on Dispute Cases Related to Limitation of the Hamburg Rules are absorbed into the Maritime Code of PRC.

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2.2 What are the key principles applicable to cargo claims 2.3 In what circumstances may the carrier establish brought against the carrier? claims against the shipper relating to misdeclaration of cargo? (1) The key principle applicable to cargo claims brought against the carrier is to prove that the cargo’s losses and damages The carrier may establish claims against shipper in the following occurred in the period during which the carrier was in circumstances under Chinese law: charge of the cargo (“the period of carrier’s responsibility”). (1) The shipper shall have the cargo properly packed and shall According to the Maritime Code of PRC, the carrier shall guarantee the accuracy of the description, mark, number of be liable for the loss of or damage to the cargo during such packages or pieces, weight or quantity of the cargo at the time

China period. For cargo carried in containers, such period starts of shipment. The shipper shall indemnify the carrier against from the time the carrier has taken over the cargo at the port any loss resulting from inadequacy of packing or inaccuracies of loading, until the cargo has been delivered at the port of in the abovementioned information. discharge. For non-containerised cargo, such period starts from the time of loading the cargo onto the ship, until the time (2) The shipper shall perform all necessary procedures at the port, the cargo is discharged therefrom. customs, quarantine, inspection or other competent authorities with respect to the shipment of the cargo, and shall furnish to (2) The carrier can be discharged from their liability if they can the carrier all relevant documents concerning the procedures prove that the loss of or damage to cargo during the period the shipper has gone through. The shipper shall be liable for of carrier’s responsibility arose from any of the following any damage to the carrier resulting from the inadequacy or causes: inaccuracy or delay in delivery of such documents. a) fault of the Master, crew members, pilot or servant of the (3) At the time of shipment of dangerous cargo, the shipper shall, carrier in the navigation or management of the ship; in compliance with the regulations governing the carriage of b) fire, unless caused by the actual fault of the carrier; such goods, have them properly packed, distinctly marked c) and perils, dangers and accidents of the sea and labelled and notify the carrier in writing of their proper or other navigable waters; description, nature and the precautions to be taken. In case the d) war or armed conflict; shipper fails to notify the carrier or notifies him inaccurately, the carrier may have such goods landed, destroyed or rendered e) act of the government or competent authorities, quarantine innocuous when and where circumstances so require, without restrictions or seizure under legal process; compensation. The shipper shall be liable to the carrier for f) strikes, stoppages or restraint of labour; any loss, damage or expense resulting from such shipment. g) saving or attempting to save life or property at sea; h) act of the shipper, owner of the goods or their agents; 3 Passenger Claims i) nature or inherent vice of the goods; j) inadequacy of packing or insufficiency or illegibility of marks; 3.1 What are the key provisions applicable to the resolution of maritime passenger claims? k) latent defect of the ship not discoverable by due diligence; or The key provisions are stipulated in Chapter V of the Maritime Code l) any other causes arising without the fault of the carrier or his servant or agent. of PRC, especially including: The carrier who is entitled to exoneration from the liability (1) Article 114 of the Maritime Code of PRC, which stipulates for compensation as provided for in the preceding paragraph that during the period of carriage of the passengers and their shall, with the exception of the causes given in sub-paragraph luggage, the carrier shall be liable for the death of or personal (b), bear the burden of proof. injury to passengers or the loss of or damage to their luggage resulting from accidents caused by the fault of the carrier (3) The carrier shall deliver the cargo at the designated discharging or his servant or agent committed within the scope of his port within the time expressly agreed upon. Otherwise, the employment or agency. The claimant shall bear the burden of carrier shall be liable for the loss of or damage to the cargo proof regarding the fault of the carrier or his servant or agent, caused by delay in delivery due to the fault of the carrier. with the exception, however, of the circumstances specified (4) The carrier is obligated to deliver the cargo against the as follows: production of the original bill of lading. Where a carrier a) If the death of or personal injury to the passengers or loss causes any loss to the holder of an original bill of lading for of or damage to the passengers’ cabin luggage occurred delivery of goods without the original bill of lading, the holder as a result of shipwreck, collision, stranding, explosion, of the original bill of lading may require the carrier to bear the fire or the defect of the ship, it shall be presumed that liability for breach of contract or bear the tort liability. the carrier or his servant or agent has committed a fault, (5) The limitation period for claims against the carrier with unless proof to the contrary has been given by the carrier regard to the carriage of cargo by sea is one year, counting or his servant or agent. from the day on which the cargo was delivered or should have b) As to any loss of or damage to the luggage other than the been delivered by the carrier; within the limitation period or passengers’ cabin luggage, unless the carrier or his servant after the expiration thereof, if the person allegedly liable has or agent proves to the contrary, it shall be presumed that brought a claim of recourse against a third person, that claim the carrier or his servant or agent has committed a fault, is time-barred at the expiration of 90 days, counting from the no matter how the loss or damage was caused. day on which the person claiming for the recourse settled the claim, or was served with a copy of the process by the court (2) Article 111 of the Maritime Code of PRC, which stipulates handling the claim against him. that the period of carriage of passengers by sea commences from the time of embarkation of the passengers and (6) The Maritime Court at the place of departure, destination terminates at the time of their disembarkation, including the or transhipment of transportation or at the place of domicile period during which the passengers are transported by water of the defendant has jurisdiction over cargo claims brought from land to the ship or vice versa, if such cost of transport is against the carrier based on the carriage of goods by sea. included in the fare. However, the period of carriage does not

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include the time when the passengers are at a marine terminal and if the applicant applies for the arrest of vessel in the or station or on a quay or in or on any other port installations. process of judicial proceedings or arbitration procedures, The period of carriage for the cabin luggage of the passengers the time limit for the arrest of vessel shall not be restricted shall be the same as the period of carriage for passengers by to 30 days. sea. The period of carriage for luggage other than cabin d) If the owner provides security as requested by the luggage commences from the time when the carrier or his applicant, the Maritime Count shall make a ruling to servant or agent receives it into his charge and terminates at release the vessel. If the owner has not provided security the time when the carrier or his servant or agent redelivers it at the expiration of arrest of vessel and it is inappropriate to the passengers. to further arrest the vessel, the applicant may, after filing (3) Article 115 of the Maritime Code of PRC, which stipulates a suit or applying for arbitration, request the Maritime

that if it is proved by the carrier that the death of or personal Court to sell the vessel by auction. China injury to the passenger or the loss of or damage to his luggage was caused by the fault of the passenger himself or the faults of the carrier and the passenger combined, the carrier’s 4.2 Is it possible for a bunker supplier (whether physical liability may be exonerated or appropriately mitigated. If it and/or contractual) to arrest a vessel for a claim is proved by the carrier that the death of or personal injury relating to bunkers supplied by them to that vessel? to the passenger or the loss of or damage to the passenger’s luggage was intentionally caused by the passenger himself, or Yes, such an arrest is possible. the death or personal injury was due to his health condition, the carrier shall not be liable therefor. 4.3 Where security is sought from a party other than the (4) Article 117 of the Maritime Code of PRC, which stipulates vessel owner (or demise charterer) for a maritime that the limitation of liability of the carrier under each carriage claim, including exercise of liens over cargo, what of passengers by sea shall be governed by the following: options are available? a) For death of or personal injury to the passenger: not exceeding 46,666 Special Drawing Rights (“SDR”). The applicant can also obtain security through applying for b) For loss of or damage to the passengers’ cabin luggage: preservation of the party’s other properties before court, including not exceeding 833 SDR. but not limited to preservation of the real estate, monies in a bank c) For loss of or damage to the passengers’ vehicles including account, stocks, vehicles and so on. Besides, the applicant can still the luggage carried therein: not exceeding 3,333 SDR. apply for a maritime injunction before court, to compel the party to d) For loss of or damage to luggage other than those described provide security. in subparagraphs b) and c) above: not exceeding 1,200 SDR. 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of 4 Arrest and Security undertaking.

Security can be accepted in the form of cash, real estate, or a letter 4.1 What are the options available to a party seeking to of undertaking issued by a bank or insurance company in China. obtain security for a maritime claim against a vessel owner and the applicable procedure? 5 Evidence (1) The party who seeks to obtain a security from a vessel owner may choose to apply for arrest of the vessel concerned, or arrest of other vessels owned, at the time of arrest, by the 5.1 What steps can be taken (and when) to preserve or vessel owners, bareboat charterers, time charterers or voyage obtain access to evidence in relation to maritime charterers who are liable for the maritime claim, except for claims including any available procedures for the claims related to ownership or possession of a vessel. preservation of physical evidence, examination of witnesses or pre-action disclosure? (2) The applicable procedure for the arrest of vessels mainly includes: The claimant can file an application with the Maritime Court for a) An application for arrest of vessels shall be filed with the the collection and conservation of evidence. Such application can Maritime Court in writing. The application shall clearly set forth the claims, reasons, vessels and the amount be filed prior to or during the action/arbitration. Prior to the action/ requested for security, and shall be supported by relevant arbitration, such application shall be filed with the Maritime Court evidence. of the place where the evidence subject to conservation is located. b) If the Maritime Court accepts an application for the arrest of vessels, it will order the applicant to provide counter- 5.2 What are the general disclosure obligations in court security. If the applicant refuses to provide such counter- proceedings? security, the application shall be denied. c) The Maritime Court shall make a ruling within 48 hours According to the Civil Procedure Law of PRC, evidence shall be after the acceptance of the application, which will be presented in court and cross-examined by the parties. The court enforced forthwith. The time limit for the arrest of vessel shall determine the evidence to be provided by a party and the time shall be 30 days. During the time limit, the applicant shall file a lawsuit before the court or apply for arbitration limit for provision of evidence. After the time limit for provision of pursuant to arbitration agreement. Otherwise, the evidence expires, the court will schedule a hearing for both parties Maritime Court will release the vessel. If the applicant to exchange and cross-examine evidence. files a lawsuit, or applies for arbitration within 30 days,

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approval of the president of the court. If the appeal is 6 Procedure against a ruling, the second instance court shall issue a final ruling for such appeal within 30 days after the appeal is put on record. Similarly, the period for the court to try a 6.1 Describe the typical procedure and timescale foreign-related appeal case shall also not be limited by the applicable to maritime claims conducted through: i) aforesaid period, which is subject to the court’s discretion. national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist d) A party who applies for constitution of a limitation arbitral bodies); and iii) mediation / alternative dispute fund for maritime claims before institution of an action resolution. shall file the application with the Maritime Court at the place of the accident, the place of performance of the China (1) In the courts of China, there are generally six typical contract or the place of ship arrest. The Maritime Court, procedures applicable to maritime claims: preservation having entertained an application for constitution of a of maritime claims; maritime injunction; trial procedure; limitation fund for maritime claims, shall notify all the procedure for the constitution of a limitation fund for maritime interested persons known within seven days, and issue an claims; procedure for the registration and satisfaction of announcement in the newspapers or other news media. claims; and procedure for interpellation of maritime liens. An interested person who objects to the application filed a) Regarding the preservation of maritime claims, the by the applicant for constitution of a limitation fund for typical preservation is the arrest of vessels or the cargo maritime claims shall file the objection in writing with carried by vessels. The Maritime Court, having accepted the Maritime Court within seven days after the an application, shall make an order within 48 hours. of the notice, or within 30 days after the date of the Where the order is to adopt measures for preservation of announcement if no such notice is received. a maritime claim, it shall be executed forthwith; where The Maritime Court, having received the written objection the conditions for preservation of the maritime claim are from the interested person, shall examine the objection not met, the application shall be rejected by order. Any and make an order within 15 days. The application of the party who is dissatisfied with such an order may, within applicant shall be rejected by order if the objection is well five days after receipt thereof, apply for a review not more founded; the application for constitution of a limitation than once. The Maritime Court shall give the result of fund for maritime claims shall be allowed by order if the the review within five days after receipt of the application objection is groundless. therefor. Execution of the order shall not be suspended Any party who is dissatisfied with such an order may during the period of the review. appeal within seven days after receipt thereof. The b) Regarding the maritime injunction, the Maritime Court, People’s Court of second instance shall make an order having accepted an application, shall make an order within 15 days after receipt of the appeal. within 48 hours. Where the order is to grant a maritime e) Regarding the procedure for registration and satisfaction of injunction, it shall be executed forthwith; where the claims, after the announcement of an order by a Maritime conditions for a maritime injunction are not met, the Court for the forced auction of a ship, the creditors shall application shall be rejected by order. Any party who apply for registration of their claims pertaining to the ship is dissatisfied with such an order may apply for review to be auctioned within the time limit of the announcement. not more than once within five days after receipt thereof. Creditors who fail to register their claims on the expiry The Maritime Court shall give the result of the review of the time limit of the announcement shall be deemed to within five days after receipt of the application therefor. have waived their rights to be satisfied from the proceeds Execution of the order shall not be suspended during the of the auction. period of the review. f) A person who applies for interpellation of maritime liens c) Regarding the trial procedure, the system of “final after shall submit to the Maritime Court a written application. two trials” applies. The first instance is tried by the The Maritime Court, having received the application and Maritime Court, and the second instance is tried by the the relevant documents, shall examine the application and Higher People’s Court of the province where the Maritime make an order within seven days to allow or disallow the Court is located. After two trials, the judgment/ruling application. A transferee who is dissatisfied with such issued by the Higher People’s Court of the province will an order may apply for review not more than once. The be final and binding on parties. Maritime Court shall, after an order to allow an application The first instance court shall complete the trial of a case becomes effective, issue an announcement in newspapers under formal procedure within six months after the case is or other news media urging the maritime lien holders to put on record. If an extension of the period is necessary assert their rights within the period of the interpellation. under special circumstances, the period may be extended The period for interpellation of maritime liens is 60 days. for six months with the approval of the president of the (2) Where the parties have reached an arbitration agreement in court; any further extension shall be subject to the approval the contracts or after a dispute has arisen, they shall refer the of the superior of the court. In particular, collision cases disputes to an arbitral institution for arbitration. The arbitral and general average cases shall be tried and concluded by award is final and binding upon both parties. Neither party a Maritime Court within one year after the case is placed may bring a lawsuit before a court or make a request to any on file. Where an extension of the period is necessary other organisation for revision of the award. under special circumstances, such an extension shall be When a party applies for preservation of property, evidence, subject to approval of the president of the court. But if a maritime injunction, or constitution of the limitation fund, case is foreign-related, the period for the court to try such they can file the application with the arbitration commission. case shall not be limited by the aforesaid period, which is The arbitration commission will then submit the party’s subject to the court’s discretion. application to the Maritime Court or other People’s Court The second instance court shall complete the trial of an with jurisdiction over the matter pursuant to the laws. The appeal case against a judgment within three months after court will review the party’s application and make a decision the appeal is put on record. Any extension of the aforesaid according to the procedure and time limit as stated in (1) period under special circumstances shall be subject to the above.

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In China, the China Maritime Arbitration Commission (“CMAC”) is a permanent arbitration institution, taking 7.2 Summarise the key provisions and applicable cognisance of domestic and international cases involving procedures affecting the recognition and enforcement maritime disputes. According to the CMAC’s arbitration of arbitration awards. rules in effect, the arbitral tribunal shall render an arbitral award within six months from the date on which the arbitral China is a contracting country to the United Nations Convention tribunal is formed. Upon the request of the arbitral tribunal, on the Recognition and Enforcement of Foreign Arbitral Awards the President of the Arbitration Court may extend the time (“New York Convention”). The court shall process the application period if he/she considers it truly necessary and the reasons in accordance with New York Convention or under the principle of for the extension truly justified. Any suspension period shall reciprocity.

be excluded when calculating the time period. China (3) Mediation is under the principle of free will of the parties. According to the New York Convention, recognition and enforcement It is usually conducted by the judge or arbitrator when the of the award may be refused when the following situations arise: case is being tried by the court or arbitration tribunal. There a) The parties to the agreement referred to in Article II were, is no explicit timescale applicable to the mediation, which is under the law applicable to them, under some incapacity, or subject to the parties’ free will. the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made. 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in b) The party against whom the award is invoked was not given mind. proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case. In China, there are 10 Maritime Courts. All disputes in relation to c) The award deals with a difference not contemplated by or maritime claims are under the exclusive jurisdiction of Maritime not falling within the terms of the submission to arbitration, Courts. As the judges in Maritime Courts are all specialised in the or it contains decisions on matters beyond the scope of the trial of maritime claims, the efficiency and professionalism they submission to arbitration. exhibit are very impressive. d) The composition of the arbitral authority or the arbitral In addition, Maritime Courts are at the level of intermediate procedure was not in accordance with the agreement of the courts. Where a party is dissatisfied with a judgment rendered by parties, or, failing such agreement, was not in accordance a Maritime Court, the appeal will be tried by the People’s Higher with the law of the country where the arbitration took place. Court of the province, which is second only to the Supreme People’s e) The award has not yet become binding on the parties, or has Court. Thus, it is also very impressive for maritime claims to be been set aside or suspended by a competent authority of the tried by high-level courts. country in which, or under the law of which, that award was made. f) The subject matter of the difference is not capable of 7 Foreign Judgments and Awards settlement by arbitration under the law of that country. g) The recognition or enforcement of the award would be contrary to the public policy of that country. 7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments. 8 Updates and Developments In China, a court’s examination of an application or request for recognition and enforcement of an effective judgment or ruling 8.1 Describe any other issues not considered above that of a foreign court is based on an international treaty concluded or may be worthy of note, together with any current acceded to by the People’s Republic of China or under the principle trends or likely future developments that may be of of reciprocity. According to the relevant international treaty or interest. the principle of reciprocity, if the court deems that the judgment or ruling does not violate the basic principles of the laws of the With the Belt and Road Initiative being promoted and conducted People’s Republic of China and the sovereignty, security and public continuously, China is devoted to establishing the International interest of the People’s Republic of China, it shall issue a ruling to Maritime Judicial Centre. Under such circumstances, China is recognise the legal force of the judgment or ruling and issue an order strengthening the training of maritime lawyers, arbitrators and for enforcement as needed to enforce the judgment or ruling. If the judges, and improving the maritime judicial environment in a variety judgment or ruling violates the basic principles of the laws of the of ways. Meanwhile, China is also engaged in enacting or amending People’s Republic of China or the sovereignty, security or public the maritime laws, to establish a better maritime legal system and to interest of the People’s Republic of China, the court shall not grant be geared towards international maritime laws. We believe that in recognition and enforcement. the near future, either the Maritime Courts or arbitration will become a main channel for resolving international maritime disputes and will be well regarded by domestic and foreign parties.

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Shouzhi An Frank Fulong Huang Guantao Law Firm Guantao Law Firm 23/F, Seven Star Building, No. 178 AF, 30/F, Noble Centre Qi Xing West Road No.1006, 3rd Fuzhong Road Siming District Futian District Xiamen 361012 Shenzhen, 518026 China China

Tel: +86 592 506 8887 Tel: +86 755 2598 0933 Email: [email protected] Email: [email protected] URL: www.guantao.com URL: www.guantao.com China

Shouzhi An is an executive partner of Guantao Law Firm Xiamen Frank Fulong Huang is a dispute resolution partner of Guantao Law Office. He specialises in shipping, international trade and investment, Firm. He concentrates his practice in all areas of dispute resolution, and energy. Dr. An has been dedicated to legal professional services with a particular focus on shipping, insurance, international trade, for over 12 years, offering legal advice to numerous clients in China guarantee, investment and shareholder disputes. Mr. Huang was and overseas, and making presentations in China, Europe and the selected as a “China Leading International Lawyer” and sent to London United States. Dr. An is currently an arbitrator in both the Hong by the All China Lawyers Association (ACLA) in 2016 to undertake Kong International Arbitration Centre and the Xiamen Arbitration the International Commercial Arbitration training programme in the Commission; he is also an adjunct professor of Navigation College, Law School of BBP University. Mr. Huang is currently vice-director Jimei University. Due to his excellent achievements, Dr. An was of the International and HK, Macau & Taiwan Working Committee and awarded by Asia Law & Practice in 2012 and 2013 as the Leading a commission member of the Shipping & Logistic Law Committee of Lawyer in the Asia-Pacific Region in Shipping & Maritime. the Shenzhen Lawyers Association, and a commission member of the Insurance Law Committee of the Guangdong Lawyers Association.

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

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Colombia

FRANCO & ABOGADOS ASOCIADOS Javier Franco

Transport Superintendency), and costs of said operation may be 1 Marine Casualty recoverable against those originally requested by the law to do so. (v) Limitation of liability 1.1 In the event of a collision, grounding or other major Colombia is neither a party to the 1976 Convention on Limitation casualty, what are the key provisions that will impact of Liability for Maritime Claims (LLMC) nor to the 1996 Protocol. upon the liability and response of interested parties? However, article 1481 of the CC states that there are some specific In particular, the relevant law / conventions in force in relation to: claims (thereby described) in respect of which the ship owner may limit his liability up to the value of his vessel, her accessories and (i) Collision the freight involved. (vi) The limitation fund Colombia is not a party to the 1910 Convention on the Unification of Certain Rules of Law with Respect to Collision Between Vessels. There is no additional request for the constitution of a limitation However, the 1972 Convention on the International Regulation fund. for Preventing Collisions at Sea (COLREG 72) is in force at the domestic level. It is worth noting that the Colombian Commercial 1.2 What are the authorities’ powers of investigation / Code (CC) has also incorporated some provisions regarding casualty response in the event of a collision, grounding collisions (articles 1531 to 1539) differentiating between: i) those or other major casualty? caused due to circumstances beyond control (i.e. so-called force majeure events); ii) those occurring as a consequence of a negligent As per articles 25 et seq. of Decree 2324 of 1984, the respective act of one of the ships involved; and iii) those in which there is a Harbour Master of the relevant area in which a maritime casualty both-to-blame collision. has occurred (i.e. wrecks, groundings, collisions, marine pollution (ii) Pollution incidents, among others, as described in article 26 of Decree 2324 of Both the 1992 Convention on Civil Liability for Oil Pollution 1984) is supposed to initiate investigation procedures. Although the Harbour Master is not, strictly speaking, a judge in Colombia, said Damage (CLC 92) and the 1992 Convention on the Establishment of procedure is supposed to determine the liability of the persons/ships an International Fund for Compensation for Oil Pollution Damage involved in the maritime casualty (article 48 of Decree 2324). They (FUND 92) are in force in the country. Decree 1875 of 1979 will also decide whether the conduct of the parties involved could also has a definition of marine pollution, and demands insurance have constituted a violation of local merchant shipping regulations policies whenever a vessel is involved in exploration, exploitation (that could be also sanctioned with, among others, a fine as per or transport of hydrocarbons or other polluting substances. On the articles 48 and 80 of Decree 2324). The decision of the Harbour other hand, it must be highlighted that regarding offshore activities, Master on the merits could be subject to appeal before DIMAR. there are also some recent important provisions (from the preventive perspective) contained in Resolution 674 of 2012 of DIMAR (the Colombian National Maritime Authority). Those provisions aim to 2 Cargo Claims request, among others, the adoption of security measures and risk mitigation plans. (iii) Salvage / general average 2.1 What are the international conventions and national laws relevant to marine cargo claims? The 1989 Salvage Convention is not in force in Colombia. However, there are some specific provisions addressing this topic at Colombia has not properly ratified any of the conventions in force the domestic level in the CC, namely articles 1545 et seq. at the international level regarding cargo claims (namely, the Hague (iv) Wreck removal Rules, the Hague-Visby Rules and the Hamburg Rules). Neither As per article 5 of Resolution 071 of 1997, a ship owner, a ship’s has the country yet ratified the Rotterdam Rules. However, there agent and/or the vessel’s captain have the obligation to duly signal are some local provisions contained in the CC (articles 1578–1665) and ultimately remove a shipwreck. If they do not act accordingly, aiming to reproduce the Hague-Visby Rules to a certain extent and the removal can be ordered (as per Resolution 071 of 1997) by with some important differences (see the answer to question 2.2 the Superintendencia de Puertos y Transportes (National Port and below).

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On the other hand, article 72 of Decree 2324 of 1984 states that (once 2.2 What are the key principles applicable to cargo claims an investigation has been initiated in cases of maritime casualties) a brought against the carrier? Harbour Master may request security to be provided by the ship(s) involved in the incident to serve different purposes; namely, to cover As per article 1609 of the CC, the carrier will have similar defences eventual fines, damages, and proceedings expenses. to those contained in article 4, rule 2 of the Hague-Visby Rules. In fact, local legislators aim to adopt the Hague-Visby scheme by making an adaptation of it to the local legal usage. It could be 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim highlighted that, under the domestic provisions (article 1644 of relating to bunkers supplied by them to that vessel? the CC), if there were no declared value of the cargo, the limit of liability would be the value which the cargo had at the port of origin. Colombia As per article 1(12) of Decision 487 of 2000, bunkers are specifically However, the Colombian Supreme Court (Decision of 8 September considered a “maritime claim” under the instrument. Thus, a supplier 2011, L. J. William Namén) ruled in a relatively recent decision – who has a claim for unpaid bunkers could arrest a vessel in Colombia and in a clear departure from what would happen internationally based upon said provision. under the Rules – that under the domestic provisions, the carrier could freely agree to limit his liability in a different manner, i.e. up to a sum agreed between the parties (even below the one resulting 4.3 Where security is sought from a party other than the from applying the local provision, as long as it does not constitute a vessel owner (or demise charterer) for a maritime so-called derisory limitation). claim, including exercise of liens over cargo, what options are available?

2.3 In what circumstances may the carrier establish As per article 41 of Decision 487 of 2000, in general terms, an arrest claims against the shipper relating to misdeclaration should only proceed to obtain security for a maritime claim (i.e. of cargo? whenever said maritime claim is supposed to be a “maritime credit” as defined by the Decision) against a vessel owner or ademise According to article 1615 of the CC, the shipper guarantees the charterer (unless there is a privileged credit as described in article 22 accuracy of the information regarding marks, number, quantity, of Decision 487). Other types of credit or credits against different quality, condition and weight of the cargo as he so declares to the persons should follow the traditional rules of domestic procedure carrier at the moment of shipment. Additionally, as per article 1619 to obtain security (which may vary depending on the nature and of the CC, whenever the shipper – knowingly – has made an inexact characteristics of the specific claim). declaration in relation to the nature or value of the cargo, the carrier On the other hand, as per article 1624 of the CC, sea carriers are will be exempted from all liability as a consequence. In any case, granted a right of lien over cargo (or the possibility to ask a judge to as per article 1623 of the CC, the shipper is only accountable for order the cargo to be put in a warehouse) in cases where freight and damages suffered by the carrier or the vessel whenever said damages other charges caused by the delay of payment are not yet paid (and arise out of his own fault (or that of his agents). until those charges are effectively paid).

3 Passenger Claims 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking. 3.1 What are the key provisions applicable to the resolution of maritime passenger claims? As per article 45 of Decision 487, parties can initially agree on the sort of security to be provided (i.e. a letter of undertaking, if Colombia is neither a party to the 1974 Athens Convention on the it is accepted by the parties involved). However, if no agreement Carriage of Passengers and their Luggage by Sea, nor to the 2002 is finally reached between the parties, then the Tribunal will Protocol. However, there are some local provisions in articles 1585 determine the nature and amount of the security. Although it could to 1596 of the CC. be debatable, the likelihood is that, in general terms, either a proper bank guarantee or insurance policy (that meet certain requirements) 4 Arrest and Security would be acceptable in the majority of cases (due to a reference made in article 40 of Decision 487 to the application of domestic law). Different rules may apply depending upon whether the arrest 4.1 What are the options available to a party seeking to has already been served/made effective. obtain security for a maritime claim against a vessel owner and the applicable procedure? 5 Evidence As in many other jurisdictions, the usual method to obtain security for a maritime claim against a vessel owner is through a ship arrest. 5.1 What steps can be taken (and when) to preserve or According to Decision 487 of 2000 of the Andean Community (a obtain access to evidence in relation to maritime regional international instrument of superior hierarchy inspired by claims including any available procedures for the the 1999 International Convention on the Arrests of Ships), a ship preservation of physical evidence, examination of may be arrested in Colombia whenever there is a “maritime credit”. witnesses or pre-action disclosure? Article 1 of Decision 487 expressly states what could constitute said type of credit for the purposes of the Statute. In Colombia, an arrest In cases of maritime casualties, the Harbour Master of the respective of a vessel under Decision 487 is to be carried out exclusively by a area will initiate procedures within the following day (or so, in civil judge. According to article 40 of Decision 487, the domestic practice) of the occurrence (as ordered by article 35 of Decree 2324 local procedure law is to be applicable to the arrest petition. of 1984). As per his opening procedure order (article 36 of Decree

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2324 of 1984), he will ex officio request evidence to be brought to moment he knows of the occurrence. He will then issue an opening the investigation. In fact, as per article 36 of Decree 2324 of 1984, procedure order, requesting captain(s) and other crew members of the Harbour Master will require the captain(s) (and usually other the vessel(s) involved to declare within the hearing to be held in crew members of the vessel(s) involved in the incident) to declare the following days. As per article 72 of Decree 2324, the Harbour within the hearings (to be held in the following days). He will Master may also require security to be provided as explained above usually appoint a maritime expert (or a Captain’s Tribunal, as per (see the answer to question 4.1). article 28 of Decree 2324, depending on the nature and complexity Once the first hearing has started, parties may request evidence to be of the situation) to have expert advice/report on operational and/or brought to the investigation. An expert (or a Captain’s Tribunal) will technical matters. be appointed by the Harbour Master to assist him by submitting a Once the first hearing has started, parties to the investigation may report regarding technical or operational matters. After completion of request the Harbour Master to secure evidence and/or to request other the hearings, parties are requested to submit their closing arguments, Colombia persons to provide documents/materials that could be important for and once this stage is finished, the Harbour Master will decide on the the investigation (article 37.5 of Decree 2324 of 1984). Parties may merits. His decision may be subject to appeal before DIMAR. also submit documents and other evidence which they consider On the other hand, civil judges will regularly deal with contractual to be important and may require the Harbour Master to call third matters (such as cargo claims) whenever Colombian law is to be persons to declare (or to be granted the condition of a party) within applicable to such issues according to the nature and/or characteristics the investigation. of the particular claim. They will also deal with arrest petitions under On the other hand, contractual situations (i.e. cargo claims) are Decision 487 of 2000 as explained above (see the answer to question usually dealt with by regular civil judges (unless an arbitration 4.1). Thus, regular Colombian law on procedure would be applicable agreement or other sort of ADR mechanism was put in place by the to those types of claims (please see the answers to questions 5.1 and parties). Thus, the general Colombian procedure will be prima facie 4.1). applicable to them. It is worth noting that, as per article 590.c of the Whenever the parties have entered into an agreement regarding the Colombian General Procedure Code, nothing precludes a judge from application of an ADR mechanism, i.e. arbitration (or if they so taking any precautionary measure he deems appropriate whenever decide at the relevant time) then, insofar as the Tribunal is to have it could be found that “[…] it is reasonable for the protection of its seat in Colombia (which is not a very usual situation for this type the right in question, to prevent his infringement or to prevent its of claim within our jurisdiction), the rules contained in Law 1563 of consequences, to prevent damages, to put a stop to those caused 2012 (National and International Arbitration Statute) should apply. or to ensure the effectiveness of the claim”. This is the so-called “innominate” precautionary measure. It is worth noting that said 6.2 Highlight any notable pros and cons related to your provision is also supposed to be available to Harbour Masters in jurisdiction that any potential party should bear in investigations carried out in cases of maritime casualties, due to a mind. reference made by Decree 2324 to domestic general procedure law. Colombia is not a traditional maritime nation. As explained, Harbour Masters deal with maritime casualties occurring in Colombian 5.2 What are the general disclosure obligations in court proceedings? waters while civil judges deal mainly with contractual matters and arrest procedures. Despite this, it must be said that Colombia still lacks a proper maritime jurisdiction to deal with maritime issues in Please refer to the answer to question 5.1. It must be said that in general. Colombia, there is no specific disclosure duty imposed on the parties (and there is no specific discovery procedure, as known in Anglo- Saxon jurisdictions). However, in procedures before regular judges 7 Foreign Judgments and Awards (i.e. cargo claims cases), parties may usually request anticipated statements and/or interrogatories, and/or a documental exhibition to be carried out (i.e. before a proper trial has initiated) if needed. In 7.1 Summarise the key provisions and applicable any case, parties should conduct procedures in good faith, and both procedures affecting the recognition and enforcement the judge and the Harbour Master will have the powers to request of foreign judgments. evidence ex officio. Recognition of foreign judgments in Colombia is dealt with in articles 693 et seq. of the Colombian Code of Civil Procedure (CPC). 6 Procedure According to these regulations, the so-called exequatur petition is to be submitted to the Colombian Supreme Court of Justice (article 695 of the CPC) unless there is an international treaty requiring 6.1 Describe the typical procedure and timescale otherwise. The affected party should be cited to participate within applicable to maritime claims conducted through: i) national courts (including any specialised maritime or proceedings. The petition should contain the request of evidence commercial courts); ii) arbitration (including specialist as deemed appropriate. The claim’s admission Court order will arbitral bodies); and iii) mediation / alternative dispute be notified to the affected party and to the State attorney for civil resolution. matters, and they will each have five days to request evidence. Once the evidence is provided, both parties will have five days to In cases of maritime accidents, the procedure will be the one present their respective closing arguments. After that, the Court will described in Decree 2324 of 1984. Accordingly, the Harbour Master decide the exequatur request. If enforcement is required, then the of the respective area will initiate investigation procedures (ex officio competent judge will be determined according to the general local or due to the notice submitted to him) within a day or so from the rules of procedural law on the matter.

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Colombian territory. The said regime is supposed to be an incentive 7.2 Summarise the key provisions and applicable for those areas to be developed in the country and to channel foreign procedures affecting the recognition and enforcement investment in order to further develop said offshore activities in our of arbitration awards. jurisdiction. On the other hand, regarding multimodal carriage of goods, it is Colombia is a party to both the New York Convention on Recognition worth nothing that in a relatively recent decision of the Colombian and Enforcement of Foreign Arbitral Awards and the Inter-American Supreme Court (Mapfre Seguros Generales de Colombia S.A. v. Air Convention on International Commercial Arbitration. The local Carrier Zona Franca S.A., 3 September 2015), the Court took the procedure for the recognition of foreign awards in Colombia (which view that Decisions 331/393 of the Andean Community (namely, a follows the guidelines of the New York Convention) is described in regional scheme on the subject) are to be applicable to a contract articles 111 et seq. of Law 1563 of 2012 (National and International Colombia according to which either the place of origin or delivery is located Arbitration Statute). According to these regulations, a petition for in a Member Country (although, at the same time, it could be said recognition is to be submitted to the Colombian Supreme Court of that the Court leaves the door open for the eventual application of Justice. The award must be submitted in original or copy, and if not the UNCTAD/ICC Rules if an agreement to that effect is in place). in Spanish, a proper translation should be carried out. Awards granted in international arbitration proceedings carried out in Colombia are considered national awards, and thus they will not require further recognition (unless the annulment action has been waived). Javier Franco If the Tribunal has its seat in a different jurisdiction, then the FRANCO & ABOGADOS ASOCIADOS procedure for recognition is the one described in article 115 of Law Calle 75 No. 13–51 Of. 408 1563. The procedure can be summarised as follows: a petition should Edificio Corinto Bogotá be filed, accompanied by the requested documents (those described Colombia in article 111). If the documentation is completed, the petition will be admitted, and parties will have 10 days to comment on the Tel: +57 1703 5633 Email: [email protected] admission. Once this period has elapsed, the judicial body will have URL: www.francoabogados.com.co an additional 20 days to decide on the recognition of the award.

If further enforcement of the award (once it has been recognised) is Javier Franco is an Attorney-at-Law who graduated from Externado required, the competent judge will be determined according to the University with a postgraduate degree in Maritime Law and an LL.M. general local rules of procedural law governing the matter. (with distinction) in International Commercial and Maritime Law from Swansea University, UK. He is a member of the standing young committee of the Comité 8 Updates and Developments Maritime International (CMI), a member of the board of the Colombian Association of Maritime Law (ACOLDEMAR) and a member of the Colombian branch of the Iberoamerican Institute of Maritime Law (IIDM). 8.1 Describe any other issues not considered above that He has relevant experience in local and international law firms, dealing may be worthy of note, together with any current with issues in the field of Commercial Law, Transportation Law, Shipping trends or likely future developments that may be of Law, Contract Law, Logistics, Insurance and Port matters. He is the interest. author of many different articles, as well as a book entitled Legal aspects of logistics and logistics contracts. He has been admitted to the list of arbitrators (“B” List) of the Bogotá Chamber of Commerce in the fields of As per Decree 2682 of 2014, the Colombian government has Transport and Commercial Law. allowed the possibility to declare offshore free zones in maritime Currently, he is a partner of FRANCO & ABOGADOS ASOCIADOS, territory. Accordingly, those zones will have special tax treatment, and he is also acting as a lecturer at Externado University in Bogotá, allowing the participants (i.e. the so-called “industrial users”) to Colombia. have tax benefits that will not regularly apply to those activities in

FRANCO & ABOGADOS ASOCIADOS is a law firm whose headquarters are located in the city of Bogotá (Colombia). We focus our attention on the needs that may arise in the areas of Commercial Law, International Commercial Law, Transport Law, Maritime Law, Mining/Energy Law, Insurance Law, Customs Law and Logistics. We are a team of legal experts with the highest levels of academic training, both in Colombia and abroad; our qualified expertise includes extensive experience in advising local and foreign companies in areas in which the firm deploys its operation. FRANCO & ABOGADOS ASOCIADOS makes available a complete service portfolio to its customers, aiming to provide them with comprehensive support, both in terms of counselling and litigation, of the highest quality and reliability.

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Costa Rica Tomás Nassar Pérez

NASSAR ABOGADOS María Fernanda Redondo Rojas

Under the environmental principle that whoever commits 1 Marine Casualty environmental damage must repair it, any environmental damage caused could generate responsibility for the participating parties. 1.1 In the event of a collision, grounding or other major In addition, in environmental matters there is a joint and several casualty, what are the key provisions that will impact obligation to respond to the damages caused, as stipulated in article upon the liability and response of interested parties? 101 of the Organic Law of the Environment, Act N° 7554. In particular, the relevant law / conventions in force in Environmental legislation states possible fines to person(s) that pollute relation to: the environment, including contamination of the sea, for example: (a) The Water Act, Act N° 276, article 162 establishes a penalty of prison (i) Collision from three months to one year or a fine, that is currently outdated, to Costa Rica is a party to the Convention for the Unification of the person who pollutes; and (b) Law for the Prevention and Integral Certain Rules of Law with respect to Collisions between Vessels, Management of Wastes, Act N° 8839 establishes a penalty of prison signed in Brussels on May 10, 1952, with the reservation that “[t]he of two to 15 years for the person who illegaly disposes of dangerous Government of the Republic of Costa Rica, when acceding to this waste. Convention, reserves the right that a civil action due to the collision Costa Rica is not part of the International Convention for the Prevention between vessels sailing in high seas or between vessels and internal of Marine Pollution from Ships as modified by its Protocol (MARPOL navigation vessels in high seas, may only be filed before a Court of 73/78). The Constitutional Court determined in 1999 that the country Justice where the habitual residence of the defendant is located or of was, at the time, not capable of executing the obligations established the State under whose flag the ship sails, consequently, the Republic in the Convention, because there were not enough resources to protect of Costa Rica does not recognise clauses b) and c) of paragraph 1 of and guard against marine pollution from ships. article 1 as mandatory”. (iii) Salvage / general average The Convention on Criminal Competition in Collision or Accident Navigation, Act N° 1799, to which Costa Rica is party, also states Costa Rica has not signed any international Conventions related to rules related to ship collisions. Costa Rica reserves the right to not the regulation of salvage or general average. On the other hand, local recognise articles 1 and 2 of the Convention. For this reason, and legislation, specifically the Commercial Code of 1853, establishes according to article 46 of the Civil Procedure Code (CPC), if a ship that a general average will be understood as any extraordinary and collision occurs in Costa Rica’s national waters, it may be ruled by eventual expense that occurs during the voyage of the ship for the the local Costa Rican courts, because for claims that are grounded in conservation of this, its cargo or both. facts or events occuring in Costa Rica, local judges have jurisdiction All parties interested in the ship and the cargo must contribute to to hear these proceedings. the payment of the expenses incurred during the average breakdown Due to a lack of knowledge, experience and specialised legislation, (article 877 of the Code of Commerce). Costa Rica is not considered a place which parties may choose to According to local regulations, the Master must consult the shippers, solve a ship collision. However, the Costa Rican authorities have which in case of a negative response, may execute under his own the jurisdiction to be informed of and investigate the casualty, if responsibility in case of emergency. It is important to state that the applicable. Code of Commerce of 1853 is outdated, nonetheless the rules are (ii) Pollution in force. In terms of pollution, Costa Rica has signed various Conventions Article 876 of the said Code establishes some of the risks that related to the prevention or liability of enviromental damages caused may be considered as common and classified as general average, to the sea and surrounding areas; for example, the International for instance: (1) the effects or money that are delivered through Convention on Civil Liability for Oil Pollution Damage and its composition to rescue the ship and its cargo that would have fallen Protocols from 1976 and 1984, ratified by Act N° 7627. into the hands of enemies or pirates; and (2) things that are thrown into the sea to lighten the ship, whether they belong to the cargo Costa Rica has also signed the Convention on the Prevention of or to the ship and its crew, and to the damage resulting from this Marine Pollution by Dumping of Wastes and Other Matter, ratifed operation to those that are conserved in the ship. by Act N° 5566. This Convention contributes to the international control and prevention of marine pollution by prohibiting the The risks established in article 883, in the event that, if the ship dumping of certain hazardous materials. is lost despite having sacrificed part of the cargo, the obligation to contribute to the general average will cease and the damages will be

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estimated as simple faults. If after the ship has been saved, due to the institution designated by the Government to control the operation risk caused by the average fault, it perishes due to another accident, managed by Sociedad Portuaria de Caldera. the obligation to contribute to compensation for the damages caused On the Atlantic side, JAPDEVA is the institution designated by during the average breakdown will persist. the Government to operate local ports; however, APM Terminal (iv) Wreck removal is currently building the most important container terminal of the Costa Rica has not signed any international Conventions related to Central American region, which is scheduled to start operations in , such as the Nairobi International Convention on the February 2019. All the authorities designated by the Government Removal of Wrecks of 2007. may participate in a preliminary investigation on a case-by-case basis. According to local law, if a shipwreck occurs by fault or intent of the Another institution that may participate is the Judicial Investigation Master or pilot, shipowners or shippers have the right to request an Police (OIJ) in case any tort, act or omission injured or affected Costa Rica indemnity due to the liability of the Master. another person. Police will investigate any possible crime and liability caused as a result of the casualty. The Caribbean Port Operations Decree N° 0, issued by the Port Authority JAPDEVA and the Pacific Port Operation Decree N° In case of marine pollution, the Environmental and Energy Ministry 3888 issued by the Port Authority INCOP, established in article 18 (MINAE) will also initiate an administrative investigation. and article 33 respectively, that shipowners, legal representatives or agents, have the obligation to remove any of their ships that due to accident, sinking, or damage, impede free navigation in jurisdictional 2 Cargo Claims waters of Costa Rica. In the case that the removal of the obstacle is not carried out within the period established by the Port Authority, 2.1 What are the international conventions and national said operation will be executed or controlled by them, leaving the laws relevant to marine cargo claims? owners, operators or agents of the ship obliged to cancel the costs generated by said action. Cargo claims in Costa Rica are regulated by the Commercial Code, Any payment for delays in the berthing of other ships, which in Port Civil Code, Chapter III of the Commercial Code of 1853 and the Authority judgment are due to the cases previously mentioned, will CPC. also be borne by the owners, operators or agents of the ship that Costa Rica has not signed any international Conventions related to caused the delay. the rules for cargo transportation, such as the Hague-Visby Rules or (v) Limitation of liability Hamburg Rules. However, most bills of lading – used to legitimise Costa Rican law does not contemplate any limitation liability, which cargo transport from and into Costa Rica – include a Hague-Visby leaves the determination of the damage and liability to the discretion Rules clause. of the Civil and Commercial Court. According to article 332 of the Code of Commerce, the declarations In Costa Rica, the repair of damage caused during the maritime contained in the bill of lading have the force of law between the activity shall be determined according to the ordinary law applicable parties and, consequently, as proof of the contract. to commercial cases. In cases of environmental pollution caused by hydrocarbons, the limit 2.2 What are the key principles applicable to cargo claims of liability will be according to the International Convention on Civil brought against the carrier? Liability Born of Damage Due to Pollution by Hydrocarbons and its Protocols of 1976 and 1984, to which Costa Rica is a party. According to the Code of Commerce, Act N° 3284, if the carrier does Costa Rica has not signed any international Conventions related to the not comply with the obligations established in articles 335 and 334.c, rules for cargo transportation, such as the Hague-Visby Rules or the that cargo owner is entitled to claim for any loss or damage. Hamburg Rules. However, most bills of lading – used to legitimise The general rule applicable establishes the obligation for any person cargo transport from and into Costa Rica – include Hague-Visby Rules (whether natural or corporate) to repair the damage caused to another. clauses. For this reason, in case of any maritime claim, shipowners The terms and conditions of the transport agreement are formalised could allege the limitation established in the Hague-Visby Rules. by means of a charterparty or a bill of lading. Even if there is a (vi) The limitation fund jurisdiction clause determined in the bill of lading, from a Costa Rican Although local legislation does not regulate limitation funds, it is perspective, article 46 of the CPC contains a list of certain matters that standard practice for vessel owners to constitute this type of funds to shall be ruled by the Costa Rican local courts. One of these matters limit the shipowner’s liability. is the jurisdiction on claims that are grounded in facts or events that occurred in Costa Rica. Costa Rica is not a signatory to the International Convention on the Establishment of an International Fund for Compensation for Oil When assessing the possibility of filing a lawsuit in Costa Rica, the Pollution Damage 1971. claimant has the obligation to notice of claim demanded by article 347 of the Costa Rican Code of Commerce, within eight days after the event occurs. 1.2 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty? 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration In case of any maritime casualty, such as collision or grounding of cargo? within Costa Rica’s territory, various authorities shall participate in the investigation, such as the Maritime Port Division of the Ministry The shipper has the obligation to declare cargo in the transport of Transportation, to which the Harbour Captaincies belong. agreement accurately, with a description of goods, weight, quantity, signs and packaging, as established in article 329 of the Code of The port operator may participate as well. In Costa Rica there are Commerce. two main ports. On the Pacific side, the Authority INCOP is the

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As a signatory of the SOLAS Convention, Costa Rican shippers are It is possible to request the arrest of any ship without exception of obliged to comply with the verified gross mass (VGM) of packed the flag. According to article 551 of the Code of Commerce, foreign containers prior to loading on board ships. This obligation, which ships held in the ports of the Republic cannot be stopped or seized went into force worldwide on July 1, 2016, was also enforceable for debts that have not been incurred in the Costa Rican territory. under local law after the issuance of the VGM Decree N° 39904-MOPT-MICITT. 4.2 Is it possible for a bunker supplier (whether physical If the shipper does not comply with the regulation related to the and/or contractual) to arrest a vessel for a claim correct declaration of goods and dangerous goods, the carrier has relating to bunkers supplied by them to that vessel? the right to claim against him for any loss or damage caused by its misdeclaration. When dangerous goods are shipped, the shipper is It is possible for a bunker supplier to arrest a vessel for a claim liable not only towards the carrier but also towards cargo owners related to the supply of that vessel in particular. Costa Rica shipped on board. Article 550 of the Commercial Code of 1853 establishes that a ship The Master is also entitled to unload cargo on board, if it has not can only be arrested due to debts acquired by its shipowner for that been declared accordingly. particular transport and not for other types of debt. Local law allows the payment of bail in order to release a ship. 3 Passenger Claims It is important to consider that the Commercial Code of 1853 is made up of many outdated regulations.

3.1 What are the key provisions applicable to the 4.3 Where security is sought from a party other than the resolution of maritime passenger claims? vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what The applicable law when a maritime passenger’s claim occurs is the options are available? Civil Code and Customers Law, Act N° 7972, in case of any claim related to the purchase agreement. The shipowner and the Master have the lien over cargoes in order to If a death or physical injury occurs to a passenger within the Costa secure freight, according to article 336.g of the Commercial Code. Rican territory, the rules established in the Criminal Code and If the bill of lading was agreed under prepaid freight, the carrier Criminal Procedures Code may be applicable as well, because an cannot retain the cargo associated with the specific bill of lading, investigation will be initiated to determine any responsibility. even if there are other debts. Another aspect is that Costa Rica has not signed the Athens Convention of 1974, related to the Carriage of Passengers and their 4.4 In relation to maritime claims, what form of security is luggage; for this reason, in case of any claim, local legislation will acceptable; for example, bank guarantee, P&I letter of be applicable. undertaking.

Civil procedure allows different types of guarantee to be rendered, 4 Arrest and Security such as bank warranties and credit letters, among others. However, a P&I letter of undertaking is not commonly used; its acceptance will be subject to the parties’ acceptance and court’s approval. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel The warranties permitted are not limited to a specific list. In our owner and the applicable procedure? experience, P&I LOUs are not generally acceptable.

According to local legislation, it is possible to file a judicial petition to request the arrest of a ship, as a preventive or precautionary attachment. 5 Evidence Additionally, Costa Rica, as a signatory of the International Convention Relating to the Arrest of Sea-Going Ships, Act N° 1798, reserved the 5.1 What steps can be taken (and when) to preserve or application of article 2 and 3 of said Convention. obtain access to evidence in relation to maritime Another option available is to request a ship arrest according to the claims including any available procedures for the Commercial Code of 1853. These rules establish in article 548 that preservation of physical evidence, examination of witnesses or pre-action disclosure? while the obligations of the shipowner continue, the ship may be arrested by its creditors with a valid title, at any port, and a judicial sale will be applicable as well. There are no maritime courts to solve maritime disputes in Costa Rica. If a lawsuit is filed, it should be resolved in an ordinary The obligations are considered as maritime liens, and are the civil proceeding at a Judicial Civil Court. Evidence related to any following according to article 542 of the Commercial Code of 1853: maritime complaint shall be executed according to the CPC. 1) Debts to the tax authorities, if any towards the ship. The CPC, Act N° 7130 establishes the means of access to evidence, 2) Court cost. such as: (a) questioning of the parties and witnesses; (b) documents 3) Pilotage, towage. and reports; (c) expert evidence; (d) judicial recognition; (e) 4) Wages of Masters, Officers and crew. scientific methods; and (f) presumptions. The New Civil Procedure 5) Construction, repair or equipment of any ship. Code (NCPC), which will enter into force in October 2018, includes as evidence “anything that is not prohibited”. 6) Goods or materials whenever supplied to a ship for its operation or maintenance. In order to preserve any evidence that may be compromised, article 49 of the CPC regulates pre-trial evidence, which is accepted only 7) Compensation related to the carriage of goods in any ship, whether or not by charterparty. under special circumstances, such as risk of losing the evidence or losing of efficacy.

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Pre-trial evidence will be incorporated into the proceedings once it Law, the party who intends to file a complaint through an is established. arbitration process must inform the other party of this in writing. The communication must also contain a copy of the agreement to submit any dispute to arbitration, a copy of the 5.2 What are the general disclosure obligations in court main agreement, an arbitrator’s proposal, and notice of the proceedings? proposed arbitrator. 2. Appointment of arbitrators. The RAC Law states that an Parties are obliged to file the evidence during the accurate proceeding arbitration procedure may be in law or in equity. According stage. It could be at the filing of the lawsuit, upon the reply, or as to article 20 of the RAC Law, to appoint the arbitrator, the pre-trial evidence. tribunal shall be composed exclusively of lawyers, in case Evidence will be admitted only if it is directly related to the facts of arbitration in law, or by any person, regardless of the Costa Rica and request for relief, as long as it is controversial. During the profession, in case of an equity arbitration. The arbitrator in hearing, evidence will be admitted or denied by the judges. The equity shall be appointed, according to the best knowledge and belief. court will also review if there is new evidence offered by the parties, or if it is necessary to request new evidence, in which case the judge 3. Acceptance of arbitration tribunal. is entitled to request. 4. Filing of the claim. The rules for admission and evaluation of evidence are burdened by 5. Admission/refusal of the claim. formalities. The rules for disclosure impose a limited obligation, 6. Answer to the claim. which is that the party demanding disclosure bears the burden. 7. Preliminary hearing. 8. Examination of evidence. 6 Procedure 9. Filing of closing arguments. 10. Arbitration award.

6.1 Describe the typical procedure and timescale During the procedure, all kinds of evidence may be provided, such applicable to maritime claims conducted through: i) as testimonial evidence, examination by the parties, expert evidence, national courts (including any specialised maritime or among others. commercial courts); ii) arbitration (including specialist In our experience, the length of an arbitration procedure is generally arbitral bodies); and iii) mediation / alternative dispute between six months and one year. resolution. (iii) Mediation/alternative dispute resolution There are no specific maritime courts to solve maritime disputes in The RAC Law establishes alternative dispute resolution other Costa Rica. than arbitration, such as mediation and conciliation. These are (i) National courts proceedings known and recognised for their expedited resolution. If a lawsuit is filed, it should be resolved in an ordinary civil proceeding at a Judicial Civil Court. The Judicial Proceeding in 6.2 Highlight any notable pros and cons related to your Costa Rica is as follows: jurisdiction that any potential party should bear in mind. 1. Filing of the lawsuit, according to article 290 of the CPC and article 35.1 of the NCPC. The NCPC will be applied starting from October 9, 2018. Pros: 2. In case the lawsuit has any defect, the plaintiff has a limited a) The judicial system is fully independent of the Government. period of time to amend it. If the plaintiff does not amend it Cons: in time, the court will reject the admonition of the lawsuit for a) Maritime legislation is outdated; Costa Rica has not signed failure to meet all filing requirements. most of the main Conventions that regulate the maritime 3. The defendant has the right to answer the lawsuit, to accept activity. or deny the allegation contained in the lawsuit, as well as b) Maritime disputes are not commonly heard in national courts. procedure defences, such as statute of limitation, lack of There is a lack of legislation, knowledge and expertise of the capacity, among others. The defendant has the right to file a judges in maritime claims. counterclaim. c) Administrative authorities do not have the experience and 4. Preliminary hearing: used for conciliation, admission of budget to attend to cases of pollution within national waters. evidence, among others. 5. Hearing to receive the proposed and admitted evidence. d) Proceedings take a significant length of time due to the quantity of files. With the entry into force of the NCPC, it 6. Hearing of closing arguments. is expected that the time for resolution will be considerably 7. Judgment. According to the NCPC, the deliberation of the reduced, mainly because the principal characteristic of the court will be secret. The court will have a period of two to five new process will be that it is conducted verbally. business days to deliver the ruling. Currently, this type of proceedings may take four to eight years. However, with the NCPC it is expected that this term will be reduced. 7 Foreign Judgments and Awards (ii) Arbitration According to the Alternative Dispute Resolution Law N° 7727 7.1 Summarise the key provisions and applicable (RAC Law), arbitration is a recognised means for resolving disputes procedures affecting the recognition and enforcement without having to attend a Judicial Court. of foreign judgments. The key provisions of the arbitration procedure are the following: In Costa Rica, the CPC establishes a special procedure to request 1. Communication to the other party of the intention to start an the execution of a foreign judgment within the Costa Rican territory. arbitration proceeding. According to article 43 of the RAC

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Article 705 of the CPC defines that an exequatur will proceed for 3. The First Chamber will review the evidence and will foreign judgments and arbitration awards. recognise the foreign judgment. The chamber will notify the corresponding court to execute the resolution. The exequatur has the purpose of recognising the legal force of judgments or arbitration awards issued abroad, which has a res The recognition of foreign awards and judgments in Costa Rica is judicata effect. A foreign judgment or foreign arbitration award only subject to the compliance of all the formalities our law states. The acquires efficancy through a judicial recognition. lack of formalities is one of the main issues that plaintiffs face when requesting the exequatur in Costa Rica. In order to execute an exequatur, some formalities must be complied with at the petition stage. The foreign judgment becomes a procedure title. 7.2 Summarise the key provisions and applicable The court authorised to resolve and grant the exequatur is the First procedures affecting the recognition and enforcement

of arbitration awards. Costa Rica Chamber (Sala Primera), according to article 54.7 of the Judicial System Act N° 9. The same rules and procedure indicated in question 7.1 apply to the The following requirements must be complied with: enforcement of arbitration awards. a) According to the Bustamante Code and the CPC, to homologate a foreign judgment or foreign aribitation award, the document must be validated by the Consul of Costa Rica 8 Updates and Developments and the Foreign Affairs Ministry in the issuance country, with its corresponding translation into Spanish. b) The defendant must have been notified according to the local 8.1 Describe any other issues not considered above that legislation of the foreign country. may be worthy of note, together with any current trends or likely future developments that may be of c) The claim requested is not of the exclusive knowledge of the interest. Costa Rican courts. d) There is no ongoing process in Costa Rica, nor a executory There is a proposal to create a Navigation Act, which is under project judgment issued by a Costa Rican court, related to the same N° 18512. The aim of the project is to regulate various maritime matter. areas, such as ship registry, extend the obligations and faculties e) Judgments or arbitration awards are enforceable in the country of the Maritime Authority and imposition of fines, among others. of origin or issuance. Different parties within the maritime sector such as fishermen, port f) Not contrary to public order. authorities, ship and cruise agents’ associations, among others, have To request an exequatur, the procedure will be as follows: opposed the project due to important defects that it has. The lack 1. The party will file the petition at the First Chamber. The of knowledge of our legislators has caused serious defects in the petition must contain the main information, for example project of law, which may affect maritime activity in Costa Rica. regarding the parties and the claim, an indication of the foreign Furthermore, since 2015, there is a project of law to ratify the court or foreign arbitration tribunal that issued the judgment to International Convention on Maritime Search and Rescue (SAR be homologated, and the means of notification, according to Convention), which means that, once it has been approved and article 705 of the CPC. Original and apostille documents shall be filed with the petition. entered into force, Costa Rica will assume the obligations and rights established in the SAR Convention; however, at the time of writing, 2. Once the First Chamber reviews and admits the filings, the the project is not in the main list of projects for Congress. party will have the possibility to oppose, offer evidence and refer the foreign judgment to homologation at a public hearing.

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Tomás Nassar Pérez María Fernanda Redondo Rojas NASSAR ABOGADOS NASSAR ABOGADOS Oficentro Torres del Campo Oficentro Torres del Campo Edificio 1, 2º piso Edificio 1, 2º piso Barrio Tournón Barrio Tournón San José San José Costa Rica Costa Rica

Tel: +506 2257 2929 Tel: +506 2257 2929 Email: [email protected] Email: [email protected] URL: www.nassarabogados.com URL: www.nassarabogados.com

Costa Rica Senior Partner Associate Education: Juris Doctor and Notary Public, Universidad de Costa Rica. Education: Juris Doctor, with honours, University of Costa Rica; Master’s in Business and Maritime Law, Universidad Pontificia Practice Areas: Aviation, Commercial and Corporate, Litigation, Comillas and Instituto Marítimo Español, Madrid, Spain; Candidate to Maritime. specialist degree on International Trade and Customs Administration, Experience: University of Costa Rica; Candidate to Diploma on Insurance Law, University of Costa Rica. Tomás is the Senior and Founding Partner of the Law Firm NASSAR ABOGADOS Centroamérica. He is recognised as a highly skilled Practice Areas: Aviation, Customs, Labour and Maritime. negotiator and litigator, and is also well known for his depth of Experience: understanding of the business environment and ability to structure highly complex deals. He is constantly invited by private companies María’s expertise includes foreign trade, logistics and customs, and industry organisations to sit on the board of directors and advisory advising shipping companies, cargo airlines and other companies in committees. the field. She worked at the Export Department at the Mediterranean Shipping Company in Spain, while studying for her Master’s degree. Tomás is a Professor of Commercial Law at the School of Law of the Universidad de Costa Rica, and Professor of Maritime Law and Languages: Spanish, English and Italian. Aviation Law at the Law School of the University of La Salle. Memberships: Costa Rican Bar Association; Ibero-American Maritime He has represented Costa Rica in international negotiations and Law Institute (IIDM). meetings regarding air and sea transport such as GATT, ICAO, OAS, COCATRAM and COCESNA. He is a consultant on several projects in international transport. He is the President of the Costa Rican Association of Maritime Law; Vice-President and President of the Ibero-American Institute of Maritime Law; Secretary, Vice-President and President of the Association of International Airlines in Costa Rica (ALA). He is a member of the Board and Vice-President of the National Chamber of Tourism (CANATUR). He is also a legal adviser to the National Chamber of Ship Owners and Steamship Agents (NAVE), the Costa Rican Association of International Freight Agencies (ACACIA) and the Costa Rican Chamber of Food Industry (CACIA), among others. Tomás is also ranked by Chambers & Partners. Languages: Spanish and English. Memberships: Costa Rican Bar Association, American Bar Association, L2B Aviation Group and ADVOC Latin America.

NASSAR ABOGADOS is a full-service and results-oriented law firm, with internationally recognised strategic experience in a large variety of areas of law. With more than 35 years of experience, the firm holds a longstanding tradition of excellence in the provision of service and legal advice designed according to first-class quality standards. Over a decade ago, NASSAR ABOGADOS expanded its Costa Rican operation to Central America, providing clients with a regionally standardised service that has become an ally to their business in the region. Our clients recognise our professionals’ knowledge, experience, sophistication and understanding of their business, as well as the attorneys’ proactive and creative skills in addressing our clients’ matters. NASSAR ABOGADOS has consolidated its position as a key player in the market of legal services in the region, being frequently nominated within the top Central American firms.

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Croatia

VUKIĆ & PARTNERS Gordan Stanković

(iii) Salvage / general average 1 Marine Casualty Croatia is party to the International Convention on Salvage, 1989. In terms of internal legislation, salvage at sea is regulated in the 1.1 In the event of a collision, grounding or other major Maritime Code (mainly in Articles 760 to 788). General average is casualty, what are the key provisions that will impact regulated in Articles 789 to 807 of the Maritime Code. upon the liability and response of interested parties? In particular, the relevant law / conventions in force in (iv) Wreck removal relation to: Croatia is not party to the Nairobi Wreck Removal Convention, 2007. (i) Collision In terms of internal legislation, wreck removal is regulated in the Croatia is party to: Maritime Code (mainly in Articles 840.A to 840.Z). ■ the Collision Convention, 1910; (v) Limitation of liability ■ the Collision Civil Jurisdiction Convention, 1952; and Croatia is party to the Limitation Convention, 1976, and the 1996 ■ the Arrest Convention, 1952. Protocol. In terms of internal legislation, collisions at sea are regulated in the In terms of internal legislation, general limitation of liability is Croatian Maritime Code, 2004, as amended (Articles 748 to 759). regulated in the Maritime Code (Articles 386 to 427). There are (ii) Pollution several sets of provisions in the Maritime Code dealing with special Croatia is party to: limitation regimes, such as the ones applying to cargo claims, passenger claims, pollution by cargo or oil carried in bulk, as well ■ the UN Law of the Sea Convention, 1982; as liability of operators of nuclear ships. Those provisions mainly ■ the International Convention, 1969, and the 1973 Protocol; reflect the respective international conventions dealing with those ■ the International Convention for the Prevention of Pollution topics. from Ships (MARPOL), 1973/1978, and the MARPOL (vi) The limitation fund Protocol, 1997; ■ the Safety of Life at Sea Convention (SOLAS), 1974; The limitation fund may be set up either by depositing cash at the court account or providing other sureties (e.g. a bank guarantee ■ the Dumping Convention, 1972; or a liability insurer’s letter of undertaking), as long as it is freely ■ the International Convention on Oil Pollution Preparedness, disposable and transferable in favour of the claimants. Response and Co-operation (OPRC), 1990; ■ the Barcelona Convention, 1995, with various Protocols; 1.2 What are the authorities’ powers of investigation / ■ the International Convention on Civil Liability for Oil casualty response in the event of a collision, grounding Pollution Damage (CLC Convention), 1992; or other major casualty? ■ the Fund Convention, 1992, and the 2003 Protocol; and ■ the Bunker Convention, 2001. The Croatian Rules on Maritime Accident Investigation contain In terms of internal legislation, various aspects of marine pollution provisions in line with Directive 2009/18/ec of the European are regulated by a great number of legislative acts, from the Parliament and of the Council of 23 April 2009 establishing the Environment Protection Act, 2007, and the Maritime Code, through fundamental principles governing the investigation of accidents to a number of governmental and/or ministerial regulations and in the maritime transport sector, and amending Council Directive other documents. 1999/35/ec and Directive 2002/59/ec of the European Parliament Amongst various national provisions that incorporate and give effect and of the Council. to the international rules, mention must be made of the Intervention The Rules distinguish between safety investigation (aimed at Plan for Sudden Pollution of the Sea. This contingency plan identifying the cause of accident in order to promote maritime safety contains systematic and detailed rules on intervention measures, and environmental protection) and administrative investigation procedures, relevant subjects and their respective tasks, and is (aimed at identifying the liable persons in order to create a basis aimed at the minimisation of pollution damage in the case of sudden for a criminal and/or misdemeanour procedure). While the safety pollution on a major scale. investigation is carried out by an independent investigation agency, the administrative investigation is carried out by the maritime

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administration personnel (i.e. officials employed at the Ministry and/ carrier is brought in tort, the carrier’s liability will be subject to the or harbour masters’ offices). Both entities have wide investigation same rules (exculpations and limitations) as if the claim is brought powers (access to various sources of information, power to take in contract. witness statements, engage experts, etc.). In addition, the inspectors carrying out the administrative investigation have the power to 2.3 In what circumstances may the carrier establish detain all the vessels involved in the casualty until all relevant claims against the shipper relating to misdeclaration information required for the investigation is gathered. of cargo?

2 Cargo Claims In case of dangerous cargo, the shipper has the duty to notify the

Croatia carrier as to the nature of the hazard involved and the protection measures to be taken. 2.1 What are the international conventions and national If the cargo is not in regular trade and requires special stowage laws relevant to marine cargo claims? arrangements, the shipper is under a duty to provide the carrier with cargo manipulation instructions. Croatia is party to the Hague Rules, 1924, as well as the Visby The shipper shall be liable to the carrier for damages suffered as a Rules, 1968, and the 1979 SDR Protocol. consequence of: (a) giving inaccurate or incomplete information on In terms of internal legislation, marine cargo claims are regulated in the nature and quantity of the cargo and/or markings; (b) the nature the Maritime Code (mainly in Articles 537 to 540, 547 to 574, and and/or condition of the cargo of which the carrier should not and 673). Those provisions follow the Hague-Visby Rules. could not have been aware; and/or (c) loading illicit or prohibited or contraband cargo, provided that at the time of loading the carrier 2.2 What are the key principles applicable to cargo claims was not aware of such nature of the cargo. brought against the carrier? 3 Passenger Claims The title to sue belongs to a lawful holder of a bill of lading, or a party subrogated into the rights of such lawful holder of a bill of lading. 3.1 What are the key provisions applicable to the According to the Maritime Code, the term “carrier” includes the resolution of maritime passenger claims? shipowner, ship operator or a person who enters into a contract with the charterer. This does not mean that all of them will always Croatia is party to the Athens Convention, 1974, as well as the be considered as carriers, but only that any of them may be so Protocols of 1976, 1990, and 2002. considered, depending on the circumstances. If a charterer has, in In terms of internal legislation, passenger claims are regulated in the capacity of carrier, entered into a contract of carriage with a third the Maritime Code (mainly in Articles 598 to 633, and 673), and person, the liability towards the third person will lie not only with the follow the provisions of the Athens Convention, as amended by the charterer (as the contractual carrier) but also with the owner / ship Protocol of 2002. operator. Although there is no case law on this issue, the authors believe that a demise clause would not be considered valid by the Croatian courts. 4 Arrest and Security In order to bind a bona fide third-party bill of lading holder, the charter party provisions should be expressly referred to in the bill of lading. A 4.1 What are the options available to a party seeking to general reference to a charter party will only bind such third-party B/L obtain security for a maritime claim against a vessel holder insofar as the terms of the charter party are not more restrictive owner and the applicable procedure? than the terms regularly used in that particular type of carriage. A charter party arbitration clause shall bind a bill of lading holder only (i) Arrest of ships if the bill of lading makes an express reference to it. Croatia is a party to the 1952 Arrest Convention. “Quality/quantity unknown” or similar clauses in the bill of lading In terms of internal legislation, ship arrest is regulated in the will be valid if the carrier actually did not have a reasonable Maritime Code (mainly in Articles 951 to 965), which will apply possibility to verify the accuracy of the information to which the in cases falling outside the scope of application of the Arrest clause relates. Convention. In all aspects which are not specifically covered by In principle, the carrier’s liability for the loss of or damage to the the Arrest Convention or the Maritime Code, the general rules cargo is based on the so-called presumed negligence, save for the regarding interim injunctions contained in the Forced Execution Act damages caused by “excepted perils” (where the carrier’s liability is should apply. based on the proven negligence), fire (where the carrier’s liability is The claims subject to arrest have been divided into two main based on the proven personal negligence) and nautical fault (where categories: the carrier’s liability is excepted). (a) claims secured by a maritime lien or a (Article The carrier is entitled to limit its liability according to a package/ 953/2 of the MC); and kilo criterion, with the limits of SDE 666,67 per package and 2,00 (b) other maritime claims, including mainly all the claims listed special drawing rights (SDR) per kilo. in Article 1 of the 1952 Arrest Convention, with the addition The time limitation period for cargo claims is one year. of agency commissions or agency fees owed in connection with the ship. A claim in tort will be allowed against the carrier if the claim does not arise out of a contract between the claimant and the carrier, and A ship may be arrested: if the claim relates to damages suffered by the claimant as a result of (a) if, at the time the arrest is requested, it is owned by the the carrier’s unlawful acts or omissions. Even if a claim against the applicant’s personal debtor (as to which see infra); or

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(b) if it is burdened with a maritime lien or a ship mortgage or a corresponding foreign charge securing the claim in question. 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime The term “personal debtor” denotes a person liable for the claim, including exercise of liens over cargo, what underlying claim, and who was, at the time the claim was created, in options are available? the capacity of owner, operator, charterer or demise charterer of the ship in connection with which the claim arose. The arrest of bunkers is theoretically possible, although in practice The concept of sister-ship arrest applies. The claimant may arrest it is extremely rare and rather difficult to obtain. The arresting party not only the particular ship (i.e. the ship in connection with which will, inter alia, have to prove that the bunkers are owned by the the claim arose), but also any other ship under the same ownership. party against whom the arrest is sought.

Nevertheless, no ship other than the particular ship in respect of The Maritime Code provides for maritime liens on cargo. The Croatia which the claim arose may be arrested in respect of claims regarding claims giving rise to a lien on cargo are those relating to: the ownership of, or lien and/or mortgage on, a ship. ■ legal costs associated with the storage and/or judicial sale of Arrest may be sought at any point before or during the (pre- the cargo; judgment) trial and/or forced execution proceedings. The arresting ■ salvage and general average; and party must show on a prima facie basis: ■ contract of carriage. (a) a valid claim; and (b) the danger that, in the absence of the arrest, the person in control of the ship (respondent) will prevent or significantly 4.4 In relation to maritime claims, what form of security is hamper the enforcement of the claim in question by disposing acceptable; for example, bank guarantee, P&I letter of of the ship or dissipating its assets. undertaking. The element of danger need not be shown if the applicant shows that The security may be provided by way of depositing cash or other the damage caused by the arrest will be insignificant. If the claim assets with the court, or by way of submitting other sureties (bank in question would have to be discharged abroad, the existence of guarantee, liability insurer’s letter of undertaking), as long as danger is presumed. it is freely disposable and transferable in favour of the claimant. The court will decide on the arrest motion based on the documents Cash deposits and bank guarantees issued by Croatian banks are submitted therewith; only on very rare occasions will the court usually accepted by the courts irrespective of the arresting party’s summon a hearing before an arrest decree is issued. opinion. With regard to protection and indemnity (P&I) letters of The arrest decree contains an order that the ship must not leave its undertaking, the court will seek approval from the arresting party. current position, and an order to a local harbour master’s office to seize the vessel’s documents (certificate of registry, crew list and safety certificates). If needed, the court will order that the ship be watched. 5 Evidence The arrest will remain in force until the completion of the proceedings on the merits and until the commencement of execution 5.1 What steps can be taken (and when) to preserve or by way of forced sale of the vessel. If the arrest is issued before the obtain access to evidence in relation to maritime commencement of proceedings on the merits, the applicant will have claims including any available procedures for the a duty to commence such proceedings and notify the court thereof preservation of physical evidence, examination of within 15 days of the arrest. Failing such action by the applicant, the witnesses or pre-action disclosure? respondent may seek that the arrest be lifted. If there is a risk that any piece of evidence will be impossible or If the arrest has been granted for the purpose of securing a monetary very difficult to obtain at a later stage, an interested party may apply claim, the arrest may be lifted upon provision of adequate security for the so-called securing of evidence. This can be sought before or in an amount sufficient to cover the principal claim, together with after commencement of the litigation procedure. interest and legal costs. (ii) Attachment or freezing of other assets 5.2 What are the general disclosure obligations in court According to the general rules on civil procedure (contained in the proceedings? Forced Execution Act), claimants may seek various interlocutory measures aimed at securing future satisfaction of their claims. In the points of claim and the points of defence, but in any event An open-ended list of those measures includes: prohibition on not later than at the preliminary hearing, the parties should produce/ the respondent to sell or dispose of its assets; prohibition on the propose all evidence supporting their positions. After that, they may respondent’s debtor to voluntarily fulfil its obligation to the submit new evidence only if they can prove that they were unable to respondent; and prohibition on the respondent’s bank to perform produce such evidence earlier. any payments from the respondent’s account. The requirements and procedure are similar to those in the ship arrest procedure. 6 Procedure

4.2 Is it possible for a bunker supplier (whether physical 6.1 Describe the typical procedure and timescale and/or contractual) to arrest a vessel for a claim applicable to maritime claims conducted through: i) relating to bunkers supplied by them to that vessel? national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist Yes, provided general requirements discussed under question 4.1 arbitral bodies); and iii) mediation / alternative dispute above are satisfied. Claims based on bunkers supplied to vessels are resolution. on the list of maritime claims both in the 1952 Arrest Convention and in the Croatian Maritime Code. Shipping matters fall within the jurisdiction of the commercial

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courts, as specialised courts. There are only three commercial courts one of the parties is a foreign entity, the parties may agree to the with jurisdiction over shipping matters (Rijeka, Split, and Zagreb). jurisdiction of a foreign or a domestic arbitration. If both parties The High Commercial Court of Croatia acts as the court of appeal. are domestic entities, they may only agree to the jurisdiction of a A third-stage appeal to the Supreme Court of Croatia is permitted domestic arbitration. on questions of law and, sometimes, questions of procedure. In Generally, there is no requirement to attempt mediation/ADR before extreme cases, if the court procedure has resulted in a breach of commencing court procedure (except in some specific cases, which some constitutional principle, a further remedy may be sought from do not involve maritime matters). Nevertheless, the rules on civil the Constitutional Court. procedure encourage the parties in a number of ways to refer their For the purpose of defining jurisdiction, shipping matters are those court disputes to ADR mechanisms.

Croatia that involve ships and navigation or the application of the maritime The Permanent Arbitration Court of the Croatian Chamber of law, or those that involve disputes between a crew member and a Economy (SIS HGK) is the only arbitral institution in Croatia. It shipowner or ship operator or manager. has an established tradition and reputation. Its list of arbitrators The Croatian courts have jurisdiction in personam, jurisdiction in rem includes some of Croatia’s leading maritime law experts. being alien to Croatian law. The procedure before the commercial With Croatia’s entry into the EU, some of the procedural issues courts differs to a certain extent from the procedure before the discussed above (such as international jurisdiction, service of ordinary courts: given that commercial litigation is generally carried proceedings and taking of evidence) are directly regulated by the out by professionals, the procedure before the commercial courts is appropriate EU rules. subject to more stringent rules aimed at expediting the process. Jurisdiction and arbitration clauses are generally recognised in 6.2 Highlight any notable pros and cons related to your Croatia, provided that they are not contrary to the provisions of jurisdiction that any potential party should bear in Croatian law setting up exclusive jurisdiction of the Croatian courts. mind. Anti-suit injunctions are alien to Croatian law. Nevertheless, a party to the Croatian court proceedings may request interruption of those As a consequence of joining the EU, Croatia has done a lot in order proceedings if a case between the same parties on the same subject to brush up its legal system, and make it fair and efficient. matter was previously commenced in another country, provided Although the Croatian courts hear a substantial number of maritime that the case is not subject to exclusive jurisdiction of the Croatian cases, the judges sometimes seem to lack the expertise and courts, and provided that there is reciprocity. understanding of the intricacies surrounding shipping business. The proceedings are commenced by lodging of points of claim Court cases still last too long. The most recent amendments to the with the court. If the court needs to serve the proceedings out of rules of civil procedure may change this. jurisdiction, it will do so by way of diplomatic channels, after it On the other hand, some of the practising lawyers have vast has ordered the plaintiff to have the proceedings translated into experience and expertise in maritime matters, and the same applies the language of the country of destination. The service procedure for many of the arbitrators on the list of the Permanent Arbitration involves the Ministry of Justice as well as the Ministry of Foreign Court at the Croatian Chamber of Economy. There are a great Affairs, and is usually very time-consuming. number of skilled expert witnesses with a thorough understanding The civil procedure (covering maritime disputes) has two main of issues in their respective fields. stages: the preliminary procedure and the main hearing. The preliminary procedure sometimes involves a preparatory hearing. In principle, the preparatory hearing and the main hearing are each 7 Foreign Judgments and Awards held on one occasion only. The court should issue a judgment within 45 days of completion of the main hearing. The parties are free to lodge an appeal against the first-instance judgment. In commercial 7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement matters (including maritime cases), the appeal should be lodged of foreign judgments. within eight days.

The overall duration of the court proceedings depends on a number In order for a foreign judgment to be enforced in Croatia, it must of circumstances (whether the proceedings need to be served abroad, first be recognised by the Croatian court. With Croatia’s entry into whether the parties are keen to have the proceedings completed the EU, cases falling within the scope of the Council Regulation soon, what is the court’s workload, and whether an appeal will be (EC) No 44/2001 of 22 December 2000 on jurisdiction and the lodged). So far, the usual duration of commercial cases (including recognition and enforcement of judgments in civil and commercial appeal procedure) is about seven years. From time to time, the matters (“Brussels I”) are regulated directly by the said Regulation. rules on civil procedure are upgraded so as to facilitate the swift In terms of internal legislation, the recognition procedure is resolution of disputes. The latest set of amendments was introduced governed by the provisions of the Croatian Conflicts of Laws Act. in April 2013. The results have yet to be seen. Once recognised, the judgment will be subject to the same rules Where a monetary claim is the subject of the procedure, an award of enforcement as an ordinary judgment issued by the Croatian in favour of the plaintiff will generally include the default interest. court. As a matter of principle, recognition is subject to a number The interest rate is usually in the range of 15% p.a. of negative criteria. Procedural costs are usually recoverable from the losing party to Recognition need not be carried out separately, but may be sought the extent to which the winning party has succeeded in the case. as part of the enforcement proceedings. This will be recommended The rules on civil procedure command a restrictive approach in in the present case. determining the amount of costs. In certain cases in which the The procedure is of a contradictory nature, i.e. the respondent must plaintiff is a foreign entity, the defendant may seek security for costs. be given the opportunity to defend its interests, at least in an appeal In cases which are not within the exclusive jurisdiction of a Croatian against the order on recognition/enforcement. Some judges summon court, the parties are free to refer their disputes to arbitration. If a hearing in the recognition proceedings, and some do not. An

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appeal against the recognition order may be lodged within 15 days. If the recognition is made as part of the enforcement proceedings, 8 Updates and Developments then the appeal period will be eight days. 8.1 Describe any other issues not considered above that may be worthy of note, together with any current 7.2 Summarise the key provisions and applicable trends or likely future developments that may be of procedures affecting the recognition and enforcement interest. of arbitration awards.

Croatia is party to the Convention on the Recognition and The Republic of Croatia is expected to introduce new amendments to its Maritime Code soon. The amendments will be quite broad,

Enforcement of Foreign Arbitral Awards, 1958 (the “New York Croatia Convention” or the “NYC”). encompassing most of the chapters within the Code. According to the NYC, each Contracting State shall recognise arbitral awards issued in another Contracting State and enforce them in accordance with the criteria set out in the NYC. Gordan Stanković The criteria set out in the NYC for the recognition and enforcement VUKIĆ & PARTNERS of foreign arbitral awards are formulated in the negative context, Nikole Tesle 9 51 000 Rijeka i.e. by way of providing a list of events in which recognition and Croatia enforcement may be refused. The recognition and enforcement will only be refused if there are some substantive deficiencies either with Tel: +385 51 211 600 Fax: +385 51 336 884 regard to the arbitration agreement or with regard to the arbitration Email: [email protected] proceedings (including the arbitral award). URL: www.vukic-lawfirm.hr In terms of internal legislation, recognition and enforcement of arbitral awards are regulated in the Arbitration Act (mainly in Prof.dr.sc. Gordan Stanković studied law at the University of Rijeka Articles 38 to 40, and 47 to 49), which mainly follows the provisions Faculty of Law. He obtained LL.M. degrees from the law faculties of Split, Croatia and Southampton, UK, and a Ph.D. degree from the law of the NYC. faculty of Split. He was a Fulbright visiting scholar at the Tulane Law School in New Orleans, Louisiana, US. He is the author of Limitation of Liability for Maritime Claims, and Maritime Liens and Mortgages, co- author of the chapter on Croatia in Kluwer’s International Encyclopaedia of Laws – Transport Law, and a co-editor of Maritime Environmental Law: A Handbook of Selected Laws and Regulations. He has been involved in the drafting of the Croatian Maritime Code as a member of the working group on registration of ships, liens and mortgages, as well as the working group on ship arrest. In 2011, he was named by Corporate INTL as the shipping lawyer of the year in Croatia.

VUKIĆ & PARTNERS is Croatia’s largest law firm outside Zagreb, and is amongst the five largest in Croatia. Much of the firm’s work is focused on commercial litigation, corporate law and maritime and transport law. Other practice areas include foreign investments, M&A and finance advice work, real estate law, construction law, intellectual property, civil law, criminal law and labour law. The members of the firm have been recruited from amongst distinguished law students. Three of the firm’s members are on the List of Arbitrators with the Permanent Court of Arbitration of the Croatian Chamber of Commerce. Vukić & Partners is the first Croatian law firm with an ISO 9001:2000 certificate of quality. On numerous occasions, it has been named as the Maritime Law Firm of the Year in Croatia by various international researchers.

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Denmark

Jensen Neugebauer Mads Poulsen

shipowner in case of pollution by mineral oils as defined in the 1 Marine Casualty CLC and subject to the limitation of liability in that convention. If the pollution is caused by gross negligence or with intent, then 1.1 In the event of a collision, grounding or other major the limits do not apply. As with the convention, it applies only to casualty, what are the key provisions that will impact vessels carrying oil in bulk (tankers). upon the liability and response of interested parties? In addition, Denmark is a party to the 2003 International Convention In particular, the relevant law / conventions in force in on Civil Liability for Bunker Oil Pollution Damage (Bunker relation to: Convention). It follows that a registered shipowner is also strictly liable for loss or damage caused by discharge of bunkers. (i) Collision Denmark is a party to the 1973 Convention on Prevention of Pollution Denmark is a party to the 1910 Collision Convention (Convention of Ships as amended by the 1978 and 1997 Protocols (MARPOL for the Unification of Certain Rules of Law with respect to Collision 73/78). Denmark is a party to the 1996 International Convention between Vessels) and this is enacted into chapter 8 of the Danish on Liability and Compensation for Damage in Connection with the Merchant Shipping Act (DMSA), also at times referred to as the Carriage of Hazardous and Noxious Substances by Sea as amended Danish Maritime Code. by the 2010 Protocol (HNS Protocol). The Danish enactment of the Accordingly, the principles of distribution of liability between convention has been prepared and awaits accession to the protocol colliding vessels in that convention apply. If one vessel is wholly at by the EU. Until then, a shipowner or operator is strictly liable for fault, this will be fully liable to all damages to the other vessel, its damage to the environment caused by events other than the escape cargo and for injuries to persons on board that vessel. of oil in bulk or bunker oil. If both vessels are partially at fault, blame will be apportioned Finally, EU rules on waste including Directive 2008/98 (Waste between them and, in a departure from ordinary Danish law, they are Directive) may have an impact on the legal position of parties only liable to vessels and cargo to the extent they are so found liable. other than registered owners under the above conventions, or ship Both vessels are jointly and severally liable for personal injury, operators under Danish law. however. If it is clear that both vessels are at fault but blame cannot (iii) Salvage / general average be apportioned, each vessel will bear 50 per cent of the losses. In recent years, blame has been apportioned in quarters, thirds Denmark is a party to the 1989 International Convention on Salvage. and halves. Should there be no information to establish whether It follows that salvage is based on the “no cure, no pay” principle; the vessels are at fault, or should the court find that the collision however, with special compensation for unsuccessful salvage where occurred as a result of a fortuity, the vessels will not be liable. the efforts of the salvor have been to the benefit of the environment (“environmental salvage”). Salvage requires the presence of These principles apply equally to collisions involving more than danger, assistance to a vessel or navigable construction or asset and two vessels and to near-miss situations. The rules on collision mobile or permanent offshore installations which are not engaged in apply to ships as well as mobile offshore units when under tow, but exploration or production of oil and minerals. not to fixed installations such as piers, pipelines or fixed offshore installations. The basis of liability is fault/culpability, although The criteria for setting the size of the award are those found in the breach of public law regulations such as the Danish Enactment of convention. the Collision Regulations, regulations to further safety at sea or Since the DMSA on salvage is not mandatory except the rules the facts of the case such as breakdown of machinery may have an concerning “environmental salvage”, Lloyd’s Open Form (LOF) impact on the likelihood that a vessel will be found liable. contracts are commonplace, and those or other salvage contracts will The single liability principle applies between the vessels. be respected to the extent they are not unreasonable and made under the influence of danger. Owners of salved assets, including vessel (ii) Pollution and cargo, are liable to pay salvage, and the salvor may exercise a Denmark has ratified and enacted the 1992 International Convention maritime lien on the asset until it has been paid or security, including on Civil Liability for Oil Pollution Damage (CLC) as well as for interest and costs, has been provided. The International Salvage the 1992 International Convention on the Establishment of an Union (ISU) standard forms and similar forms are common. International Fund for Compensation of Oil Pollution Damage The 1974 York-Antwerp Rules as amended 1990 (YAR) have been (Fund Convention) and The 2003 Supplementary Fund (Fund). incorporated into the DMSA and apply to the extent no other rules, This entails that liability is strict and channelled to the registered including other versions of the YAR, have been agreed between the

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parties. Owners of assets subject to general average contribution are not personally liable for the contribution; however, they may be 2 Cargo Claims required to assume such liability in exchange for the assets being delivered. The standard GA bond and guarantee forms issued by 2.1 What are the international conventions and national average adjusters are common and accepted. laws relevant to marine cargo claims? (iv) Wreck removal Denmark is a party to the 2007 Nairobi International Convention Denmark is a party to the International Convention for Unification on the Removal of Wrecks (Wreck Removal Convention) and so of Certain Rules of Law Relating to Bills of Lading 1924 with its the Danish authorities can order a wreck to be removed by the Visby Protocol and SDR Protocol (Hague-Visby Rules). In addition, shipowner, or that work be carried out on the wreck to ensure however, Denmark has enacted certain elements of the Hamburg sufficient depth for safe passage above the wreck. Rules into the DMSA to the extent these are not repugnant to the Denmark Hague-Visby Rules. Denmark has signed the Rotterdam Rules Should the shipowner fail to do so, the authorities may carry out the which, however, have not yet been ratified. work necessary to remove the wreck or ensure safe passage at the expense of the shipowner. However, the latter is permitted to limit liability in accordance with the Wreck Removal Convention. 2.2 What are the key principles applicable to cargo claims (v) Limitation of liability brought against the carrier? Denmark is a party to the Convention on Limitation of Liability Being a Hague-Visby state, a carrier subject to Danish law is for Maritime Claims 19 November 1976 and its 1996 Protocol. responsible for loss or damage to the goods occurring during The parties entitled to limit liability are the owners of the ship, the period of responsibility if notification of loss or damage has including parties who equip, crew and operate the ship for their occurred within three days of delivery, unless the carrier can show own account. This includes users, charterers, managers and parties that its liability is not involved. The “Hague-Visby catalogue” of providing services in direct connection with salvage operations (the exemptions of liability does not apply. The carrier must instead imputed tonnage being 2,000 tons). The ambit of parties included show that the loss or damage was not caused by fault or neglect by may be wider than in other jurisdictions, and may include freight it or any person for whom it is responsible. forwarders. Those for whom the shipowner is responsible and the shipowner’s insurers may also limit liability. The limits are set out In addition, the period of responsibility extends to the entire time the in the protocol and there are special limits set for vessels less than carrier has the goods in its custody, rather than from tackle-to-tackle. 300 tons. In addition, the DMSA allows for an increase of the limits This period may extend to road, rail or air carriage before or after the as per article 8 of the 1996 Protocol. Limits may be breached where ocean carriage in question. In addition, there are specific provisions the damage is caused with intent to cause such loss or damage, or on deck carriage and carriage of live animals, which derogate from recklessly with the knowledge that such damage would probably the Hague-Visby Rules. The fire and error in navigation exceptions to liability apply. occur. A contractual and performing carrier are jointly and severally liable It is thought that the EU directives regarding waste, particularly to the cargo interest. their rules on “polluter pays”, may have an impact on the above. (vi) The limitation fund Liability may be limited to SDR 2 per kg or SDR 667 per package, whichever is the higher, unless the damage resulted from an act or It is not a condition for invoking the right to limit liability that a omission of the carrier caused with intent to cause damage, or recklessly fund be established. A fund may, however, be established in the and with knowledge that such damage would probably occur. Maritime and Commercial High Court if legal proceedings have The DMSA rules apply to both bills of lading and sea waybills. been commenced in Denmark; that is, a claim form has been issued Charterparties may be incorporated into bills of lading and, if or the vessel has been arrested in Denmark. successfully incorporated, they will govern the contractual relationship The fund is established upon application to the court, which will between cargo interest and carriers; however, the DMSA will prevail require payment of funds into the court in cash, by first class where the charterparty conflicts with it. Danish bank guarantee or, in appropriate circumstances, a guarantee The DMSA applies on a mandatory basis and the Danish courts will provided by an insurer. take jurisdiction on a mandatory basis in case of carriage to and from Denmark and, in appropriate circumstances, including pre-carriage or 1.2 What are the authorities’ powers of investigation / carriage after discharge into Denmark by another mode of transport. casualty response in the event of a collision, grounding These provisions will, however, yield to the Brussels Regulation and or other major casualty? a valid choice of law between parties within the EU/EEA. A choice of law in a charterparty and reference to the charterparty Marine accidents will be investigated at the discretion of the in a bill of lading is insufficient; the reference in the bill of lading Danish Maritime Accident Investigation Board (DMAIB), which must include a specific reference to the jurisdiction clause as well. investigates more serious marine incidents, particularly involving injury, large casualties or casualties which could have caused Suit time is one year. serious loss or injury. The DMAIB fully investigates such incidents in Danish and Greenlandic waters, though investigations regarding 2.3 In what circumstances may the carrier establish foreign ships may be agreed and left with the authorities of the flag claims against the shipper relating to misdeclaration state. of cargo? The purpose of the DMAIB investigation is to ascertain the events and reasons for the accident in order to prevent similar accidents in Dangerous cargo must be declared and the cargo interest must advise the future, but not to establish liability. Nevertheless, the report of of the fact that the goods are dangerous and precautions to be taken. the DMAIB will often have persuasive effect and may be the only/ Failure to do so may mean that the shipper is strictly liable to the best account of the events leading to the casualty. carrier (and performing carrier) for damage and loss arising out

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of the carriage of the dangerous cargo. In addition, the carrier enforcement is to levy execution on the debtor’s property, including is permitted to unload, render innocuous or destroy the goods as a vessel. Execution will ultimately entail the forced sale of the asset. necessary, without compensation to the cargo interest.

Where non-dangerous goods are concerned, the shipper is liable 4.2 Is it possible for a bunker supplier (whether physical for loss or damage arising out of the shipper’s fault or negligence, and/or contractual) to arrest a vessel for a claim including misdeclaration. relating to bunkers supplied by them to that vessel?

Bunker suppliers can arrest vessels for claims for delivery of bunkers 3 Passenger Claims where the owner is liable for the delivery. Danish law does not recognise delivery of bunkers as a statutory lien and, accordingly, Denmark 3.1 What are the key provisions applicable to the arrest of a vessel for supply of bunkers to a charterer is not possible. resolution of maritime passenger claims? Bunker suppliers may, however, arrest in accordance with the aforementioned procedure for arrest under the Danish Administration Denmark is a party to the 2002 Protocol to the 1974 Athens Convention of Justice Act. The target of such arrest could be the arrest of any relating to the carriage of passengers and their luggage by sea. asset owned by the debtor, including bunkers on board a vessel. In addition, EC Regulation 392/2009 on the liability of carriers of passengers by sea in the event of accidents, incorporating the Athens 4.3 Where security is sought from a party other than the Convention into EU law, is applicable in Denmark. vessel owner (or demise charterer) for a maritime These rules cover intra-Danish carriage as well. claim, including exercise of liens over cargo, what options are available?

4 Arrest and Security Arrest of a vessel without the owner being liable for the underlying claim is normally only possible if the claim is secured by a lien. The statutory maritime liens recognised by Danish law are: 1) 4.1 What are the options available to a party seeking to wages and other sums due to the Master and crew in respect of their obtain security for a maritime claim against a vessel owner and the applicable procedure? employment; 2) port canal and other waterway dues and pilotage dues; 3) claims for personal injury in direct connection with the operation of the ship; 4) claims for damage to property in direct Denmark is a party to the 1952 International Convention Relating to connection with the operation of the ship if the claim is not based the Arrest of Seagoing Ships. Accordingly, arrest of vessels may be on contract or salvage; 5) wreck removal; and 6) contributions in made for the claims set out in that convention. general average. Arrest may be made of the vessel in respect of which the maritime The following claims give rise to a lien on cargo: 1) claims for claim lies and sister ships, that is the vessel owned by the same salvage and contribution in general average; 2) claims relating to shipowner. Sister-ship arrest is not available regarding disputes the carrier or Master having made agreements, taken measures or concerning property rights to a ship, possession, use or revenues of the made payments on behalf of the cargo owner; 3) claims by a or mortgages in a ship. Arrest of associated ships is not possible. owner for reimbursement for goods sold for the benefit of other As a general rule, the owner of a vessel must be liable for a claim cargo owners; and 4) claims of the carrier pursuant to the contract for arrest to be possible. The exception is where the claim is secured of carriage including freight, provided that these claims are valid by a lien (see below). against the party requesting delivery. To arrest a vessel, the arresting party must submit an application A shipowner may establish a contractual lien on freight and sub- for arrest with the Enforcement Court. The arresting party must freight. The act of perfection is notification of this assignment to the show that there is a maritime claim, but does not need to raise a charterer or sub-charterer. presumption that the claim will succeed on its merits. In addition to A shipyard has a non-statutory right of retention in the vessel built the application, the arresting party must provide counter-security in or repaired for payment of its remuneration, provided the vessel is case the claim is wrongful. The counter-security usually amounts to in its possession or under its control. five days’ hire of the arrested vessel. Within one week of the arrest, the arresting party must commence 4.4 In relation to maritime claims, what form of security is confirmatory proceedings to decide whether the arrest was legal or acceptable; for example, bank guarantee, P&I letter of wrongful. These proceedings will often be stayed if the underlying undertaking. claim is subject to jurisdiction elsewhere. Should the court conclude that the arrest was wrongful – that is illegal, not that it fails on the An arresting party must expect to provide security for damages and merits – the arrest will be lifted and the arresting party will be strictly inconvenience of an arrest should this turn out to be unlawful. The liable for the damages and losses incurred by the vessel owner. security is decided by the Enforcement Court and is usually set at Assets other than vessels may be arrested for non-maritime claims five days’ hire of the particular vessel. The security accepted is according to the Danish Administration of Justice Act. Such arrest may usually cash deposit or a first class Danish bank guarantee. be made if it is not yet possible to execute a judgment and the arresting A vessel owner will usually be required to provide security to avoid party can show that, if the arrest is not permitted, the possibility of arrest or for the release of an arrested vessel without the underlying obtaining payment will be severely reduced. This option is normally claim being resolved. The amount of security is a matter for the unattractive where vessel arrest is possible, as the Enforcement Court’s discretion of the Enforcement Court but 130–140 per cent of the requirement as to security is higher than five days’ hire. total claim is normally sufficient. The forms of security normally Once a claimant has acquired judgment or has another enforceable accepted by the courts are cash deposits, first class Danish bank instrument, arrest is not possible. Instead, the avenue for guarantees and LOUs from Clubs and first class insurers.

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5 Evidence 6 Procedure

5.1 What steps can be taken (and when) to preserve or 6.1 Describe the typical procedure and timescale obtain access to evidence in relation to maritime applicable to maritime claims conducted through: i) claims including any available procedures for the national courts (including any specialised maritime or preservation of physical evidence, examination of commercial courts); ii) arbitration (including specialist witnesses or pre-action disclosure? arbitral bodies); and iii) mediation / alternative dispute resolution. In case of a serious marine incident, the DMAIB will usually collate Proceedings are commenced by delivering a claim form which evidence, interview the crew and issue a report. The report is public, Denmark but the documentation so obtained will not be available to the public includes particulars of claim to the court. The court is seized once or interested parties afterwards. Shipowners may therefore wish this has been received. The court fee is – roughly – 1.2 per cent of to ensure that documentation presented to the DMAIB is provided the claim amount, however, maximised at DKK 75,000. A court fee only in copy, or that a copy is retained for their own purposes. in the same amount is payable when the matter is set down for trial. Under the DMSA, in certain instances a party with an individual The court fees are fully recoverable for a claimant who wins. Once interest in the accident may request that a maritime enquiry be the defendant has filed its defence, the court will normally convene a held in court. If the court allows it, any person involved in or with telephone case-management conference and set out the further steps knowledge of the event can be required to give evidence as a witness including expert reports, reply, rejoinder or any other issues. Most before the court, and documentation can be presented. The enquiry maritime cases are heard by the Maritime and Commercial High will not result in any finding of the court as to liability or other legal Court. In the alternative, they must commence in the Danish court issues, but is purely a fact-finding mission. of first instance. Appeal from both courts is ordinarily to the High Court of Appeal, though in certain specific circumstances, appeal In other cases, the Danish courts may be requested to appoint a court from the Maritime and Commercial High Court to the Supreme expert to deliver an expert opinion, to hear a witness before trial if Court is possible. Appeal to the Supreme Court will otherwise there is good reason to do so or, in limited circumstances, to order require leave to appeal. that evidence, in the form of documents, be presented to the court. All appeals entail a full hearing of the case on both facts and law Whilst an expert opinion is virtually always allowed, the other steps unless the appeal is expressly limited to certain aspects. The time are at the discretion of the court. None of these steps involve a for hearing a Danish court case in the first instance is approximately finding of the court, and the party requesting the steps must bear the 18 months, assuming everything runs smoothly. costs of the procedure. However, under more recent Danish law, the party which may be deemed to have “lost”, once a joint expert Arbitration proceedings are usually commenced by submitting report is rendered, may be required by the court to pay the cost of a request for arbitration to the relevant body and paying the other parties to that procedure. registration fee, if any. Subsequent proceedings will often follow the above pattern subject to the parties’ agreement otherwise. Expert opinions obtained by a party unilaterally are usually allowed by the court if they have been obtained prior to the commencement The Danish Arbitration Act is based upon the 1985 UNCITRAL of proceedings. After proceedings have commenced, unilateral Model Law. reports are permitted where the parties agree to each obtain their A winning party may be awarded costs which are normally awarded own opinion, whereas the court will otherwise normally require the according to a scale of tariffs, the value of a claim and the degree parties to agree a joint expert. of success. Whilst a winning party will usually recover some costs, The rules regarding expert reports after the commencement of trial the cost award will not reflect the full costs to be expected in Danish are in a state of change, and it remains to be seen whether unilateral proceedings. reports will be common going forward. It is considered, however, Interlocutory steps such as injunctions are available in appropriate that a joint expert report will have greater evidential value than circumstances; however, anti-suit injunctions are neither known nor unilateral reports in any event. recognised by the Danish courts.

5.2 What are the general disclosure obligations in court 6.2 Highlight any notable pros and cons related to your proceedings? jurisdiction that any potential party should bear in mind. Danish law does not, as a point of departure, operate with disclosure. Each party will decide what documents to present to the court. Under Danish court proceedings and arbitration are flexible and informal. the Danish Administration of Justice Act, however, a party may No power of attorney is required to commence proceedings request a court order for the opponent and, in certain circumstances, and evidence is not required to be notarised. The Maritime and a third party to deliver up evidence such as documents (including Commercial High Court accepts documentation in English and electronic documents), recordings, etc. The party requesting such translations do not generally have to be authorised. The costs disclosure must, however, show what is to be proven by the request of Danish court proceedings are manageable when likened and why the documents are (only) in the possession of the opposing to comparable jurisdictions, and judgments are handed down or third party in question. The scope for “fishing expeditions” is reasonably fast. The Maritime and Commercial High Court is therefore relatively narrow. The consequence of not adhering to competent throughout the country and has great expertise in a court order for disclosure is that the court may make adverse maritime matters. inferences at its discretion. Trials are usually conducted in a reasonably short space of time and judgment handed down within four to six weeks of the hearing.

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7 Foreign Judgments and Awards 8 Updates and Developments

7.1 Summarise the key provisions and applicable 8.1 Describe any other issues not considered above that procedures affecting the recognition and enforcement may be worthy of note, together with any current trends of foreign judgments. or likely future developments that may be of interest.

Although Denmark generally has a reservation in its EU participation Recent developments of Danish procedural law are the relaxation on legal affairs, through a bilateral agreement, Regulation 1215/2012 of rules concerning court-appointed experts and – should it come – on Jurisdiction and the Recognition and Enforcement of Judgments Danish accession to the Hague Convention on the Choice of Courts.

Denmark in Civil and Commercial Matters applies in Denmark. Similarly, Denmark is also preparing for the enactment of the International Denmark is a party to the Lugano Convention. Convention on Liability and Compensation for Damage in As a consequence, judgments handed down by courts in either the Connection with the Carriage of Hazardous and Noxious Substances EU or the EEA are recognised and enforceable in Denmark. by Sea, 1996 (HNS Convention) and Rotterdam Rules, should these come into force. Denmark is not, however, a party to Regulation 805/2004 on the European Enforcement of Uncontested Claims. No other judgments are recognised and enforceable in Denmark, Mads Poulsen although Denmark is preparing to enact the Hague Convention of Jensen Neugebauer 30 June 2005 on Choice of Court Agreements. This may therefore Frederiksgade 21, 3 apply if the convention comes into force. 1256 Copenhagen K Denmark

7.2 Summarise the key provisions and applicable Tel: +45 33 34 80 10 procedures affecting the recognition and enforcement +45 53 70 80 10 of arbitration awards. Email: [email protected] URL: www.jnlaw.dk

Denmark is a party to the 1958 New York Convention of the Mads was born in 1971, graduated in 1998 from the University Recognition and Enforcement of Foreign Arbitration Awards. of Copenhagen, and obtained an LL.M. in Maritime Law from the Foreign arbitration awards of most other countries are therefore University of Southampton in 1999. recognised and enforceable in Denmark. Subsequently he was employed in English law firms as well as in roles connected to the English insurance industry and Lloyd’s. Mads qualified as a Danish advokat (advocate) in 2004, obtaining rights of audience before the Danish High Court of Appeal in 2005 and before the Danish Supreme Court in 2010. He is particularly active in advocacy as well as in advising clients on maritime law and marine insurance, including cargo claims/defence, collisions, salvage, general average, ship arrest, freight, demurrage and defence, charterparties, freight forwarders, CMR/road carriage, air and rail carriage. Mads edits the Danish Insurance and Tort Law Reports concerning maritime and transport cases, and has taught International Transport Law as an external lecturer at the University of Copenhagen.

Jensen Neugebauer is a firm specialising in insurance, which is an ever-present part of any maritime dispute. Accordingly, marine insurance, and the claims that give rise to claims under such insurance, form an important part of the firm’s practice. Jensen Neugebauer advises both marine insurers as well as shipping companies, non-vessel-operating common carriers, freight forwarders and other parties involved in maritime contracts and disputes, both in such disputes and in avoiding dispute through risk management and drafting. The firm’s philosophy is to deliver the right solution to each client, who may have very different needs, and to do so using experienced staff, yet at a manageable cost. Workable, commercial solutions are therefore at the forefront of our efforts where this is called for, whilst dispute resolution in all its forms is applied as and where necessary.

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Q.E.D INTERLEX CONSULTING SRL Luis Lucas Rodríguez Pérez

breakdowns. There are no relationships established between salvage 1 Marine Casualty contract parties (i.e. salvors and owners) or circumstances under which assistance is considered as one or the other. Thus, any salvage 1.1 In the event of a collision, grounding or other major act at sea is regulated by contracts which the salvors and owners may casualty, what are the key provisions that will impact enter into (like the standard Lloyd’s Open Form contract (LOF)), by upon the liability and response of interested parties? the internationally accepted practice or by an administrative act of In particular, the relevant law / conventions in force in the competent authority, which is the Navy, in accordance with the relation to: authority granted by Law No. 3003 on Police Ports and Coasts of 10 July 1951. (i) Collision In general terms, there is no specific regulation stipulating the usage Casualties are well enumerated in the Code of Commerce. In the case of a specific salvage contract, so it would be at the discretion of the of a collision, the Code of Commerce clearly states that the damaged salvor and owner or insurers, as the case may be, or even the local vessel may not proceed against the other vessel. In a collision where authority. This means that if an LOF rules the salvage operation, then the responsibilities cannot be established, damages will be equally regulations other than those established in the Dominican Republic assumed by the vessels which have caused and suffered damages, and London Salvage Convention of 1989 criteria, including a Special whose estimation will be performed by experts. However, in this Compensation Protection and Indemnity Clause (SCOPIC), can type of accident and specifically in a collision, one of the main apply. causes is non-compliance with the regulations of the International Other general averages and their treatment as such are clearly defined Convention for the Safety of Life at Sea (SOLAS), which are also in Article 400 of the Code of Commerce. This Code does not make requirements for vessels in Dominican territorial waters; the Navy is reference to the option of whether they can be adjusted in accordance responsible for their implementation, control and monitoring. with generally accepted international rules or not; it only states very With respect to other casualties such as grounding and others of simply that the goods – which will be priced in the place of cargo – greater magnitude, they are not clearly regulated or defined in the the freight and half of the vessel shall contribute in proportion to the Code of Commerce, thus limiting them and only classifying them in value. The interesting point is that it is not established that the general casualty lists as particular or general average. average should not be compulsorily adjusted or liquidated under In situations of collision and shipwreck, as well as other major Dominican law. However, if the matter is referred to Dominican law, accidents that prevent the ship from sailing or where the damage is the rule set forth in Article 408 states that there shall be no claim for applied to at least three-quarters of the ship (CTL), these situations general average if the value thereof does not exceed one per cent of are considered as causes of abandonment to insurers. the total value of the ship and goods, excluding the value of freight. (ii) Pollution (iv) Wreck removal In the specific case of pollution, the country has modern national The main legal regulation regarding wreck removal is Law No. 3003 legislation expressed in Law No. 64-00 and in other sectorial of 1951, On Port and Coastal Police. This Act, in its Articles 66 regulations under its laws. However, it is mainly Law No. 64-00 that and 67, includes the treatment to be given to the wreck, including sets forth administrative powers, civil and criminal responsibilities, certain procedures and measures. Article 66 defines the obligations among other relevant aspects. This leaves the Courts to impose of the owners and captains to report to the Harbour Master if the penalties for the violation of the Law on environmental issues. These vessel is abandoned and not wrecked, and to ensure the delivery of responsibilities include the marine environment. all documents regarding the ship. Environmental regulations are complemented by the Constitution Article 67 of said Law establishes, among other items, that the of the Republic, the same Law No. 64-00, Criminal Code, Criminal removal of vessels in Dominican waters may be carried out by their Procedure Code, Civil Code and other environmental laws and owners with previous permission from the Harbour Master; he will International Conventions and treaties to which the Dominican monitor the operation and determine the conditions that must be in Republic is a party. place when these may affect navigable routes. The time allowed to (iii) Salvage / general average perform the removal may be extended, or the Harbour Master can also run or administratively order the removal or demolition of the Salvage is also provided in the Code of Commerce, but in a very wreck with prior notice to the Consul of the country under which the profuse way and without a clear definition of it, or its treatment, flag of the shipwrecked vessel was registered. as the Code is limited; it considers salvage only within general

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A wrecked vessel can be topped in sale by an administrative procedure followed by the Harbour Master. Eventually, and in 1.2 What are the authorities’ powers of investigation / the case of dispute over ownership of the shipwrecked vessel, the casualty response in the event of a collision, grounding or other major casualty? Harbour Master will seek immediate authorisation from a judge for removal or demolition. Although not specified, it can be interpreted that this action occurs when somehow the navigation safety or the The authority is the Navy (Armada) through the Harbour Master environment may be affected. (Comandancia de Puertos), which has full power to handle any marine casualty within the territorial waters of the Dominican As shown, this regulation refers only to the physical abandonment Republic; such powers include all the recommendations and of the shipwrecked vessel without reference to the abandonment to measures they consider necessary and reasonable. insurers, which is regulated by the Code of Commerce in Articles 369 to 396. The regulation regarding wreck removal makes it a condition not 2 Cargo Claims to use a specific contract; therefore, it would be at the discretion Dominican Republic of the owner and the insurers or the local authority regarding the 2.1 What are the international conventions and national underwriting of some of the international agreements on removal laws relevant to marine cargo claims? of wrecks. (v) Limitation of liability From a national perspective, cargo claims in the Dominican Republic The Dominican Republic’s law does not contemplate any limitation are regulated by the Commercial Code, the Civil Procedure Code of liability, leaving its determination to the discretion of the and the Civil Code as national laws. In terms of international law, Civil and Commercial Court with competency to hear the case the International Convention for the Unification of Certain Rules in question; such determination is based on three core principles of Law relating to Bills of Lading (Hague Rules) apply. Claims commonly accepted by most of the laws: (i) repair of the damage; are judged by the Commercial Court or Civil Court, essentially (ii) repair of the moral damage; and (iii) lucrum cessan, perhaps according to the nature of the case. most importantly of all for the purpose of determining the maximum range of responsibility. Civil liability is clearly contained in Articles 2.2 What are the key principles applicable to cargo claims 1382, 1383 and 1384 of the Civil Code. brought against the carrier? That is, the limit of liability that is often established or identified in the case of maritime accidents is not regulated by Dominican law The basic principles in the exercise of claims against the carrier are and is governed only by the principles already stated. the first carrier’s liability under the Hague Rules, and the grounds Of course, on claims for damage to cargo, the limit is set by the established by the Code of Commerce, among others, are the Hague Rules, to which the Dominican Republic is a party. following: In cases of environmental pollution specifically, there is no limit a) the loading costs are the shipper’s, as are the discharge costs of liability determined for the polluter, although it should be noted and the costs for reloading the other goods to be transported; that Law No. 64-00 on the Environment establishes liability without and prejudice to the penalties provided by law; anyone who causes harm b) the Master Captain cannot retain the goods aboard his ship to the environment or natural resources will have responsibility for for lack of payment of freight, but, at the time of discharging, damage that may result, in accordance with this Act and the relevant may demand that the goods are deposited with a third party statutory provisions. It shall also repair the damage materially, at its until the freight is fully paid. expense, if this is possible, and pay compensation according to law. The Civil Code also regulates the obligation of any person (whether The reparation of the damage is to restore the situation prior to natural or juridical) to repair the damage done to another, either by the event, where possible, on the compensation of the damage the person, persons under their charge or their property. and the damage caused to the environment or natural resources, communities or individuals. 2.3 In what circumstances may the carrier establish To determine the magnitude or the amount of damage incurred, claims against the shipper relating to misdeclaration the Court will consider the reports prepared by the technicians of cargo? and inspectors and formal reports evacuated from the Ministry of Environment and Natural Resources and other state environmental The carrier may, under any circumstances, initiate a claim for agencies, without prejudice to the evidence and surveys that the trial damages against the shipper for misdeclaration having verified judge himself required, ex officio or upon request. the same, and it is recommended that the Master issues his protest within 24 hours of knowing such misdeclaration. The Master is also In addition to administrative and civil responsibility, criminal entitled to unload the goods on board the ship if they have not been responsibility is also supervised by Law No. 64 and is subject to reported or if they have been required to pay higher freight costs in random sanction; this regulates the levels of fines applicable to those place for that kind of merchandise. responsible for lesser damages. It should be understood that the levels of fines should not be confused with limits of liability as they One issue to comment on is the lien, in the sense that retention of are distinct concepts. cargo is regulated by the lien. This means that any lien on cargo shall be there on commercial grounds but not under Dominican Republic (vi) The limitation fund law. This commercial action could be considered unlawful if the The limitation funds follow the same concept of liability. However, cargo interests so request to the Court. in some specific cases, the seizure of assets for example, the Civil Procedure Code states in Article 557, 2nd Paragraph that in no event should the unavailability caused by the retentive seizure exceed twice the value of the debt incurred.

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3 Passenger Claims 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 3.1 What are the key provisions applicable to the resolution of maritime passenger claims? It is possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers The provisions are the Civil Code and the Code of Civil Procedure, supplied by them to that vessel, since the nature of the credit is based on the same principles as stated for civil claims. The vessel the same as recognised by the law for other similar credits over a or other assets under the property of the owner (or demise charterer) vessel; however, due to the usual lack of knowledge and experience can be seized, but only under a civil claim. in the practice of maritime law on the part of judges, the case must be strongly supported and reasoned in order for the judge to be 4 Arrest and Security convinced to grant the arrest. Dominican Republic

4.3 Where security is sought from a party other than the 4.1 What are the options available to a party seeking to vessel owner (or demise charterer) for a maritime obtain security for a maritime claim against a vessel claim, including exercise of liens over cargo, what owner and the applicable procedure? options are available?

There are two options for the arrest of ships, one of a conservatory It should be noted that, in this case, and taking into consideration the character and the other of an executable character. Both are protected fact that cargo is not subject to special treatment as ships are, there in the Code of Commerce, Law No. 603 on Naval Mortgages and are two options applicable, both regulated in the Civil Procedure Act No. 222-92. Law No. 603 on Mortgages protects the right of Code. seizure of the ship and sets a mortgage lien that may be exercised. The first is an ex parte action under the legal basis of Article The procedure for exercising the lien is contained in the Civil 557 (amended by Law No. 1471 of 1947), which provides that Procedure Code as amended by Act No. 845 of 1978, although the any creditor may, by virtue of title, and under private authentic Code of Commerce also provides certain basic procedural rules to signature, seize retentively what is held by a third party and the be followed. sums and effects belonging to the debtor, or oppose the delivery of The Code of Commerce defines the degree of privilege of the loans these items to their address. In any case, the unavailability caused that fall on a ship and the reasons that justify them as being required by the embargo shall exceed twice the value of the debt by which or extinct. However, the Code is silent on defining the types of the embargo is originated. Another issue to consider is the fact that credits considered maritime liens, which omission is overcome with it does not establish a defined deadline for resolution of thisex parte the aforementioned Convention. action. From the reading of Article 199 of the Code of Commerce, it is The second option is to follow the common procedure for seizure of inferred that a vessel may be seized on an “action in personam” conservatory goods by a resolution of the Court. by a non-marine claim and an “action in rem” for a maritime claim privileged or established in that law. 4.4 In relation to maritime claims, what form of security is Its Article 215 sets a limit on lien contrary to the usual legal practice acceptable; for example, bank guarantee, P&I letter of in many countries, and establishes that a ship ready to sail cannot be undertaking. arrested unless legal action is based on debts incurred for the voyage that it is about to make, unless the debtor posts a bond. The Code of Article 215 of the Commercial Code provides that the arrest of a Commerce states that a ship is ready to sail when (and only when) ship can be prevented by providing bail; however, the security to the Captain is in possession of the departure documentation. lodge is not clearly stated, and it remains at the discretion of the The limitation set forth in Article 215 is extended to other Court to accept even a Bank Guarantee, a Letter of Undertaking circumstances by Law No. 222-92, which states that for ships in from a P&I, or any other kind of security. It is always understood port being loaded with local goods in transit or contracted cargo, that such guarantee documents should not contain unreasonable the Dominican Port Authority shall, as a prerequisite, require that terms and conditions that leave the claimant defenceless, or in some the claimant provide at its expense the funds needed for the transfer way prejudice and/or reduce the rights of the claimant. and transport of cargo to another ship in order that it may continue without delay to its destination and the international maritime trade is not therefore interrupted. That is to say, the judge’s action is 5 Evidence subject to an administrative act as a sine qua non prerequisite. A judge will grant conservatory arrest when, in addition to the same 5.1 What steps can be taken (and when) to preserve or requirement that all the formalities have been complied with in the obtain access to evidence in relation to maritime demand for payment, there is urgency and an imminent danger that claims including any available procedures for the the goods can somehow disappear and the debtor’s insolvency may preservation of physical evidence, examination of witnesses or pre-action disclosure? occur. The minimum time that it can take for a conservatory arrest of a ship from the request to the judge until it is granted, as long as the process formalities have been completed and all titles and All steps to preserve or to obtain evidence should be made inside and documents prove and justify the existence of a credit, may vary during the civil procedure; therefore, there is no specific procedure between 30 and 45 days. There may be other circumstances in allowing an interested party to take any steps or action to preserve which the period is reduced. evidence.

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Cons: 5.2 What are the general disclosure obligations in court 1. Maritime legislation is outdated with respect to current trends proceedings? and international treaties and Conventions on the subject. 2. The lack of knowledge, practice and expertise of the judges Disclosure obligations in Courts are also ruled on in civil in maritime matters. proceedings; the disclosure can be made in two different stages: one 3. Apart from legal action against an arrest which, as mentioned at the same time as filing the claim; or as requested by the Court, previously, is granted by a judge by means of a resolution, depending on the stage of the proceedings. there is a widely used method, without being a Court resolution; it has the same effects and is none other than the “opposition”, which is established by being written ex parte 6 Procedure and is notified by an act of bailiff to the presumed debtor and other authorities and persons or entities related to the subject matter. Our view is that this document does not have 6.1 Describe the typical procedure and timescale

Dominican Republic any legal force or validity although, in reality, it has effect applicable to maritime claims conducted through: i) because, in many cases, people who should make a decision national courts (including any specialised maritime or to use it will inhibit in detriment of the rights of the presumed commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute debtor; such opposition works like an ex parte retention right. resolution. 4. Processes are too long and slow, and sometimes the judge does not have a definite deadline to sentence, specifically on In civil and arbitration processes, the typical procedure begins with conservatory ship arrests, although the Court may decide a shorter timescale at its sole discretion under Articles 417 and when filing the claim. 418 of the Civil Procedure Code, respectively. i. This procedure in Civil or Commercial Courts could take 14 months (approximately) plus another 14 months (approximately) if there is an appeal. However, in the 7 Foreign Judgments and Awards Commercial Courts, in cases requiring speed, the presiding judge may allow the summons to be made even on a day- to-day basis and on an hourly basis, if movable effects are 7.1 Summarise the key provisions and applicable embargoed; this may also occur if the complainant constitutes procedures affecting the recognition and enforcement a sort of guarantor or justifies their argument. The resolution of of foreign judgments. the President shall be enforceable, notwithstanding opposition or appeal. (Article 417 of the Civil Procedure Code.) The recognition of foreign judgments is protected under the Civil ii. In maritime cases, when any party is not domiciled, as Code and the Civil Procedure Code as amended by Law No. 834- in matters relating to rigging mouth provisions, baggage, 78 which, very briefly, states under Article 122 that a judgment of careening, and repair of ships ready for their departure, and a foreign Court and acts received by the officers are enforceable in other urgent matters and provisional citations made on a daily the territory of the Republic in the manner and in the cases provided or hourly basis, the procedure can be carried out without prior notification, and the case will be susceptible to resolution by law. executable immediately. (Article 418 of the Civil Procedure In this regard, the Code of Private International Law of 1928 also Code.) applies, which is known as the Code of Bustamante and to which the The arbitration procedure in the Dominican Republic is ruled by Law Dominican Republic is a party. As basic principles, the following No. 489-08 enacted on 7 October 2008. All arbitration procedures, rules must be observed: it has jurisdiction to hear the case and judge except those that may be agreed ad hoc by the parties involved, are according to the rules of this Code; the judge or Court decides settled by the Centre for Alternative Dispute Resolution (Centro de that the parties are to be summoned in person or through a legal Resolución Alternativa de Controversias – CRC) under the umbrella representative for the judgment; the judgment does not contravene of the Chamber of Commerce and Production of Santo Domingo. public order or public law of the country in which it was executed, The average time for the granting of an award is about five to six which is enforceable in the state in which it was rendered and months. authoritatively translated by an official interpreter in order for it to be executed, if there is more than one language used; the document meets the requirements to be considered authentic in the state where 6.2 Highlight any notable pros and cons related to your appropriate; and the judge or Court must do what is required in state jurisdiction that any potential party should bear in law to satisfy the judgment. mind. The process begins when suing is filed in the Court for obtaining Pros: execution (exequatur), and the Court will verify the relevant requirements and start the process in accordance with the provisions 1. The Dominican Republic is a State of Law. of the Civil Procedure Code until the final sentence. 2. The judicial system is fully independent of the Government. 3. For the first time in the Dominican Republic, a Master’s Degree course in Maritime Law has been initiated in order to 7.2 Summarise the key provisions and applicable improve the knowledge of maritime law knowledge among procedures affecting the recognition and enforcement law practitioners and other people connected to the shipping of arbitration awards. sector. 4. The relative increase of interest on the part of some The recognition and enforcement of foreign arbitral awards is Government bodies connected to the maritime sector in governed by Law No. 489-08 on Commercial Arbitration, which placing the country in the international industry, as should expresses appreciation of the execution of foreign awards in the have been the case for a long time. Dominican Republic; such procedure follows the applicable law,

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treaties, agreements or Conventions in force in the country; also, in Commerce, although there are, without a doubt, certain aspects of that order, the Dominican state undertakes to recognise the authority the non-abolished regulations that will be amended. of judgments and arbitration while granting its implementation in To date, no clear moment is foreseen when this will finally be passed accordance with the rules of procedure. and the expected law enacted. Furthermore, Resolution No. 178-01 of the National Congress approved the accession of the Dominican Republic to the New York Convention of 1958. According to Law No. 490-08, it may refuse to recognise the award for various reasons, which briefly include the following: disability of a party; invalidity of the award under (or by virtue of) the law, to Luis Lucas Rodríguez Pérez which the parties have adhered, of the country that issued the award; Q.E.D INTERLEX CONSULTING SRL failure of due process; or that the award rests with controversy, not Gustavo Mejía Ricart, No. 126 the arbitration agreement, or exceeds the terms of the arbitration Condominio Smeter, Suite 301-B Piantini, C.P. 10127 Dominican Republic agreement. According to the law of the Dominican Republic, the Santo Domingo, D.N. object of the dispute is not capable of settlement by arbitration, and Dominican Republic the recognition or enforcement of the award would be contrary to Tel: +1 809 531 8913 the public policy of the Dominican Republic. Mob: +1 809 605 9010 Email: [email protected] The execution of a foreign award will be brought before and resolved URL: www.interlexcons.com by the competent Courts of Justice and, among other requirements, Education: Law Degree, University of Havana. Mr. Rodríguez’s one must submit the original award and the arbitration agreement or studies focused on Maritime, Port, Commercial Law and International the contract that contains it. Finance. He graduated in Mediation of Commercial Disputes at the Cuban Court of Commercial Arbitration and the Centre for Conflict Education and Research, Carleton University, Ottawa, Canada. He 8 Updates and Developments completed his studies on the Training and Familiarization Course for ISPS Code, Panama Maritime Training Services Inc. He was a trainee Solicitor at the distinguished Richards Butler Law Firm (now Reed Smith), London. 8.1 Describe any other issues not considered above that may be worthy of note, together with any current Position: Founding and Senior Partner of the firm Q.E.D INTERLEX trends or likely future developments that may be of CONSULTING SRL and Of Counsel to the international law firm interest. Russin Vecchi & Heredia Bonetti (www.rvhb.com). Member of the Instituto Iberoamericano de Derecho Marítimo – IIDM A project of law proposing that the Dominican Maritime (Ibeoramerican Institute of Maritime Law). Administration bring the law of the Dominican Republic into Areas of Practice: Maritime Law (including, and not limited to, line with the new international regulations and trends has been charterparties, admiralty, ship finance, marine insurance, , marine construction and dredging, and port terminals). He submitted to the relevant committee of the National Congress. also deals with international commerce, litigation and ADR. This project of law essentially focuses on protecting the activities Professional Expertise: Practising Lawyer since 1983. Professor and of the Dominican Maritime Administration, ports, infringements speaker on Maritime Law at various institutions. Has attended as a and administrative sanctions in the area of national shipping, port delegate several national and international seminars, including those seafarers, vessel registration and other aspects of national interest. of the International Salvage Union. The project being considered by the National Congress does not Languages: Spanish and English. replace many other laws in maritime matters including the Code of

The firm is essentially a consulting firm that was incorporated in Dominican Republic in 2012; however, its team enjoys vast professional experience in the services provided. Its goal is to render a wide range of specialised and tailor-made services according to the needs of the clients, mainly of a legal nature as well as commercial, essentially in the field of the maritime industry in general, insurance and international commerce, without dismissing other fields of law, trade and business. The firm is an effective member of: ALEXIA (an international network of maritime lawyers); the Instituto Iberoamericano de Derecho Marítimo – IIDM (Iberoamerican Institute of Maritime Law); and Global Law Experts. The staff members comprise four lawyers, plus another two external associated lawyers and seven associated experts in different areas of the marine industry. One of the lawyers is currently based in the USA. The firm has a wide network of other service providers, which support its work along with correspondents in other countries as a useful complement to an efficient services package for the benefit of the clients’ interests.

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France Laurent Garrabos

LERINS & BCW Rémi Racine

■ Give relief to owners of oil tankers with respect to the 1 Marine Casualty additional financial burden imposed on them by the Civil Liability Convention. 1.1 In the event of a collision, grounding or other major The Bunker Pollution Convention was signed in 2001 and entered casualty, what are the key provisions that will impact into force on 21st November 2008 (Bunker Convention). This upon the liability and response of interested parties? Convention is based on the CLC and applies to damage caused by In particular, the relevant law / conventions in force in spills of bunker oil carried as fuel in ships’ tanks. relation to: French law also contains specific provisions on the liability of shipowners for oil pollution damage (articles L.5122-25 to L.5122- (i) Collision 30 of the Code of Transport) that expressly refer to the CLC. France is a party to the Convention for the Unification of Certain The French Environment Law also introduced a “polluter pays” Rules of Law with Respect to Collisions between Vessels dated 23rd principle which notably applies in case of environmental damages September 1910 (1910 Collision Convention), which entered into caused by ships (articles L.160-1 et seq. of the Environment Code). force in France on 1st March 1913. Most of its provisions were incorporated in French law – now articles L.5131-1 to L.5131-7 of Criminal liability the Code of Transport. Criminal liability is governed by the following provisions: As a general principle, the 1910 Collision Convention applies when ■ International Convention for the Prevention of Pollution from all the vessels involved sail under the flag of contracting parties. Ships (MARPOL 73/78). It is applied in combination with the two International Conventions ■ International Convention for the Safety of Life at Sea on Civil Jurisdiction in Matters of Collision and on Penal Jurisdiction (SOLAS 1974). in Matters of Collision dated 10th May 1952. ■ EU Directive 2008/99/EC. France also applies the International Regulations for Preventing ■ EU Directive 2005/35/EC, as amended by EU Directive Collisions at Sea 1972 (COLREGs), which entered into force on 2009/123/EC. 15th July 1977. The COLREGs are used to assess the behaviour of ■ French Code of Transport and Environmental Code. the parties involved in a collision. These are supplemented, where Any discharge of oil or oil mixtures, whether voluntary or applicable, by relevant local regulations (relating to traffic in ports, involuntary, can lead to criminal liability. The master of the vessel, inland navigation, yachting, etc.). the owner or operator of the vessel and/or any person who has a Collisions can also give rise to criminal liability under articles power of control or management in the operation of the vessel is L.5242-4 and L.5263-1 of the Code of Transport, together with deemed to be responsible. article 223-1 of the Penal Code. (iii) Salvage / general average (ii) Pollution Salvage Civil liability The International Convention on Salvage dated 28th April 1989 The International Convention on Civil Liability for Oil Pollution came into force in France on 20th December 2002. Damage dated 29th November 1969 (CLC), as amended by the 1992 The 1989 Convention has been incorporated into the Code of Protocol and the 1992 Fund Convention Protocol, applies in France. Transport (articles L.5132-1 to L.5132-11). The CLC governs the liability of shipowners for oil pollution Salvage does not have to be agreed in writing. When a salvage damage. It lays down the principle of strict liability and creates a contract is signed (in practice, through a standard form such system of compulsory liability insurance. The shipowner is liable as Lloyd’s Open Form or the French Formule Villeneau), it is for damages even if no fault is established. still deemed to be somehow of a legal nature, since a number of The main objectives of the Fund Convention are to: obligations are set by law. ■ Establish an International Oil Pollution Compensation Fund There are situations where non-contractual salvage can or must be to provide compensation for pollution damage to the extent obtained. When a vessel is in serious peril and another vessel is that the protection afforded by the Civil Liability Convention rescuing it, the need for salvage is obvious and the parties do not is inadequate. even discuss contractual terms.

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Salvage can even be imposed on an endangered vessel if the refusal of assistance is unreasonable. The salvage regime shall then fully 1.2 What are the authorities’ powers of investigation / apply, including the right to compensation. casualty response in the event of a collision, grounding or other major casualty? Where it is appropriate to apply the salvage regime, it is strictly exclusive of any other legal provisions or tort liability. (i) CROSS The salvage contract or the agreed salvage indemnity can always be Regional Operational Monitoring and Rescue Centres (CROSS) set aside or revised in court, in consideration of the service actually are public authorities located on the French coast (six centres rendered (article L.5132-6 of the Code of Transport). along the French coast, excluding overseas territories) in charge of General average salvage and surveillance of ships in French territorial waters and France Articles L.5133-1 to L.5133-19 of the Code of Transport, together the French Exclusive Economic Zone (EEZ). CROSS are under with the decree of 19th January 1968, govern general average claims. the authority of the Ministry of Ecology through the Directorate for Maritime Affairs and the Maritime Prefect. CROSS are part of the However, this regime is entirely optional, so that the parties are at international network of Maritime Rescue Coordination Centres liberty to put aside national rules in favour of the York-Antwerp instituted by the Convention of Hamburg (1979). Rules (YAR) or any other contractual provisions. The main missions of CROSS are the following: In practice, most, if not all, contracts of carriage refer to the YAR. ■ Search and rescue at sea: CROSS carry out a continuous radio (iv) Wreck removal and telephone watch to answer incoming emergency alerts The Nairobi International Convention on the Removal of Wrecks and supervise and coordinate search and rescue operations at entered into force on 14th April 2015. It was published by French sea, including the handling of major maritime accidents. decree n°2016-615 dated 18th May 2016. ■ Traffic monitoring: mainly focused on the English Channel. Under this Convention, shipowners are financially responsible for the ■ Pollution watch: collecting information on pollution at sea. removal of hazardous wrecks, making insurance, or some other form CROSS analyse data and transmit it to the French authorities. of financial security, compulsory. The Convention allows a state (ii) BEAmer party to remove a wreck which constitutes a hazard to navigation or The French Marine Casualties Investigation Board (BEAmer) was the environment and to take direct action against insurers. created in 1997 to investigate marine casualties and prevent similar Articles L.5142-1 et seq. of the Code of Transport also provide accidents occurring in the future. BEAmer is a national board for specific rules in relation to the ownership, sale and disposal of managed by the General Inspector for Maritime Affairs. wrecks. The action of the BEAmer is governed by international, European (v) Limitation of liability and national rules and notably: The international regime for the limitation of liability of shipowners is ■ International law: the Code for the Investigation of Marine set by the Convention on Limitation of Liability for Maritime Claims Casualties and Accidents laid out in Resolution MSC 255 th dated 19th November 1976 (LLMC), as amended by the 1996 Protocol (84) on 16 May 2008 and introduced by decree n°2010-1577 th which came into force in France on 23rd July 2007 (Protocol). dated 16 December 2010. ■ European law: EU Directive 2009/18/EC dated 23rd April This regime applies to contractual as well as tort liability of 2009 establishing the fundamental principles governing the shipowners. investigation of accidents in the maritime transport sector; and The provisions of the LLMC have been incorporated into French EU Regulation n°1286/2011 adopting a common methodology law (articles L.5121-3 to L.5121-11 of the Code of Transport). for investigating marine casualties and incidents. As for the calculation of such a limitation, article L.5121-5 refers to ■ French law: Code of Transport, especially articles L.1621-1 the provisions of the LLMC, as amended. to L.1622-2 and R.1621-1 to R.1621-38 relating to technical investigations after marine casualties and terrestrial accidents Article L.5121-2 of the Code of Transport provides that shipowners, or incidents. charterers, disponent owners, managing owners, masters of the vessel, crew members and other maritime or land agents have the BEAmer investigations apply: right to limit liability. ■ to French-registered vessels wherever the casualty occurs; It differs from the LLMC in that there is no notion under French law ■ to vessels flying the flags of other states when the marine of in rem action, and therefore no liability of the vessel, and it does casualty or incident occurs in French territorial waters; or not incorporate provisions for the limitation of liability of the salvor ■ when the casualty, regardless of where it happened, has led to and the insurers. the death or serious injury of French nationals, or has caused or threatened to cause serious harm to the French territory, The limitation can be broken when it is proved that loss was the environment, and installations or structures over which caused by the personal act or omission of a party entitled to limit, France has jurisdiction. ‘committed with the intent to cause such loss, or recklessly and with The aim of its investigations is to collect and analyse relevant knowledge that such loss would probably result’ (article 4 of the information, to determine the circumstances and possible causes LLMC and article L.5121-3 of the Code of Transport). and, if appropriate, to make recommendations to improve maritime (vi) The limitation fund safety and pollution prevention. The principles that govern the limitation fund are also defined by the LLMC. Article 11.2 of the LLMC provides that any person entitled to limit may set up a limitation fund either by depositing the sum, or 2 Cargo Claims by producing a bank or protection and indemnity (P&I) guarantee. Article L.5121-6 of the Code of Transport also provides that the 2.1 What are the international conventions and national responsible entity may set up a fund, without any admission of laws relevant to marine cargo claims? liability, in order to secure the payment of the limitations of liability that might be applicable. France is a signatory to the International Convention for the

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Unification of Certain Rules of Law relating to Bills of Lading of Brussels dated 25th August 1924 as modified by the 1968 and 1979 2.3 In what circumstances may the carrier establish Protocols (Hague-Visby Rules). claims against the shipper relating to misdeclaration of cargo? France has ratified neither the Hamburg nor the Rotterdam Rules. French courts have always considered that the Hague-Visby Rules The carrier can claim damages against the shipper for any loss apply to all types of bills of lading (including straight bills of lading) resulting from an inaccuracy concerning the description of the and to all types of documents materialising a contract of carriage of goods on the bill of lading (article 4.5 of the Hague-Visby Rules / goods by sea (sea waybills, etc.). article L.5422-4 of the Code of Transport). French courts apply the Hague-Visby Rules to the carriage of goods France between two different states when a bill of lading is issued in France or the vessel leaves from a French port (article 10). 3 Passenger Claims The Hague-Visby Rules also apply when France is the country of destination and the bill of lading was issued in, or the vessel 3.1 What are the key provisions applicable to the departed from, a country that is a signatory to the Hague Rules only. resolution of maritime passenger claims? When France is the country of destination, but the country where the bill of lading was issued or the vessel departed from is not a The carriage of passengers by sea is governed under French law rd signatory to any cargo convention, then the applicable law will be by EU Regulation n°392/2009 of 23 April 2009 on the liability determined by French courts in accordance with the criteria set forth of carriers of passengers by sea in the event of accidents. This by the Rome Convention or Rome I. Regulation incorporates the provisions of the 1974 Athens Convention as amended by the 2002 Protocol on the carriage of Domestic carriage of goods is governed by articles L.5121-1 et seq., passengers and their luggage by sea as well as the guidelines from articles L.5422-1 et seq. and article L.5423-1 of the Code of Transport. the International Maritime Organization. This Regulation applies to all ships flying the flag of an EU Member 2.2 What are the key principles applicable to cargo claims State, travelling to or from a European port, or under a European brought against the carrier? contract of carriage (i.e. a contract between the carrier and its passengers defining rights, duties and liabilities). The carrier is strictly liable for any damage which occurs during the The carrier is strictly liable in case of death of or personal injury voyage, i.e.: to a passenger caused by a shipping incident, unless the incident is ■ From the beginning of the loading up to the end of the the result of an act of war, hostilities, civil war, insurrection or force discharging operations, under the Hague-Visby Rules. majeure or was wholly caused by an act or omission done by a third ■ From the taking-over of the goods up to their delivery (both party with the intent to cause the incident. from a legal and physical standpoint) under French law. The carrier is also liable in case of loss of or damage to luggage The parties to the contract of carriage are entitled to sue the carrier other than cabin luggage unless the incident which caused the loss for any proven loss or damage arising out of the carrier’s default. occurred without the fault or neglect of the carrier. In the absence of a bill of lading, such parties are those to the contract of carriage per se, i.e., the shipper and the consignee. 4 Arrest and Security In the event a bill of lading was issued, the rightful bearer thereof is, as a matter of principle, the only person entitled to sue for breach of contract. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel However, it has long been established that the actual consignee owner and the applicable procedure? (notified) of the cargo is also entitled to commence proceedings against the carrier, provided he can demonstrate by any means that The International Convention for the Unification of Certain Rules he is indeed the final consignee. Relating to the Arrest of Sea-Going Ships dated 10th May 1952 As for the shipper, who is also a party to the contract of carriage, entered into force in France on 25th November 1957 (1952 Arrest case law has gradually granted him a right to sue the carrier. It Convention). is now certain that the shipper is entitled to sue, provided that he The International Convention on the Arrest of Ships, adopted by the can demonstrate that he suffered a loss or damage in relation to the International Maritime Organization (IMO) in 1999 to replace the carrier’s alleged default. above-mentioned Convention, has not entered into force yet – and Rights under the contract of carriage may also be transferred to a was not signed by France. third party. This international regime is supplemented by French law (articles The carrier’s liability may be excluded in the event of listed “excepted L.5114-20 to L.5114-22 of the Code of Transport) which applies to the perils” (17 excepted perils listed in article 4.2 of the Hague-Visby arrest of ships which do not fly the flag of a contracting state, and to Rules; nine listed by article L.5422-12 of the Code of Transport) claims by a French claimant regarding a French ship in a French port. related to: Under the 1952 Arrest Convention, alleged maritime claims ■ the ship (e.g. act, neglect, or default of the master, mariner, allowing for the arrest of a ship are exhaustively listed (article 1). pilot or the servants of the carrier in the navigation or in the management of the ship); Under French law, it is possible to arrest a ship, whatever kind of title/relationship the claim is based upon. The principal requirement ■ external events (e.g. , arrest or government is that one holds a good prima facie claim against the owner of the measures); or ship. If the ship does not fly the flag of a contracting state, she may ■ the cargo itself (e.g. loss or damage arising from inherent be arrested either pursuant to the provisions of the French law or defect, quality or vice of the goods; insufficiency of packing). pursuant to the 1952 Arrest Convention (article 8.2).

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The applicant must file a request and demonstrate that he hasa The requirement of “sufficient security” to be paid by the guarantor maritime claim as listed by the 1952 Arrest Convention or (i) he will be appreciated by the courts. The criterion is the respect of the has a good prima facie claim, and (ii) recovery of his claim is in interests of each party. jeopardy (an allegation that can be substantiated in every manner) Thus, in principle, any kind of safe security which is equivalent to (article L.511-1 CPCE). the guarantee offered by the arrest of the ship might be accepted. The judge to whom the application is submitted has jurisdiction over A recognised bank or insurance guarantee, or P&I club letter of the defence claim to lift the arrest order (article R.512-2 CPCE). undertaking, will be accepted. It is also possible for the debtor to escrow a sufficient amount to secure his debt.

4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim 5 Evidence France relating to bunkers supplied by them to that vessel?

Yes, it is possible under French law for a bunker supplier to arrest a 5.1 What steps can be taken (and when) to preserve or vessel for such claim. The arrest is also possible on the grounds of obtain access to evidence in relation to maritime the 1952 Arrest Convention if the vessel concerned by the arrest is claims including any available procedures for the the one to which the bunker has been supplied. preservation of physical evidence, examination of witnesses or pre-action disclosure?

4.3 Where security is sought from a party other than the Since the French procedural system does not provide for the vessel owner (or demise charterer) for a maritime hearing of witnesses of facts and experts, the appointment of a court claim, including exercise of liens over cargo, what surveyor is the main, if not the only, way to enlighten the court on options are available? the causes and circumstances of a casualty, the implications thereof, the extent of the damages thereby caused and, in certain cases, to (i) French law provides that the carrier and/or the owner hold a lien on the cargo for the payment of freight (articles L.5422- provide a technical solution and mitigate losses. 8, L.5422-9 and L.5423-3 of the Code of Transport). Provided that no action has been commenced on the merits, an The carrier is entitled to lien the cargo within a period of 15 application for the appointment of a court surveyor should normally days as from delivery, if the property of the cargo has not be made inter partes (“procédure de référé”). In the case of an been transferred to a third party. emergency, a party may seek to have the court surveyor appointed In the event the owner does not receive payment of the freight by means of an ex parte application (“requête”). If substantive at the time of discharge, he is entitled to have the cargo retained proceedings on the merits have already been commenced, the in the hands of a third party, and have it sold, except if the appointment of a court survey can be requested from and ordered by charterer can provide a guarantee. Such retention of the cargo the court in charge of the merits of the case. can only be allowed by an ex parte court order, while the sale The court-appointed surveyor will usually call upon the parties to of the goods must be granted by an interlocutory judgment. the survey to attend a number of meetings, whose purpose is to This lien is for the guarantee of the payment of freight, collect relevant information and documents and to hear any material deadfreight and demurrage only. It does not guarantee salvage witness of fact. or general average. Such a lien extends to all cargo on board but only to the extent In the same manner as for the appointment of a court surveyor, a of the amount of freight still owed for transporting it. Therefore party may also seek from the court an order authorising the taking of the owner can exercise a lien on all goods loaded on board, conservative measures or ordering a party not to dispose of specific whether the property of the charterer or of any other person and identified documents likely to be in its possession. (receiver or otherwise), but only insofar as that person owes the said amount in performance of the contract of carriage. 5.2 What are the general disclosure obligations in court (ii) As regards further security options, two principles govern the proceedings? obtaining of security under French law: (i) it is possible to claim against all of the debtor’s assets, whatever the claim – a consequence of the principle of ‘patrimonial unity’ (article Unlike proceedings before English courts, there is no equivalent of 2284 Civil Code); and (ii) any claim gives rise to a right to seek discovery of documents before the French courts. any sort of conservatory security, as these are not prioritised. Therefore, unless otherwise expressly ordered by the court (in The applicant must file an ex parte request and demonstrate exceptional cases), a party is not required to disclose documents that: (i) he has a good prima facie claim; and (ii) recovery of which may adversely affect its case or support the other side’s case. his claim is in jeopardy (an allegation that can be substantiated Each party is only required to provide documents to which specific in every manner) (article L.511-1 CPCE). reference is made in its pleadings and/or which may be necessary to The creditor can thus obtain: a freezing order on the support its arguments. defendant’s bank accounts; a conservatory attachment of the (An application may be made to the court to order the disclosure of defendant’s titles, claims and assets; a conservatory mortgage specific and identified documents, but the court will not authorise on their real estate properties; etc. fishing expeditions and such orders are only given in exceptional cases.) 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.

A letter of guarantee from a protection and indemnity club will be accepted by the French courts. In practice, this is the most commonly used guarantee.

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6 Procedure 7 Foreign Judgments and Awards

6.1 Describe the typical procedure and timescale 7.1 Summarise the key provisions and applicable applicable to maritime claims conducted through: i) procedures affecting the recognition and enforcement national courts (including any specialised maritime or of foreign judgments. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute EU Regulation n°1215/2012 dated 12th December 2012 governs resolution. recognition and enforcement of judgments from EU countries.

France (i) There are no specialised maritime courts in France. Most Enforcement of judgments from non-European countries requires a maritime disputes will be considered before commercial courts, more complex procedure (a request for exequatur must be introduced and occasionally before a civil court, in cases where one of the by way of a writ of summons). parties is not a commercial entity or a business person, or in certain matters relating to arrests or enforcement of judgments. 7.2 Summarise the key provisions and applicable A commercial action is initiated by the service of a writ, made procedures affecting the recognition and enforcement by a bailiff, to the defendant. If the defendant is a European of arbitration awards. Union resident, the rules of service within the European Union apply as set out by EU Regulation n°1393/2007 dated 13th November 2007. Otherwise, service will have to be done France is a party to the 1958 New York Convention. As such, the through the intermediary of the prosecutor of the civil court recognition of awards from other contracting countries is relatively having jurisdiction in the place where the proceedings have straightforward. been commenced. The recognition and enforcement of arbitral awards are subject to A commercial action involves a series of procedural hearings, the French civil procedure rules which require filing an ex parte at which the matter will be called before the court which will request for exequatur before the relevant civil court. set down the deadlines for the parties to comply with their The civil court with which the application is filed will only perform a procedural obligations (service of pleadings, supporting top-level examination of the award. The unsuccessful party is always documents, etc.). entitled to challenge the exequatur order that has been rendered and Once it appears that the matter may be ready for trial, the date of request inter partes proceedings in relation to the recognition and the final hearing, at which the matter will be heard, shall be set. enforcement of the arbitral award. First instance proceedings typically take between 12 and 18 months (this varies according to the complexity of the case and/or the number of parties involved). 8 Updates and Developments An appeal can always be brought by any party at first instance on questions of law and/or facts. (ii) Arbitration is a common method of dispute resolution in 8.1 Describe any other issues not considered above that maritime matters (as many maritime contracts subject to may be worthy of note, together with any current French law contain an arbitration clause). trends or likely future developments that may be of interest. The Chambre Arbitrale Maritime de Paris is the French maritime arbitral institution which is specialised in handling maritime matters. It has a list of maritime arbitrators and French contract law has been substantially modified by ordinance th issues its own rules that are tailored to deal with mediation (“ordonnance”) n°2016-131 dated 11 February 2016. The aim of proceedings, small and fast arbitration claims and longer cases. this ordinance is the modernisation and simplification of French Mediation and ADR can be envisaged before mediators contract law. appointed by the parties or before specialised bodies. ADR is The new rules codify decades of case law in order to increase legal now encouraged by the French judicial system. certainty. One of their main purposes is to reduce a significant contractual imbalance between the parties. The ordinance covers a wide scope of French contract law and notably sets new rules regarding: 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind. ■ Pre-contractual relations. ■ Economic and contractual imbalance. Court costs are very limited (almost close to zero) and urgent ■ Interpretation and cancellation of contracts. matters can be dealt with rapidly through interlocutory proceedings. ■ Hardship and force majeure. A formal power of attorney is not required for a lawyer to be able ■ Transfer of contracts, rights and obligations. to act. ■ Remedies for non-performance. Claim documents and their translation do not require notarisation. This ordinance became effective on 1st October 2016. As a matter Lawyers’ fees are not automatically recoverable from the losing of principle, contracts signed before this date remain subject to the party. The court will award, at its absolute discretion, a sum for previous regime. the cost incurred in pursuing or defending an action that would It is worth noting that by a decision dated 11th December 2017, the otherwise be irrecoverable. The amounts awarded are seldom French Tribunal des Conflits (a court that has been established to representative of the costs actually incurred. settle conflicts of jurisdiction between judicial and administrative Judges of commercial courts (at first instance) are lay magistrates, courts), has held that any claim that the State may have on a private chosen from the local business community, whose knowledge of person for the expenses relating to an intervention at sea carried complex legal or maritime issues may therefore vary. However, in out as part of the administrative police mission is inherently an traditional “maritime” jurisdictions, commercial judges have real administrative claim. Therefore, only the administrative courts practical experience of maritime matters. shall have jurisdiction to deal with such a claim.

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Laurent Garrabos Rémi Racine LERINS & BCW LERINS & BCW 25, rue du Général Foy 25, rue du Général Foy 75008 Paris 75008 Paris France France

Tel: +33 1 42 84 84 70 Tel: +33 1 42 84 84 70 Email: [email protected] Email: [email protected] URL: www.lerinsbcw.com URL: www.lerinsbcw.com France Laurent Garrabos is a Partner at LERINS & BCW. He joined the Rémi Racine is an Associate at LERINS & BCW. firm (previously BCW & Associés) as a Partner in 2007 after having He deals with commodities, transport (shipping, air and land transport) practised at different international law firms in Paris and acted as and business litigation. General Counsel for a French trading company. Rémi joined the firm as an Associate in 2017 and qualified asan Laurent specialises in international trade, shipping, transport and Avocat of the Paris Bar. insurance. He advises traders, carriers, freight forwarders, brokers and insurance companies and industrial companies generally with particular expertise in commodity, charterparty, bill of lading and express transport disputes. Laurent handles disputes throughout France before French courts, as well as disputes in the Chambre Arbitrale Maritime de Paris (CAMP), Chambre Arbitrale Internationale de Paris (CAIP) and the International Chamber of Commerce (ICC) Arbitration Court. He also sits as an arbitrator with the CAIP. Laurent qualified as an Avocat of the Paris Bar in 1992 and as an Attorney of the Louisiana Bar in 1994. He graduated from the University of Paris II-Assas and from Tulane University, New Orleans, Louisiana (LL.M. in Admiralty, 1993).

Created by the merger of BCW & Associés and Lerins Jobard Chemla Avocats in 2017, LERINS & BCW gathers some 40 lawyers, including 16 partners, with over 15 years’ experience advising French and foreign companies in the main areas of business law. The lawyers at LERINS & BCW benefit from a wide variety of professional backgrounds, from big Anglo-Saxon firms and niche boutique French firms to in-house legal departments. As such, they pride themselves on their entrepreneurial values and provide services in a wide range of sectors through both litigation and counsel, with particular expertise in sectors such as transport, commodities, healthcare and industry. LERINS & BCW has recognised and in depth-experience in handling international trade and transport disputes, in France and abroad.

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Germany Dr. Axel Boës

KOCH DUKEN BOËS Henrike Koch

(iii) Salvage / general average 1 Marine Casualty Germany incorporated the Salvage Convention (International Convention on Salvage, 1989) into sec. 574 et seq. HGB. These 1.1 In the event of a collision, grounding or other major provisions are of dispositive nature and only apply when no casualty, what are the key provisions that will impact agreement is in place. Given that salvage is usually agreed on the upon the liability and response of interested parties? basis of Lloyds Open Form, which provides for arbitration in London, In particular, the relevant law / conventions in force in there are but very few older court decisions on salvage in Germany. relation to: A dispute about salvage will usually concern the remuneration. German law incorporated the criteria of art. 13 Salvage Convention (i) Collision into sec. 577 HGB, so a German court seized with such a dispute Germany is a party to the Collision Convention 1910 (Convention will consider criteria such as the salved value of the vessel and other for the Unification of Certain Rules of Law with respect to Collisions property, skill and effort of the salvors, measure of success obtained between Vessels of 23 September 1910) and partly incorporated by the salvor, etc. as laid down in art. 13 Salvage Convention. The its provisions in sec. 570 to 573 of the German Commercial Code Special Compensation for preventing environmental damage, as (Handelsgesetzbuch – HGB). German courts will apply German provided for in art. 14 Salvage Convention, has been incorporated law if (i) the collision took place in German territorial waters or (ii) into sec. 578 HGB, so a salvor that prevents environmental damage the Parties made a choice of law after the collision (art. 40 of the is entitled to compensation even if the salvage fails. Introductory Act of the German Civil Code (EGBGB)), or (iii) will In sec. 588 et seq. HGB, German law contains basic rules regarding apply the Collision Convention directly if all ships involved fly flags General Average (GA) which would apply if the York-Antwerp Rules of contracting states (art. 12 of the Collision Convention). (YAR) are not agreed upon. GA adjustment is done by specially Sec. 570 to 573 HGB are based on the Collision Convention 1910, appointed average adjusters. The GA statement can be confirmed by however, Germany did not incorporate the convention into the the local court at the place the GA statement was drawn and – with HGB. German courts tend to apply a prima facie evidence or rules the confirmation of the court – becomes an enforceable title against of experience (for instance, if an anchored vessel breaks loose, there all participants of the GA proceedings. Participants to the GA who is prima facie evidence that it was insufficiently secured) that comes do not agree with the GA statement may file an objection, which is close to a presumption of fault which should be excluded by art. 6 then decided by the competent court at the place the GA statement para 2 of the Collision Convention 1910. was made. Once all objections are decided by the court, the GA (ii) Pollution statement is confirmed and may be enforced against all participants Germany is a party to the relevant international conventions such as to the GA. MARPOL, the Bunker Oil Convention (International Convention (iv) Wreck removal on Civil Liability for Bunker Oil Pollution Damage), the CLC Germany is a party to the Nairobi Convention (Nairobi International (Convention on Civil Liability for Oil Pollution Damage) and Convention on the Removal of Wrecks), but did not opt for the the Ballast Water Convention (International Convention for the choice offered by art. 3 para 2 to extend the application of the Control and Management of Ship’s Ballast Water and Sediments) Nairobi Convention to territorial waters. So German courts will and the relevant provisions of MARPOL. Under the Bunker Oil apply the Nairobi Convention to wrecks in the exclusive economic Convention, it is obligatory to have the Blue Card on board. zone, and national German law to wrecks within territorial waters. Violation of environmental provisions may result in civil, criminal In both cases, the authorities have the right to order the removal and administrative liability. Criminal liability is regulated by sec. of the wreck if it poses a danger to shipping or the environment. 324 Criminal Code and imposes up to five years’ imprisonment for Authorities have the right to demand removal of the wreck or to intentional pollution and up to three years for negligent pollution of effect the removal themselves. If the authorities choose to organise water. Under civil and administrative law, the clean-up costs can be the removal, they may do so by instructing private salvage firms and claimed from the shipowner and/or master. they may demand a security for the expected costs from the owner. For claims under the Bunker Oil Convention, sec. 611 HGB clarifies Liability for wreck removal may be limited according to sec. 612 that limitation of liability under the Limitation Convention (see HGB by establishing a separate limitation fund. below) applies.

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(v) Limitation of liability Visby Rules will apply, unless the B/L was issued in a country that Germany is a party to the 1996 Protocol of the Limitation Convention is only a contracting state of the Hague Rules, in which case, the (Convention on Limitation of Liability for Maritime Claims 1976), Hague Rules will apply. Germany has not ratified the Rotterdam so the tacit amendment from 2012 came into effect in Germany Rules and has so far no intention to ratify them. on 8 June 2015, i.e. the limitation amounts have been increased to a minimum of 1.51/3.02 million SDR. The Limitation Convention 2.2 What are the key principles applicable to cargo claims has been incorporated into sec. 611 et seq. HGB by reference, that brought against the carrier? is, all amendments to the 1996 protocol come into effect without any transition necessary. As stated above, claims under the Bunker Germany follows the generally accepted principles of the Hague- Convention are subject to the limitation fund created under art. 6 of Visby Rules, that is, the carrier is liable for losses that occur between the Limitation Convention, whereas claims for wreck removal are loading and unloading of the cargo. The carrier is not liable if the Germany subject to a separate limitation fund. loss is attributable to errors of the shipper (such as packaging or (vi) The limitation fund misdeclaration). Since the latest reform of maritime law in 2013, The limitation fund can be established by way of cash deposit, bank errors in navigation and fire on board are no longer defences of the guarantee or guarantee by a recognised insurer. A letter of undertaking carrier, unless they are explicitly agreed upon in the contract of from a major P&I club is usually acceptable. carriage or the B/L. Limitation may also be invoked as a defence in court proceedings Another particularity of German law is the liability of the actual without establishing a limitation fund (cf. art. 10 of the Limitation carrier (sec. 509 HGB): If the contract was subcontracted (which is Convention). If limitation is invoked as a defence, the claimant always the case if the B/L was issued by a NVOCC), under German who has a claim exceeding the limitation amount may only obtain law there is a direct claim against the actual carrier. There is still a a judgment not exceeding that amount. If the defendant can prove lot of dispute about the question of whether this provision applies other claims, the judgment will be limited to a quota of the limitation in case the actual carrier is not a German entity. It is argued that amount. If the defendant is unable to prove other claims, he may apply this provision applies for all contracts where the place of delivery for a judgment which may only be enforced against the limitation is in Germany, as this is the place where the damage occurs. In that fund, in which case the defendant will have to establish the fund. case, the consignee could claim directly against the actual carrier, although he has no contractual relation with that party. Limitation of the carrier is always limited to 2 SDR/KG or 666.67 1.2 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding SDR per unit. There are a few decisions in which German courts or other major casualty? allowed for a breach of this limitation in cases of gross negligence. The particularity here is that according to art. IV 5 (e) of the Hague- There are two different aspects that need to be distinguished: (i) Visby Rules, only intent or recklessness of the carrier (and not of the prevention of further damage: In this respect (especially if it his employees) will deprive the carrier of the possibility to limit comes to pollution/environmental protection), the authorities have liability. Under German law, there is a concept of organisational vast powers of ordering certain (even very costly) measures to errors, which allows certain errors to be attributed to the top prevent further damage to the environment; and (ii) investigations: management of the carrier and thus provides for means to brake the There are numerous authorities who investigate casualties; in the limitation of the Hague-Visby Rules. first place, the Federal Bureau of Maritime Casualty Investigation (Bundesstelle für Seeunfalluntersuchungen) which investigates 2.3 In what circumstances may the carrier establish casualties with the aim to prevent similar losses in the future. In claims against the shipper relating to misdeclaration most major casualties, there is at least the possibility of criminal of cargo? or administrative offences (such as pollution, damage to property, endangering navigation, etc.), so the authorities can use the The shipper is liable towards the carrier for damages resulting powers of the criminal investigation bodies, which allows them to from misdeclaration of cargo, especially with regard to weight and interrogate all witnesses and seize all required documents. That hazardous materials. In addition, the shipper is liable for providing way, the file of the public prosecutor can become a very valuable necessary documentation for customs clearing. If the shipper fails tool in the hands of opponents in civil proceedings. Therefore, it is to give correct information, he is liable for damages. advisable to check carefully which authority, and under which set of rules, seizes certain documents and – if possible – to file a complaint against that and/or at least require that opposing parties (such as the 3 Passenger Claims other party to a collision) are refused access to the file. 3.1 What are the key provisions applicable to the 2 Cargo Claims resolution of maritime passenger claims?

Germany is a party to the Athens Convention (Athens Convention 2.1 What are the international conventions and national relating to the Carriage of Passengers and their Luggage by Sea, 1974 laws relevant to marine cargo claims? as amended by the Protocol of 2002), and EU Regulation 392/2009 (Athens Regulation) also applies. Under the Athens Convention, Germany has the rather peculiar situation that it only ratified there is strict liability (with a limited number of exonerations) for the Hague Rules and not the Hague-Visby Rules, however, the shipping incidents for losses caused by personal injury or loss of commercial code implemented the Hague-Visby Rules with certain life up to 250,000 SDR, and unlimited liability for losses resulting amendments (for instance, neither error in navigation, nor fire on from personal injury, loss of life or loss of cabin luggage with a board is a defence against carrier’s liability, unless agreed upon in presumption of fault on the carrier. A shipping incident is defined the contract of carriage). In consequence, in most cases the Hague- by the convention as “shipwreck, capsizing, collision or stranding

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of the ship, explosion or fire in the ship, or defect in the ship”. The carrier is also liable for damages resulting from death or personal 4.4 In relation to maritime claims, what form of security is injury not caused by a shipping incident if the passenger proves fault acceptable; for example, bank guarantee, P&I letter of undertaking. of the carrier.

The first choice of German law in terms of security is a cash deposit 4 Arrest and Security with the court or the guarantee of a bank registered in the EU. However, the court has discretion to allow other forms of security, so a club letter of undertaking may be acceptable (and is widely 4.1 What are the options available to a party seeking to accepted). In any case, the parties are free to agree on the form of obtain security for a maritime claim against a vessel security, so if both parties agree, a P&I letter of undertaking has to Germany owner and the applicable procedure? be accepted by the court.

The typical measure to obtain security for a maritime claim against a shipowner would be the arrest of the vessel. In 2013, Germany 5 Evidence amended the rules for ship arrest in order to render them more “arrest-friendly”. Thus, sec. 917 of the civil procedure code (ZPO) provides that an arrest in a sea-going vessel is always possible if 5.1 What steps can be taken (and when) to preserve or the claimant can establish a claim against the owner, there is no obtain access to evidence in relation to maritime claims including any available procedures for the need to prove urgency or the risk that the claim would otherwise be preservation of physical evidence, examination of endangered. witnesses or pre-action disclosure? If the arrest application is prepared carefully, the court should grant it within a few hours. There is usually no requirement to pose It is advisable to take statements from master, crew and everybody security before the arrest is granted; however, it is at the discretion else who was involved and is accessible right after any major of the court to order the provision of security. The arrest order is incident. Although witness statements are not admissible as usually rendered without an oral hearing and without informing the evidence by themselves under German law, any witness summoned owner of the vessel. The arrest is executed by the bailiff who takes by the court may rely on written documents, so statements taken over possession of the vessel. The bailiff will demand an advance properly, at a time close to the incident, can be very valuable at of the costs incurred by this. If the arrested ship has cargo on board, a later stage. In addition, party-appointed experts who prepare the bailiff may arrange for the discharge. expert reports and secure evidence can be a very valuable source It should be noted that under German law, the arresting creditor is of evidence in later proceedings. These experts can be heard as liable for all costs incurred during the arrest (berthing, insurance, witnesses and, given their expertise in the field and the fact that minimum crew) and the bailiff, who will have to arrange for it, will they usually take pictures and copies of documents at the time of the demand regular advances for these costs. The owner can file an incidents, are a very valuable source of information for the court. appeal against the arrest order and if he is successful and the arrest Party-appointed experts will not substitute an expert appointed by is lifted, the arresting creditor is liable for damages, regardless of the court, but considering that court proceedings are usually started fault (sec. 945 ZPO). a long time after the incident, any court-appointed expert will have to rely on the facts established by the party-appointed experts.

4.2 Is it possible for a bunker supplier (whether physical Apart from these – voluntary – measures, German law has neither and/or contractual) to arrest a vessel for a claim pre-trial discovery nor disclosure proceedings as may be known relating to bunkers supplied by them to that vessel? from Anglo-Saxon legal systems. The only measure that comes close to pre-trial investigation is a procedure known as independent In general yes, however, it would be necessary to establish a claim taking of evidence (selbständiges Beweisverfahren). It is possible against the owner of the vessel. Since bunker is usually ordered by to ask the court to appoint an independent expert to preserve the time-charterer, this requirement is only fulfilled if the bunker evidence that otherwise might be lost. In these proceedings, it is was ordered by the owner. Bunker supplies do not create a maritime possible to appoint an independent expert even prior to starting lien under German law. It is, however, possible to arrest the bunker legal proceedings. Both parties to the (later) dispute are allowed itself if there is a retention of title. to participate in the taking of evidence and therefore the findings of the independent, court-appointed expert may be used in later proceedings. 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what 5.2 What are the general disclosure obligations in court options are available? proceedings?

The carrier has a lien over cargo belonging to the shipper or a third There are no general disclosure obligations in court proceedings. party that agreed with the transport of the goods (sec. 495 HGB) Each party has to present the evidence it intends to rely on. In for all claims resulting from the contract of carriage. For goods limited cases, for instance if a party refers to a certain document, or belonging to the shipper, the lien extends to claims resulting from if a document has been prepared in the joint interest of both parties, other contracts as well. The lien may be exercised until 10 days after the court may order a party to present certain documents. When it delivery, if the goods are still in the possession of the consignee. comes to taking factual evidence, a party may be ordered to grant For a limited number of claims secured by maritime liens (such access to premises or a vessel to allow a court-appointed expert or as crew claims for payment, claims resulting from collisions, port the court itself to get its own impression of the circumstances. dues, etc.) a creditor may arrest the vessel regardless of the question whether or not the owner is the debtor of the claim.

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of Appeal rejected that possibility, the underlying party can 6 Procedure appeal directly to the BGH with the application to allow the cassation appeal. Only 10–15% of all cases are appealed to BGH, but if they are decided at that level, that adds another 6.1 Describe the typical procedure and timescale one to two years to the proceedings, and the decision might applicable to maritime claims conducted through: i) well be that the matter is referred back to the Court of Appeal national courts (including any specialised maritime or for reconsideration. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute It should be noted as well that under German law, the resolution. underlying party has to bear the costs of the proceedings, that is, the court fees and the lawyer’s fees of his opponent. For the (i) A claim in the national courts will usually start at the District purpose of this rule, lawyer’s fees are capped by a statutory scale, so usually not the full hourly fees are recoverable. Germany Court (Landgericht). There are specialised commercial chambers (Kammern für Handelssachen), which only deal (ii) Arbitral proceedings in maritime cases will usually be with commercial disputes, but there is no specialised body considered under the rules of the German Maritime Arbitration Association (GMAA) or by an ad hoc tribunal. for maritime or admiralty law. The commercial chambers GMAA rules are flexible and can be amended by the parties are composed of one professional judge and two laymen who to reflect their special requirements. By default, a GMAA must have a background as director (or senior manager) of a tribunal consists of only two arbitrators, appointed by the commercial firm. parties. If these two cannot agree on a matter of procedure or The proceedings are started with the filing of the statement law, they appoint an umpire. However, the majority of cases of claim which must be accompanied (or followed suite) are decided by two arbitrators only. GMAA arbitration is not by the payment of an advance of the court fees. Court fees limited to considering cases of German law; many GMAA are calculated according to a statutory scale in (decreasing) arbitrators are qualified as solicitors or barristers and consider cases under English law as well. The language of arbitration relation to the amount in dispute. For example, a claim can be chosen by the parties; it is common to have arbitration of EUR 100,000 will require an advance payment of EUR proceedings in English under GMAA rules. 3,000 and a claim of EUR 1,000,000 will require an advance (iii) Mediation, expert adjudication and conciliation are provided payment of EUR 16,008, so there is no percentage of the for in the rules of GMAA and other arbitral institutions such claim but a decreasing scale. as DIS (German Institute for Arbitration). However, in Upon payment of the advance of court fees, the court (and practice, they are rarely used. not the claimant) will serve the statement of claim on the defendant. At the same time, the court will usually impose 6.2 Highlight any notable pros and cons related to your a delay to file a reply to the claim; the delay (which may be jurisdiction that any potential party should bear in extended) will usually be between two and six weeks. As a mind. matter of principle, each party has to prove the facts it relies on, and has to offer evidence for these facts. However, if In maritime cases, German courts and arbitration institutions factual circumstances remain undisputed by the other party compete with English courts and arbitration. The advantage of (or if the court deems that they are not substantially disputed), German courts and arbitration in this respect is certainly that a the court will abstain from taking of evidence. German judges party receives a decision with the same quality as one might expect usually take a pro-active stand towards the proceedings and from an English court or tribunal, but the proceedings are less will use the first hearing to give preliminary views of the cumbersome and usually less expensive. The active approach of case and direct the parties with regard to the facts that will German judges and arbitrators helps to identify the core issues of the require the taking of evidence. In addition, German judges dispute and avoids lengthy submissions and several days of hearings are called upon to initiate and propose settlement in all stages on minor aspects that are irrelevant for the decision of the case. of the proceedings, so it is not uncommon that a judge will In addition, the judges and arbitrators will encourage settlements even propose a settlement, if the parties declare that they are which help to reach a final solution. The downside of German generally open to such a proposal. If the parties cannot agree courts may be the duration; German judges are very thorough and on that proposal, the judge will not be considered as biased. sometimes lack a proper commercial background that would allow The duration of court proceedings differs considerably. A them to render a more commercial and quicker decision. This last simple matter (which is rare in shipping) may take around point can, however, be compensated by choosing arbitration. six months from the filing of the claim until the judgment. A more complicated matter, which requires expert evidence and the hearing of witnesses, may take up to two or three years in the first instance. 7 Foreign Judgments and Awards After the first instance, there is always the right to appeal to the Court of Appeal. In the appeal instance, the facts 7.1 Summarise the key provisions and applicable established by the first instance remain unchanged, unless the procedures affecting the recognition and enforcement Court of Appeal considers that the District Court overlooked of foreign judgments. relevant facts or failed to take evidence on relevant issues. In that case, even the Court of Appeal can take evidence. The There are four different types of foreign judgments that need to be duration of appellate proceedings depends very much on the distinguished: circumstances and would usually vary from six months if the matter is simple and no new evidence is taken, to one or two 1. Judgments from EU countries are recognised without (in rare cases, more) years if the Court of Appeal has to hear any formality and enforced if they are accompanied by a witnesses or appoint experts. certificate according to art. 53 of EU Regulation 1215/2012. The certificate according to art. 53 summarises in standardised If the matter is of principal relevance, the Court of Appeal form the content of the judgment, the date service was may grant leave to file a cassation appeal to the German made, interests and their amount, and the date on which the Supreme Court (Bundesgerichtshof – BGH), or, if the Court

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judgment became enforceable. EU judgments do not require Awards), so in general, foreign arbitral awards are recognised and a confirmation by a German court and can be enforced in the enforced in Germany without much problem (unless one of the same way as German judgment. grounds for refusal stated in the New York Convention is established). 2. Judgments from countries with which Germany has a Applications to recognise and declare enforceable a foreign arbitral treaty about recognition and enforcement: Germany has award have to be filed at the Higher District Courts (which are usually bilateral treaties with many countries in the world about the the second instance), which allows for a concentration of these enforcement of court decisions. In that case, court decisions decisions at a higher level with highly qualified judges. The court need to be presented to a German court, which checks only may order preliminary enforcement of the award while the matter formal requirements and may only consider a limited number of recognition and enforcement is pending. In general, Germany of defences that constitute a violation of public order (such as a violation of the right to a fair trial) and, in the absence of any can be considered an arbitration-friendly country and there are but Germany viable defence, issues a so-called “Exequatur” which renders a few cases (usually related to a violation of fair trial) in which the the foreign judgment enforceable in Germany. recognition of a foreign arbitral award is refused. 3. Judgments from third countries are recognised and enforced on the basis of reciprocity; that is, if the foreign country recognises and enforces German judgments, Germany will recognise and 8 Updates and Developments enforce judgments from these countries as well. A claimant wishing to enforce a foreign judgment in this category will 8.1 Describe any other issues not considered above that have to present an original or certified copy of the judgment may be worthy of note, together with any current and in the proceedings it might become necessary to prove trends or likely future developments that may be of that reciprocity exists. However, for many countries there is interest. an established praxis which can be looked up in the relevant commentaries, so no special evidence is required. Given the dominance of English law in the maritime world, there 4. In the case that no reciprocity exists (this is the case, for is a tendency for disputes to be shifted to London. The GMAA, example, for Russia), the foreign judgment will still be considered documentary evidence; that is, it is necessary to with very flexible rules and a competitive cost structure, works start proceeding on the merits again; however, the foreign against that by providing arbitration of English law disputes with judgment can be used as prima facie evidence of the existence German procedural law, which offers an advantage over the rather of the claim and the defendant will have to argue that the (first) cumbersome proceedings in London. judgment was incorrect.

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

Germany is a Member State of the New York Convention 1958 (UN Convention on the Recognition and Enforcement of Foreign Arbitral

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Dr. Axel Boës Henrike Koch KOCH DUKEN BOËS KOCH DUKEN BOËS Colonnaden 21 Colonnaden 21 20354 Hamburg 20354 Hamburg Germany Germany

Tel: +49 40 30 70 90 716 Tel: +49 40 30 70 90 714 Email: [email protected] Email: [email protected] URL: www.kdb.legal/en URL: www.kdb.legal/en

Shipping, arbitration and Russia are the threads which run through the Henrike Koch advises clients from all segments of the maritime Germany career of Axel Boës. Axel studied law in Mainz, Chambéry (France) industry and uses her former in-house experience to the benefit of a and Hamburg and received a Doctorate degree from the University commercially optimised and reliable solution that always stands the of Hamburg, the topic of his thesis being the law on limited liability test of being practicably enforceable. After her graduation (Abitur) companies in Russia. she successfully completed an apprenticeship as a shipping merchant in Bremen. Thereafter Henrike studied law, focusing especially on Axel started his career in a boutique shipping law firm in Hamburg and economics and business competition, with stages in Hamburg and before joining KOCH DUKEN BOËS as a partner in 2018, he worked Copenhagen. Initially she worked as an academic assistant, and as Of Counsel at an international law firm. subsequently as a project leader in the Institut für Seeverkehrswirtschaft Axel has extensive experience in complex litigation and arbitration und Logistik, and provided assistance to the management of the matters, particularly in international transportation and maritime law. Deutsche GVZ-Gesellschaft, which is the umbrella organisation of Axel’s clients include German and foreign insurance companies, German freight centres. shipping companies and shipowners, which he regularly represents in Furthermore, Henrike lectured in the department of law at the University disputes before state courts and in arbitration matters. A main aspect of Bremen and Hochschule Bremen, as well as on the Shipping and of his work is representing clients in dispute matters related to Russia Chartering course at the German Academy for Foreign Business. At and advising Russian-speaking clients. Axel has sat as an arbitrator Hochschule Ostfalia, Sazgitter she was a lecturer on Freight Traffic under the rules of DIS, GMAA, Hamburg Chamber of Commerce, Riga Systems. District Court of Arbitration and acted as counsel in arbitration under the rules of LMAA, ICC and Stockholm Chamber of Commerce as well. From July 2012 to June 2015 Henrike was a Legal Counsel of Rickmers-Group. She was one of two founding partners of KOCH Axel lectures on international transportation and maritime law at the DUKEN PARTNER, now KOCH DUKEN BOËS. University of St. Petersburg and is a vice president of the German- Russian law association and a member of GMAA, DVIS and DFJV.

KOCH DUKEN BOËS is a highly specialised law boutique in Hamburg with a strong focus on maritime and commercial law as well as arbitration. Clients of KOCH DUKEN BOËS are particularly shipping companies and shipyards, but also private equity investors and service companies from the shipping industry. Henrike Koch, Dr. Axel Boës and Jan Duken have gained their experience and expertise over more than 20 years in different companies and positions before starting their law boutique in summer 2015. This broad and in-depth experience enables them to not only work closely with their clients on legal issues, but also to offer a tailored approach to corporate management and strategy challenges. The team offer accompanying advice and support their clients from initial analysis of a problem, through to strategy development, until its successful implementation. A mandate always ends with a holistic and critical evaluation of the progress and the targets achieved, both from an economic and legal perspective.

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Guatemala

NASSAR ABOGADOS Tomás Nassar Pérez

imprisonment from two to 10 years, and a fine of 3,000 to 10,000 1 Marine Casualty Quetzales (Guatemalan national currency). (iii) Salvage / general average 1.1 In the event of a collision, grounding or other major In the Republic of Guatemala, the rescue of passengers and the cargo casualty, what are the key provisions that will impact of a vessel in case of collision are governed by the following rules, upon the liability and response of interested parties? included in book III of the Code of Commerce, Decree No. 2946: “It In particular, the relevant law / conventions in force in relation to: is the obligation of the captain to ensure the safekeeping and rescue of passengers on board the vessel. Likewise, passengers have the (i) Collision obligation to assist the captain in all urgent cases that require it for the salvation of the vessel.” (Article 1082.) Guatemala has not signed any international treaty that regulates vessel collisions. In 1993, Guatemala adopted the International Regarding merchandise, in case it is necessary to save the vessel, the Regulations for Preventing Collisions at Sea 1972 (COLREG). In captain has the right to throw part of the cargo into the sea (article 901 case any collision occurs in Guatemala’s jurisdiction, general rules numeral 12). In the case that it is necessary to proceed in this way, will be applicable. For example, article 868 of book III of the Code the loss of the load is considered a common fault. Common fault of Commerce, Decree No. 2946 establishes that the owner of a consists of any damage suffered by the vessel or the cargo, before vessel is obligated to respond civilly to the facts of the Master or or during the trip, by piracy, liberation of the vessel, loss of things crew, will constitute an offence, damages or finding of mere guilt. thrown into the sea to save the vessel, among others (article 1089). Likewise, article 1651 of the Civil Code, Decree No. 106, By the common fault, all those interested in the ship and in what establishes that the ship owner is jointly and severally liable for the it transports, will bear the consequences of the measures taken for damages that may be caused by the driving of the vehicles. This salvage, as the cost of the damage. However, the owner of the responsibility prevails even if the handling of the vehicle has been thing that has suffered the damage or caused the expense may claim temporarily entrusted to the person who caused the incident. compensation for it, in the event that the damage is due to fault of a third party. The crew have the same right. Finally, if, as consequence of the collision of the vessel, a person dies (iv) Wreck removal or is injured, the Criminal Code, Decree No. 17-73, establishes that the person responsible for the commission of crimes against a person Book III of the Code of Commerce, Decree No. 294, does not can be sentenced to a prison term of between one and 50 years. establish specific regulation regarding the contract of towing or (ii) Pollution wreck removal caused by a collision or any other flaw. The Code establishes the rules and rights the captain has to collect fragments In the Republic of Guatemala, the pollution caused by vessels of the vessel and the cargo in case of shipwreck or stranding. In is regulated by the following laws: (i) Law for the Protection accordance with the provisions of article 1149 of the aforementioned and Improvement of the Environment, Decree No. 68-86; (ii) Decree, the captain of the vessel shall extract the most valuable Commercialization of Hydrocarbons Law, Decree No. 109-97; (iii) goods from the cargo, and after that, he must go to the nearest Penal Code, Decree No. 17-73; (iv) International Convention for the authority to the place where the shipwreck occured. He has to make Prevention of Pollution from Ships (MARPOL); (v) International an affidavit in relation to the event, check it with the statements of Convention on Civil Liability for Oil Pollution Damage (CLC); and the crew and passengers, and request the delivery of the original (vi) Convention on the Prevention of Marine Pollution by Dumping proceedings in defence of their rights. Those interested in the vessel of Wastes and Other Matter (London Convention). or cargo may produce evidence against the statements of the captain, Environmental liability in Guatemala is punishable with a fine, crew or passengers. if the offence is committed as a result of a procedural error or by (v) Limitation of liability accident, caused by bad operating practices, driving and negligence In Guatemala there is no applicable law related to the limitation of of compliance with industrial and environmental safety measures. liability that allows the ship owner and carrier to stand against the An example of that may be spills of oil or petroleum products claimant. For this reason, the determination of the liability may be originating from a collision. Depending on the magnitude of the on a case-by-case basis, according to general legislation. pollution, the Prosecutor can initiate criminal prosecution for the crime of environmental pollution contained on article 347 ter of the In cases of environmental pollution caused by fuels, the limit of Criminal Code, Decree No. 17-73. This crime is punishable with liability will be according to the CLC, to which Guatemala has been

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a signatory since 1983. The Convention established the possibility to limit liability in case of oil pollution damage, and is applicable to 2.3 In what circumstances may the carrier establish all seagoing vessels actually carrying oil in bulk as cargo. claims against the shipper relating to misdeclaration of cargo? According to the local legislation, the ship owner is obligated to respond civilly to the facts of the captain or crew, whether they The shipper has the obligation to declare accurately a description of constitute an offence or signify mere guilt. However, the obligations goods, weight, quantity, signs and packaging, as established in article undertaken by the captain to his advantage are not the responsibility 805 of the Code of Commerce. of the shipping industry, nor are those that are prohibited or permitted in which the enabling conditions or substantial formalities prescribed In addition, as Guatemala is a signatory of the SOLAS Convention, by law are omitted. To absolve themselves of responsibility, the shippers are obliged to comply with the verified gross mass (VGM) of packed containers prior to loading on board ships. This obligation, carriers shall verify that the damage which resulted from the inherent Guatemala defect of the thing, their special nature, force majeure, or facts or which entered into force worldwide on 1 July 2016, is also enforceable instructions of the shipper or consignee. under local law following the issuance of Ministerial Agreement No. 787-2016, issued by the Communications and Infrastructure Ministry. (vi) The limitation fund According to the said Agreement, companies entitled to verify Local legislation does not contemplate the possibility for the ship the weight of containers must first register at the National Port owner to create a limitation fund. Commission of Guatemala. However, the CLC, to which Guatemala is a signatory, establishes If the shipper does not comply with the regulation related to the that in order to benefit from the limitation of article V, paragraph 1, correct declaration of goods and dangerous goods, the carrier has the owner shall constitute a fund for the total sum representing the the right to claim against him for any loss or damage caused by its limit of his liability with the Court. The fund can be constituted misdeclaration. When dangerous goods are shipped, the shipper either by depositing the sum or through a bank guarantee or other would be liable not only towards the carrier but also towards cargo acceptable form under the legislation. owners shipped on board. The Master is also entitled to unload cargo on board, if it has not been 1.2 What are the authorities’ powers of investigation / declared accordingly. casualty response in the event of a collision, grounding or other major casualty? 3 Passenger Claims In case of any maritime casualty such as collision, shipwreck or grounding, the authority that will initiate an investigation will be, in the first place, the Maritime Affairs General Directorate, which 3.1 What are the key provisions applicable to the belongs to the Ministry of National Defence. Additionally, other resolution of maritime passenger claims? authorities such as the Prosecutor of the Republic of Guatemala may initiate an investigation. If, as a result of the casualty, environmental The Commercial Code of the Republic of Guatemala, Decree No. pollution occurs, the Ministry of the Environment and Natural 2-70, regulates the transportation of passengers by sea (article 755). Resources and the Ministry of Energy and Mines, through the Claims related to the baggage of the passengers are precedent only General Directorate of Hydrocarbons, will intervene as well. in the value declared, unless the claimant proves that the value was greater. If the value is not declared, the carrier’s liability shall be limited to an equal amount, per kilogram of baggage, to the amount 2 Cargo Claims of the ticket corresponding to a journey of 50 kilometres, according to articles 801 and 802 of the said Code.

2.1 What are the international conventions and national In the event of injury or death of any passenger occurring in laws relevant to marine cargo claims? Guatemalan territory, the provisions of the Criminal Code shall apply, and whether they are invoked for the crime will depend on the The Republic of Guatemala has not ratified any convention related circumstances of injury or death of the person. These kinds of crime to the carriage of goods by sea. Any cargo claims carried through are prosecuted ex officio by the Public Prosecutor of Guatemala. maritime transportation may be regulated by local legislation; for instance, chapter III of the Code of Commerce of the Republic of 4 Arrest and Security Guatemala, Decree No. 2946 of the Congress of the Republic. A new Commercial Code is in force; however, the aforementioned chapter is still enforceable. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure? 2.2 What are the key principles applicable to cargo claims brought against the carrier? The party that seeks to obtain security for a maritime claim may request the Court for precautionary measures to order the seizure In Guatemala, shippers and are entitled to claim against of the the vessel. the carrier for cargo damages or losses during the carriage of his goods. To make the request, the claimant must file a petition to the Judge and justify this by reference to the imminent danger that may occur. A Civil Court resolves the claim, because the Republic of Guatemala The precautionary measures are granted at the Judge’s discretion. does not have a specialised Court for disputes arising from maritime If it happens, the Judge grants the claimant a period of 15 days trade. to present the principal claim. If the claimant does not file, the precautionary measures will be left without effect.

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4.2 Is it possible for a bunker supplier (whether physical 6 Procedure and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) Yes, it is possible. According to book III of the Code of Commerce national courts (including any specialised maritime or of the Republic of Guatemala, Decree No. 2946 (article 846), commercial courts); ii) arbitration (including specialist Guatemalan vessels can be arrested as a consequence of credits arbitral bodies); and iii) mediation / alternative dispute pending payment, like tax debts, payment of salaries, costs, or resolution. debts of piloting or tonnage. The vessel may be seized and sold by the Court through a public auction, which will be held in the port In the Republic of Guatemala, there are no specialised Courts Guatemala where the vessel is located (article 851). The public auction will to solve maritime disputes. As a consequence of that, disputes take place at the request of any of the creditors. Foreign vessels can over maritime transport of goods can be resolved in different be seized at the ports of the Republic of Guatemala only for debts jurisdictions, such as administrative, criminal, civil, commercial or contracted in Guatemalan territory due to the cause or futility of the environmental, among others. same (article 848). i) National Courts: a judicial proceeding is composed of the following stages: 4.3 Where security is sought from a party other than the (a) Submission of the claim. vessel owner (or demise charterer) for a maritime (b) Admission process, which involves the analysis and review claim, including exercise of liens over cargo, what of compliance with the minimum legal requirements of options are available? law, the issuance of the first resolution and the granting of precautionary measures, such as precautionary seizure of The internal regulation related to maritime trade, contained in book assets and intervention of commercial companies. III of the Code of Commerce, Decree No. 2946 of the Congress (c) Summons of the defendant. of the Republic, establishes that the acceptable guarantee for the (d) Period to receive evidence. parties or third persons is the bond issued by an insurer authorised (e) Presentation of final conclusions. to operate in the Republic of Guatemala. The aforementioned (f) Judgment. The parties involved have the right to file an regulation does not establish any other kind of guarantee. appeal against the judgment. Against the second instance decision, it is possible to file cassation before the Supreme 4.4 In relation to maritime claims, what form of security is Court of Justice. acceptable; for example, bank guarantee, P&I letter of The cassation is only applicable in disputes whose amount undertaking. is over 400,000.00 Quetzales (approximately 50,000.00 USD). The guarantee acceptable under Guatemalan law is bail, according The general trend is for this type of proceeding to last at to article 848 ter of book III of the Code of Commerce, Decree least 36 months. No. 2946 of the Congress of the Republic. However, this security ii) Arbitration process: in Guatemala, this is handled by two by provision of law can only be issued by an insurer that has been authorised Arbitration Centres. The process can be resolved authorised to operate in the Republic of Guatemala. based on equity or based on the law; this aspect is determined by the parties to the agreement. The procedure to be taken will depend on the internal 5 Evidence regulation of the Arbitration Centre to which the parties have submitted. The arbitral award is not appealable, but it is reviewable by a Jurisdictional Court. The length of time that 5.1 What steps can be taken (and when) to preserve or an arbitration lasts is approximately 18 months. obtain access to evidence in relation to maritime claims including any available procedures for the iii) Mediation: likewise, an alternative is available in Guatemala, preservation of physical evidence, examination of to resolve claims through a Mediation Centre, which belongs witnesses or pre-action disclosure? to the judicial authorities. The parties may submit the dispute to this Centre on a voluntary and unilateral basis. The approximate duration is three months. The steps to be taken to preserve evidence depend on the type of claim. If it is a civil claim, the first step will be to collect all documents related to the claim, affidavits and notarial acts about the facts. 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in If it is a criminal claim, the evidence will be collected by the Prosecutor mind. and the company will have access by an accreditation in the file. In both types of claims, there is a preliminary process before the Judge to Guatemalan maritime legislation is outdated; the main aspects prepare evidence. The process may consist of a declaration before the are regulated according to the Commercial Code of the Republic Judge and a recognition of documents, places, or things. of Guatemala, issued in 1942. Additionally, the new Commercial Code does not include any rules related to maritime trade. The non- 5.2 What are the general disclosure obligations in court existence of a Maritime Court and specialised judicial process, as proceedings? well as the lack of knowledge and experience in maritime disputes, are disadvantages when considering Guatemalan jurisdiction for In Guatemala, if it is a civil claim, the parties have the obligation to maritime claims. present their own evidence for examination by the other party. In The existence of arbitration proceedings is an advantage in relation criminal proceedings, only the Prosecutor can present evidence, but to the time taken for resolution of the process. The disadvantage of the victim has the right to collaborate with the Prosecutor.

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the arbitration process is its cost, because the professional fees for aforesaid Convention, the Arbitration Law Decree No. 67-95 was the arbitration panel and the authorised arbitration centre are paid by reformed, in order to be consistent with the requirements of the the parties, and are high. Convention. According to the CPC (articles 295 and 346), the process of execution 7 Foreign Judgments and Awards of the award is processed before a Judge of Civil Instance, who admits the request for execution, dictates the pertinent precautionary measures to ensure the results of the claim, and summons the 7.1 Summarise the key provisions and applicable defendant for three days to express himself on the subject. procedures affecting the recognition and enforcement The Arbitration Law provides the basic requirement that the plaintiff of foreign judgments. has to present the following for the execution of the award: (i) the original of the document that contains the foreign award; Guatemala The recognition and enforcement of foreign judgments in Guatemala and are regulated by the Civil Procedure Code of Guatemala (CPC) (ii) the original of the arbitration agreement signed by the parties. Decree No. 107. Article 344 of the said Code establishes that the foreign judgment has to be resolved by the Judge in Guatemala. Both documents must be duly authenticated and duly translated into Spanish or, if there is no single language to determine the document, The Arbitration Law provides that the plaintiff has to file the it will be translated under oath by two people who speak and write requirement of execution and a certified document that contains the both languages, with legalisation of their signatures. foreign judgment. The document must comply with formalities such as the apostille and official translation if issued in a language other The execution can be denied, among other causes, when: (a) one than Spanish. of the parties proves that he was affected by some incapacity at the moment of signing the agreement; (b) the party against whom the The procedure to execute a foreign judgment is the following: award is executed proves that he has not been duly notified of the (a) request for execution; (b) first resolution and precautionary appointment of the arbitration panel or of the arbitration proceedings; measures; (c) summoning of the defendant to reply within five days; or c) the Court verifies that (i) according to the Guatemalan legal (d) period of 15 days to receive evidence; and (d) judgment. The system, the object of the controversy is not to be resolved by parties involved have the right to file an appeal against the judgment. arbitration, or (ii) the recognition or execution of the foreign award The claim has to fulfil the following requirements: would be contrary to the public order of the Republic of Guatemala. (a) the foreign judgment has to be emitted as a consequence of the exercise of a personal, civil or commercial action; (b) the foreign judgment has to be issued with a summons and 8 Updates and Developments participation of the defendant; (c) the obligation is not forbidden in the Republic of Guatemala; 8.1 Describe any other issues not considered above that (d) the foreign judgment has to be executed according to the laws may be worthy of note, together with any current of the nation in which it was issued; and trends or likely future developments that may be of (e) the foreign judgment has to meet all the necessary interest. requirements to be considered authentic. There are no further issues, updates or developments of particular 7.2 Summarise the key provisions and applicable note. procedures affecting the recognition and enforcement of arbitration awards. Acknowledgment The recognition and enforcement of foreign awards in Guatemala The author would like to thank Carlos Pellecer, of NASSAR is regulated by the United Nations Convention on the Recognition ABOGADOS’ Guatemala City office, for his contribution to the and Enforcement of Foreign Arbitral Awards 1975, ratified by preparation of this chapter. Guatemala through Decree No. 9-84. Tel: +502 2428 4800; Email: [email protected]. This Convention contains the rules on the recognition and execution of a foreign award in Guatemala. After the entry into force of the

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Tomás Nassar Pérez NASSAR ABOGADOS Oficentro Torres del Campo Edificio 1, 2º piso Barrio Tournón San José Costa Rica

Tel: +506 2257 2929 Email: [email protected] URL: www.nassarabogados.com

Guatemala Senior Partner Education: Juris Doctor and Notary Public, Universidad de Costa Rica. Practice Areas: Aviation, Commercial and Corporate, Litigation, Maritime. Experience: Tomás is the Senior and Founding Partner of the Law Firm NASSAR ABOGADOS Centroamérica. He is recognised as a highly skilled negotiator and litigator, and is also well known for his depth of understanding of the business environment and ability to structure highly complex deals. He is constantly invited by private companies and industry organisations to sit on the board of directors and advisory committees. Tomás is a Professor of Commercial Law at the School of Law of the Universidad de Costa Rica, and Professor of Maritime Law and Aviation Law at the Law School of the University of La Salle. He has represented Costa Rica in international negotiations and meetings regarding air and sea transport such as GATT, ICAO, OAS, COCATRAM and COCESNA. He is a consultant on several projects in international transport. He is the President of the Costa Rican Association of Maritime Law; Vice-President and President of the Ibero-American Institute of Maritime Law; Secretary, Vice-President and President of the Association of International Airlines in Costa Rica (ALA). He is a member of the Board and Vice-President of the National Chamber of Tourism (CANATUR). He is also a legal adviser to the National Chamber of Ship Owners and Steamship Agents (NAVE), the Costa Rican Association of International Freight Agencies (ACACIA) and the Costa Rican Chamber of Food Industry (CACIA), among others. Tomás is also ranked by Chambers & Partners. Languages: Spanish and English. Memberships: Costa Rican Bar Association, American Bar Association, L2B Aviation Group and ADVOC Latin America.

NASSAR ABOGADOS is a full-service and results-oriented law firm, with internationally recognised strategic experience in a large variety of areas of law. With more than 35 years of experience, the firm holds a longstanding tradition of excellence in the provision of service and legal advice designed according to first-class quality standards. Over a decade ago, NASSAR ABOGADOS expanded its Costa Rican operation to Central America, providing clients with a regionally standardised service that has become an ally to their business in the region. Our clients recognise our professionals’ knowledge, experience, sophistication and understanding of their business, as well as the attorneys’ proactive and creative skills in addressing our clients’ matters. NASSAR ABOGADOS has consolidated its position as a key player in the market of legal services in the region, being frequently nominated within the top Central American firms.

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Honduras René Serrano Zelaya

NASSAR ABOGADOS Jessy Aguilar

Upon the failure to comply with this requirement, the General 1 Marine Casualty Directorate of Merchant Marine will proceed to remove the ship to a location that does not affect the port activities or navigation; 1.1 In the event of a collision, grounding or other major or, if it is necessary, to sink the ship. All of the expenses involved casualty, what are the key provisions that will impact in the salvage of a ship will be at the expense of the individuals or upon the liability and response of interested parties? companies initially required (article 102 of the Constitutive Law of In particular, the relevant law / conventions in force in the General Directorate of Merchant Marine of Honduras). relation to: General average shall be payable according to the York-Antwerp Rules. The York-Antwerp Rules are not mandatory and only apply (i) Collision on a contractual basis. Therefore, it is important to confirm whether Article 996 of the Commerce Code, Decree N° 73, states that if a general average is to be adjusted in accordance with YAR 1974, ship collides with another due to fault, negligence or impairment of YAR 1994 or YAR 2004. the Master, pilot or any other individual of the vessel, the shipowner (iv) Wreck removal of the responsible vessel shall indemnify the damages and losses that have occurred, prior to judicial appraisal. Additionally, article Article 115 of the Constitutive Law of the General Directorate of 997 of the Commerce Code provides that, if the collision was Merchant Marine of Honduras states that the owners, lessees or attributable to both ships, each one of them will be responsible for shippers of ships at their sole expense will be required to remove its own damage, and both will be jointly liable for the damages shipwrecks or sunken goods as long as they affect the maritime suffered by their cargo. traffic, navigation and natural resources. For the foregoing purposes, the General Directorate of Merchant Marine, together with the port In the event of collision, if the captain does not provide the name authorities, will establish the period for the removal, procedures to and registry port, place of origin and destination to the maritime be followed and safety measures to be adopted in order to avoid authorities, he will be subject to a fine for a serious infraction (article future shipwrecks. 117 of the Constitutive Law of the General Directorate of Merchant (v) Limitation of liability Marine of Honduras, Decree N° 167-94). (ii) Pollution Article 1363 (Paras 2–3) of the Civil Code, Decree N° 76, establishes that the debtor is not responsible in case of a force majeure event, Local applicable legislation does not regulate the limitation of liability; except in default or where the event occurred by its own fault. The nonetheless, according to the International Convention on Civil proof of diligence or care corresponds to the part which should have Liability for Oil Pollution Damage, Decree N° 26-97 (CLC 1969), the employed it; the proof of the event’s occurrence corresponds to the shipowner is entitled to limit his liability in respect of any one incident. alleging party. As such, the carrier may limit his liability for cargo Article v, 3) of this Convention provides that in order to limit his claims by submitting sufficient evidence of the existence of theforce liability under article v, 1), the shipowner shall constitute a fund majeure event. for the total sum representing the limit of his liability with the Locally accepted legal principles establish the following court or other competent authority of any one of the contracting requirements for an event to be determined as force majeure: states in which action is brought under article IX. The fund can a. The event occurred beyond the control of the debtor, and the be constituted either by depositing the sum, by producing a bank debtor did not contribute to its occurrence. guarantee or other guarantee, acceptable under the legislation of the contracting state where the fund is constituted. The insurer or b. The event was unexpected. other person providing financial security is entitled to constitute a c. The event was insuperable; in order words, within the means fund on the same conditions and having the same effect as if it were of the debtor, its occurrence could not have been avoided. constituted by the owner (article v, 11)). (vi) The limitation fund (iii) Salvage / general average Although local legislation does not regulate limitation funds, it is The General Directorate of Merchant Marine’s prior report of the standard practice for vessel owners to set up this type of fund to Harbour Master, together with the port authorities, will adopt all the limit the shipowner’s liability. necessary measures to avoid the sinking of a ship in local ports. To Honduras is not a signatory to the International Convention on the this end, local authorities will require owners, lessees or shippers to Establishment of an International Fund for Compensation for Oil remove the ship from the port or to proceed to its immediate repair. Pollution Damage 1971.

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With regard to defence, a carrier may assert exemption from 1.2 What are the authorities’ powers of investigation / liability for cargo claims (article 1363 (Paras 2–3) of the Civil casualty response in the event of a collision, grounding Code), indicating that the debtor is not responsible in case of a force or other major casualty? majeure event except in default or where the event occurred by its own fault. The proof of diligence or care corresponds to the party In general, the General Directorate of Merchant Marine of Honduras which should have employed it; the proof of the event’s occurrence is the authority responsible for performing technical inspections of corresponds to the alleging party. As such, the carrier may limit his ships in order to examine their navigating conditions. If a ship liability for cargo claims by submitting sufficient evidence of the suffers an accident that affects its navigability conditions, it will be existence of the force majeure event. subject to an extraordinary inspection by the General Directorate of Locally accepted legal principles establish the following Merchant Marine of Honduras to confirm the damages or repairs

Honduras requirements for an event to be determined as force majeure: required (articles 18 and 19 of the Constitutive Law of the General a. The event occurred beyond the control of the debtor, and the Directorate of Merchant Marine of Honduras). debtor did not contribute to its occurrence. Upon confirmation that a ship is not in the necessary condition b. The event was unexpected. for navigation, the General Directorate of Merchant Marine of c. The event was insuperable; in order words, within the means Honduras will order the suspension of the ship from rendering/ of the debtor, its occurrence could not have been avoided. offering services, or prohibit its sailing until the required repairs As for limiting liability in respect of cargo claims, article 702 of are completed (article 26 of the Constitutive Law of the General the Commerce Code states that any agreement that excludes or Directorate of Merchant Marine of Honduras). limits in advance the responsibility of a company will be null in the As for shipwrecks, if the responsible party does not initiate or remove following cases: the wreck within the term established by the local authorities, then a. Tort or negligence of their personnel or third parties used by the General Directorate of Merchant Marine together with the port the company to comply with its corporate obligations. authorities will proceed to its removal or hire third parties to do so b. Violation of public order rules. (article 113 of the Constitutive Law of the General Directorate of Merchant Marine of Honduras). The carrier will only be entitled to limit his liability in those cases expressly agreed and when the cargo claim is not due to deliberate With regard to the sinking of a ship, if the responsible party fails to actions. comply with the instructions delivered by the local authorities, the General Directorate of Merchant Marine will proceed to remove the ship to a location that does not affect port activities or navigation; or, 2.3 In what circumstances may the carrier establish claims if it becomes necessary, to sink the ship. All of the expenses involved against the shipper relating to misdeclaration of cargo? in the salvage of a ship will be at the expense of the individuals or companies initially required (article 102 of the Constitutive Law of If the shipper loads undeclared or misdeclared cargo without notice to the General Directorate of Merchant Marine of Honduras). the carrier, or any damages, confiscation, seizure or detention of the carrier or other shippers occur, he will respond with the value of its cargo and assets up to full compensation of all who were injured by 2 Cargo Claims the false or incorrect declaration (article 852 of the Commerce Code). Honduras, as a signatory of the International Convention for the 2.1 What are the international conventions and national Safety of Life at Sea, 1974 (SOLAS Convention), must oblige laws relevant to marine cargo claims? Honduran shippers to weigh their containers according to the verified gross mass (VGM) regulation prior to loading on board ships. a. Unified Central American Customs Code, Resolution N° If a shipper does not comply with the regulation related to the 223-2008 (COMIECO XLIX). correct declaration of goods and dangerous goods, the carrier has b. Regulation of the Unified Central American Customs Code, the right to claim against him for any loss or damage caused by Resolution N° 224-2008 (COMIECO XLIX). his misdeclaration. When dangerous goods are shipped, the shipper c. Civil Code, Decree N° 76. would be liable not only towards the carrier but also towards cargo owners shipped on board. d. Commerce Code, Decree N° 73. e. Civil Procedure Code N° 211-2006. The Master is also entitled to unload cargo which is on board, if it has not been declared accordingly. To date, Honduras is not a signatory to any international conventions A resolution issued by the Marina Mercante entity states that all regarding marine cargo claims. containers must be certified by the scale provided directly by the port terminal (Operadora Portuaria Centro Americana – OPC). 2.2 What are the key principles applicable to cargo claims The VGM transmission to the shipping line will be done directly brought against the carrier? by the OPC.

According to article 104 of the Reglamento del Código Aduanero Uniforme Centroamericano (RECAUCA), the period of 3 Passenger Claims responsibility of the carrier for the goods covers the time during which the carrier is in charge of the goods at the port of loading 3.1 What are the key provisions applicable to the during the carriage and at the port of discharge. This encompasses resolution of maritime passenger claims? the period from port to port and accordingly increases the liability of the carrier. The carrier is not responsible until the receipt of the Article 867 of the Commerce Code states that if a passenger dies goods from the port authority or other third party pursuant to law before initiating a voyage, his successors will only be required to or regulation. pay half of the price of the ticket.

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If the voyage is suspended due to a captain’s or shipowner’s fault, passengers will be entitled to claim the full price of the ticket paid 4.4 In relation to maritime claims, what form of security is and applicable damages. However, if the voyage was suspended due acceptable; for example, bank guarantee, P&I letter of undertaking. to a fortuitous event of force majeure or any other cause independent of the captain or shipowner, passengers shall only be entitled to obtain the refund of their ticket (article 868 of the Commerce Code). Article 387 of the Civil Procedure Code (Decree N° 211-2006) provides the following forms of security: In the case that a voyage is interrupted, the passenger will only be a. Cash. required to pay a proportional value of the ticket for the distance travelled, without any right to claim damages unless the voyage b. Certified cheque. was interrupted due to the fault of the captain (article 869 of the c. Cashier’s cheque.

Commerce Code). d. Bank or financial institution’s guarantee. Honduras A Club’s letter of undertaking can be accepted by local authorities, 4 Arrest and Security due to its financial strength. However, local authorities advise that their acceptance will be reviewed on a case-by-case basis.

4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel 5 Evidence owner and the applicable procedure?

5.1 What steps can be taken (and when) to preserve or Any party seeking to obtain security for a maritime claim against a obtain access to evidence in relation to maritime vessel owner has the option to seize or impose liens over the vessel claims including any available procedures for the (article 86 of the Constitutive Law of the General Directorate of preservation of physical evidence, examination of Merchant Marine of Honduras). witnesses or pre-action disclosure? The applicable procedure for the seizure of a vessel is the following: ■ Filing of petition by creditor and final resolution. The seizure Before any judicial process begins, the initiator may request the of vessels may be requested for the following reasons: court to adopt the appropriate preventive measures to avoid material evidence being destroyed or altered due to human acts or natural a. The debtor is not domiciled in Honduras. events, it being impossible to use such evidence in trial at a later b. The credit is evidenced through public deeds or private time. documents. The request shall be filed before the same court which is resolving c. Evidence has been submitted that the debtor is trying to sell, hide or transport the goods mortgaged or pledged. the principal claim. These measures will only be executed when there are sufficient reasons to presume that failure to adopt them d. Evidence has been submitted that the debtor does not have a liability insurance to cover the damages caused. may result in the impossibilty of being examined in the future. The evidence resulting from these proceedings shall remain in the ■ Once the seizure of the vessel has been judicially ordered, custody of the secretary until the claim is filed, according to article the creditor must request the registration of the security at the property registry (articles 358 and 359 of the Civil Procedure 249 of the Civil Procedure Code. Code). Each party has the burden of proof in connection with the facts ■ Having completed the judicial process, the creditor must each one alleges and access to evidence held by the counterparty is request the registration of the security (i.e. seizure) over the usually requested and granted directly by a court order and, in many vessel at the Property, Mortgages and Other Naval Liens cases, within the scope of an expert opinion to be prepared by an registry maintained by the General Directorate of Merchant expert appointed by the court. Marine (articles 87, 88 and 89 of the Constitutive Law of the Documentary evidence: all documentary evidence must be translated General Directorate of Merchant Marine of Honduras). into Spanish by an official translator or a translator appointed by the judge. International public documents must be legalised (an 4.2 Is it possible for a bunker supplier (whether physical apostille procedure applies). and/or contractual) to arrest a vessel for a claim Witness evidence: witness objection can take place when the relating to bunkers supplied by them to that vessel? witness: i) is the spouse or relative up to the fourth degree of consanguinity or the second degree of kinship by choice, to the party Foreign vessels in Honduran port areas cannot be detained or that has presented him/her as a witness or his/her defendants; ii) is arrested, even if they are free of cargo, for debts that have not been a dependant of the party that has proposed him/her as a witness or undertaken in Honduran territory and for the benefit of the same his/her defendants, or is in a partnership with any of them; iii) has vessel or cargo, or payable in Honduran territory (article 745 of the a direct or indirect interest in the matter; iv) is a close friend or Commerce Code). declared enemy of any one of the parties or their defendants; or v) has been convicted of giving false statements. 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what 5.2 What are the general disclosure obligations in court options are available? proceedings?

Local legislation does not regulate additional options besides the Disclosure obligations are not applicable in Honduras. Each party vessel owner and charterer. has the burden of proof in connection with the facts each one alleges

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and access to evidence held by the counterparty is usually requested (ii) Arbitration and granted directly by a court order and, in many cases, within the The arbitration procedure is as follows: scope of an expert opinion to be prepared by an expert appointed by a. Request for appointment of arbitral tribunal. the court. Pre-trial motions are not available as in the United States. b. Appointment of arbitrators. In Honduras, the defences are filed as part of the response to the c. Conciliation hearing. lawsuit, including defences such as: lack of capacity or representation (article 451 of the Civil Procedure Code); undue accumulation of d. Acceptance of arbitral tribunal hearing. petitions (article 452 of the Civil Procedure Code); faulty lawsuit e. Filing of lawsuit. (article 454 of the Civil Procedure Code); litispendence (article f. Admission/Refusal of the lawsuit. 455 of the Civil Procedure Code); inadequate procedure (article g. Answer of the lawsuit. Honduras 456 of the Civil Procedure Code); arbitral commitment; and lack of h. Preliminary hearing. necessary joinder (article 453 of the Civil Procedure Code). i. Examination of evidence. j. Filing of closing arguments. 6 Procedure k. Final ruling. There is no statutory term applicable to the procedure. However, in 6.1 Describe the typical procedure and timescale practice, judicial procedures can take over five months. applicable to maritime claims conducted through: i) national courts (including any specialised maritime or 6.2 Highlight any notable pros and cons related to your commercial courts); ii) arbitration (including specialist jurisdiction that any potential party should bear in arbitral bodies); and iii) mediation / alternative dispute mind. resolution.

Arbitration Honduras does not have specialised courts for maritime disputes; generally, judicial disputes are resolved before the Unified Civil The parties to the dispute usually agree on the arbitrator(s), so the District Court and administrative proceedings (i.e. fines, licences, arbitrator(s) will be someone in whom both sides have confidence permits, etc.) are resolved before the General Directorate of as regards impartiality and fairness. The dispute will normally be Merchant Marine. resolved much sooner, as a date for the arbitration can usually be (i) National courts obtained a lot faster than a court date. Arbitration is usually a lot less expensive. Unlike a trial, arbitration is essentially a private As such, maritime disputes are resolved before the Unified Civil procedure, so if the parties desire privacy, the dispute and the District Court of the domicile of the defendant. The process for resolution can be kept confidential. If an arbitration is binding, there filing a lawsuit is: are very limited opportunities for either side to appeal. a. Filing of the lawsuit. The most recommended arbitral institution would be the Conciliation b. Admission/rejection of the lawsuit. and Arbitration Centre at the Chamber of Commerce and Industry c. Service of the summons. of Tegucigalpa. This institution offers wide experience in resolving d. Answer. international disputes. Parties are able to define the applicable e. Preliminary hearing: used for conciliation, remedies, or procedure and resolutions are issued with great swiftness. proposal and admission of evidence. Local courts f. Evidentiary hearing. The fundamental problem in our country lies in the bureaucracy g. Hearing of closing arguments. and lack of transparency of the judges when applying and imparting h. Final ruling. justice; they do not provide enough of a guarantee of obligatory There is no statutory term applicable to the procedure. However, in judicial impartiality. Historically, civil procedures are characterised practice, judicial procedures can take over two years. by excessive prolongation on the part of the courts without any real justification in all matters that are submitted to their competence, Disputes with Government entities, such as the General Directorate and by a lack of confidence in the judges as well as their judgments. of the Merchant Marine of Honduras, are resolved before the Contentious Administrative Court of the domicile of the defendant. The process for filing a lawsuit before this court is the following: 7 Foreign Judgments and Awards a. Filing of the lawsuit. b. Admission/refusal of the lawsuit. 7.1 Summarise the key provisions and applicable c. Service of the summons. procedures affecting the recognition and enforcement d. Filing of preliminary pleas and defences by the Government of foreign judgments. entity. e. Preliminary pleas and defences hearing. In relation to the enforcement of a foreign judgment or arbitral f. Resolution of Preliminary pleas and defences. award in Honduras, the following procedure must be followed: g. Answer of the lawsuit. The party enforcing the foreign judgment or arbitral award – the h. Preliminary hearing. executor – must file a written request to the Honduran Supreme Court of Justice requesting the enforcement of the foreign judgment/ i. Examination of evidence. arbitral award. The executor may propose any evidence deemed j. Filing of closing arguments. necessary; the “executed” party will then be notified of this, in order k. Final ruling. to formulate any allegations.

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If the evidence is admitted by the Supreme Court, a date for a hearing iii. such judgment/arbitral award complies with all the will be set, in order for all evidence and allegations to be filed and necessary legal requirements imposed by the foreign presented to the Supreme Court. The hearing will not take more court or arbitration in order to consider it authentic, as than 10 days and the Supreme Court will have to issue a judgment well as with requirements imposed by Honduran law for within such period. The Supreme Court may not take more than 10 the purpose of admitting such judgment/arbitral award as evidence in Honduras; days to issue its decision recognising or refusing to recognise the foreign judgment or arbitral award. No appeal may be filed against iv. the judgment/arbitral award does not contradict Honduran such decision. public order principles, and the obligation contained therein complies with applicable laws in Honduras; and The following must also be considered for the recognition of foreign v. the judgment/arbitral award does not conflict with another judgments/arbitral awards: judgment previously or simultaneously issued by a Judgments/arbitral awards obtained in a foreign court or foreign Honduran court. Honduras arbitral tribunal, as applicable, shall be recognised and enforceable in the courts of Honduras, provided that: 7.2 Summarise the key provisions and applicable a) there is a treaty between Honduras and the country in which procedures affecting the recognition and enforcement such judgment/arbitral award has been rendered, and the of arbitration awards. provisions of such treaty shall apply; b) in the absence of a treaty, under the reciprocity rule, The recognition and enforceability process of arbitration awards in reciprocity will be presumed and a judgment/arbitral award, Honduras is the same as that established for foreign judgments. given by a competent foreign court, will be admissible in the Honduran courts and will be enforceable thereby under the same terms and conditions under which such foreign court 8 Updates and Developments recognises judgments issued in Honduras; or c) if (a) and (b) above are not applicable, such foreign judgment/ arbitral award may be enforced in Honduras, provided that: 8.1 Describe any other issues not considered above that i. the obligation pursuant to which the judgment was may be worthy of note, together with any current rendered is considered res judicata in the issuing country, trends or likely future developments that may be of interest. and has been issued by a competent court recognised as such by the Honduran norms for international jurisdiction; There are no further updates or developments of particular note. ii. the defendant has been personally summoned, even if declared “in default”, the defendant was provided with the opportunity to exercise its right to defence, and the defendant has been duly notified of such judgment/arbitral award in accordance and compliance with the laws of the issuing country;

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René Serrano Zelaya Jessy Aguilar NASSAR ABOGADOS NASSAR ABOGADOS Colonia Lomas del Guijarro Sur Colonia Lomas del Guijarro Sur Edificio Torre Alianza I Edificio Torre Alianza I Quinto piso (local 501) Quinto piso (local 501) Tegucigalpa Tegucigalpa Honduras Honduras

Tel: +504 2271 0061 Tel: +504 2271 0061 Email: [email protected] Email: [email protected] URL: www.nassarabogados.com URL: www.nassarabogados.com

Honduras Associate Associate Education: Juris Doctor, Universidad de Navarra, Pamplona, Spain. Education: Juris Doctor, Universidad Nacional Autónoma de Honduras (UNAH). Master’s degree in Business Law, Universidad Tecnológica de Practice Areas: Civil, Corporate, Labour and Tax. Honduras (UNITEC). Experience: Practice Areas: Civil Law, Telecommunications, Transportation. René provides legal advice to local and international companies Experience: established in the Central American region in their corporate, labour and tax structures. René acts as legal counsel to multilateral agencies Jessy is an Attorney with experience in business. She has provided legal and international financial entities in structuring cross-border loan assistance to various companies on issues related to contracts, mergers transactions. He provides advice on foreign direct investment through and acquisitions, due diligence processes, corporate restructuring, the establishment of local operations, and in the design and negotiation purchases of commercial establishments, as well as competition issues of contracts in areas such as franchising, distribution and agency. at the regulatory level. Languages: English and Spanish. Within her legal practice, she provides corporate advice to companies on corporate governance guidelines, advice on hiring in various branches, Memberships: Honduras Bar Association. and on the organisation and administration of legal compliance before regulatory entities. Jessy’s expertise includes providing legal advice to national and international companies on the local and international implementation of their projects, with special emphasis on telecommunications, transportation and customs matters, environmental issues, and all corporate matters related to obtaining required permits and authorisations to operate in Honduras, as well as their adherence to forms of modern contracting and e-commerce. She has advised several maritime clients regarding vessel issues, personal injury and wrongful death, marine insurance, vessel arrests, liens, environmental law and tort claims, in addition to commercial and customs matters. Languages: Spanish, English and French.

NASSAR ABOGADOS is a full-service and results-oriented law firm, with internationally recognised strategic experience in a large variety of areas of law. With more than 35 years of experience, the firm holds a longstanding tradition of excellence in the provision of service and legal advice designed according to first-class quality standards. Over a decade ago, NASSAR ABOGADOS expanded its Costa Rican operation to Central America, providing clients with a regionally standardised service that has become an ally to their business in the region. Our clients recognise our professionals’ knowledge, experience, sophistication and understanding of their business, as well as the attorneys’ proactive and creative skills in addressing our clients’ matters. NASSAR ABOGADOS has consolidated its position as a key player in the market of legal services in the region, being frequently nominated within the top Central American firms.

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Hong Kong Andrew Rigden Green

Stephenson Harwood Evangeline Quek

board. Subject to the payment of all expenses in the seizure, the 1 Marine Casualty Director may sell or dispose of the vessel, cargo or other things as he thinks fit. 1.1 In the event of a collision, grounding or other major Hong Kong is not a party to the Nairobi International Convention on casualty, what are the key provisions that will impact the Removal of Wrecks. upon the liability and response of interested parties? (v) Limitation of liability In particular, the relevant law / conventions in force in relation to: The Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap. 434) incorporates the provisions of the two main (i) Collision conventions of limitation of liability, namely the Convention on The International Regulations for Preventing Collisions at Sea Limitation of Liability for Maritime Claims 1976, as amended by 1972 as incorporated into the Merchant Shipping (Safety) (Signals the 1996 Protocol (“Limitation Convention”), and the Athens of Distress and Prevention of Collisions) Regulations (Cap. 369N) Convention relating to the Carriage of Passengers and their Luggage apply to vessels registered in Hong Kong and to any other vessels by Sea 1974 and its 1976 Protocol (“Athens Convention”). within Hong Kong waters. (vi) The limitation fund The International Convention on Salvage 1989 is implemented in A limitation fund may be constituted with the Court of Hong Kong Hong Kong through the Merchant Shipping (Collision Damage in accordance with Article 11 of the Limitation Convention. Liability and Salvage) Ordinance (“MSCO”) (Cap. 508). (ii) Pollution 1.2 What are the authorities’ powers of investigation / The International Convention for the Prevention of Pollution from casualty response in the event of a collision, grounding Ships 1973 as subsequently modified is implemented through the or other major casualty? Merchant Shipping (Prevention and Control of Pollution) Ordinance (Cap. 413) and its subsidiary legislation. Any casualty involving a Hong Kong registered ship or occurring within Hong Kong waters must be reported to the Director of The International Convention on Civil Liability for Oil Pollution Marine. Damage 1992 and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage The Marine Accident Investigation and Shipping Security Policy 1992 are implemented through the Merchant Shipping (Liability Branch of the Marine Department (“MAISSPB”) conducts and Compensation for Oil Pollution) Ordinance (Cap. 414). investigations to establish the causes and circumstances of marine accidents (with the aim of improving the safety of life at sea). It also The Shipping and Port Control Ordinance (Cap. 313) governs the carries out official inquiries ordered by the Director under various discharge of oil into Hong Kong waters. shipping ordinances including the Merchant Shipping Ordinance (iii) Salvage / general average (Cap. 281) and the Shipping and Port Control Ordinance (Cap. 313). The International Convention on Salvage 1989 has force of law in Hong Also, the Chief Executive may, whenever the circumstance warrants Kong by the MSCO. The common law remains effective in relation it, as detailed in the Merchant Shipping Ordinance (Cap. 281), order to salvage operations falling outside the scope of the Convention and a marine court to make investigations as to casualties affecting ships assists in the interpretation and application of the Convention. or to inquire into charges of incompetency or misconduct on the There is no legislation governing general average in Hong Kong. part of the crew. Common law rules form the law on general average. Usually, parties agree to apply the York-Antwerp Rules by contract. (iv) Wreck removal 2 Cargo Claims Under the Shipping and Port Control Ordinance (Cap. 313), the Director of Marine has the power to direct the owner, master or 2.1 What are the international conventions and national other persons who have control over a stranded, abandoned or laws relevant to marine cargo claims? sunken vessel in Hong Kong waters to remove that vessel. If the directions are not complied with, the Director of Marine may The Hague-Visby Rules have the force of law in Hong Kong by seize and detain the vessel together with any cargo or things on virtue of the Carriage of Goods by Sea Ordinance (“COGSO”)

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(Cap. 462). The Hague-Visby Rules set out the responsibilities and ■ mortgages; liabilities of the carrier under every contract of carriage of goods by ■ damage done or received by a ship; sea in relation to the loading, handling, stowage, carriage, custody, ■ damage to life or goods; care and discharge of such goods, and their rights and immunities. ■ agreements related to carriage of goods in a ship or the use or hire of a ship; 2.2 What are the key principles applicable to cargo claims ■ salvage; brought against the carrier? ■ towage or pilotage; ■ goods or materials supplied to a ship for operation or It would depend on how the claim is framed by cargo claimants. maintenance (i.e. necessaries); If the claim is brought against the contractual carrier, the Hong Kong ■ construction, repair, dock charges and dues; Hong Kong Court will consider the contract of carriage between the parties to ■ crew wages, Master’s wages and disbursements; or ascertain the responsibilities of the contractual carrier and if liable, if the contractual carrier can rely on any contractual exceptions ■ general average. or limitations or the claim is time barred. The Hong Kong Court This includes the maritime liens available under Hong Kong law such will also consider the Clause Paramount (if any) in the contract of as damage done by a ship, salvage, wages and Master’s disbursements. carriage to determine if the Hague Rules or Hague-Visby Rules or To arrest a ship in Hong Kong, the applicant must file (1) an the Hamburg Rules apply. admiralty writ in rem, (2) an application for an arrest warrant, and (3) a supporting affidavit. Before applying for the arrest warrant, the 2.3 In what circumstances may the carrier establish claims applicant should check the caveat book for caveats against arrest. against the shipper relating to misdeclaration of cargo? When the warrant of arrest is obtained, the warrant is served by the Bailiff on the ship. The Bailiff must be provided with (1) a request Assuming that the Hague-Visby Rules (as implemented in Hong to execute the warrant, and (2) an undertaking to pay the Bailiff’s Kong law) applies, the shipper is deemed to have guaranteed to costs of the arrest. the carrier the accuracy of the characteristics of the cargo furnished Counter-security is not required. by him. If the declaration is inaccurate, the shipper will have to indemnify the carrier against all loss, damages and expenses arising The affidavit must establish a right to arrest, including the existence or resulting from the inaccuracies. This indemnity may be expressly of an admiralty claim and ownership of the ship to be arrested by the provided for in the contract of carriage. person who would be liable on an action in personam. As the application is usually made without notice to the opponent, the applicant has a duty to make full and frank disclosure when 3 Passenger Claims applying. If there is material non-disclosure, the warrant of arrest may be set aside and damages for wrongful arrest may be ordered if 3.1 What are the key provisions applicable to the the non-disclosure amounts to proceeding in a “cavalier fashion” or resolution of maritime passenger claims? “malicious negligence”. Alternatively, the claimant may consider applying for a Mareva The Athens Convention is in force in Hong Kong by virtue of the injunction over assets in Hong Kong. A Mareva injunction may Merchant Shipping (Limitation of Shipowners’ Liability) Ordinance be obtained in aid of foreign proceedings (section 21M of the High (Cap. 434). It sets out the liability of the carrier and its servants or Court Ordinance (Cap. 4)). Briefly, the claimant must demonstrate agents and a system whereby they can limit their liabilities for incidents that there is a good arguable case, a real risk of dissipation of assets, causing death, personal injuries or loss/damage to passengers’ luggage. and that the balance of convenience is in favour of granting the Under the Control of Exemption Clauses Ordinance (Cap. 71), injunction order. contractual clauses seeking to exclude liability arising from death or personal injuries of passengers caused by negligence are unenforceable 4.2 Is it possible for a bunker supplier (whether physical in Hong Kong. and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 4 Arrest and Security It is possible to do so, provided that the person liable for the unpaid bunkers is the owner or demise charterer of the vessel to be arrested. 4.1 What are the options available to a party seeking to Where the bunker supply contract is with a third party, no right of obtain security for a maritime claim against a vessel arrest will exist unless it can be shown that the third party was acting owner and the applicable procedure? as agent for the owner or demise charterer of the vessel.

Hong Kong is a signatory to the International Convention on the Unification of Certain Rules relating to the Arrest of Sea-going 4.3 Where security is sought from a party other than the Ships 1952. vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what If the maritime claim comes within the admiralty jurisdiction of the options are available? Hong Kong Court, the party seeking to obtain security may apply for an arrest, subject to certain procedural requirements being fulfilled. In certain circumstances, a maritime claimant may have a lien. The types of maritime claims over which the Hong Kong Court has For example, a carrier may have a lien over cargo for outstanding admiralty jurisdiction are set out at section 12A of the High Court freight and general average contribution. An owner of a ship may Ordinance (Cap. 4). Essentially, these are: also have a contractual right to lien cargo, sub-hire or sub-freight ■ possession or ownership / disputes between co-owners in under a charterparty. respect of the ship;

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Cargo liens should be exercised with particular consideration to a number of factors, including: 6 Procedure ■ whether cargo owners had in fact agreed to the exercise of a lien over the cargo; 6.1 Describe the typical procedure and timescale ■ whether the law of the place where the lien is to be exercised applicable to maritime claims conducted through: i) recognises the lien; and national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist ■ practical and other logistical issues in the exercise of a lien. arbitral bodies); and iii) mediation / alternative dispute If there is a concern over dissipation of assets by the debtor, one can resolution. consider a Mareva injunction (see answer to question 4.1 above). (i) National courts Hong Kong 4.4 In relation to maritime claims, what form of security is The Court of First Instance at the Hong Kong High Court has acceptable; for example, bank guarantee, P&I letter of admiralty jurisdiction. Claimants may pursue against or arrest vessels undertaking. to obtain security for the claim. An admiralty judge is assigned to hear such cases. The Hong Kong Court will accept a bail bond or payment into court. Depending on the nature of the claim, cases may also be assigned to If the arresting applicant agrees, security may be provided in the specialist court lists, such as the Commercial List and the Arbitration form of a P&I club letter of undertaking or a bank guarantee. List. Litigants are expected to take a proactive approach in managing their 5 Evidence cases. The Court has wide case management powers to facilitate expedient resolution of cases, particularly after the Civil Justice Reform in 2009. Cases typically take some 12 to 18 months for 5.1 What steps can be taken (and when) to preserve or resolution, depending on the circumstances of the case and parties’ obtain access to evidence in relation to maritime conduct of the case. claims including any available procedures for the preservation of physical evidence, examination of (ii) Arbitration witnesses or pre-action disclosure? Hong Kong adopts a pro-arbitration approach. The Arbitration Ordinance (Cap. 609) incorporates most provisions of the Provisions within the court procedural rules are in place for the UNCITRAL Model Law on International Commercial Arbitration inspection of a ship or other property, obtaining of information or 2006. Arbitration is also facilitated by the Hong Kong International other evidence, detention and preservation of the subject matter and Arbitration Centre (“HKIAC”), with established arbitration rules for taking of samples. Anton Piller orders (i.e. orders to search premises administration of cases. The Maritime Arbitration Group, a division and seize evidence without prior warning) may be obtained. within the HKIAC, provides a list of arbitrators experienced in Pre-action disclosure is possible subject to the satisfaction of the maritime matters. stringent necessity and relevance requirements. (iii) Mediation / alternative dispute resolution As to arbitration proceedings, the Arbitration Ordinance (Cap. 609) The Hong Kong Courts encourage parties to mediate and resolve provides for the arbitral tribunal to have powers to make orders their differences. It is a procedural requirement in civil litigation directing the inspection, photographing, preservation, custody, that parties state in a certificate that they have considered the detention or sale of any relevant property by the arbitral tribunal, a possibility of a mediation, and if they do not wish to mediate, to state party to the arbitral proceedings or an expert; or directing samples the reasons. There may be adverse costs consequences for a party to be taken from, observations to be made of, or experiments to be that refuses mediation without good reasons. Various institutions conducted on any relevant property. The arbitral tribunal also has are in place to assist a mediation where required. power to make orders to preserve evidence that may be relevant and material to the resolution of the dispute and/or to preserve assets out of which a subsequent award may be satisfied. 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind. 5.2 What are the general disclosure obligations in court proceedings? Hong Kong retains the common law system post the 1997 handover; its jurisprudence is largely derived from English law. Judges are In Hong Kong, parties are obliged to disclose all relevant documents highly regarded for their impartiality and the soundness of the law. which are or have been in their (or their agents’ or employees’) Renowned judges from major Commonwealth jurisdictions also possession, custody or power, including those that may be detrimental sit on the Court of Final Appeal. With the Civil Justice Reform in to their case. Parties and their lawyers are expected to take active 2009, certain court processes have been streamlined with the goal of steps to preserve such documents at an early stage of the litigation. expediting the fair resolution of cases. “Privileged” documents are exempted from disclosure. Any Arbitration has also steadily grown and Hong Kong is one of the document created for the dominant purpose of assisting an actual or premier arbitration centres in Asia. The UNCITRAL Model Law contemplated litigation, such as communication with investigators on International Commercial Arbitration 2006 applies in Hong and surveyors, is privileged. Communications between clients Kong, subject to certain modifications as set out in the Arbitration and their legal advisers for the purpose of obtaining legal advice Ordinance (Cap. 609). Finality and certainty are promoted, with are protected from disclosure, and this privilege is entrenched by restrictive grounds to challenge an arbitral award, but parties can article 35 of the Basic Law. The Court of Appeal in Citic Pacific agree to have a right to apply to the court to appeal a question of law. Ltd v Secretary for Justice No. 2 [2015] 4 HKLRD 20 held that legal advice privilege may cover communications with in-house counsel and employees throughout the business under certain circumstances.

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New York Convention on the Recognition and Enforcement of 7 Foreign Judgments and Awards Arbitration Awards 1958. Awards from non-New York Convention contracting states are enforced in the same way as awards made 7.1 Summarise the key provisions and applicable in Hong Kong under the Arbitration Ordinance (Cap. 609). The procedures affecting the recognition and enforcement Ordinance also sets out provisions for the enforcement of arbitral of foreign judgments. awards from mainland China and Macau.

The Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap. 319) and the Foreign Judgments (Reciprocal Enforcement) Order 8 Updates and Developments (Cap. 319A) govern the reciprocal recognition of foreign judgments in Hong Kong, including judgments of certain Commonwealth

Hong Kong 8.1 Describe any other issues not considered above that countries, including Australia, Bermuda, Brunei, India, Malaysia, New may be worthy of note, together with any current Zealand, Singapore and Sri Lanka, and to some non-Commonwealth trends or likely future developments that may be of countries, including , Belgium, France, Germany, Israel, Italy interest. and the Netherlands. The Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. In recent years, Hong Kong has taken a tougher stance on air 597) governs the enforcement of judgments given on or after 1 August pollution, as reflected in the penalties against dark smoke emission 2008 of the Supreme, Higher and Intermediate People’s Court in and the use of high sulphur fuel at berth. Currently, there are mainland China and certain recognised Basic People’s Courts. The discussions to extend the current cap of 0.5 per cent on the sulphur arrangement applies only to the enforcement of money judgments in content of fuel oil on ocean-going vessels at berth to cover all civil and commercial matters, not being a sum payable in respect of marine vessels operating in Hong Kong waters. taxes or other fines or penalties. New arrangements have been made by the Immigration Department In the absence of any applicable statutory regime, the common law to allow non-local seafarers joining a vessel stranded in Hong Kong principles apply. To enforce in common law, the judgment creditor to work on board beyond the original 14-day limit and subsequently of the foreign judgment has to commence civil proceedings in Hong depart with it, where the vessel is stranded due to unforeseeable Kong by way of writ. The court will enforce the foreign judgment if circumstances including ship arrest. This greatly reduces the cost of certain conditions are met, such as the judgment being shown to be ship arrest in Hong Kong waters. final and conclusive, and it is a claim for a fixed sum. Usually, it is For the first time since the Competition Ordinance came into effect possible to apply for summary judgment to speed up the recognition in Hong Kong, the Competition Commission granted a conditional and enforcement process. block exemption of vessels sharing agreements between liner shipping companies. The block exemption is valid for five years starting from 8 August 2017. However, voluntary discussion 7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement agreements are not exempted. of arbitration awards.

Hong Kong continues to take a pro-enforcement approach towards arbitral awards after the 1997 handover, and remains a party to the

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Andrew Rigden Green Evangeline Quek Stephenson Harwood Stephenson Harwood 18th floor, United Centre 18th floor, United Centre 95 Queensway 95 Queensway Hong Kong Hong Kong

Tel: +852 2533 2761 Tel: +86 21 5385 2299 Email: [email protected] Email: [email protected] URL: www.shlegal.com URL: www.shlegal.com

Andrew specialises in marine business and international trade, in both Evangeline specialises in dispute resolution, focusing in particular on Hong Kong dispute resolution (arbitration, litigation and mediation) and advisory work commercial, international trade and shipping matters. She practised in (contract drafting and negotiation). His practice includes commercial Singapore before moving to Hong Kong with a well-known international shipping, shipping litigation, ship-building and offshore construction, law firm in 2008. She is currently qualified to practise English and Hong commodities and marine insurance. He regularly represents ship- Kong law. She is a native English speaker and speaks fluent Mandarin owners, charterers, commodity traders, energy clients, bill of lading Chinese and conversational Cantonese. holders, P&I clubs, insurers, shipyards, offshore contractors and banks. She is instructed on a regular basis by international group P&I Clubs He has represented clients in a number of substantial disputes and and shipowners and charterers in Hong Kong, Taiwan and the PRC. cross border transactions involving different jurisdictions in Europe, She is very experienced with obtaining pre-action security. The disputes the former Soviet Union, Asia, Africa and the Caribbean. He is familiar are then resolved by LMAA, HKIAC, ICC, SIAC or ad hoc arbitrations or with maritime, trade and institutional arbitration as well as high court litigation in the English or Hong Kong courts. litigation. Part of Evangeline’s practice is also focused on providing non- Andrew speaks fluent French and Russian. Andrew has been with the contentious advice to shipowners and operators. She negotiates firm since 2001 and is a partner in both London and Hong Kong. He has and drafts both standard form and custom commercial and shipping worked in the Marine and International Trade group for over 10 years. agreements for her clients.

Stephenson Harwood is a law firm headquartered in London, with over 1,000 people worldwide, including more than 170 partners, and is committed to achieving the goals of clients – listed and private companies, institutions and individuals. Our offices in Asia provide English and Hong Kong legal advice and in conjunction with our associated offices provide Chinese, Indonesian and Singapore legal advice. Our lawyers are fluent in English and the major Asian languages: Chinese (Cantonese, Mandarin, Shanghainese), Bahasa and Korean as well as French and Russian. Our world-leading marine law practice offers a breadth of services to clients in the shipping, insurance, offshore and commodity sectors. Our clients include many of the world’s largest shipowners, shipyards, major ship finance banks, marine insurers and P&I clubs, energy services companies, oil and gas businesses and commodities traders. In addition to Asia we have specialist maritime, commodity and international trade lawyers in key shipping and trade hubs worldwide: Dubai, London, Paris and Piraeus, together with our alliance firms, deliver seamless market-leading maritime expertise to a truly international clientele. We routinely act in high-profile disputes involving complex legal and commercial problems throughout the world. With our long track record of representing best-in-class maritime companies all over the world, you can be sure of the highest quality of service every time.

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India

Mulla & Mulla & Craigie Blunt & Caroe Shardul Thacker

(ii) Pollution 1 Marine Casualty The Sections under Parts X-B, X-C and XI-A deal with the prevention and containment of pollution of the sea by oil. India 1.1 In the event of a collision, grounding or other major follows the International Convention on Civil Liability for Oil casualty, what are the key provisions that will impact Pollution Damage, 1992 (as amended). Section 352 G applies to upon the liability and response of interested parties? every Indian ship, wherever it is, and every foreign ship while it In particular, the relevant law / conventions in force in is at a port or place in India or within Indian territorial waters or relation to: marine areas adjacent thereto over which India has or may have exclusive jurisdiction. In regard to control of marine pollution (i) Collision under territorial waters and on the continental shelf, the Exclusive The legal regime relating to collisions and accidents at sea occurring Economic Zone and any Maritime Zones Act, 1976 or any other law in Indian territorial waters, is governed by the Part X of the Merchant currently in force applies. Shipping Act, 1958 (MSA), which provides for: The MSA also provides for civil liability for oil pollution damage 1) Division of loss in case of collision (Section 345). The and international oil compensation funds. Apart from the above, apportionment of liability shall be in proportion to the degree there are several rules that have been drawn up with regard to in which each ship is at fault. pollution. These rules are as follows: 2) Damages for personal injury (Section 346). The liability of the owners of the ships concerned is joint and several. ■ The Merchant Shipping (Civil Liability for Oil Pollution Damage) Rules, 2008. 3) Right of contribution (Section 347). In case of loss of life or personal injuries suffered by a person on board a ship ■ The Merchant Shipping (International Fund for Compensation owing to the fault of that ship and of any other ship or ships, for Oil Pollution Damage) Rules, 2008. and a proportion of the damages being recovered from the ■ The Merchant Shipping (Prevention of Pollution by Garbage owners of one of the ships which exceeds the proportion in from Ships) Rules, 2009. which she was at fault, the said owner may recover, by way ■ The Merchant Shipping (Prevention of Pollution by Sewage of contribution, the amount of the excess from the owners of from Ships) Rules, 2010. the other ship or ships by which those ships were respectively ■ The Merchant Shipping (Prevention of Pollution by Harmful at fault; the right of limitation of liability being, however, Substances Carried by Sea in Packaged Form) Rules, 2010. unaffected. ■ The Merchant Shipping (Control of Pollution by Noxious 4) The duty of the Master of Ship to assist in case of a collision Liquid Substances in Bulk) Rules, 2010. (Section 348). ■ The Merchant Shipping (Prevention of Pollution by Oil from 5) A requirement to record the collision in the official log book Ships) Rules, 2010. of the vessel involved in the incident (Section 349). The Union Cabinet, chaired by the Prime Minister, has approved 6) A report to be given to the Central Government of India regarding accidents to ships, specifically in relation to loss of the Ministry of Shipping’s proposal for India’s accession to the life or injury or damage (Section 350). International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunker Convention) of the International Maritime 7) Notice of the loss of an Indian ship to be given to the Central Government (Section 351). Organization (IMO) as well as to amend the Merchant Shipping Act, 1958, Part XBA. A suit for damages by the shipowner against any vessel for collision on the high seas must be tried exclusively by the High Court on its The proposed amendments to the Merchant Shipping Act 1958, Admiralty side, regardless of whether the vessel is an Indian vessel if enacted, shall also give effect to the Nairobi Wreck Removal or a foreign flag vessel (Kamlakar Mabadev v. Scindia Steamship Convention and the Salvage Convention of the IMO, to which India Navigation Co. Ltd ([1962] Bombay 146)). is already a party. (iii) Salvage / general average A suit for damages with respect to loss of life as a result of collision on the high seas, whether in rem or in personam, falls within the Part XIII of the MSA governs Wreck and Salvage (Sections 402 to exclusive jurisdiction of the High Court under its Admiralty 404). jurisdiction (Bai Kashibai v. Scindia Steamship Navigation Co. Ltd The MSA does not contain any specific provisions or rules in relation ([1961] AV 8209)). to general average. The law on general average would therefore be

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dependent upon the common law and the provisions of the contract (v) Limitation of liability between the parties. Generally, the contract or a bill of lading Prior to 2002, India was following the Convention of Limitation of incorporates the York-Antwerp Rules for adjustment of general Liability of the Owners of Sea-Going Ships 1957 (1957 Convention) average and for security and payment of general average contribution. and the MSA incorporated the 1957 Convention on Limitation of However, Section 352 A(3)(b) exempts claims for salvage or to claims Liability. However, in 2002 the MSA was amended to bring it into for contribution in general average from the limitation of liability. line with the Convention on Limitation of Liability of Maritime (iv) Wreck removal Claims (LLMC) 1976. The said Convention provides for a higher Wreck removal is governed by Part XIII of the MSA (Sections 390 limitation fund but makes it extremely difficult to deprive the owner to 404). of the right to limit liability. The test to the owner of the right to limit liability is: “the loss should result from any personal act or India Where any ship is wrecked, stranded or in distress at any place or omission committed by the ship owner or the salvor with the intent near the coast of India, the receiver of wreck, within the limits of to cause such loss committed recklessly and with knowledge that whose jurisdiction the place is situated, is entitled to proceed and such loss would probably result.” take command, and takes steps for the preservation of the vessel On 23 March 2011, India acceded to the 1996 protocol, which and the lives of the person belonging to the vessel and its cargo prescribes a higher limit. The protocol of 1996 amends the or equipment (Section 392). Investigations are carried out by the Convention on Limitation of Liability for Maritime Claims, 1976. receiver of wreck in respect of wrecks which are stranded or in The shipowner, salvor or any person for whose act, neglect or default, distress (Section 396). the shipowner or salvor, as the case may be, is responsible and an The receiver may in certain cases order immediate sale of the wreck insurer of liability for the claims to the same extent as the assured where it is under the value of Rs. 500 or it is damaged, or the cargo himself, may limit his liability as provided under Section 352 B in is perishable in nature, to the extent that it cannot be kept or is not of respect of loss of life, personal injury, loss or damage to property sufficient value to be worth incurring warehousing costs. including damage to harbour works, basins and waterways and aids Section 392 governs the duty of the receiver where a vessel is in to navigation, delay in carriage by sea or cargo or passengers or their distress. luggage by sea, etc. Section 394 gives powers to the receiver of wreck, where necessary, The following persons/entities are now allowed to limit liability: to suppress, plunder and disorder by force (Section 394). (i) The owner of a vessel. Section 395 lays down the procedure to be observed by persons (ii) The charterer/manager/operator of a vessel. finding a wreck. (iii) Master/crew/other servants of the owner, manager or operator Section 396 governs investigations to be carried out by a receiver of the vessel acting in the course of their employment. into certain matters in respect of vessels wrecked, etc. (iv) A salvor, including for any act, neglect or default of persons for whom he or she is responsible. Section 398 governs the immediate sale of a wreck by the receiver in certain cases. (v) An insurer of liability to limit his or her liability to the same extent as his or her assured. Section 399 provides for claims made by owners of a wreck. The old Section 352 A(2) has been deleted from the Act, and the Sections 400 and 401 provide for the prohibition of certain acts in onus of proof now lies on the claimant or a person attempting to respect of wrecks, and search warrants where a wreck is involved, break the limitation as construed by Article 4 of the Convention on respectively. Limitation of Liability for Maritime Claims, 1976 (LLMC). Section 402 governs salvage payable for saving life, cargo or wreck. The Ministry of Shipping, by notifying the Merchant Shipping Any dispute concerning the amount due for salvage services is to (Limitation of Liability for Maritime Claims) Rules, 2015 and be determined by: (i) a Judicial Magistrate of the first class or the further amending the same by the Merchant Shipping (Limitation Metropolitan Magistrate, as the case may be, where the amount of Liability for Maritime Claims) Rules, 2017, has specified the claimed does not exceed Rs.10,000; or (ii) High Court where the limit of liability for claims under Section 352 A, particularly those amount exceeds Rs.10,000. relating to loss of life, personal injury, loss or damage to property. There are, however, amendments suggested in the Merchant Section 352 B provides for limitation of liability in accordance with Shipping (Amendment) Bill, 2016 in relation to Section 390. LLC 1996. The old Section 402 relating to salvage will be substituted with the Section 352 C provides for the constitution of limitation funds and following: consolidation of claims. (i) New Section 402 – Application of the part to salvage. Section 352 D provides for Release of Ship, etc. (ii) Section 402 A – Definitions. Section 352 F also extends the right to limit the liability to the (iii) Section 402 B – Salvage payable for saving life, cargo or charterer, manager or operator of the vessel; master, members of the wreck. crew and other servants of the owner, charterer, manager or operator (iv) Section 402 C – Salvage operations controlled by Government acting in the course of the employment; in the same manner as they or port and public authorities. apply in relation to the owner. (v) Section 402 D – Salvage contracts. Part XA of the MSA enumerates the provisions for Limitation of (vi) Section 402 E – Annulment and modification of contracts. Liability. A suit is required to be filed by the owner or salvor, etc., as the case may be, to limit liability. (vii) Section 402 F – Duties of salvor and of owner and master. (vi) The limitation fund (viii) Section 402 G – Rights and duties of Central Government in relation to salvage operations. The limitation fund would have to be set up in accordance with the (ix) Section 402 H – Rights of salvors. limits provided in the Protocol of 1996 amending the Convention of Liability for Maritime Claims, 1976. Specific provisions relating to (x) Section 402 I – Adjudication of disputes. limitation funds and their procedure are mentioned in Part X-A of (xi) Section 402 J – Extinguishment of claims. the MSA, and more particularly under Section 352 C.

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Section 352 C deals with limitation fund and consolidation of claims ■ Section 373 provides that a Marine Board outside India may against owners. This Section states that where any liability is alleged investigate casualty, loss of life, incompetency or misconduct, to have been incurred by the owner of a vessel in respect of claims damage, etc. arising out of an occurrence and the aggregate of the claims exceeds ■ Sections 374, 375 and 376 provide for the constitution or is likely to exceed the limits of liability of the owner, then the and procedure of a maritime board, powers of a maritime owner may apply to High Court for the setting up of a limitation board and the decision of the maritime board to be given by fund for the total sum representing such limits of liability. majority. To set up a limitation fund, the owner is required to make an ■ Sections 377 to 381 provide for cancellation, suspension of the certificate of master, mate or engineer, and the modalities application to the High Court. The High Court determines the in respect thereof. India owner’s liability and directs him or her to deposit such an amount or security as it deems fit to constitute the fund. ■ Sections 383 to 386 provide for the constitution of a Court of Survey, its procedures and its power to make rules.

1.2 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding 2 Cargo Claims or other major casualty?

Part XII (Sections 357 to 372) of the MSA provides for investigations 2.1 What are the international conventions and national laws relevant to marine cargo claims? and inquiries. The fundamental purpose of a marine accident investigation is to determine the circumstances and the causes of accidents that have been reported, with the aim of improving the safety India has enacted the Indian Carriage of Goods by Sea Act, 1925 of life at sea and the avoidance of accident in the future. Towards (COGSA), which has adopted the Hague Rules subject to some this objective, shipping casualties occurring in relation to Indian notifications. The COGSA was amended in 1993 by the Multimodal ships are investigated, in pursuance of the mandate requirement of Transportation of Goods Act, 1993 (MTOGA) to give effect to the Part XII of the MSA. Similar reports are received from foreign amendments to the Hague Rules, more particularly the Hague-Visby flag administrations for accidents occurring on ships where Indians Rules and SDR Protocol, by the Protocol signed at Brussels in 1968 have been involved. These reports are collated and disseminated for and 1979. Cargo claims can be enforced by instituting proceedings information and learning. by seeking principles of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (Admiralty Act). The Admiralty Act Section 359 provides for the obligation of any officer such as the came into force on 1 April 2018 and repealed the application of the master, pilot, harbour master or other person in charge of the ship or, where two ships are concerned, in charge of each ship at the time of following acts in India: the casualty, to notify the Central Government forthwith about the (a) the Admiralty Court Act, 1840; shipping casualty. (b) the Admiralty Court Act, 1861; The officer appointed by the Central Government may proceed to (c) the Colonial Courts of Admiralty Act, 1890; make a preliminary inquiry into the casualty (Section 360). (d) the Colonial Courts of Admiralty (India) Act, 1891; and A formal investigation into the shipping casualty is also carried out (e) the provisions of the Letters Patent, 1865 insofar as they by the Judicial Magistrate of the first class and/or a Metropolitan apply to the admiralty jurisdiction of the Bombay, Calcutta Magistrate (Section 361). and Madras High Courts. Under Section 362, the court has the power while making a formal The important changes to the COGSA brought about by the MTOGA investigation into a shipping casualty, to inquire into any charge of are: incompetency or misconduct arising in the course of investigation (i) it provides for parties to agree on the extension of the one- against any master, mate or engineer to any charge of a wrongful act year period to bring suit for cargo claims; or default on his part in causing a shipping casualty. (ii) it has increased the per-package limitation to bring the Under Section 363, the Central Government has powers to direct COGSA into line with the Hamburg Rules, i.e. the package inquiry into charges of incompetency or misconduct of any master, limitation under Indian law is now 666.66 special drawing mate or engineer. rights (SDR) per package or unit or 2 SDR per kilogram of gross weight of the goods lost or damaged, whichever is Further provisions are as follows: higher; and ■ Section 364 gives a person an opportunity to make a defence. (iii) neither a carrier nor the ship shall be entitled to the benefit ■ Section 366 provides that a court may appoint any assessor of the package limitation of liability if it is proved that (not less than two to three persons) who is conversant with the damage resulted from an act or omission of the carrier either maritime or mercantile affairs, to assist the court. done with intent to cause damage, or recklessly and with ■ Section 367 empowers the court to arrest or issue a warrant of knowledge that damage would probably result. arrest for any person or witness. Under the Admiralty Act, loss or damage to or in connection with ■ Section 368 empowers the court to make an investigation or any goods constitutes a maritime claim. an inquiry to arrest or commit a person, or hold him under bail to take his trial before a proper court, and to oblige any person to give evidence at trial. 2.2 What are the key principles applicable to cargo claims brought against the carrier? ■ Section 369 provides for a full report, including the conclusion arrived at, together with evidence in relation to the investigation, and any inquiries to be transmitted to the The key principles applicable to cargo claims brought against the Central Government. carrier are set out under the COGSA. ■ Sections 370, 371 and 372 enumerate the powers of the court The rules set out in the Schedule of the COGSA are applicable to the to censure, suspend and/or appoint a new master, mate and carriage of goods by sea in ships carrying goods from any port in engineers based on investigations and enquiries held suo moto. India to any other port whether in or outside India. The Schedule sets

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out the following powers/duties of the carrier (in short, the COGSA the High Court within whose jurisdiction the vessel is located would is applicable to onward cargo and not inward/import cargo): have to be moved for any reliefs for arrest in India. If the vessel ■ Article 3 provides for responsibility and liabilities. is within the territorial waters of the Bombay High Court, viz. if it ■ Article 4 provides for rights and immunities. is at the vicinity of any port in the State of Maharashtra, this court would have jurisdiction, and likewise other High Courts would have ■ Article 5 provides for the surrender of rights and immunities. jurisdiction over the coastal waters of the respective State. ■ Article 6 provides for special conditions where a carrier is at liberty to enter into any agreement to enhance his The claimant is required to file a plaint in court and pay the requisite responsibility or liability. court fees and thereafter move an application for arrest of the vessel ex parte. If the court is prima facie satisfied with the merits of the ■ Article 7 provides for limitation on the application of these India rules. case, it will sign and issue a warrant for the arrest of the vessel. The warrant of arrest is then served through the officer of the court upon ■ Article 8 provides for limitation of liability. the vessel. The court and customs authorities are notified of the ■ Article 9 was amended in 1993 by the Multimodal arrest of the vessel and they are required to ensure that the vessel Transportation Goods Act, 1993 which provides for special does not sail away from the jurisdiction of the court. drawing rights as the basis for calculating the liability of a carrier in relation to the cargo claim. Under the Admiralty Act, the High Court may order arrest of any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim which is the subject of an admiralty 2.3 In what circumstances may the carrier establish proceeding, where the court has reason to believe that: claims against the shipper relating to misdeclaration of cargo? (a) the person who owned the vessel at the time when the maritime claim arose is liable for the claim and is the owner of the vessel when the arrest is effected; Article 3 (5) of the Carriage of Goods by Sea Act, 1925 obligates the shipper to guarantee to the carrier the accuracy at the time of shipment (b) the demise charterer of the vessel at the time when the of the marks, number, quantity and weight of the cargo as furnished maritime claim arose is liable for the claim and is the demise by him, and the shipper is obligated to indemnify the carrier against charterer or the owner of the vessel when the arrest is effected; all loss, damages and expenses arising or resulting from inaccuracies (c) the claim is based on a mortgage or a charge of a in such particulars. If the shipper breaches this obligation, he will be similar nature on the vessel; liable to compensate for any loss caused to the carrier. (d) the claim relates to the ownership or possession of the vessel; Moreover, Article 4 (5) Para 4 of the COSGA further limits the or liability of the carrier by stating that where the nature or value of the (e) the claim is against the owner, demise charterer, manager or goods has been knowingly misstated by the shipper (so as to cause operator of the vessel and is secured by a maritime lien as such entries) in the bill of lading, the liability of the carrier or ship provided in Section 9 of the Admiralty Act. shall not exceed the value so stated. This declaration, if embodied When instituting an action for arrest, the plaintiff is required to furnish in the bill of lading, shall be prima facie evidence, but shall not be a written undertaking to pay damages in the event of a wrongful binding or conclusive on the carrier. arrest. Under the Admiralty Act, the High Court may, as a condition of arrest of a vessel, impose upon the arrestor an obligation to provide an unconditional undertaking to pay such sums of money as damages, 3 Passenger Claims or such security for any loss or damage which may be incurred by the defendant as a result of the arrest. An application for interim relief by way of arrest is passed on a Judge’s Order, and a warrant of arrest 3.1 What are the key provisions applicable to the resolution of maritime passenger claims? is issued by the Sheriff. This warrant may be served on the vessel and the master at any time of the day or night. Upon service being Part VIII of the MSA contains provisions applicable to passenger complete, the vessel stands arrested. To ensure that the vessel does ships and maritime passenger claims. not sail away while under arrest, the vessel’s port agents, the port authorities and the customs authorities are also informed, and customs Section 275 provides for refund of passage money and deposits. clearance will be denied. If there is an imminent risk that despite the Section 279 provides for compensation for delay in sailing. order of arrest, the vessel will still evade arrest, on an application the The High Court may exercise jurisdiction to hear and determine any court may also order the ship’s papers to be removed from the vessel question on a maritime claim, against any vessel, inter alia arising and taken into custody by the Sheriff. The plaintiff is not obliged to out of any: maintain the vessel or pay any crew wages during the period of arrest ■ loss or damage to or in connection with any goods; or of the vessel. (Coromandel International Limited v. M.V. Glory I and Andromeda Ship Holdings Ltd 2014 (3) AIR BR 365.) ■ agreement relating to the carriage of goods or passengers on board a vessel, whether contained in a charter party or The vessel can be released upon the owner furnishing security of the otherwise. claim, either by way of a bank guarantee or cash deposit.

4 Arrest and Security 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel Yes, it is possible for a bunker supplier to arrest a vessel for a claim owner and the applicable procedure? relating to bunkers supplied by them to that vessel. Furthermore, the bunker suppliers whose dues remain unpaid can be secured by a If a claimant has a claim which falls under the Admiralty Act, it is maritime claim and/or by arresting the vessel to which the bunkers entitled to file an admiralty suit. The Admiralty Act stipulates that were supplied.

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In many other jurisdictions, while the bunker supplier’s claim is not secured by a maritime lien, it may qualify as a ‘maritime claim’, 5 Evidence which may entitle the bunker supplier to arrest the vessel to which the bunkers were supplied (in some cases, also sister vessels). 5.1 What steps can be taken (and when) to preserve or The Hon’ble Court has accordingly held that arrest of a vessel is not obtain access to evidence in relation to maritime permissible for unpaid bunkers ordered by the time charterer of the claims including any available procedures for the preservation of physical evidence, examination of vessel, since there is no in personam liability on the shipowner. The witnesses or pre-action disclosure? Hon’ble Court, in the case of Gulf Petrochem Energy Pvt. Ltd. v. m. t. Valor, followed this view and further held that in personam liability

India Under Order XXXIX, Rule VII of the Code of Civil Procedure, of a shipowner may arise in contract, quasi contract and tort. 1908 (CPC), the court may, on the application of any party to a suit, As per Indian law, bunkers are not considered to be maritime and on such terms as it thinks fit, make an order for the detention, property (Peninsula Petroleum Ltd. v. Bunkers on Board the Vessel, preservation or inspection of any property which is the subject M.V. Geowave Commander 2015(3) Bom CR 693). matter of such suit, or as to which any question may arise. For all or any of the aforesaid purposes, any person may be authorised 4.3 Where security is sought from a party other than the to enter upon or into any land or building in the possession of any vessel owner (or demise charterer) for a maritime other party to such suit; and, for all or any of the aforesaid purposes, claim, including exercise of liens over cargo, what may be authorised to take any samples, make any observation or options are available? attempt any experiment, which may seem necessary or expedient for the purpose of obtaining full information or evidence. It is not possible for the charterer/claimant to arrest a ship against Under Section 139 of the Evidence Act, 1872 a person in possession which there exists no maritime claim. However, the Admiralty Act of a document can be called upon to produce it in court, and the contemplates arrest of any other ship which is within the jurisdiction mere fact that he produces it does not make him a witness. of the court. However, for the arrest of such other ship, it is important that the owner/demise charterer of the vessel at the time when the maritime claim arose is liable for the claim and is the owner/demise 5.2 What are the general disclosure obligations in court proceedings? charterer of the vessel. In absence of any of the two aforesaid conditions, arrest of any other ship is not possible/permissible under Indian law. Lien on cargo can be exercised for unpaid freight or for In every litigation process, each party is required to disclose the documents that are relevant to the issues in dispute to the other party. general average contribution. Lien can also be exercised if there is a If disclosure is not sufficient, the other party can seek the production contractual right of the lien which is improperly exercised; the only of these documents. As India has an adversarial litigation system, remedy is to move the court. parties must prove their own cases, and discovery and production As per Section 5(1) of the Admiralty Act, the High Court may orders are not commonly used. An order for the discovery and order the arrest of any vessel which is within its jurisdiction for the production of documents can be sought before and, in certain cases, purpose of providing security against a maritime claim which is the after the trial starts. subject of an admiralty proceeding, where the court has reason to Generally, in the event of non-disclosure, courts can draw adverse believe that: (a) the person who owned the vessel at the time when inferences. the maritime claim arose is liable for the claim and is the owner of the vessel when the arrest is effected; (b) the demise charterer of the vessel at the time when the maritime claim arose is liable 6 Procedure for the claim and is the demise charterer or the owner of the vessel when the arrest is effected; (c) the claim is based on a mortgage or a charge of a similar nature on the vessel; (d) the claim relates to 6.1 Describe the typical procedure and timescale the ownership or possession of the vessel; or (e) the claim is against applicable to maritime claims conducted through: i) national courts (including any specialised maritime or the owner, demise charterer, manager or operator of the vessel and commercial courts); ii) arbitration (including specialist is secured by a maritime lien as provided in Section 9 of the said arbitral bodies); and iii) mediation / alternative dispute Admiralty Act. resolution.

4.4 In relation to maritime claims, what form of security is As far as national courts are concerned, it depends upon where court acceptable; for example, bank guarantee, P&I letter of proceedings are filed. Proceedings in the Bombay High Court would undertaking. take between seven and 10 years to be heard and decided finally. However, according to the Arbitration and Conciliation (Amendment) Security may often be placed ‘without prejudice’ to the owner’s Act, 2015, particularly Section 29 A, the Arbitral Tribunal is required contention that the vessel is wrongfully arrested, so that the vessel to give its award within 12 months of the formation of the Tribunal. may not be unnecessarily detained until the issue of whether the Mediation proceedings can be completed within a year or so. arrest is wrongful or otherwise is ultimately determined by the court. Security is only accepted by way of a cash deposit or a bank guarantee. A Protection and Indemnity (P&I) Club letter of 6.2 Highlight any notable pros and cons related to your undertaking is not accepted without the plaintiff’s consent. The jurisdiction that any potential party should bear in Bombay High Court, in the case of M.V. Nordlake v. Union of India mind. (2012 (3) Bom CR 510), held that in the event that the value of the arrested vessel is less than the value of the plaintiff’s claim, the The judicial system in India is slow and there is a backlog of cases. shipowner is liable to furnish security up to the value of the vessel. It could take seven to 10 years for a suit to be decided, if not longer. An admiralty action in rem is an excellent remedy available to seek

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security of a claim. The majority of the cases where security is (a) the original award or a copy thereof, duly authenticated furnished in court pursuant to an action in rem are settled out of in the manner required by the law of the country in which court. The Admiralty Court can award damages against the plaintiff it was made; where the order of arrest was unjustifiably restrained and the party (b) the original agreement for arbitration or a duly certified has suffered prejudice by such an order. copy thereof; and (c) such evidence as may be necessary to prove that the award is a foreign award. 7 Foreign Judgments and Awards (2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the

award shall produce a translation into English certified as India 7.1 Summarise the key provisions and applicable correct by a diplomatic or consular agent of the country to procedures affecting the recognition and enforcement of foreign judgments. which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. A foreign judgment is enforceable in India if it complies with the Conditions for enforcement of foreign awards: requirements of Section 13 of the CPC. A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon (1) Enforcement of a foreign award may be refused, at the between the same parties or between parties under whom they or request of the party against whom it is invoked, only if that party furnishes to the court proof that: any of them claim litigation under the same title, except: (a) the parties to the agreement referred to in Section 44 (a) where it has not been pronounced by a court of competent were, under the law applicable to them, under some jurisdiction; incapacity, or the said agreement is not valid under the (b) where it has not been given on the merits of the case; law to which the parties have subjected it or, failing any (c) where it appears on the face of the proceedings to be founded indication thereon, under the law of the country where on an incorrect view of international law or a refusal to the award was made; recognise the law of India in cases in which such law is (b) the party against whom the award is invoked was not applicable; given proper notice of the appointment of the arbitrator (d) where the proceedings in which the judgment was obtained or of the arbitral proceedings or was otherwise unable to are opposed to natural justice; present his case; (e) where it has been obtained by fraud; and (c) the award deals with a difference not contemplated by or not falling within the terms of the submission to (f) where it sustains a claim founded on a breach of any law in arbitration, or it contains decisions on matters beyond the force in India. scope of the submission to arbitration. A judgment of a court of a reciprocating territory country can be Provided that, if the decisions on matters submitted to put into execution straight away if it complies with Section 13 of arbitration can be separated from those not so submitted, the CPC (supra). that part of the award which contains decisions on Section 44 A of the CPC states the following: matters submitted to arbitration may be enforced; (1) Where a certified copy of a decree of any of the superior (d) the composition of the arbitral authority or the arbitral courts of any reciprocating territory has been filed in a procedure was not in accordance with the agreement of the District Court, the decree may be executed in India as if it parties, or, failing such agreement, was not in accordance had been passed by the District Court. with the law of the country where the arbitration took place; or (2) Together with the certified copy of the decree, a certificate from such superior court shall be filed, stating the extent, (e) the award has not yet become binding on the parties, or if any, to which the decree has satisfied or been adjusted, has been set aside or suspended by a competent authority and such certificate shall, for the purposes of proceedings of the country in which, or under the law of which, that under this Section, be conclusive proof of the extent of such award was made. satisfaction or adjustment. (2) Enforcement of an arbitral award may also be refused if the (3) The provisions of Section 47 shall, as from the filing of the court finds that: certified copy of the decree, apply to the proceedings ofa (a) the subject matter of the difference is not capable of District Court executing a decree under this Section, and the settlement by arbitration under the law of India; or District Court shall refuse execution of any such decree if it (b) the enforcement of the award would be contrary to the is shown to the satisfaction of the court that the decree falls public policy of India. within any of the exceptions specified in clauses (a) to (f) of Explanation: without prejudice to the generality of clause Section 13. (b) of this sub-section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with 7.2 Summarise the key provisions and applicable the public policy of India if the making of the award was procedures affecting the recognition and enforcement induced or affected by fraud or corruption. of arbitration awards. (3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to Enforcement of foreign awards is governed by Part II of the in clause (e) of sub-section (1), the court may, if it considers Arbitration and Conciliation Act, 1996. it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming Sections 47 and 48 of Part II of the Arbitration and Conciliation Act, enforcement of the award, order the other party to give 1996 are summarised below: suitable security. Evidence: Section 49 provides that where the court is satisfied that the foreign (1) The party applying for the enforcement of a foreign award award is enforceable under this Chapter, the award shall be deemed shall, at the time of the application, produce before the court: to be a decree of that court.

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8 Updates and Developments Shardul Thacker Mulla & Mulla & Craigie Blunt & Caroe 51, M. G. Road, Mulla House 8.1 Describe any other issues not considered above that Fort may be worthy of note, together with any current trends Mumbai 400001 or likely future developments that may be of interest. India

Tel: +91 22 6634 5496 The Admiralty Act came into force on 1 April 2018. It consolidates +91 22 2262 3191 the existing laws relating to admiralty jurisdiction of courts, Email: [email protected]

India admiralty proceedings on maritime claims, and arrest of vessels; and URL: www.mullaandmulla.com stipulates the order of priorities for maritime claims/liens inter se as Mr. Shardul Thacker heads the firm’s Banking, Maritime and Offshore well as against other claims and related issues. It also repeals five practice group. obsolete British statutes on admiralty jurisdiction in civil matters, Lloyd’s List, on 12 December 2014, ranked him third in the ‘Top 10 namely: (a) the Admiralty Court Act, 1840; (b) the Admiralty Lawyers’ list, stating: “Highly regarded for his work in the liquefied Court Act, 1861; (c) the Colonial Courts of Admiralty Act, 1890; natural gas sector, particularly for interesting and highly geared finance (d) the Colonial Courts of Admiralty (India) Act, 1891; and (e) the deals in relation to infrastructure projects, energy, ports and ships.” provisions of the Letters Patent, 1865 applicable to the admiralty He has extensive experience in structured ship and asset finance, jurisdiction of the Bombay, Calcutta and Madras High Courts. acting for lenders. He advises on regulatory issues including Indian flagging, cabotage, tonnage tax, applicable taxes, licensing, etc. The Admiralty Act makes the statute retrospective in application and therefore all admiralty proceedings in the concerned High Mr. Thacker has a sizeable practice in the offshore and energy project sectors, advising on upstream as well as downstream projects. His Courts pending before commencement of the statute, as well as all in-depth knowledge of these sectors assists him in offering solution- actions initiated, by-laws, rules framed and notices issued under the based and well-rounded advice. Mr. Thacker currently acts for a repealed enactments will be now be adjudicated by the provisions multinational in India’s first FSRU/FSU-based LNG port. Chambers’ of the Admiralty Act, 2017, as long as they are not inconsistent with interviewees testify to his leading position in the shipping sector, the provisions of the same. conferred on him by his outstanding depth of knowledge. He has been described as a “very safe pair of hands who’s aware of what’s going The Admiralty Act confers admiralty jurisdiction on High Courts on, is very commercial and uses his vast experience to avoid pitfalls”. to order arrest of any vessel which is within its jurisdiction for the He is India correspondent for Lloyd’s Maritime and Commercial Law purpose of providing security against a maritime claim. Quarterly and is the Vice President, Indian Maritime Law Association, affiliated to the Comité Maritime International (CMI). The Merchant Shipping Bill, 2016 was introduced in Lok Sabha (Parliament) on 16 December 2016 and is pending approval/ He has received the Leading Lawyers Award from Chambers and ratification. Among other changes, the Bill replaces the Merchant Partners for Shipping and Maritime for several years, and is ranked in Who’s Who Legal for Transport – Shipping. Shipping Act, 1958, and repeals the Coasting Vessels Act, 1838.

Mulla & Mulla & Craigie Blunt & Caroe is a world-class firm with a broad-based practice and a diversified client base. It is one of India’s leading law firms proudly acting as legal counsel to numerous multinational companies, several large Indian corporates and a number ofFortune 500 companies. Individual partners concentrate on different practice areas providing specialist legal, commercial and technical services to clients. The firm’s in-depth knowledge and sound understanding of commercial and market realities result in providing relevant solutions which are legal and of real commercial value. Chambers and Partners have always ranked the firm as Band 1 in the field of shipping. Key areas of practice: Admiralty; Arbitration (Domestic & International); Aviation Law; Banking & Securities; Capital Markets; Competition/Antitrust; Construction; Company/Commercial Law; Customs & Tariffs; Employment & Industrial Relations; Energy Law (Oil & Gas); Entertainment Law; Environmental Law; Finance Law (Aircraft, Ship & Project); Foreign Investment; IT; Infrastructure Projects (Power & Ports); Intellectual Property; Insurance Law; Litigation; Logistics; Mergers & Acquisitions; Media & Entertainment; Offshore Investment & Securities; Privatisation; Real Estate & Property Law; Tax Law; Telecommunications; and Trade & Transport.

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Indonesia Dyah Soewito

SSEK Legal Consultants Stephen Igor Warokka

by way of Presidential Decree No. 46 of 1986 and Presidential 1 Marine Casualty Regulation No. 29 of 2012. c. The International Convention on Civil Liability for Oil 1.1 In the event of a collision, grounding or other major Pollution Damage of 1969 and its amendment of 1992 casualty, what are the key provisions that will impact (“CLC”), by way of Presidential Decree No. 52 of 1999. upon the liability and response of interested parties? Indonesia has not ratified the International Oil Pollution In particular, the relevant law / conventions in force in Compensation (“IOPC”) Fund Convention of 1992 and the relation to: Supplementary Fund Protocol of 2003.

(i) Collision Under the Shipping Law, all crew members in a vessel are obliged to prevent and mitigate environmental pollution from their vessel. With regard to liability in a collision, the Indonesian Commercial In addition, vessel owners or operators are obliged to procure an Code (“ICC”), which was enacted in the 19th century, provides that: insurance policy for their pollution liability. Failure to comply may a. If the collision is caused by force majeure, or if there are result in imprisonment and/or fines for vessel owners or operators. doubts as to the cause of the collision, the damages shall be (iii) Salvage / general average borne by those who have suffered them. b. If the collision is caused by the fault of one of the colliding We are not aware of any salvage conventions that have been ratified vessels, liability to remedy the damages shall be borne by the by Indonesia. vessel that committed the fault. Wirjono Prodjodikoro, an The Shipping Law was further implemented by Minister of Indonesian scholar, stated that a collision caused by a defect Transportation (“MOT”) Regulation No. PM 71 of 2013 on Salvage (unseaworthiness) of the vessel shall also be considered as and Underwater Works, as amended by MOT Regulation No. PM the fault of the vessel. 33 of 2016 (“MOT Reg 71/2013, as amended”). This regulation c. If the collision is caused by the fault of two or more vessels, defines salvage as the provision of aid to a vessel and/or its cargo the liability of each vessel is in proportion to the degree that has suffered a vessel accident or perils of the sea, including of their respective faults. Prodjodikoro stated that the test removing the shipwreck or underwater obstacle or other object. of fault is the impact of the fault on the damage suffered, MOT Reg 71/2013, as amended provides that a salvage operation irrespective of the intention (culpa) of the vessel. may only be conducted by a business entity specifically engaging d. If a vessel being towed collides due to the fault of the towing in the salvage business, fulfils the technical requirements under vessel, the owners of both the towed and the towing vessel MOT Reg 71/2013, as amended and holds a permit from the Capital shall be jointly and severally responsible for the damage. Investment Coordinating Board (Badan Koordinasi Penanaman Upon declaring independence in 1945, Indonesia decided that the Modal or “BKPM”) upon the recommendation of the Directorate articles of the ICC would continue to be followed unless they were General of Sea Transportation (“DGST”). contrary to the Constitution. Under Article 547 of the ICC, a salvage reward shall be paid for any Under Law No. 17 of 2008 regarding Shipping (“Shipping Law”), salvage operation. Such reward must be paid even if the salvage unless it can be proven otherwise, the master of the vessel shall be operation is not successful, unless otherwise agreed by the parties. held liable in a vessel accident. The salvor is also entitled to receive compensation for costs, losses and loss of profits. As to collisions, Indonesia has ratified the 1972 International Regulations for Preventing Collisions at Sea, by way of Presidential Indonesia has not ratified the York-Antwerp Rules, but parties Decree No. 50 of 1979, but has not ratified the Convention for the may agree to incorporate such rule within their agreements. In the Unification of Certain Rules of Law with respect to Collisions absence of a contractual provision on general average, the provisions between Vessels. of the ICC shall apply. (ii) Pollution (iv) Wreck removal Indonesia has ratified the following treaties: Indonesia has not ratified the Nairobi International Convention on the Removal of Wrecks of 2007. a. The United Nations Convention on the Law of the Sea of 1982 (“UNCLOS”), by way of Law No. 17 of 1985. The Shipping Law, as implemented by MOT Reg 71/2013, as b. The International Convention for the Prevention of Pollution amended, obliges a vessel owner to remove its shipwreck and/or from Ships of 1973, as modified by the Protocol of 1978 cargo that are disturbing navigational safety and security within 180 relating thereto and by the Protocol of 1997 (“MARPOL”), days after such vessel and/or cargo sank.

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MOT Reg 71/2013, as amended also requires vessel owners to Article 513 of the ICC provides that if the bill of lading states that insure their vessels with wreck removal insurance or protection the “content/nature/amount/weight/size is unknown”, or a similar and indemnity insurance from an insurance company recognised by clause to this effect, the carrier will not be responsible for any cargo the Government of Indonesia. This requirement is waived for war claim, unless the carrier should have known the condition and type vessels, state vessels used for governmental duty, and motor vessels of the cargo or the cargo was quantified before the carrier. with a gross tonnage of less than 35 tonnes. Unless otherwise agreed by the parties, the ICC provides a one-year (v) Limitation of liability limit to bring legal claims related to: (i) payment to be made by Indonesia has not ratified the International Convention relating to the the consignee; (ii) carriage of passengers and luggage against the Limitation of the Liability of Owners of Sea-Going Ships of 1957 carrier; and (iii) compensation for cargo damages. or the International Convention on the Limitation of the Liability Aside from the ICC, an injured party is also entitled to submit a Indonesia for Maritime Claims of 1976, including their Amendment Protocols. civil claim on the basis of an unlawful act (similar to tort) under the Based on the original text of Article 474 of the ICC, the liability Indonesian Civil Code. Like the ICC, the Indonesian Civil Code of a vessel owner due to vessel collision or cargo claims is limited was promulgated in the 19th century and has not been amended since to 50 gulden (the currency used by the Netherlands during the East Indonesian independence. Indies occupation) per cubic metre of the net tonnage of a vessel. A mechanically moved vessel shall have the tonnage of the machinery 2.3 In what circumstances may the carrier establish added to the gross tonnage to determine the net tonnage for vessel claims against the shipper relating to misdeclaration collision liability. However, the tonnage of such machinery shall of cargo? be deducted from the gross tonnage to determine net tonnage for cargo claims liability. The ICC uses 50 gulden because the ICC was The carrier shall be entitled to receive compensation for damages enacted during the Dutch occupation of Indonesia and it has not been caused by incorrect or incomplete information related to the nature amended since Indonesia’s independence in 1945. of cargo, unless the carrier knew or should have known about the (vi) The limitation fund nature of the cargo. Indonesian law does not specifically regulate the form or amount of a limitation fund. In practice, a shipper may request the vessel 3 Passenger Claims owner to provide a cash deposit to be used as a limitation fund.

1.2 What are the authorities’ powers of investigation / 3.1 What are the key provisions applicable to the casualty response in the event of a collision, grounding resolution of maritime passenger claims? or other major casualty? Indonesia has not ratified the Athens Convention relating to the The Shipping Law provides that any preliminary investigation with Carriage of Passengers and their Luggage by Sea of 1974. respect to vessel accidents shall be conducted by the relevant port Article 522 of the ICC regulates that the carrier is responsible for authority. The port authority may forward the result of its investigation passenger safety starting from when the passenger embarks on to the Shipping Court (Mahkamah Pelayaran) to be examined further. the vessel until when they disembark. The carrier is obliged to Presidential Regulation No. 2 of 2012 regarding the National compensate for losses caused by injuries suffered by passengers Transportation Safety Committee (Komite Nasional Keselamatan related to the voyage, unless the injury was caused by the passengers Transportasi or “KNKT”) established the KNKT to conduct themselves. Should the injury result in death, the carrier is investigations related to vessel accidents for the purpose of preventing responsible for compensating the spouse, children, and parents of similar future accidents. the deceased for the loss. If the passenger is carried based on a third- party agreement, the carrier is responsible for both the passenger and the third party. 2 Cargo Claims 4 Arrest and Security 2.1 What are the international conventions and national laws relevant to marine cargo claims? 4.1 What are the options available to a party seeking to The ICC provides that a carrier is liable to provide compensation obtain security for a maritime claim against a vessel owner and the applicable procedure? for any damages arising from its failure to deliver cargo, whether partially or entirely, or any damages to the cargo, unless such damage or failure to deliver was caused by force majeure. The Shipping Law provides that a vessel may be arrested by the harbourmaster at the relevant port, based on a written court order Indonesia has not ratified the Hague/Hague-Visby/Hamburg/ that is issued if the vessel is involved in a criminal or civil case. Rotterdam Rules. The Shipping Law further provides that a court order for a vessel arrest in a civil case relating to maritime claims may be issued 2.2 What are the key principles applicable to cargo claims without initiating civil court proceedings. Further provisions on the brought against the carrier? procedures for vessel arrest at Indonesian ports are supposed to be provided by Minister of Transportation regulation. However, as of In practice, either the shipper, the consigner, the lawful holder of the the date of this writing, such regulation has not been issued. bill of lading, the cargo owner or the cargo insurer (by subrogating) is entitled to bring cargo claims against the carrier for loss or damages arising from the carrier’s alleged default.

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4.2 Is it possible for a bunker supplier (whether physical 5 Evidence and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime Yes. The elucidation of Article 223 of the Shipping Law provides claims including any available procedures for the that costs related to bunkering activities are one of the legitimate preservation of physical evidence, examination of bases for a maritime claim. witnesses or pre-action disclosure?

4.3 Where security is sought from a party other than the Indonesian law does not specifically regulate procedures for investigations and evidence-gathering for maritime claims. vessel owner (or demise charterer) for a maritime Indonesia claim, including exercise of liens over cargo, what options are available? 5.2 What are the general disclosure obligations in court proceedings? Article 316 of the ICC provides that several receivables over a vessel are given priority right, namely (in order of priority): Indonesia does not recognise general disclosure obligations (i.e. the 1. Cost of seizure and auction. discovery rule) in a court proceeding as a means to obtain evidence. 2. Receivables of the vessel master and the crew arising from an Each party to a dispute has the burden to produce evidence to employment agreement during their tenure in that vessel. support their claims. 3. Salvage reward, pilotage cost, signal cost and port cost, and other shipping costs. 4. Collision claims. 6 Procedure Under the Shipping Law, a party may exercise a maritime lien (referred to as “prioritised maritime receivables”) upon claims to 6.1 Describe the typical procedure and timescale receivables for which a vessel acts as a security. Upon such claim applicable to maritime claims conducted through: i) against receivables secured by the vessel, the payment of maritime national courts (including any specialised maritime or receivables must be prioritised. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute The Shipping Law provides that maritime receivables include: resolution. a. Payment of wages, costs, and other payments to the master and crew of the vessel. Maritime claims are already regulated in Indonesia under the b. Payment for the death or medical expenses for bodily injuries Shipping Law. However, under the elucidation of Article 223 of the related to the operation of the vessel. Shipping Law, maritime claims are conducted in accordance with c. Payment for the salvage of the vessel. the provisions on vessel arrest. As discussed in section 4, Indonesia d. Payment of port fees or other shipping routes and pilotage has not enacted an implementing regulation on the procedure for costs. vessel arrest in Indonesia. Thus, there is no typical procedure or e. Losses arising out of physical loss or damage caused by timescale applicable to maritime claims. the operation of the vessel aside from loss or damage to the cargo, container, and baggage. 6.2 Highlight any notable pros and cons related to your Under the ICC, the Indonesian Civil Code, and the Shipping Law, jurisdiction that any potential party should bear in payment of maritime receivables shall be prioritised over payment mind. of pledges, mortgage, and registered receivables. If there are no prioritised receivables or maritime liens, then parties With regard to ship arrest, as we stated above, there are as yet no may make claims to the district court by way of a regular civil claim. specific guidelines for ship arrest under Indonesian law. Indonesia is a signatory to the International Convention on the Arrest of Ships Indonesia has also ratified the International Convention on Maritime of 1999 (“Ship Arrest Convention”), although Indonesia has not Liens of 1993, by way of Presidential Regulation No. 44 of 2005. ratified the Ship Arrest Convention. Under Law No. 24 of 1999 regarding International Treaties (“Treaties Law”), ratification of an 4.4 In relation to maritime claims, what form of security is international convention must be done through the issuance of a Law acceptable; for example, bank guarantee, P&I letter of (Undang-Undang) or Presidential Decree (Keputusan Presiden), as undertaking. the case may be, in order to be enforceable in Indonesia. Pursuant to Articles 10 and 11 of the Treaties Law, the Ship Arrest Convention There is no mandatory type of security under Indonesian law. should have been ratified by way of a Presidential Decree. Although However, in practice, a bank guarantee or corporate guarantee is the Ship Arrest Convention has been signed by the Government of more commonly used than P&I letters of undertaking. Indonesia, it is still not applicable in Indonesia absent the ratification of the same into law. We note that in 2005, the President of Indonesia enacted Presidential Instruction No. 5 of 2005 regarding the Empowerment of the National Shipping Industry, in which the President instructed the legislature to accelerate the process of ratifying the Ship Arrest Convention. In conclusion, Indonesia has recognised the basic principles of ship arrest, but has yet to implement those principles.

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However, it should be noted that according to the ICC, as further 7 Foreign Judgments and Awards regulated in the Shipping Law and MOT Reg 39/2017, a vessel may only be registered if it has a gross tonnage of at least 7 tonnes, is owned 7.1 Summarise the key provisions and applicable by an Indonesian citizen or a legal entity established under Indonesian procedures affecting the recognition and enforcement law, or is owned by an Indonesian joint-venture company in which at of foreign judgments. least 51% of the shares are owned by an Indonesian citizen. (ii) Cabotage principle Indonesian law does not recognise foreign court judgments as The Shipping Law requires that domestic sea transportation be enforceable in Indonesia. The parties must submit a new claim in carried out by an Indonesian shipping company using an Indonesian- an Indonesian court to enforce a judgment awarded by a foreign flagged vessel and Indonesian crew. These provisions are broadly Indonesia court. The foreign court judgment may be submitted as evidence in interpreted to cover most vessels, including different types of vessels the new claim in the Indonesian court. operating in Indonesian waters that are not engaged in domestic sea transportation. However, pursuant to MOT Regulation No. PM 100 7.2 Summarise the key provisions and applicable of 2016 regarding Procedure and Requirement to Obtain License to procedures affecting the recognition and enforcement Use Foreign Vessels for Other Activities Not Included within the of arbitration awards. Carriage of Passenger and/or Goods in Domestic Transportation, as amended by MOT Regulation No. PM 115 of 2017 (“MOT Reg Indonesia has ratified the Convention on the Recognition and 100/2016, as amended”), specific types of foreign-flagged vessels Enforcement of Foreign Arbitral Awards of 1958 (“New York operated in Indonesian waters for specific types of activities may Convention”), by way of Presidential Decree No. 34 of 1981. be exempted from cabotage rules. Such foreign-flagged vessels Pursuant to Law No. 30 of 1999 regarding Arbitration and may be operated in Indonesia by a holder of a Shipping Company Alternative Dispute Resolution (“Arbitration Law”), a foreign Business License (Surat Izin Usaha Perusahaan Angkutan Laut or arbitral award is recognised and enforceable in Indonesia if: “SIUPAL”) after meeting the requirements provided in MOT Reg 100/2016, as amended. The cabotage exemption is granted in the a. The award is given by an arbitrator or tribunal in a state that is, along with Indonesia, a party to a bilateral or multilateral form of a permit to use foreign vessels (Izin Penggunaan Kapal treaty that recognises foreign arbitral awards. Asing or “IPKA”), which can only be issued to SIUPAL holders. b. The award is only limited to an award that is considered to Under MOT Reg 10/2016, as amended, an IPKA is granted for fall within the scope of commercial laws under Indonesian a maximum period of one year and may be extended with a law. recommendation from an evaluation team appointed by the DGST, c. The award does not contravene public order. if the applicant has exhausted all efforts concerning the procurement d. The award has received an execution order from the Central of an Indonesian-flagged vessel and provides proof of its latest Jakarta District Court. procurement or tender offer. e. If the award involves the Republic of Indonesia as one of A list of foreign-flagged vessels that can conduct drilling activities the parties in dispute, the award may only be enforced after in Indonesian waters up to the end of December 2018 is provided receiving an execution order from the Indonesian Supreme in Annex I to MOT Reg 10/, as amended. These vessels include: Court. a. Jack-up rigs/jack-up barges/self-elevating drilling units. b. Semi-submersible rigs. 8 Updates and Developments c. Deepwater drill vessels. MOT Reg 10/2016, as amended allows for foreign-flagged vessels not included in Annex I to MOT Reg 10/2016, as amended to be 8.1 Describe any other issues not considered above that may be worthy of note, together with any current used in Indonesian waters. However, these foreign-flagged vessels trends or likely future developments that may be of may be used in Indonesia only at the discretion of the MOT, rather interest. than through the typical IPKA. The MOT shall approve the use of such vessels in Indonesian waters after taking into account the (i) Vessel registration following: The Shipping Law states that an Indonesian vessel’s legal status a. The availability of Indonesian-flagged vessels that have the can only be valid if the vessel has already been registered in a specifications required by the applicant, as confirmed by the jurisdiction. To implement the provisions of the ICC and the evaluation team. Shipping Law, MOT Regulation No. PM 39 of 2017 regarding the b. Whether the activity of the foreign-flagged vessel is to Registration and Nationality of Vessels (“MOT Reg 39/2017”) support Indonesian national interests, with a recommendation states that vessel registration includes registration of: (i) ownership confirming such from the relevant ministry and/or institution. right; (ii) granting of mortgage; and (iii) other proprietary right, c. The limited time period of the permit. such as by way of and leasing. Vessel registration can be done with a Vessel Registrar, a government official appointed by the Director of the DGST.

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Dyah Soewito Stephen Igor Warokka SSEK Legal Consultants SSEK Legal Consultants 12th & 14th Floor, Mayapada Tower 12th & 14th Floor, Mayapada Tower Jl. Jend. Sudirman Kav. 28 Jl. Jend. Sudirman Kav. 28 Jakarta 12920 Jakarta 12920 Indonesia Indonesia

Tel: +62 21 521 2038 Tel: +62 21 521 2038 Email: [email protected] Email: [email protected] URL: www.ssek.com URL: www.ssek.com

Dyah Soewito is a founding partner of SSEK Legal Consultants and the Stephen Igor Warokka is a senior associate at SSEK. Stephen is Indonesia head of the firm’s award-winning shipping practice. She specialises involved in a wide range of projects, including shipping and maritime in shipping and maritime law, foreign investment, and corporate and law, general corporate law, mergers and acquisitions, foreign capital commercial law. investment law, immigration law and negotiations with various government officials related to commercial transactions. Dyah assists multinational and joint-venture shipping and offshore drilling companies with all aspects of their operations in Indonesia. Stephen’s more recent experience includes: representation of various Most recently, she advised a global provider of floating production foreign shipping companies in the acquisition and sale of vessels; services to the oil and gas industry in an $870 million lease deal. She advising a foreign shipping company on the shipping agency business in has assisted a European multinational in navigating foreign ownership Indonesia; advising and representing an Indonesian shipping company restrictions under Indonesia’s shipping law, represented a leading in connection with a facility agreement with syndicated lenders; and European contractor on a possible joint venture with an Indonesian advising shipping companies on foreign ownership restrictions and shipping entity, and advised an Australian dredging marine company Indonesian cabotage laws. on the importation and reflagging of dredgers. In 2015, Stephen was seconded to the Tokyo offices of Mori Hamada Dyah has been recognised by Chambers & Partners, Asialaw and & Matsumoto, one of the largest and most highly regarded law firms in IFLR1000 as one of the leading practitioners in Indonesia in shipping Japan. During his secondment, Stephen advised on Indonesian laws law, real estate and corporate law. and regulations for Japanese companies doing business in the country.

SSEK is an independent Indonesian law firm formed in 1992. Our practice includes shipping and logistics, banking and finance, capital markets and securities, construction and real estate, corporate and commercial matters, employment law, energy, mining and natural resources, foreign investment, IT, telecoms and e-commerce, litigation and dispute resolution, mergers and acquisitions, oil and gas law, project finance and infrastructure development, and restructuring and insolvency. SSEK was named the 2014 Indonesian Law Firm of the Year by Who’s Who Legal, the 2013 Indonesian Law Firm of the Year by Chambers Asia- Pacific, and an Asian-MENA Counsel Law Firm of the Year every year since 2009. SSEK produces a series of publications that track and examine changes in the Indonesian legal environment. SSEK’s Legal Alert is a monthly bullet-point summary of major new legislation. Our Legal Updates provide a more detailed analysis of the most important changes in Indonesian law. These publications are available at http://blog.ssek.com.

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Ireland

Noble Shipping Law Helen Noble

Ireland is also subject to all European Directives relating to pollution. 1 Marine Casualty Other relevant Irish legislation includes, but not exclusively: the Air Pollution Act 1987 which, inter alia, criminalises the failure 1.1 In the event of a collision, grounding or other major to use the best practicable means to limit and, if possible, prevent casualty, what are the key provisions that will impact emissions; and the Harbours Act 1946 (as amended) which imposes upon the liability and response of interested parties? liability on a person putting or causing or allowing any substance to In particular, the relevant law / conventions in force in be put into the waters of a “harbour company” in Irish waters. relation to: (iii) Salvage / general average

(i) Collision The International Convention on Salvage 1989 was incorporated in Ireland by the Merchant Shipping (Salvage and Wreck) Act Ireland is a party to the Collision Convention 1910, the Collision 1993 (the “1993 Salvage Act”). There is no mandatory form of (Civil Jurisdiction) Convention 1952 (enacted into Irish law by the salvage agreement, with the Lloyd’s open form in common usage. Jurisdiction of Courts (Maritime Conventions) Act 1989 (the “1989 There are no restrictions on who may carry out salvage operations. Act”)) and the Collision Regulations (implemented by the Merchant Parties may agree on whatever salvage agreement or terms they Shipping (Collision Regulations) (Ships and Water Craft on the deem appropriate. Pursuant to section 22 of the 1993 Salvage Act, Water) Order 2012 [S.I. No. 507 of 2012]). the Minister for Transport (the “Minister”) has the right to give Under the European Communities (Vessel Traffic Monitoring and directions in relation to the salvage operations if necessary. Information System) Regulations 2010 as amended, it is an offence Generally, the York-Antwerp Rules 2004 will be incorporated by under Irish law to fail to immediately report to the Irish Coast Guard operators. any incident or accident affecting the safety of a ship within the (iv) Wreck removal exclusive economic zone of the state. A failure to report is very likely to result in prosecution. Under section 40 of the 1993 Salvage Act, the Minister has general superintendence throughout the state for all matters relating to every Under the Merchant Shipping (Investigation of Marine Casualties) wrecked or stranded vessel. Under section 41, the Minister has the Act 2000 (the “2000 Act”), an owner, master, skipper, person in power to appoint a designated Receiver of the wreck if appropriate. charge, ship’s agent or ship’s manager of a vessel involved in a marine casualty must also by the quickest means feasible notify the casualty Ireland is a signatory to the Nairobi International Convention on the to the Marine Survey Office immediately he is aware of a casualty. Removal of Wrecks, 2007. To date, no enabling legislation has been (ii) Pollution published but it is proposed in the Merchant Shipping (International Conventions) Bill 2017 (see below). The following international conventions are in force in Ireland: Pursuant to the National Monuments (Amendment) Act 1987, if ■ The International Civil Liability for Oil Pollution 1969 and the 1976 and 1992 Protocols – implemented by the Oil salvage operations are to be carried out on a shipwreck over 100 years Pollution of the Sea (Civil Liability and Compensation) Acts old within the Irish continental shelf, a licence is required from the 1988–2005. Department of Arts, Heritage and the Ghaeltacht. The requirement for ■ The HNS Convention 1996 – implemented by the Sea a licence extends to any activity that may affect the wreck, including, Pollution (Hazardous Substances) (Compensation) Act 2005 but not limited to, surveying, diving, salvaging, etc. (not yet in force). (v) Limitation of liability ■ The International Convention for the Prevention of Pollution The 1976 Convention on Limitation of Liability for Maritime Claims (MARPOL) 1973 together with 1978 and 1997 Protocols – (“LLMC”) was enacted into Irish law by the Merchant Shipping implemented by the Sea Pollution Acts 1991 to 2006 and (Liability of Shipowners and Others) Act 1996 (the “1996 Act”). subsequent statutory instruments. The Sea Pollution (Hazardous Substances) Compensation Act 2005 ■ The Fund Convention 1992 and Supplementary Fund gives effect to the 1996 Protocol. The LLMC applies to seagoing Protocol 2003 – implemented by the Oil Pollution of the Sea ships, to non-seagoing ships (section 10 of the 1996 Act), and to any (Civil Liability and Compensation) (Amendment) Acts 1998 structure (whether completed or not) launched and intended for use and 2003. in navigation as a ship or a part of a ship (section 9 of the 1996 Act). ■ The International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 – implemented by the Sea Article 2 of the LLMC lists the claims which are subject to limitation. Pollution (Miscellaneous Provisions) Act 2006. Section 11 of the 1996 Act qualifies Article 2 by providing that the

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right to limit liability under the LLMC shall not apply to claims in of such goods as if the contract contained in the bill of lading had respect of the raising, removal, destruction or rendering harmless been made with them. of a ship which is sunk, wrecked, stranded or abandoned, including The 1855 Act only transfers rights of suit where the property passes anything that is or has been on board such a ship and that Article 3 to a consignee or endorsee; a pledgee of goods does not acquire (claims excepted from limitation) of the LLMC shall be construed the property. In addition, it does not apply to waybills, multimodal accordingly. transport documents or delivery orders. The party entitled to limit liability pursuant to the LLMC is the The limitations in section 1 of the 1855 Act have been partially shipowner, as defined in Articles 1(2) to include the owner, charterer, overcome by the established principle that where a consignee takes manager and operator of a seagoing ship. Whether a charterer has delivery of goods from the carrier by presenting the bill of lading and the right to limit liability has not come before the Irish Courts. The paying outstanding charges, a contract on the terms of the bill of lading Ireland Irish Courts would, however, most likely find the judgment of the may be implied between the consignee and carrier. The Irish courts English Courts in CGM v Classica Shipping (2004) EWCA Civ would follow the leading English case Brandt v Liverpool, Brazil and 2004 persuasive authority. River Stream Navigation Co Ltd (1924) 1 K.B 575. However, there are (vi) The limitation fund still situations where it is impossible to establish an implied contract. Article 11 of the LLMC permits any person alleged to be liable for Whilst the Law Reform Commission of Ireland published a report in a claim to constitute a fund with the court or competent authority 2008 on Privity of Contract and Third Party Rights recommending in any state party where legal proceedings are instituted in respect statutory reform, no legislation has been passed to date. of claims subject to limitation. Under Article 11(20), a fund may Where it is not possible to establish a contractual claim, a claim may be constituted by producing a guarantee or by depositing a sum of still arise under the principles of tort or bailment. money. Under Section 15 of the 1996 Act, the court may stay any proceedings relating to any pending claim against the person by 2.3 In what circumstances may the carrier establish whom the fund has been constituted and, under section 16 of the claims against the shipper relating to misdeclaration 1996 Act, the distribution of a fund is not affected by the rights of of cargo? lien holders. Where the Hague-Visby Rules apply, the shipper is deemed to have 1.2 What are the authorities’ powers of investigation / guaranteed the accuracy of any information supplied by him for casualty response in the event of a collision, grounding incorporation into a bill of lading issued by the carrier. A carrier can or other major casualty? refuse to issue a bill where he has reasonable grounds for suspecting the information is misdeclared or where he has not reasonable Article 11 of the LLMC permits any person alleged to be liable for grounds of checking (Article III Rule 5). The bill of lading, in a claim to constitute a fund with the court or competent authority accordance with the Hague-Visby Rules, is prima facie evidence of in any state party where legal proceedings are instituted in respect the quantity and condition of the cargo but it is open to the carrier of claims subject to limitation. Under Article 11(20), a fund may to produce evidence to the contrary. Under the Hague-Visby Rules, be constituted by producing a guarantee or by depositing a sum of however, it will not be possible to dispute information contained in money. Under Section 15 of the 1996 Act, the court may stay any the bill of lading once the bill is transferred to a third party acting proceedings relating to any pending claim against the person by in good faith. whom the fund has been constituted and, under section 16 of the Where the Hague-Visby Rules are not applicable, section 3 of the 1996 Act, the distribution of a fund is not affected by the rights of 1855 Act applies and provides that information on cargo contained lien holders. in the bill of lading is prima facie evidence of the quantity and condition of the goods provided. Once the bill is transferred into 2 Cargo Claims the hands of a third party, statements as to condition are binding on the master and/or person signing the bill of lading unless a misrepresentation was caused without any default on his part and 2.1 What are the international conventions and national wholly by the fraud of the shipper. This leaves open the possibility laws relevant to marine cargo claims? of a claim against the shipper. Marine Notice No. 05 of 2016 notified all shippers, consignees, Section 31 of 1996 Act gives the Hague-Visby Rules force of law freight forwarders, etc. of the requirement pursuant to SOLAS in Ireland. The Rules are set out in full in the third schedule to the Chapter VI Regulation 2 to verify a packed container’s gross weight 1996 Act. before the container can be loaded on a ship. Ireland has neither signed nor ratified the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (the “Rotterdam Rules”). 3 Passenger Claims The rights and liabilities arising under bills of lading, including title to sue, are dealt with under the Bills of Lading Act (the “1855 Act”). 3.1 What are the key provisions applicable to the resolution of maritime passenger claims?

2.2 What are the key principles applicable to cargo claims brought against the carrier? The Athens Convention 1974 and 1976 Protocol apply in Ireland under Part III of the 1996 Act. The Convention and Protocol are The 1855 Act provides that every consigner of goods named in a set out in the second schedule to the 1996 Act. Maritime passenger bill of lading, and every endorsee of it to whom the ownership of claims, therefore, are dealt with in Ireland in accordance with the the goods described in it shall pass, will have transferred to them all provisions of the Athens Convention, including the limits of liability the rights of action, and be subject to the same liabilities, in respect as amended under the Protocol.

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As from 31 December 2012, EU Regulation 392/2009 applied in Ireland by virtue of S.I. No. 552 of 2012 and raised the limits of 4.2 Is it possible for a bunker supplier (whether physical liability and introduced compulsory insurance to cover passengers and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? on ships as per the 2002 Protocol to the Athens Convention. The application of the regulation is deferred in relation to class B ships travelling in the state until 31 December 2018. The S.I. provides for Vessels can be arrested in Ireland by bunker suppliers under the prosecution and fines of up to €5,000 on summary conviction for 1952 Arrest Convention (supply of goods and materials to a vessel). failure to comply the legislation. The Irish courts have not considered the position as to whether there is a valid in personam claim against the owner of a vessel S.I. No. 552 of 2012 also gives effect to EU Council decisions in circumstances where the bunker supply contract is with a time

Ireland 2012/22/EU and 2012/23/EU amending the 1996 Act to give the charterer and that contract and any applicable terms and conditions, force of law to the 2002 Protocol to the Athens Convention. as a matter of law, cannot bind or apply to the owners of the vessel. If and when the matter comes before the Irish courts, it is arguable 4 Arrest and Security that the Irish courts should find as persuasive authority the position adopted by the English courts that there must be a contractual link between the vessel’s owners and the supplier. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure? 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what Ship arrest is possible in Ireland pursuant to the Admiralty (Ireland) options are available? Acts 1867 and 1876 and/or the 1952 Arrest Convention. The 1952 Arrest Convention was enacted into Irish law by the 1989 Act. All liens that arise by operation of law or by agreement between Ireland is not a party to the Arrest Convention 1999. parties can be recognised and exercised by the holder under Irish law. The 1989 Act confers jurisdiction on the High Court to hear and The right to lien may be challenged by, for example, interlocutory determine maritime proceedings. Maritime matters are dealt with proceedings such as an injunction. In addition, a maritime claim in the Admiralty Court, a sub-division of the High Court, and are can be enforced in the same way as any other contractual or tortious determined in accordance with Order 64 of the Rules of the Superior claim through the courts and, if judgment obtained can be enforced, Courts (“RSC”). against goods and chattels. It is only possible to arrest a vessel in Ireland which is flying the flag of one of the contracting states to the 1952 Arrest Convention. It is 4.4 In relation to maritime claims, what form of security is not possible to arrest “associated ships”, only true “sister ships” (the acceptable; for example, bank guarantee, P&I letter of MV ‘Kapitan Labunets’ (1995) 1 I.L.R.M. 430). undertaking. Whilst the arresting party is not required to provide security to the court, the solicitor for the arresting party must provide an The format of security tends to be a letter of undertaking from a undertaking to the Admiralty Marshal to indemnify the Admiralty Protection and Indemnity (“P&I”) Club or alternatively a bank Marshal for all losses and expenses incurred in arresting a vessel. guarantee from a highly rated bank. However, absent agreement, Following a vessel arrest, absent provision of sufficient security to the RSC provide for payment into court or a bail bond. obtain release, an application can be made by the arresting party to the Admiralty Court for the judicial sale of an arrested vessel. 5 Evidence In addition, in default of appearance, the Admiralty Judge can also, pursuant to Rule 35 of Order 64 of the RSC, if satisfied that the arresting party’s claim is well founded, order the vessel to 5.1 What steps can be taken (and when) to preserve or be appraised and sold. On application for sale of the vessel, the obtain access to evidence in relation to maritime appraisal and sale is carried out by the Admiralty Marshal who claims including any available procedures for the appoints an auctioneer. preservation of physical evidence, examination of witnesses or pre-action disclosure? The sale will usually take place within four to eight weeks. The net proceeds of sale are paid into court and, after payment of the sale There is no provision in the RSC for pre-action discovery. However, or appraisal expenses and other expenses of the Admiralty Marshal, it is possible to get “Norwich Pharmacal” relief to identify a the various interested parties may agree distribution/priority or defendant or to formulate a claim. It is also possible to obtain an application can be made to court for determination of order of freezing injunctions in relation to the preservation of evidence. priorities. A party may also seek a search order when documents may be The court costs associated with a judicial sale are usually 5 per cent destroyed or withheld from discovery. of the sale price. There is also duty payable to the court of 10 per There are various steps that can be taken during proceedings to obtain cent of the sale proceeds. Both of these amounts come out of the access to evidence. These steps are governed by the RSC and include sale proceeds. Orders 31 (Interrogatories, Discovery and Inspection), 39 (Evidence) The test for wrongful arrest is usually bad faith or gross negligence. and 40 (Affidavits). In addition, the RSC provide for discovery (see In the 1997 case of MV Blue Ice (1997) IEHC 56, reference was below). Pre-trial depositions do not occur in Irish proceedings. made to the need to establish a “fair and statable” case and “sufficient In relation to arbitration proceedings, under the Arbitration Act grounds for the arrest of the vessel”. 2010 (the “2010 Act”) the UNCITRAL Model Law on International Where an arrest is not possible, it may be possible as an alternative Commercial Arbitration has force of law in the state. Pursuant interim remedy to seek a freezing injunction over assets, including a to Section 10 of the 2010 Act, the High Court has power to deal vessel, to secure a claim. with procedural issues under Articles 9 and 27 of the Model Law

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including protectionary measures and the taking of evidence. In right to appeal an arbitration award to the Court of Appeal, thereby addition, Article 17 of the Model Law provides that, unless the ensuring finality. If, however, arbitrators reach a conclusion that a parties agree otherwise, the tribunal can order parties to maintain party does not agree with, the lack of right to appeal is very negative. and preserve assets and evidence. Since 2004, Ireland has had a dedicated Commercial Court – a division of the High Court which deals with commercial cases of 5.2 What are the general disclosure obligations in court at least €1 million in value (albeit it has a discretion to hear claims proceedings? of a lesser value). The Commercial Court Rules provide greater flexibility in management of cases, and cases are therefore dealt Rule 12 Order 31 of the RSC, as amended, sets out the discovery with more swiftly with an average time for disposal of cases of

obligations. Discovery requires the disclosure by the parties of all 20 weeks with 90% of all admitted cases being disposed of in less Ireland relevant documents, now or previously in its power, possession than 51 weeks. The cases that the Commercial Court hears include or procurement. Disclosure can be sought from a non-party to disputes involving the carriage of goods by land, sea, air or pipeline. proceedings. The establishment of the Court of Appeal in 2014 to hear appeals There is no “general disclosure” obligation as in some other common from the High Court and Circuit Court has significantly reduced law jurisdictions. Discovery is sought by way of a request setting delay in appeals. out the various categories of documents that are required, referable The Mediation Act 2017 came into effect in Ireland on 1 January to the written pleadings, and the reasons such discovery is required. 2018 and the rules of court have also now been amended to take The party seeking discovery must demonstrate that the discovery into account any unreasonable refusal or failure by a party to sought is both relevant and necessary either for disposing fairly of proceedings to consider using mediation and to attend mediation the issues or for saving costs. A party seeking discovery cannot when considering awarding costs – see section 8 below. “indulge in an exploratory or fishing operation” (Finlay CJ in Bula Limited (in receivership) v Crowley [1990] ILRM 756). 7 Foreign Judgments and Awards Discovery can be voluntarily agreed between the relevant entities or ordered by the court. A party has a duty to provide discovery under oath and to provide 7.1 Summarise the key provisions and applicable documents regardless of whether or not they support or oppose their procedures affecting the recognition and enforcement position or that of its opponent(s). This obligation is subject to the of foreign judgments. right to claim privilege. There are a few regimes that allow for the enforcement of judgments in the Irish courts. The most significant are probably those in respect 6 Procedure of European countries. For proceedings commenced on or after 10 January 2015, EU Regulation 1215/2012 applies in Ireland and for those proceedings commenced before, EC Regulation 44/2001 6.1 Describe the typical procedure and timescale applies. The Lugano Convention dictates the recognition and applicable to maritime claims conducted through: i) national courts (including any specialised maritime or enforcement of judgments as between Ireland and the EFTA states. commercial courts); ii) arbitration (including specialist To enforce a judgment from another EU Member State, an application arbitral bodies); and iii) mediation / alternative dispute should be made ex parte by way of Notice of Motion and Grounding resolution. Affidavit to the Master of the High Court. The application is to be accompanied by a certificate from the court officials in the Member To commence admiralty proceedings in Ireland, you must firstly State in which the judgment was given. The Master, if satisfied, establish the jurisdiction of the court (Rule 1 Order 64 RSC) and will order that the judgment is enforceable and the foreign judgment then issue a summons (plenary or special). Admiralty proceedings will then have the same force and effect as if it were a judgment of are heard by the Admiralty Judge. The Irish procedure follows the the Irish High Court. It is possible to appeal an order of the Master common law adversarial standard; summons, claim, defence, reply within one month of the service of the Notice of Enforcement. to defence, etc. Timescales vary from 12–24 months for proceedings For uncontested claims, under EU Regulation 805/2004, a party can other than in relation to arrest or judicial sale. Order 64 of the RSC utilise as an alternative the European Enforcement Order procedure. provides for modular trials on any question or issue, appointment of The judgment can be certified by the originating state, avoiding the experts and assessors by the Admiralty Judge, and a power to order an need for application to the Master. The creditor simply needs to early trial and dispense of the normal rules for delivery of pleadings. provide to the Judgments Section of the High Court a copy of the Alternative dispute resolution is encouraged in Ireland under judgment and the European Enforcement Order certificate. the RSC, providing for a stay of proceedings in appropriate For non-EU/EFTA states, unless there is a reciprocal convention circumstances (parties can refuse to mediate, though this can be for enforcement such as with the US, Canada and , Irish taken into account by the court when awarding costs). There is no common law will apply. In order to recognise a foreign judgment, dedicated maritime arbitration service in Ireland. Whilst arbitration the judgment must be for a definite sum, final and conclusive, and proceedings tend to be shorter in duration that court proceedings, given against the defendant by a court of competent jurisdiction. that is dictated by the issues to be heard. In order to determine that the court that gave the judgment had competent jurisdiction, the following criteria will need to be met: 6.2 Highlight any notable pros and cons related to your the defendant must have been present in the country at the time of jurisdiction that any potential party should bear in mind. the foreign proceedings; and the defendant must have submitted to the jurisdiction either by prior agreement or participation in the Ireland has adopted the UNCITRAL Model Law on International proceedings (participation to challenge the jurisdiction will not Commercial Arbitration, with the result that there are limited grounds suffice). Fresh proceedings have to be commenced by way of an for judicial intervention in matters referred to arbitration. There is no originating summons in the High Court.

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In accordance with Marine Notice No. 8 of 2018, the Department 7.2 Summarise the key provisions and applicable of Transport, Tourism and Sport (the “DTTAS”) has indicated that procedures affecting the recognition and enforcement the maritime sector/industry should make cybersecurity an integral of arbitration awards. part of their risk assessment, following agreement on measures at the Maritime Safety Committee of the International Maritime The New York Convention on the Recognition and Enforcement Organization (“IMO”) in 2017. In relation to ports, the Department of Foreign Arbitral Awards 1958 (the “NY Convention”), was has indicated that cybersecurity risks will be factored into ports’ given effect in Irish law by Part III of the Arbitration Act 1980 (the security assessments, which are carried out in accordance with “1980 Act”). Ireland has made the reciprocity reservation under Regulation (EC) No. 725/2001 and Directive 2005/65/EC in Irish Article 1(3) of the NY Convention, which means that under the NY ports and port facilities. Ireland Convention one can only enforce awards that were made in a state In relation to Brexit, the Commission has published Notices to that is a party to the NY Convention. Stakeholders in relation to the fields of industrial products, seafarer In practical terms, the NY Convention has been overtaken in Irish certificates and maritime transport, to facilitate preparation for the law by the UNCITRAL Model Law on International Commercial possibility of the UK leaving the EU on 29 March 2019 without Arbitration, which was given the force of law by the 2010 Act. A a deal on a transitional period. The DTTAS has published this party may now seek recognition and enforcement of an arbitration guidance under Marine Notice No. 7 of 2018. award under Articles 35 and 36 of the Model Law. Unlike the NY Currently there are two recognition procedures for seafarer Convention, the Model Law, as implemented by the 2010 Act for certificates. Firstly, for EU Member States, Article 3 of Directive both domestic and international arbitration, allows enforcement of 2005/45/EC provides for every Member State to recognise certificates an arbitration award irrespective of where it was made. It does not issued to seafarers by other Member States. Secondly, a Member need to be a foreign award, nor is there a requirement that it be given State can endorse certificates issued by recognised third countries in a state which is a party to any particular convention. pursuant to Article 19(4) of Directive 2008/106/EC. Ireland is a party to the Washington Convention on the Settlement As of the withdrawal date, certificates issued to seafarers by the of Investment Disputes between States and nationals of other UK will no longer be recognised pursuant to Article 3 of Directive States, 1965 (the ICSID Convention). Part IV of the Arbitration 2005/45/EC, as the UK ceases to be a Member State. Any Act 1980 makes provision for enforcement under this convention. endorsement issued prior to the withdrawal date will continue to be The procedure entails an application for permission for enforcement valid until expiry. A master or an officer holding an “endorsement under the provisions of section 16(1) of the 1980 Act. attesting recognition” issued by a Member State will be able to continue working on board vessels flying the flag of that Member 8 Updates and Developments State. However, they will not be able to change and work on board a vessel flying the flag of another Member State on the basisof their existing UK-issued certificates, given that the basis for the 8.1 Describe any other issues not considered above that recognition of their certificates by that Member State (Directive may be worthy of note, together with any current 2005/45/EC) would no longer be applicable. As of the withdrawal trends or likely future developments that may be of date, recognition by a Member State of certificates issued to interest. seafarers by the United Kingdom will be subject to the conditions set out in Article 19 of Directive 2008/106/EC6, in line with the new The Mediation Act 2017 came into force in Ireland on 1 January status of the United Kingdom as a third country. 2018. This Act encourages the use of mediation by parties in order to relieve strain on the court system, achieve fairer outcomes for the In relation to maritime transport, as at the withdrawal date, and in parties and reduce costs involved. Section 14 of the 2017 Act imposes the absence of any transitional arrangement, the EU Rules in this certain obligations on solicitors prior to issuing proceedings, to field will no longer apply in the UK, which has significance for include advising their client to contemplate mediation and advising maritime transport between Ireland and the UK. It will impact on on the benefits of mediation. issues such as cabotage, port state control, and UK fishing vessels operating in Irish waters.

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Helen Noble Noble Shipping Law Ards, St Mary’s Road Arklow Co. Wicklow, Y14 W586 Ireland

Tel: +353 402 28567 Email: [email protected] URL: www.nobleshippinglaw.com Ireland Helen has over 23 years’ experience specialising in all areas of admiralty, maritime and transport law, including ship arrests, collisions, cargo claims, charterparty and bill of lading disputes and crew and passenger personal injury claims. Helen regularly advises on issues of port state control, marine casualty investigations by authorities and has routinely represented owners and crew in prosecutions. Her experience includes advising clients on commercial negotiations and drafting of commercial agreements such as ship management and sale and purchase agreements. She is regularly appointed as an independent Irish legal maritime and transport law expert for international disputes. Helen is the President of the Chartered Institute of Logistics and Transport in Ireland, a titulary member of the Comité Maritime International, and the Irish representative for ForwarderLaw.com. She is an overseas supporting member of the London Maritime Arbitrators Association and a member of the Irish Maritime Law Association.

Noble Shipping Law is Ireland’s only law firm specialising exclusively in shipping and transport law, providing a complete contentious and non- contentious advisory service. The firm’s client base includes international shipowners and ship mangers, hull and machinery and P&I insurers and brokers, port operators, international freight forwarders, hauliers, transport managers, borrowers, lessors, commercial banks and overseas law firms. On the non-contentious side of the practice, Noble Shipping Law acts for a number of international banks and shipowners in relation to ship finance transactions and ship sale and purchases. The firm advises regularly on international and Irish regulatory and environmental issues. On the contentious side, the firm has acted in a number of casualties and groundings in Irish waters. The team acts on behalf of both operators and insurers in defending personal injury claims of crew and passengers, and regularly advises clients in relation to cargo claims in both the shipping and haulage sectors.

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Isle of Man Mark Dougherty

DQ Advocates Kirsten Middleton

of Man section 163 of the Merchant Shipping Act 1995 (the 1 Marine Casualty “MSA 1995”), which requires certain Shipowners to have insurance or other security against oil pollution damage. 1.1 In the event of a collision, grounding or other major ■ Merchant Shipping (Prevention of Oil Pollution) (Reception casualty, what are the key provisions that will impact Facilities) Order 1986. upon the liability and response of interested parties? ■ Merchant Shipping (Prevention of Oil Pollution) (Records) In particular, the relevant law / conventions in force in Order 1986. relation to: ■ Oil Pollution Act 1986. ■ Oil Pollution (Compulsory Insurance) Regulations 1981. (i) Collision ■ The Fund Convention 1992 and the Supplementary Fund The Merchant Shipping (Distress Signals and Prevention of Protocol 2003 apply to the Isle of Man and provide for Collisions) Regulations 1996 apply and give effect to the International payment of supplementary compensation where the funds Maritime Organisations Regulations for Preventing Collisions at available under the CLC prove insufficient. Sea 1972. Manx vessels wherever they may be, and other vessels ■ The International Convention on Civil Liability for Bunker (including hovercraft and seaplanes) in Manx waters, are required to Oil Pollution Damage 2001 also applies to the Isle of Man comply with the International Regulations as amended. and provides compensation to parties who suffer damage (ii) Pollution caused by spills of bunker oil when carried as fuel in ships’ bunker tanks. The key provisions in force in the Isle of Man relating to pollution are as follows: (iii) Salvage / general average ■ The International Convention for the Prevention of Pollution The provisions of the International Convention on Salvage 1989 from Ships (“MARPOL”) 1973, together with its 1978 are applied by the Isle of Man Merchant Shipping (Miscellaneous and 1997 protocols as applied by the Isle of Man Merchant Provisions) Act 1996. The Convention does not apply (a) to a Shipping (MARPOL Annex III – Prevention of Pollution by salvage operation which takes place in inland waters of the Island Harmful Substances) Order 2015. MARPOL is the leading and in which all the vessels involved are of inland navigation, or international convention dealing with the prevention of (b) to a salvage operation which takes place in inland waters of the pollution of the marine environment by ships. Island and in which no vessel is involved. ■ Merchant Shipping (MARPOL Annex VI – Prevention of Air Part 9 of the MSA 1995 also sets out the provisions relating to Pollution) Order 2014. salvage. ■ Merchant Shipping (MARPOL Annex V – Prevention of Pollution by Garbage) Order 2014. (iv) Wreck removal ■ Merchant Shipping (MARPOL Annex IV – Prevention of The MSA 1995 grants wide-ranging powers to the relevant coastal Pollution by Sewage) Order 2014. authorities to intervene in relation to wrecks, including the power to ■ Merchant Shipping (MARPOL Annex II - Control of Pollution remove, destroy or take possession of wrecks as necessary. by Noxious Liquid Substances in Bulk) Regulations 2008. The Wreck Removal Convention Act 2011 implements the Nairobi ■ The International Convention on Oil Pollution, Preparedness, International Convention on the Removal of Wrecks 2007 (“WRC”), Response and Co-operation 1990 is applied by the Isle which came into force in 2015. Vessels with a gross tonnage of 300 of Man Merchant Shipping (Oil Pollution Preparedness, or more may not enter or leave a port in the Island or elsewhere Response and Co-operation Convention) Regulations 2000 unless the vessel has wreck removal insurance and the Department and requires the manager of an offshore installation in Manx of Enterprise (née The Department of Economic Development) (the waters, where there is present risk of an oil pollution incident, “Department”) has certified that it has wreck removal insurance. to have an oil pollution emergency plan. (v) Limitation of liability ■ The International Convention on Civil Liability for Oil Pollution Damage (“CLC”) 1992, which establishes the The Convention on Limitation of Liability for Maritime Claims principle of strict liability for tanker owners for damage caused (“LLMC”) 1976 as amended by the 1996 Protocol is in force in the by spills of persistent oil from laden tankers and creates a Isle of Man. The Convention sets limits of liability based upon the system of compulsory liability insurance, is applied by the Isle tonnage of the vessel concerned. Amendments to the 1996 protocol of Man Oil Pollution (Compulsory Insurance) Regulations (providing for significantly increased limits of liability) came into 1998. The Regulations define “oil” for the purposes of Isle force in June 2015.

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(vi) The limitation fund Article IV(6) of the Hague Rules provides for further extensive rights Article 11 of the LLMC (as applied by Schedule 7 of the MSA 1995) to the carrier in relation to “goods of an inflammable, explosive or provides that the “fund may be constituted, either by depositing the dangerous nature carried without the consent of the carrier”. The sum, or by producing a guarantee acceptable under the legislation carrier may, at any time before discharge, land, destroy or render of the State Party where the fund is constituted and considered innocuous the cargo without providing compensation to the hauler. adequate by the Court or other competent authority”. The hauler is held liable for all damages and expenses directly or indirectly arising out of, or resulting from, such shipment.

1.2 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding 3 Passenger Claims or other major casualty? Isle of Man The Isle of Man Shipping Casualties (Inquiries, Investigations and 3.1 What are the key provisions applicable to the Reports) Act 1979 (the “1979 Act”) provides that the Department resolution of maritime passenger claims? shall, for the purposes of investigation, appoint such number of persons as it may determine to be inspectors. The provisions of the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974 is in force in the Isle of Where such an accident has occurred, the Department may (whether Man by virtue of section 183 of the MSA 1995. an investigation has been carried out or not) cause a formal investigation into the accident to be held by the High Bailiff. The The carrier is liable for the damage suffered as a result of the death Inquiries (Evidence) Act 2003 applies to a formal investigation. of or personal injury to a passenger, and the loss of or damage to luggage, if the incident which caused the damage so suffered The Isle of Man Merchant Shipping (Accident Reporting and occurred in the course of the carriage and was due to the fault or Investigation) Regulations 2001 (to be read in conjunction with neglect of the carrier or of his servants or agents acting within the the 1979 Act) state that the fundamental purpose of investigating scope of their employment. Fault or neglect of the carrier, or of a casualty, an accident, or an incident under the Regulations is to his servants or agents acting within the scope of their employment, determine its circumstances and the causes, with the aim of improving shall be presumed unless the contrary is proved, if the death of or the safety of life at sea and the avoidance of accidents in the future. personal injury to the passenger, and the loss of or damage to cabin The purpose is neither to apportion liability, nor – except so far as is luggage, arose from or in connection with a shipwreck, collision, necessary to achieve the fundamental purpose – to apportion blame. stranding, explosion or fire, or a defect in the ship. The burden of proving that the incident caused the loss or damage 2 Cargo Claims that occurred in the course of the carriage, and the extent of the loss or damage, shall lie with the claimant.

2.1 What are the international conventions and national laws relevant to marine cargo claims? 4 Arrest and Security

As with the UK, the Isle of Man Carriage of Goods by Sea Act 1974 (the “1974 Act”) gives effect to the 1968 Protocol to the 4.1 What are the options available to a party seeking to International Convention for the Unification of Certain Rules of obtain security for a maritime claim against a vessel owner and the applicable procedure? Law relating to Bills of Lading 1924 (the “Hague Rules”). The 1974 Act addresses the rights and liabilities arising under bills of lading, including title to sue. Isle of Man law provides that arrest proceedings may be commenced following the issuing of an in rem claim against a ship. The right to bring proceedings in rem is governed by Part 1 of Schedule 1 of the 2.2 What are the key principles applicable to cargo claims High Court Act 1991 (“HCA”) and Rule 13.39 of the Isle of Man brought against the carrier? Rules of the High Court of Justice 2009 (the “Rules”). Part 1 of the HCA lists a number of claims that may be brought in rem, and a The 1974 Act will apply in circumstances where the bill of lading is ship arrested in respect of them. The HCA lists 18 types of maritime issued in a contracting State or where the port of shipment is in the claims within the admiralty jurisdiction of the High Court, and in contracting State. When claims arise under the bill of lading, these respect of which a ship may be arrested. These include: will be determined in the Isle of Man in accordance with Isle of Man ■ claims relating to the possession or ownership of, or mortgage law, then the Isle of Man Courts will apply the Hague Rules. on a ship; ■ claims for damage done by a ship; 2.3 In what circumstances may the carrier establish ■ claims for loss of life or personal injury due to a defect in a claims against the shipper relating to misdeclaration ship; of cargo? ■ claims relating to the carriage of goods on a ship; ■ claims for towage, pilotage and/or salvage in respect of a Under the Hague Rules, the hauler has established obligations to the ship; carrier regarding declaration of cargo. Under Article III(5) of the Hague Rules as applied by Schedule 1(2) of the 1974 Act, the hauler ■ claims in respect of goods or materials supplied to a ship for operation or maintenance; is deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity and weight, as furnished ■ claims in respect of construction, repair or equipment of a ship; by him, and the hauler shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such ■ claims by a master or member of the crew of a ship for wages; particulars.

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■ claims in respect of disbursements made on account of a ship; action arises and remains so attached until satisfied or time-barred. and In the event that the ship has changed ownership, and the claim is ■ claims arising out of bottomry. against the Shipowner, but does not constitute a maritime lien, arrest The procedure for ship arrest is provided under the Action of of a sister ship is still possible, provided such sister ship was owned Arrest Act 1953 and Rule 13.39 of the Rules, and is relatively by the same entity/Shipowner connected to the claim at the time the straightforward. It is not necessary to provide counter-security for cause of action arose, and the Shipowner is the beneficial owner in the arrest, although an undertaking to meet the expenses must be respect of all shares in the sister ship. provided. It must be established that: (i) there is a good cause of action; (ii) the defendant is about to depart the Island or will remain 4.4 In relation to maritime claims, what form of security is absent; and (iii) the defendant has not settled the action or submitted acceptable; for example, bank guarantee, P&I letter of undertaking. Isle of Man to the jurisdiction. In accordance with Rule 13.39 of the Rules, a claimant may apply to the High Court to have the property arrested, subject to certain In practice, it is likely that the Court will limit the security either conditions. A party making an application for arrest must: (i) to the value of the vessel or to the statutory limit of liability with request a search to be made in the register before the warrant is interests and costs. Whether the form of security is acceptable will issued, to determine whether there is a caution against arrest in depend on the facts of each case and what security is available. force with respect to that property; and (ii) file a declaration (which Commonly, payments into Court have been a popular method of incorporates the undertaking to pay the fees and expenses of the security; however, provision of security by way of a guarantee or coroner in executing the warrant of arrest). undertaking is not uncommon. This type of security is contractual, Where a claim in rem is not available, a party may seek to apply for a in that there are no actual funds being paid into Court or held in a freezing injunction (formerly known as “Mareva” injunctions) over secure account, and such agreement will only be enforceable on its the assets to prevent the defendant from disposing of, or dealing terms. Whether an agreement is in addition to or replaces any liens freely with the assets prior to the determination of the claim. It is will again depend on its terms. used to preserve those assets with a view to enforcing a judgment Under Isle of Man law, there is no prescribed form of security, and against them. A freezing injunction is an interim remedy and an this is a matter of negotiation between the parties. In the event application can be made ex parte (i.e. without the defendant having that the Court is required to intervene, it will consider the financial notice). Whilst a freezing order is not a form of security in itself, it position of any guarantor being proposed (whether the guarantor does require the defendant to comply with the terms of the order or is the Shipowner, his or her P&I Club or another entity). It is not be held in contempt of Court. necessary for security to be provided by an independent financial institution. The grounds that must be established when applying for a freezing injunction are: There is also the possibility of lodging a caution against release (i) there must be a good arguable case against the defendant (i.e. from arrest over the specific property. The person with the benefit more than “barely capable of argument”); of the caution will be notified in the event that the property arrested was to be released/sold. (ii) there must be a real risk that a judgment will go unsatisfied due to the disposal of assets (a high standard of proof due to the potential injustice to the defendant); and 5 Evidence (iii) it must be just and convenient in all the circumstances to make the order. 5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime 4.2 Is it possible for a bunker supplier (whether physical claims including any available procedures for the and/or contractual) to arrest a vessel for a claim preservation of physical evidence, examination of relating to bunkers supplied by them to that vessel? witnesses or pre-action disclosure?

Under Isle of Man law, a bunker supplier can only proceed against It may be possible to seek a pre-action disclosure application the party with whom that supplier has contracted, and cannot arrest pursuant to Rule 7.45 of the Rules, which permits an application for a vessel if it did not contract directly with the owner or demise disclosure to be made before proceedings start. The Court will only charterer. Furthermore, even if the bunker supply contract with the make an order under Rule 7.45 where: charterer contains an express term giving the supplier a lien on the (i) the defendant is likely to be a party to the proceedings; vessel under the law governing that contract, this would have no effect under Isle of Man law because the owners are not party to (ii) the applicant is also likely to be a party to those proceedings; and that contract. Bunkers, however, could still be subject to a freezing injunction (please see question 4.1). (iii) the documents would be disclosable if the proceedings had already started. The purpose behind this rule is to resolve the dispute without 4.3 Where security is sought from a party other than the proceedings and to save costs. Pre-action disclosure, however, is vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what not granted as a matter of course. It is for the applicant to satisfy the options are available? Court that it is just to order that disclosure be given at a time other than in the normal course of proceedings. A lien is usually exercised by refusing to discharge or release the It may also be possible to seek an order for specific disclosure cargo until payment is made, and is, therefore, dependent on the pursuant to Rule 7.41 of the Rules, to direct a party to carry out a Shipowner having retained possession of the cargo. If the claim thorough search for any documents which it is reasonable to suppose is a maritime lien, the vessel may be arrested even in change of may adversely affect his own case or support the case of the party ownership, as the lien attaches to the property at the time the cause of applying for disclosure.

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a limitation period, which can be extended by the Court. The 5.2 What are the general disclosure obligations in court arbitration agreement will set out the provisions in respect of the proceedings? appointment of an arbitrator and how the arbitration will progress. An award may be made in arbitration proceedings at any time. A Under Isle of Man law, disclosure is an important exercise and party may apply to the Court for an order allowing an arbitration each party is under a duty to disclose. A “document” is anything in award to be enforced as though it were a judgment of the Court. which information of any description is recorded, including written Special rules apply to arbitration under the Arbitration (International documents, audio tapes, videotapes, photographs, USB hard-drives, Investment Disputes) Act 1983. These are set out in Rule 13.55 of etc. the Rules. The duty continues throughout the proceedings and any new documents which come to light must be disclosed. Each party’s Isle of Man advocates must advise each party at the outset on their respective 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in obligations for disclosure. mind. A party must disclose all documents (whether originals or copies): which are or have been in its control, including physical possession; The Isle of Man is a self-governing dependent territory of the Crown over which it has a right to possession; and which it has a right which has a long and distinguished maritime history dating back to to inspect or take copies of. In order to identify which documents 1786 and is one of the Organisation for Economic Cooperation and are disclosable, each party must carry out a reasonable search. Development’s (“OECD”) “white-listed” jurisdictions. The Isle Pursuant to Rule 7.36 of the Rules, each party must then consider of Man Ship Registry provides flexibility in respect of mortgage the proportionality of the disclosure, which includes (but is not registration. The Isle of Man operates on a system of English limited to): law and enables parallel registration with other States as well as (i) the number of documents involved; both demise-in and demise-out registration. The Isle of Man flies (ii) the nature and complexity of the proceedings; the British Red Ensign as a badge of quality and has a strong (iii) the ease and expense of retrieving a particular document; and performance on memorandum of understanding (“MoU”) white- lists and the United States Gulf Coast (“USGC”) Qualship 21 (iv) the significance of any documents likely to be located during the search. program. In addition, the Isle of Man Ship Registry provides a 24/7 emergency response and out-of-hours registration, as well as being relatively low in costs and registration fees. 6 Procedure 7 Foreign Judgments and Awards 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or 7.1 Summarise the key provisions and applicable commercial courts); ii) arbitration (including specialist procedures affecting the recognition and enforcement arbitral bodies); and iii) mediation / alternative dispute of foreign judgments. resolution. The Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968 Claims are heard pursuant to the admiralty jurisdiction in the High makes provision for the enforcement in the Isle of Man of judgments Court. The title of the proceedings shall begin with the words given by certain prescribed “superior Courts” of countries which “Admiralty claim in rem against” and brief particulars of the are afforded reciprocal treatment to judgments given in the Isle of property against which the claim is made (including in the case of Man. At present, these include the following: a ship, her name and port of registry). Such particulars must be (i) the United Kingdom and Channel Islands (excluding served on the defendant either in the claim form or within 75 days Guernsey and Jersey); after the service of the claim form. An acknowledgment of service (ii) Guernsey; must be filed within 14 days after service of the claim form. In any (iii) Jersey; event, the claim form must be served within 12 months after the date of issue. (iv) Suriname; (v) Israel; There is no obligation in the Isle of Man for parties to mediate; however, mediation has become increasingly popular. In accordance (vi) Italy; with the Rules, any time after a defence is filed, any party to the (vii) the Netherlands; and proceedings can make an application for the whole or part of the (viii) the Netherlands Antilles (covered by Dutch legislation). claim to be referred to mediation. All parties must provide written A judgment of such a superior Court (the “original Court”) can be consent and agree who the mediator will be. The Court may set registered in the Isle of Man if it is final and conclusive and there directions as to providing reports on the progress of the mediation is payable thereunder a sum of money (not being a sum in respect and informing the Court if an agreement is reached or, alternatively, of taxes, fines or similar penalties). Note that a UK judgment in if the mediation should be terminated. Mediation is encouraged respect of VAT can be registered in the Isle of Man. A judgment will as an alternative route to resolving disputes without the need for be treated as final and conclusive notwithstanding that an appeal protracted litigation and excessive costs. may be pending. Registration will not be permitted, however, if, at Arbitration in the Isle of Man is governed by the Arbitration Act the date of the application for registration: 1976 (the “1976 Act”) and Part 13, Chapter 6 of the Rules. Once (i) the judgment has been wholly satisfied; or a party has entered into an arbitration agreement, any party may (ii) the judgment could not be enforced by execution in the apply to the Court to have any proceedings relating to a dispute to country of the original Court. which the agreement applies stayed. The agreement may define

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Enforcement of judgments from countries that do not hold reciprocal “New York Convention”). As such, enforcement is relatively treatment may apply to the Isle of Man Court, pursuant to Rule straightforward and relates to an award made in pursuance of an 12.56 of the Rules, to register such foreign judgment. A foreign arbitration agreement in the territory of a State other than the UK judgment once registered shall, for the purposes of execution, be of which is a party to the New York Convention. the same force and effect as if the judgment had been a judgment Foreign awards relate to parties of the Geneva Convention on originally given in the High Court of Justice of the Isle of Man and the Execution of Foreign Arbitral Awards (signed at Geneva on entered on the date of registration. 26 September 1927) (the “Geneva Convention”) in territories to which the Geneva Convention applies. 7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards. 8 Updates and Developments Isle of Man

Section 27 of the 1976 Act permits an award on an arbitration 8.1 Describe any other issues not considered above that agreement, with leave of the Isle of Man Court, to be enforced in the may be worthy of note, together with any current same manner as a judgment or order to the same effect; and where trends or likely future developments that may be of leave is given, judgment may be entered in terms of the award. interest. In respect of foreign arbitration awards, the 1976 Act defines two types of awards: (i) convention awards; and (ii) foreign awards The Isle of Man Ship Registry has achieved certification to the new made after 28 July 1924. ISO 9001 standard 9001:2015. The Isle of Man is a party to the 1958 New York Convention on In addition, the Ship Registry now operates under the general the Recognition and Enforcement of Arbitration Awards (the inspection scheme.

Mark Dougherty Kirsten Middleton DQ Advocates DQ Advocates The Chambers The Chambers 5 Mount Pleasant 5 Mount Pleasant Douglas, IM1 2PU Douglas, IM1 2PU Isle of Man Isle of Man

Tel: +44 1624 632 982 Tel: +44 1624 632 978 Email: [email protected] Email: [email protected] URL: www.dq.im URL: www.dq.im

Mark Dougherty is the Managing Director of DQ and has extensive Kirsten Middleton is an Associate within the corporate and commercial experience, both in the Isle of Man and Bermuda, in corporate and team, and advises both domestic and international clients on a wide commercial law, and is ranked as one of the top corporate and range of corporate and commercial matters, including business and commercial lawyers on the Island. Mark regularly advises multinational asset sales, corporate banking and finance, the re-domiciliation of companies, listed entities, banks and private equity houses, as well as companies into and out of the Isle of Man, listed entities, insolvency high-net-worth individuals, in a wide range of Isle of Man corporate and shipping matters. and commercial matters, and specialises in maritime law.

DQ Advocates (“DQ”) is a leading Isle of Man based law firm with an international reach and offers a full range of legal, regulatory and compliance services to our local and global clients. DQ is accessible, responsive and commercial, with client-oriented strategies and goals. DQ’s specialist lawyers are recommended as leading lawyers in Chambers Global and The Legal 500. DQ has a thriving and dynamic practice which has seen phenomenal growth and is capitalising on a simple formula – for which DQ has been recognised by Chambers Global – to provide a speed and quality of service that cannot be bettered on the Isle of Man. DQ’s directors serve on the board of STEP Isle of Man and various governmental and private sector steering groups, tribunals and committees. DQ is the sole Isle of Man member of TAGLaw. Founded in 1998, TAGLaw is an international alliance of high-quality, independent law firms. TAGLaw is ranked as an “Elite” network by Chambers Global, the highest ranking awarded to legal networks. Collectively, the legal and non-legal TAG Alliances provide services on a worldwide scale. With over 15,000 professionals in 280 member firms, and 590 offices in over 100 countries, the TAG Alliances serve tens of thousands of clients from all industry and commercial sectors.

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Israel Avi Cordova

Grossman, Cordova, Gilad & Co. Law Offices (GCG) Roy Gilad

(vi) The limitation fund 1 Marine Casualty See point (v) above.

1.1 In the event of a collision, grounding or other major 1.2 What are the authorities’ powers of investigation / casualty, what are the key provisions that will impact casualty response in the event of a collision, grounding upon the liability and response of interested parties? or other major casualty? In particular, the relevant law / conventions in force in relation to: The Administration of Shipping and Ports (“ASP”), serving under (i) Collision the Ministry of Transport, is the authorised party to investigate marine accidents. Israel adopted the 1972 Collision Regulations set in London on 20 October 1972, through the Ports Ordinance Regulations, under the Ports Regulation (prevention of collisions at sea) 1977. 2 Cargo Claims (ii) Pollution The key provisions in force in Israel relating to pollution at sea are 2.1 What are the international conventions and national as follows: laws relevant to marine cargo claims? ■ The Prevention of Sea Pollution by Oil Ordinance 1980, and its Regulation (implementation of the Convention) 1987, The following are relevant to such claims: which adopted into Israeli law the International Convention for the Prevention of Pollution (“MARPOL”) 1973 together ■ The Hague-Visby Rules, which were adopted into Israeli Law with its 1978 protocol. by the Carriage of Goods by Sea Ordinance 1926. ■ The Liability for Compensation of Damages by Oil Pollution ■ The Torts Ordinance 1968. Law 2004, which adopted into Israeli law the Fund Convention ■ The Contracts Law 1973. on Civil Liability for Oil Pollution Damage (“CLC”) 1992 as ■ The Uniform Contracts Law 1982. amended in London on 18 October 2000. ■ The English Marine Insurance Act 1906. It is important to emphasise that sea pollution in Israel is a criminal act to which a presumption of liability is set under law, and therefore proving ‘mens rea’ is not necessary for conviction. 2.2 What are the key principles applicable to cargo claims brought against the carrier? (iii) Salvage / general average

The key provisions in force in Israel relating to salvage and GA are The Hague-Visby Rules govern cargo claims brought against the as follows: carrier by the parties to the Bill of Lading issued by the carrier, or ■ The Lost Goods and Salvage Ordinance. their insurers. ■ The Ottoman Marine Commerce Law 1863. Jurisdiction clauses on Bills of Lading must be both explicit and ■ The Unlawful Enrichment Law 1979. exclusive in order to be recognised by the Israeli courts as such. In practice, the York-Antwerp Rules will apply contractually in Marine insurances in Israel are subject to the English Marine most cases. Insurance Act 1960. (iv) Wreck removal Foreign (non-Israeli) insurance companies are generally not allowed ■ The Shipping Law (Vessels) 1960. to pursue subrogation claims in Israel; however, foreign marine (and (v) Limitation of liability aviation) insurers are allowed to do so on cargo claims. ■ The Shipping Law (Limitation of Vessel Owners’ Liability) Foreign law, if applied by the contract of carriage, must be proved to 1965, which adopted into Israeli law the International the court by legal experts. Convention relating to the Limitation of the Liability of Bona fide (or ‘good faith’) is a ‘supreme principle’ under the Israeli Owners of Sea-going Ships (Brussels, 10 October 1957) and legal system, and will be examined in each and every case, including Protocol made on 21 December 1979. marine cargo claims. ■ The Shipping Regulations (Limitation of Vessel Owners’ Liability) (Legal Procedure) 1970.

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2.3 In what circumstances may the carrier establish 4.3 Where security is sought from a party other than the claims against the shipper relating to misdeclaration vessel owner (or demise charterer) for a maritime of cargo? claim, including exercise of liens over cargo, what options are available? The shipper is fully responsible and liable for any and all information provided to the carrier regarding the cargo. Any damage and/or The shipowner may rely upon a lien on the cargo; however, such expense caused to the carrier by misdeclaration of cargo interests lien must be proportional to the interest protected (for example, it is is subject to claims, whilst the burden of proof lies with the carrier. not possible to place a lien on cargo worth 1 million USD for freight There is no limitation of liability. debt of 100 USD). Israel The key provisions covering the subject matter are Contract Law 1973, the Uniform Contract Law 1982, and Contractor Agreement 3 Passenger Claims Law 1974.

3.1 What are the key provisions applicable to the 4.4 In relation to maritime claims, what form of security is resolution of maritime passenger claims? acceptable; for example, bank guarantee, P&I letter of undertaking. Israel is not a party to the Athens Convention 1974. Tort law is the major relevant provision relating to bodily injuries The following are acceptable: and death of passengers. There is no limitation on compensation ■ Bank guarantee. available by law. ■ P&I Club guarantee (“LOU”). Contract Law 1973 is the major relevant provision relating to ■ Cash deposit at the court’s treasury. passengers’ luggage claims. 5 Evidence 4 Arrest and Security

5.1 What steps can be taken (and when) to preserve or 4.1 What are the options available to a party seeking to obtain access to evidence in relation to maritime obtain security for a maritime claim against a vessel claims including any available procedures for the owner and the applicable procedure? preservation of physical evidence, examination of witnesses or pre-action disclosure? An in rem claim before the Admiralty Court with a request for an arrest of the vessel, with the purpose of obtaining a security in return Under the Civil Procedure Regulations (“CPR”), it is possible to seek for lifting the arrest. a court order for pre-action disclosure, subject to certain conditions, if the court is convinced that same is desirable and also necessary at The authority of the Admiralty Court derives from the Colonial such an early stage (i.e., cannot be done sufficiently at a later stage). Courts of Admiralty Act 1890 (an English Law which is still in force in Israel from the days of the British Mandate over Palestine), and It is of course possible to seek a court order for specific disclosure, from the Admiralty Courts Law 1952, which provided this authority and/or testimonies. to the Haifa District Court. In order to succeed in obtaining an arrest, the claimant must prove 5.2 What are the general disclosure obligations in court a recognised cause such as ‘damage done by ship’. The list of proceedings? recognised causes which may lead to a vessel arrest can be found in case law, and in the Shipping Law (Vessels) 1960, and in the Generally, all documents must be presented to court and to Admiralty Court Acts of 1840 and of 1861, as well as in the Vice opponents at the pre-trial hearings, otherwise their presentation Admiralty Rules 1883 (all originally English laws which are still in may not be allowed in later stages. The ‘supreme principle’ under force in Israel since the time of the British Mandate over Palestine). local legal system is ‘Open Cards’, and any document which a party wishes to keep concealed for later stages must be granted the court’s permission in advance. 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 6 Procedure Generally yes, since bunker supply fits the recognised cause, under the Israeli Shipping Law (Vessels) 1960, for maritime lien, as the 6.1 Describe the typical procedure and timescale bunker supply is considered a necessity (and also under Admiralty applicable to maritime claims conducted through: i) Court Act 1861). national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist However, such lien/arrest is limited – in accordance with the arbitral bodies); and iii) mediation / alternative dispute precedent set under Admiralty Court Case No. 45897-02-12 O.W. resolution. Bunker Malta Limited v. M/V Emmanuel Tomasos – to the direct party who entered the supply agreement with the vessel only, and Claims up to 2.5 million NIS are heard before the Magistrates’ Courts; will not be granted to any other party in the ‘chain of supply’. while those above this sum are heard before the District Courts. The average timescale for a court claim is about two years, but mainly depends on the circumstances.

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Vessel arrests are dealt with only at the Admiralty Court (the District ■ The judgment does not contradict natural justice principles. Court in Haifa), regardless of the amount of the claim, and are ■ The judgment does not contradict public policy. usually resolved more quickly – within an average of one year. ■ The judgment will be enforced only in the case that the Arbitration is usually resolved after one to two years on average, defendant is residing in Israel or agreed to the jurisdiction. depending on the circumstances. Another major principle is that a foreign judgment shall be neither Mediation usually take four to six months on average. recognised nor enforced if given in a country/state which, according to its laws, does not enforce Israeli judgments.

6.2 Highlight any notable pros and cons related to your Finally, the procedure for recognition and enforcement of a foreign judgment in Israel is submission of an application to court, together jurisdiction that any potential party should bear in Israel mind. with a sworn affidavit.

The Hague-Visby Rules apply on actual carriers but not necessarily 7.2 Summarise the key provisions and applicable on contractual carriers like freight forwarders and so forth. procedures affecting the recognition and enforcement Israeli courts are known to be less formalistic, which means the of arbitration awards. Israeli judges tend to place less weight on procedural issues and regulations, and more weight on the essence of the incident brought The subject of arbitration is regulated in Israel under the Arbitration before them. Law 1968. The majority of cargo claims in Israel end in out-of-court settlements. The subject of enforcement of foreign arbitration awards is regulated Court judgments in Israel usually order low expense payments in under the Regulation for Execution of the New York Convention favour of the winning party, which are not in proportion to the (Foreign Arbitration) 1978. actual expenses. 8 Updates and Developments 7 Foreign Judgments and Awards 8.1 Describe any other issues not considered above that may be worthy of note, together with any current 7.1 Summarise the key provisions and applicable trends or likely future developments that may be of procedures affecting the recognition and enforcement interest. of foreign judgments.

Israeli law applies the Hague-Visby Rules on actual carriers; however, A foreign judgment may be recognised and enforced only under the it does not resolve the legal status of freight forwarders acting as Foreign Judgments Enforcement Law 1958. contractual carriers/principals/non-vessel-operating common carriers The basic conditions for recognition and enforcement are as follows: (“NVOCCs”). ■ The judgment was given in a state in which, according to its In several cases, the courts have found the forwarder’s demand to laws, the courts were authorised to give such judgment. equalise its status concerning its contractual liabilities vis-à-vis its ■ The judgment cannot be appealed. clients in connection with the transport of cargo to that of the actual ■ The compulsion under the judgment is applicable under carriers, to be reasonable. In other cases, the courts determined that Israeli law. the was not entitled to the defences of the Hague- ■ The judgment is attainable in the state in which it was given. Visby Rules because it does not meet the definition of a “carrier” ■ The judgment is personal only. under the Hague Convention.

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Avi Cordova Roy Gilad Grossman, Cordova, Gilad & Co. Grossman, Cordova, Gilad & Co. Law Offices (GCG) Law Offices (GCG) 53 Hashalom Road 53 Hashalom Road Givatayim 53454 Givatayim 53454 Israel Israel

Tel: +972 3733 1599 Tel: +972 3733 1599 Email: [email protected] Email: [email protected] URL: www.gcglaw.co.il URL: www.gcglaw.co.il Israel

LL.B. and Israel Bar Association member since 1988. Avi Cordova, LL.B. and Israel Bar Association member since 1998. Roy Gilad, Adv. Adv. specialises in civil/commercial law, international trade, international specialises in civil/commercial law, international trade, maritime and forwarding, customs brokerage, international transportation, maritime and aviation law, international forwarding, customs brokerage, international aviation law, contracts, commercial transactions, financing, insolvency, transportation, commercial transactions, contracts, international sales, labour law, commercial litigation in the courts and arbitration. He agencies and distributers, marine insurance, professional liability in represents international forwarding and customs brokerage companies, global transportation and international trade and civil/commercial logistics agencies, shipping agents, shipping companies, financing litigation. He represents international forwarding and customs companies, etc. He speaks Hebrew, English, Greek and French. brokerage companies, logistics companies, international insurance corporations, trading companies and commercial entities. He speaks Hebrew and English.

Grossman, Cordova, Gilad & Co. Law Offices (GCG) is a leading and dominant law firm in the fields of maritime law and international trade in Israel. The firm’s partners have many years of experience, professional know-how and legal skills in a wide range of civil and commercial law practice areas. The firm was ranked among the leading law firms in Israel in the field of maritime law Globesby Dun’s 100 rankings in 2017 and 2018. The firm represents some of the largest Israeli freight forwarders, global freight forwarders, customs brokerage companies, shipping agents, logistics and trading companies, importers and exporters, and international insurance corporations engaged in insuring and managing risks in international trade and transportation. The main office of the firm is located in Givatayim, adjacent to Tel Aviv. The firm has a branch in Haifa run by Adv. Ariel Zisman, who has extensive know-how and experience in the field of maritime law.

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Italy Marco Manzone

Dardani Studio Legale Lawrence Dardani

It is noteworthy, in respect of the interpretation of the CLC, that 1 Marine Casualty following the sinking of the Haven, the Tribunal of Genoa also included in the items of damages the purely economic loss of profit 1.1 In the event of a collision, grounding or other major unconnected to any physical damage. casualty, what are the key provisions that will impact Italy has further ratified the 2001 Bunker Oil Convention, but not upon the liability and response of interested parties? the International Convention on Liability and Compensation for In particular, the relevant law / conventions in force in Damage in Connection with the Carriage of Hazardous and Noxious relation to: Substances by Sea 1996 (1996 HNS Convention). (i) Collision (iii) Salvage / general average In case of collision, the matter of compensation for damages will Italy has ratified the 1989 London Convention on Salvage. be governed by the Brussels Convention dated 23 September 1910, The Italian Code of Navigation provides a series of rules specifically provided that all vessels concerned belong to contracting states. aimed at the discipline of salvage and inspired by the 1910 Brussels Otherwise, the matter will be regulated by the Italian Code of Convention. Such provisions, however, although technically Navigation, which contains a number of rules which are partially never repealed, were rendered almost inapplicable following the different from those of the Convention. ratification by Italy of the 1989 London Convention, in viewof Both under the Convention and under national law, liability can the wide-ranging scope of application set under article 2 of such be established in tort and is founded on negligence. When the Convention. collision is caused by the fault of two or more vessels, each vessel As a consequence, the rules of the Italian Code of Navigation will responds for the percentage of the fault committed and, according only remain applicable to salvage services rendered by an Italian to the Code of Navigation, also in relation to the seriousness of the vessel to another vessel equally flying the Italian flag. Among such consequences. Each vessel would instead bear its own losses in rules, it is worth mentioning the provision of the Code of Navigation cases where the collision is accidental, caused by force majeure or if (article 496) according to which the crewmembers of the salving the cause of the collision is left in doubt. vessel are entitled to receive two-thirds of the salvage reward. Once a collision occurs, the local Port Authority will immediately Although there are no specialised Courts in Italy having specific start an investigation to collect evidence on the casualty. The final jurisdiction on salvage matters, Italian jurisprudence has still given report of such investigation will be made available to the Judicial rise to an impressive amount of reported decisions, dealing with Authority. several questions but particularly the issue of assessment of the If a ship-owner applies for the arrest of the other vessel in order to salvage reward in accordance with the criteria indicated in articles obtain security for his claim for damages, the Italian Court shall 13 and 14 of the Convention. retain jurisdiction to determine the case upon its merits (pursuant to The conventional regime, founded on the principle of ‘no cure, no article 7.1 (d) of the 1952 Arrest Convention) even if there are no pay’, has been constantly upheld by the Italian Courts. links with the Italian territory. (iv) Wreck removal (ii) Pollution The Nairobi Wreck Removal Convention, which was adopted in The most important pieces of national legislation concerning 2007 and entered into force in 2015, has not been ratified by Italy the protection of the environment are the following Acts of as yet, therefore the matter is still regulated by a specific article of Parliament: n. 979 of 31.12.1982; n. 220 of 28.02.1992; and n. the Italian Code of Navigation (article 73) according to which wide 349 of 08.07.1986. These establish the notion of protection of discretion is given to the Port Authorities to issue orders for wrecks’ the environment and set measures to be implemented by both the removal whenever the wreck may cause danger or an obstacle to administrative bodies and the private parties involved. navigation. As far as oil pollution potentially deriving from cargo is concerned, The order of removal is to be addressed to the registered owner of Italy has ratified the Civil Liability Convention 1969 (CLC) and the wreck with a deadline for compliance and if the owner of the the 1992 Protocol. Italy is also a contracting party to the 1971 wreck does not comply in time, the Authority will proceed ex officio Convention establishing the International Fund for compensation by seeking recovery of the expenses from the enforced sale of the for oil pollution, as well as the 1992 and 2003 Protocols thereto. wreck and from the ship-owner. Detailed agreements are normally

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stipulated between the competent Port Authority, on the one side, and the ship-owner and its Protection and Indemnity (P&I) Club, on 2 Cargo Claims the other, to ensure that the removal operations are carried out safely and by protecting the environment. 2.1 What are the international conventions and national (v) Limitation of liability laws relevant to marine cargo claims? The Italian traditional regime of limitation of liability was based in the past on a specific article of the Italian Code of Navigation (article The Italian legal system is based on the so-called “double track” 275) according to which the ship-owner could limit his liability (in regime since, on the one hand, Italy has ratified the Hague-Visby connection with the obligations arising from a voyage) to an amount Rules and, on the other hand, Italy enacted in 1942 the Code of Italy equal to the aggregate of the value of the vessel, the amount of the Navigation on the basis of the Hague Rules, but without later freight and of the other earnings of the voyage. For the purpose of enacting the modifications introduced by the Visby Rules. determining the value of the vessel, article 276 specified that such On the other hand, Italy is a contracting party neither to the Hamburg sum should be determined in an amount between one-fifth and two- Rules nor to the Rotterdam Rules. fifths of the insured value of the vessel, depending on the vessel’s The Code of Navigation is still in force, and it contains a number of actual value at the end of the voyage. articles (421–424) dealing with the carrier’s liability for damages Such discipline has recently been dismantled by an Act of Italian to cargo, which broadly, but not completely, mirror the provisions Parliament dated 28 June 2012 n. 111, according to which the rule contained in articles IV, V and VI of the Hague Rules. contained in the abovementioned articles of the Code applies only to Since the Hague-Visby Rules are “lex specialis”, their application vessels having a gross tonnage below 300 tons. prevails on the application of the Code of Navigation which is, Furthermore, the above Act n. 111/2012, which was adopted in order consequently, applicable only to cases which do not fall within the to comply with the European Directive 2009/20/EU on the insurance ambit of application of the Hague-Visby Rules, pursuant to article of ship-owners for maritime claims, has in practice introduced into X of the same. the Italian legal system the limitations of ship-owners’ liability as The Italian Code of Navigation also applies to any carriage foreseen by the Convention on Limitation of Liability for Maritime performed by Italian vessels between Italian ports. Claims (LLMC Convention), which Italy has not yet ratified. The result of the above is an extremely dissatisfactory legal system, 2.2 What are the key principles applicable to cargo claims giving rise to numerous discrepancies between the regime of insurance brought against the carrier? of claims adopted with Act n. 111/2012 and the LLMC regime incorporated therein, but not ratified by the Italian Government as yet. The carrier’s liability regime is grounded on the so-called fault- (vi) The limitation fund based liability system. If the claimant proves that damage or loss A further negative consequence which derives from the failure of occurred while the cargo was under the custody of the carrier, the the Italian Government to adopt the LLMC Convention is the legal latter is presumed at fault. As a result, the burden of disproving this uncertainty in connection with the procedure for the establishment presumption rests on the carrier, and in order to have its liability of the limitation fund, which is still governed by a few articles of the excluded, the carrier shall provide proper evidence that the loss Italian Code of Navigation (articles 620 to 642) which by now must or damage to the goods was caused by one of the excepted perils be considered obsolete. provided by article IV of the Hague-Visby Rules. The carrier has the right to limit its liability in accordance with the 1.2 What are the authorities’ powers of investigation / provision of article IV para. 5 of the Hague-Visby rules. In case the casualty response in the event of a collision, grounding Italian domestic law applies, article 423 of the Code of Navigation or other major casualty? provides that the liability of the carrier cannot exceed EUR 103.29 for each unit of cargo, or the major figure corresponding to the value Administrative investigation into maritime casualties is regulated by declared by the shipper prior to loading. In any case, the carrier’s articles 578–584 of the Code of Navigation. The Code foresees two right to limit will be denied if the Court establishes that the carrier types of maritime investigation: a summary investigation, aimed at acted with wilful misconduct. determining the causes and liabilities arising out of the accident; and Any cargo claim against the carrier pursuant to contracts of carriage a more extended investigation – the so-called formal investigation of goods subject to the Hague-Visby Rules is time-barred within one – which is carried out only in case of major casualties. During the year after delivery of goods or the date on which they should have formal investigation, the parties involved, such as the ship-owner, been delivered. Such time limit can be avoided by the cargo interest the registered owner of the vessel, crewmembers, insurers and by starting legal proceedings. However, the parties can extend such injured persons, can be represented before the competent maritime time limit by agreement. authority. It is noteworthy that facts ascertained during the formal If, on the contrary, the domestic law applies, a cargo claim is time- investigation will be considered as admitted in the relevant civil barred after six months, but, in the event that either the port of merits proceedings, unless there is evidence to the contrary. loading or the port of discharge is located outside Europe or outside Act n. 165 of 2011 has implemented Directive 2009/18/EC, thereby the Mediterranean countries, the limitation period will be one year. creating, within the Italian Ministry of Transport, the body of a The limitation periods provided by the Code of Navigation cannot Central Commission of Investigation of Maritime Casualties, whose be extended or shortened by agreement, but they can be interrupted aim is to carry out investigations for the purpose of identifying by the claimant by serving a written claim to the carrier with a causes and liabilities from a strictly technical perspective. The body request of payment. is also aimed at reporting maritime casualties in order to implement measures for the avoidance of future casualties. In case of deaths or serious personal injuries, the prosecutor will require a criminal investigation to be carried out.

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assets can also be obtained in accordance with the general rules 2.3 In what circumstances may the carrier establish established by the Italian Code of Civil Procedure. claims against the shipper relating to misdeclaration of cargo? Ships flying the flag of contracting states of the Brussels Convention can be arrested only in respect of the maritime claims set out in the list contained therein. Furthermore, according to the prevailing trend in The shipper is obliged to provide a complete and accurate description Italian case law, the Brussels Convention will also be held applicable of the cargo to the carrier both as per article III para. 5 of the Hague- to ships flying the flag of non-contracting states, in case the arrest is Visby Rules and as per article 457 of the Code of Navigation. sought for a maritime claim included in the list. Thus, at the time of loading of the cargo on board, the shipper should If Italian Courts have no jurisdiction over the merits of the case, the provide accurate indications of marks, quality, quantity, numbers Italy arrest can be filed before the Court having territorial jurisdiction to and weight of the goods. enforce the arrest measure, i.e. the place where the vessel is located. Should the shipper fail to do so, he will be liable against the carrier Therefore, Italian Courts acquire jurisdiction to arrest a ship when the for the damages and losses due to such misinformation. ship enters the territorial area of the port. In case of goods of an inflammable, explosive or dangerous nature, A power of attorney is required in order to file an application for arrest. loaded without the consent of the carrier, the carrier may, at any Although the Italian Code of Civil Procedure indicates that Judges time before discharge, land, destroy or render innocuous the cargo have discretion to order the claimant to deposit counter-security, this without providing compensation to the shipper, who will be held is normally not required. liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. The application for arrest of a ship can be granted ex parte. In such a case, the order of the Judge will be immediately enforced by the Court chancellor, by informing the Harbour Master that a civil arrest 3 Passenger Claims is pending over such ship and that she is prevented from sailing until further Court order. However, a hearing will be scheduled a few days later, at which the ship-owner can appear in Court and challenge 3.1 What are the key provisions applicable to the the arrest. As a result of such hearing, the arrest of the ship can be resolution of maritime passenger claims? confirmed or revoked. If the arrest is confirmed, the claimant will have to start proceedings on the merits within 60 days. Rules on maritime passengers’ claims can be found in the Code of Navigation and in EC Regulation n. 392/2009 dated 23 April An appeal against the order of confirmation of arrest or against the 2009, by which the regime of the 1974 Athens Convention was order of revocation of arrest can be filed within 15 days. implemented in Italy, although such Convention has so far not been ratified by Italy. However, contrary to the Athens Convention, 4.2 Is it possible for a bunker supplier (whether physical the EC Regulation is also applicable to carriages within a single and/or contractual) to arrest a vessel for a claim Member State, if effected on board class A and B ships (as defined relating to bunkers supplied by them to that vessel? under article 4 of Directive 98/18/EC). In accordance with rules contained in the Regulation, Italy has chosen to defer the application Legal issues arise when the bunker supplier does not have a credit of the Regulation in respect of such domestic carriages: presently, against the vessel’s owner but against other vessel operators, such the Regulation is applicable to Italian domestic carriages effected on as a demise charterer or a time charterer. In such a case, it will be board class A ships, whilst for carriages on board class B vessels, the necessary to examine the construction made by Italian Courts of EC Regulation will be applicable from 1 January 2019. The Italian article 3.4 of the Brussels Convention. There is a conflict under Code of Navigation applies only in case the EC Regulation is not Italian law as to whether a claimant can arrest a ship for a credit not deemed applicable. against the owner of the vessel, irrespective of the nature of such Regarding the regime set out in the Code of Navigation, key claim, i.e. whether such credit is supported by a maritime lien or provisions are the liability regime and limitation period: article 409 not. Recent Italian case law has adopted a wider approach, allowing of the Code of Navigation establishes a regime of strict liability and, claimants to arrest the particular ship for a credit not against the owner according to article 418, the limitation period is shorter than that of the vessel, but against the time charterer, even if not supported by established in the EC Regulation: only six months; or one year in the a maritime lien. However, the case law is not set in stone and the case that the carriage started or finished outside the Mediterranean contrary opinion is favoured by part of the Italian jurisprudence and Sea or outside Europe. eminent doctrine. However, as indicated, the application of the regime of the Code of In any case, the physical bunker supplier will have to establish a Navigation is now residual, and from 1 January 2019, it will be even contractual relationship with at least one of the vessel’s operators in further reduced. order to try to successfully plead its right to arrest the ship.

4.3 Where security is sought from a party other than the 4 Arrest and Security vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what options are available? 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure? A maritime lien can be exercised by the vessel owner over cargo only with the permission of the local Court, which will verify Italy has ratified the International Convention for the Unification whether legal requirements set out in the Italian Code of Navigation of Certain Rules Relating to the Arrest of Sea-going Ships, signed are met by claimants. in Brussels on 10 May 1952. Conversely, Italy is not a party of the The lien can indeed be exercised by the owner of the vessel to secure 1999 Arrest Convention signed in Geneva. Security over a debtor’s its claim for freight and demurrages arising out from a contract of

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carriage. The Court application must be filed within 15 days from process is indeed based on the principle that evidence admitted is discharge of cargo and, in any case, before the delivery of the goods only that gathered by the parties before the Judge and “fishing” to third parties. discovery requests are not admitted. According to article 437 of the Italian Code of Navigation, it is As an exception to the above rule, the Italian procedural law allows possible to exercise the lien and to obtain permission to discharge the parties to request the Judge to order (to the other party or to the cargo at the same time, under control of justice (but arrangements a third party) the production of a specific and properly identified will have to be made in advance with the local agents to identify the document, which proves to be material to the requesting party’s case. shore installations where cargo can be stored under lien). The requesting party should also demonstrate that the document to The arrest of bunkers can be obtained (as security for a claim against be produced exists. Italy a time charterers of a vessel) by triggering the general procedure for arrest of moveable goods, set out in the Italian Code of Civil 6 Procedure Procedure, thereby implying that the creditor will not only need to establish prima facie evidence of its claim ( fumus boni iuris) but also that there is the risk that enforcement of a later decision on 6.1 Describe the typical procedure and timescale the merits will be impaired by the financial conditions of the debtor applicable to maritime claims conducted through: i) (periculum in mora). national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute 4.4 In relation to maritime claims, what form of security is resolution. acceptable; for example, bank guarantee, P&I letter of undertaking. A typical and special procedure applicable to maritime claims can be found in the so-called “cause marittime” (maritime claims). These are As per article 684 of the Italian Code of Civil Procedure, the ship- Court cases dealing with claims deriving from maritime casualties, owner may obtain the release of the vessel from the arrest, by such as claims for damages arising out of collisions, damages to placing an adequate guarantee in substitution of the goods under vessels in performing anchorage and berthing operations or other arrest. It has been held that an adequate guarantee is constituted by ports’ manoeuvres, damages arising out of the use of loading or the deposit of a sum equivalent to the credit sought plus expenses unloading mechanisms and from the handling of goods in port, claims in a bank account opened in the name of the Court or by a bank for salvage compensation or remunerations. Apart from special rules guarantee. Italian Judges do not accept P&I Clubs’ LOUs as for establishing the competent local Court, the main characteristic adequate guarantee, unless there is an agreement between the is the compulsory presence of a nautical expert appointed by the parties. Court. Other special procedural rules can be found in the proceedings concerning adjustments of general average and in the procedure for 5 Evidence establishing the ship-owner limitation fund. All other claims are regulated by standard civil procedure. No special procedure is foreseen under arbitration proceedings. 5.1 What steps can be taken (and when) to preserve or Mediation does not entail any special rules as to its conduct, which obtain access to evidence in relation to maritime claims including any available procedures for the is free. preservation of physical evidence, examination of witnesses or pre-action disclosure? 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in Preservation of physical evidence is achieved in Italy through the mind. so-called accertamento tecnico preventivo. Pursuant to article 696 of the Italian Code of Civil Procedure, in case of urgency, one party Italy is a maritime country with a long-established maritime law has the right to apply to the President of the competent Court to tradition. The Italian Association of Maritime Law was founded have a surveyor appointed in order to ascertain the physical state, only few years after the establishment of the Comité Maritime quality and condition of goods. The Court might require the expert International. Practitioners, scholars, lawyers and Judges have been to provide technical evaluations as to the causes and damages. The qualifying through universities such as Genoa, Naples and Trieste, Italian Code of Civil Procedure also contemplates pre-examination all of which have a profound maritime orientation. Nowadays of witnesses. One party, who has grounded reasons to consider this signifies that Courts have many precedents to rely upon in the that one or more witnesses would not be available to render their maritime field, thereby creating a degree of certainty when industry deposition during the future Court proceedings, might ask the Court players approach a Court for maritime matters, especially before to grant permission to hear such witnesses. The rule is normally historical maritime Courts. triggered in case of extreme and poor health conditions of witnesses, Trial length is by far the main disadvantage when analysing the but it can be also triggered in case of non-EU crewmembers on health of the overall Italian judicial civil system. However, in board non-EU vessels, arguing that, after departure of the vessel, recent years Italian Governments have tried to overcome this issue it will be difficult, or even impossible, to hear the crewmembers as by establishing reforms aimed at reducing trial time. Among these, witnesses in Italy. it is noteworthy that Italian proceedings are now managed via an entirely electronic system. 5.2 What are the general disclosure obligations in court proceedings?

The Italian legal system does not include the Anglo-Saxon concept of general and wide discovery of documents. The Italian civil

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7 Foreign Judgments and Awards 8 Updates and Developments

7.1 Summarise the key provisions and applicable 8.1 Describe any other issues not considered above that procedures affecting the recognition and enforcement may be worthy of note, together with any current trends of foreign judgments. or likely future developments that may be of interest.

Italy is part of the “European judicial area” which is based on The adoption of the LLMC Convention is still on the agenda the principle of free circulation of judgments and is presently of the Italian Minister of Transport. In the meantime, confusion governed by Regulation (EU) No. 1215/2012 (so-called “Brussels is reigning over the matter of ship-owners’ limitation of liability, Italy I bis”), which provides for a mechanism of automatic recognition feeding different opinions and arguments among scholars. It is and immediate enforcement of judgments in Europe (without any hoped that the new Italian government will boost such an important special procedure or declaration of enforceability of the Italian piece of legislation for the Italian maritime industry. Courts being required). * * * In this European system, the recognition or the enforcement of a The recent reform of the registration procedure of yachts, which is judgment is refused only upon application of the interested party, aimed, among other things, at digitalising and centralising the Italian who must prove that the judgment does not meet the requirements Yacht Registry, may open the way to a digitalisation of the entire indicated in the same Regulation No. 1215/2012. Italian ship registry and particularly of the Italian International Ship On the other hand, as far as extra-European judgments are Registry, which, lacking the necessary modern digital structure, has concerned, the Italian Private International Law Act of 1995 not been capable of reaching one of its original goals: to open its provides for automatic recognition of judgments which comply with arms to foreign owners. some material requirements (aimed at ensuring that the “adversarial A new challenge that the Italian International Ship Registry may principle” and the principles of fundamental rights of defence and of face in the near future is represented by the EU pilot procedure public policy are observed). For enforcement purposes, as well as in established by the EU Commission against Italy, questioning the case of any dispute about recognition, a special procedure must be advantages available to owners of Italian vessels registered under commenced before the competent Court of Appeal. the International Registry. As a result of this, by the Italian Act n. 167 dated 20 November 2017, an amendment has been introduced to 7.2 Summarise the key provisions and applicable the Italian Registry Act to make the Italian International Registry’s procedures affecting the recognition and enforcement benefits available to shipowners (who are residents in Italy or with of arbitration awards. an Italian permanent establishment) operating vessels that fly other EU or EEA flags (however, such amendment is yet subject toa Italy has ratified the 1958 New York Convention on the Recognition ministerial decree for the implementation of the practicalities of the and Enforcement of Foreign Arbitral Awards (NY Convention). reform and, at the time of writing this chapter, such decree has not At the same time, the Italian Code of Civil Procedure provides yet been published). autonomous procedural rules which are subsidiary to the system of The dilemma is: will such a new development constitute an the 1958 NY Convention, and apply if a foreign arbitration award has opportunity for Italy to attract new operators or will this result in a been rendered in a non-contracting State of the Convention. floodgate of tonnage to more efficient registries? The answer will Under both systems, in order to obtain the recognition or the depend on the innovative measures that will be implemented in the enforcement in Italy of a foreign arbitration award, a special procedure Italian International Ship Registry. must be commenced before the competent Court of Appeal by the * * * interested party. In case of opposition, a new phase of the proceedings There is no doubt that the Italian ship-owners community has is opened and the burden of proving that the requirements for suffered in recent years. However, many have managed to remain recognition or enforcement are not met lies with the opposing party. afloat, after concluding successful restructuring agreements, and are In respect of recognition of foreign arbitral awards, it is worth noting now looking to the market and considering new projects, especially that Italian Courts have taken a strict interpretation approach on the ahead of the technical revolutions that will soon have an impact on requirement of the agreement in writing to arbitrate as prescribed the shipping industry. in the NY Convention, thereby creating issues as to the recognition Unfortunately, the Italian ship financing system has not yet shown of maritime arbitral awards when the agreement to arbitrate is not any sign of recovery, as Italian banks are not encouraging new debt effectively signed or agreed by one party. In order to circumvent the exposure, being yet embroiled in issues concerning previous non- above issue, and if the award is issued in England, it is sometimes performing loans. In this scenario, foreign funds are becoming advisable to turn the arbitral award into an English judgment, so that more active in trying to acquire non-performing loans from Italian only the judgment is enforced in Italy by taking advantage of EU banks, which are now keen on disposing of their debt exposure due Regulation No. 1215/2012. to a more favourable second-hand market. The hope is that foreign funds will soon appreciate the competence and professionalism of the Italian maritime industry, thus assisting Italian owners in financing their new projects.

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Marco Manzone Lawrence Dardani Dardani Studio Legale Dardani Studio Legale Salita di Santa Caterina 10/8A Salita di Santa Caterina 10/8A Genoa Genoa Italy Italy

Tel: +39 010 576 18 16 Tel: +39 010 576 18 16 Email: [email protected] Email: [email protected] URL: www.dardani.it/en URL: www.dardani.it/en Italy

Marco assists clients in transactions in the sale and purchase of ships, Lawrence is an Avvocato at the Italian Bar and a Barrister at the Bar in shipbuilding contracts, and in ship finance. He also advocates for of England and Wales. clients in charterparty disputes, and in precautionary measures such His practice covers all areas of shipping law, both dry and wet shipping, as the arrest of ships or liens on cargo. He also handles cargo claims Italian and English law-related matters and disputes, comparative law mainly on behalf of ship-owners. and international private law issues. He appears as an advocate Marco is particularly keen on the law of international trade and he assists and counsels in charterparty disputes, issues related to the carriage clients in commodity disputes (including international arbitrations) and of goods by sea, the liability of classification societies, as well as non-litigation matters. shipbuilding contracts, ship sale and purchase, and ship finance. He was admitted to the Italian Bar in 2006 and he is a member of the Lawrence has been a partner at Dardani Studio Legale since 2014. Genoa Bar. Having completed the qualified lawyer transfer test, in He speaks Italian, English and Spanish. October 2012 he joined the Law Society as a Solicitor of the Senior Courts of England and Wales. Marco has been a partner at Dardani Studio Legale since 2014. He speaks Italian, English and Spanish.

Based in Genoa and Milan, Dardani Studio Legale is an international boutique law firm that gathers a team of advocates specialised in maritime and international trade law, dealing with a broad range of commercial, corporate, ship finance and competition matters. The firm originates from the expertise of the founding partner Maurizio Dardani, who is recognised as one of the major experts in the field, and it consists of four additional partners, Luca Di Marco, Marco Manzone, Lawrence Dardani and Brian Dardani. Dardani Studio Legale assists clients in all shipping matters, including both dry and wet issues. The firm regularly advises Italian and foreign clients in transactions involving all kinds of shipping contracts; in particular, ship sale and purchase, shipbuilding contracts, charterparties, bills of lading, salvage and complex matters of ship financing are among the areas of the firm’s expertise. Clients include Owners, Charterers and P&I Clubs.

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Japan Norio Nakamura

Yoshida & Partners Taichi Hironaka

In Japan, an amendment to the Commercial Code in relation to 1 Marine Casualty maritime law has been discussed, and a draft amendment was submitted to the Diet. The amendment could be enacted in 2018 and 1.1 In the event of a collision, grounding or other major enter into force within a few years. The draft amendment includes casualty, what are the key provisions that will impact the same time-bar regime of the Collision Convention for all claims upon the liability and response of interested parties? arising out of a collision other than personal injury claims. In particular, the relevant law / conventions in force in (ii) Pollution relation to: Japan has ratified the CLC Protocol 1992 and the Fund Protocol 1992, (i) Collision and enacted the Act on Liability for Oil Pollution Damage thereon. The Act was amended in 2005 to reflect the Fund Protocol 2003. (a) Jurisdiction and governing law Japan had not ratified or acceded to the Bunkers Convention 2001, The international jurisdiction of Japanese courts over a claim arising but the Act on Liability for Oil Pollution Damage requires non- out of a collision, grounding or other major casualty is determined tanker vessels entering Japanese ports be covered by protection and according to the Civil Procedure Code. Japanese courts have indemnity (P&I) insurance in respect of oil pollution damage by jurisdiction over such a claim if: a) the above marine casualty was bunkers. occurred in Japanese territorial sea; b) the damaged vessel first arrived at a Japanese port after the marine casualty; c) the defendant The oil pollution claim is subject to a three-year time-bar from is domiciled, or keeps doing business, in Japan; or d) there are the the date when the claimant comes to know of the damages and the assets owned by the defendant in Japan. The agreement on the identity of the defendant. The above ongoing amendment of the jurisdiction is enforceable and precedes the above international Commercial Code may change the time-bar period to two years in jurisdiction articles in the Civil Procedure Code. respect of a pollution claim arising out of a collision. The governing law of marine casualty is determined by the Act on (iii) Salvage / general average General Rules for Application of Laws. A claim arising out of a Japan has ratified the Salvage Convention 1910. Japan has not marine casualty would be governed by the law of the place where ratified or acceded to the Salvage Convention 1989, but the ongoing the marine casualty occurred, but the agreement on the governing amendment to the Commercial Code in relation to maritime law, law precedes it. which is expected to enter into force within a few years, would (b) Navigation rules introduce a right to special compensation in respect of salvage efforts preventing or minimising environmental damage, similar to Japan has ratified the Convention on the International Regulations the Salvage Convention. While the time-bar for a salvage claim is for Preventing Collisions at Sea 1972 (COLREGs) and has enacted currently one year in the Commercial Code, the draft amendment the Act on Preventing Collisions at Sea based thereon. Also, the would change it to two years. Maritime Traffic Act provides special navigation rules for channels, and the Port Regulation Act provides those in ports. The fault of the The Commercial Code has some articles for general average, but it master or officer, and the blame ratio, would be decided according has not been used because carriage contracts usually have a clause to these navigation rules. from the York-Antwerp Rules 1994. The ongoing amendment may (c) Time-bar make the Code consistent with said Rules. (iv) Wreck removal Japan has acceded to the Collision Convention 1910, thus if a collision occurred between Convention-country-flagged vessels, the Japan has not ratified or acceded to the Nairobi International time-bar would be two years from the date of the collision. For a Convention on the Removal of Wrecks 2007, but the Act on Liability collision that has occurred between Japanese vessels or a Japanese for Oil Pollution Damage requires vessels entering Japanese ports to vessel and a non-Convention-flagged vessel, the Commercial Code be covered by P&I insurance in respect of wreck removal expenses. and the Civil Code would apply. For such a collision, inter-ship The authorities may order the vessel owner to remove the wreck claims are subject to a one-year time-bar from the date when the according to administrative laws such as the Port Regulation Act and claimant comes to know of the damages and the identity of the the Act on Prevention of Marine Pollution and Maritime Disasters, defendant, and personal injury claims are subject to a three-year but if the vessel owner fails to do so, the authorities may remove it time-bar from the date when the claimant comes to know of the by themselves and recover the cost of the wreck removal from the damages and the identity of the defendant. vessel owner.

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(v) Limitation of liability covers such ocean carriage contracts that designate either (or both of) Japan has ratified the LLMC 1976 and the LLMC Protocol 1996, a port of loading or a port of discharging outside of Japan. Claims and enacted the Act on Limitation of Liability of Shipowners under a pure domestic contract are governed by the Commercial Law. based thereon. The Act was amended in 2015 to reflect the 2012 COGSA is also applicable to a contract of carriage for which bills amendments to the Protocol 1996. of lading or other similar documents of title (e.g. sea waybills) are The vessel owner, demise charterer and charterer can limit their not issued. liability in the limitation proceedings by establishing the limitation Carriers’ obligation under COSGSA, in contrast to that under the fund, which is the limit of liability calculated by the gross tonnage convention, is extended from receipt by carriers to delivery against of the ship plus 6% interest per annum (it will be changed to 3% receivers. Japan per annum from April 2020, and the changed interest rate will be applied to the limitation proceedings relating to marine casualties occurring after 1st April 2020) from the date of the marine casualty 2.2 What are the key principles applicable to cargo claims brought against the carrier? until the date of establishing the fund. The limitation fund should be established by cash deposit or guarantee of a bank, an insurance company, the Japan P&I club or a licensed foreign insurance A governing law of the contract (including bill of lading) may company (including some International Group (IG) clubs). affect the liability of the carrier in cargo claims, as our court would approve a foreign law clause. It should be noted that registered gross tonnage of Japanese domestic vessels is different from, and generally less than, the gross tonnage A rightful holder of the bill of lading is entitled to the cargo and may measured according to the International Convention on Tonnage submit cargo claims. In the case that a bill of lading has not been Measurement of Ships 1969, which should be used for calculation of issued, a shipper exclusively has a title to the cargo until it reaches a the limit of liability under the Act. Thus, when calculating the limit destination but, thereafter, a consignee may demand delivery of the of liability of a Japanese domestic vessel, the gross tonnage should cargo to the carrier. be newly obtained or calculated according to the above Convention. Sometimes, a dispute as to who should be a responsible carrier under Claims for loss of life or personal injury to passengers of a ship are the bill of lading for cargo claims (i.e. identity of carrier) will break not subject to the limitation under the Act. out, particularly in such a case where a bill of lading is issued using (vi) The limitation fund a charterer’s form but signed “for the Master”, following a demise clause or an identity-of-carrier clause on its reverse side; whether See above. the carrier is a shipowner or a charterer. Our Supreme Court held, in one case, that the shipowner should be the carrier, but this will not 1.2 What are the authorities’ powers of investigation / bind other cases which involve different situations. casualty response in the event of a collision, grounding Our courts would recognise a jurisdiction clause or an arbitration or other major casualty? clause stipulated on the reverse side of a bill of lading. (i) Japan Coast Guard (JCG) The JCG are in charge of casualty response and also criminal 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration investigations of a marine casualty. In most cases, they request of cargo? voluntary cooperation with their investigation from the vessel owner or crew members, and as a result, the negligent master or officer who In general, a shipper has an obligation to accurately notify the caused the marine casualty may be charged a fine of up to JPY500,000, or up to JPY1,000,000 if it involved loss of life or personal injury. In specification of goods to a carrier before shipment. If a shipper serious casualties involving gross negligence of the master or officer, fails to observe such obligation and a carrier suffers loss or damage there have been some cases in which the JCG arrested the master or resulting therefrom, a carrier is entitled to claim against a shipper for officer in charge, who stood in criminal courts thereafter. Even in breach of contract or in tort. such cases, it is very rare for them to be sent to prison. In particular, a shipper is required to identify whether or not goods (ii) Japan Transport Safety Board to be carried are named under the International Maritime Dangerous Goods Code (IMDG Code) or related regulations. In such a case, a The Japan Transport Safety Board is in charge of investigating causes shipper must classify the dangerous nature of goods as prescribed of marine casualties. Its investigation is carried out separately from and notify accurate information of goods to a carrier before shipment. the criminal investigation. They release their investigation reports to the public upon completion of the investigation. (iii) Japan Marine Accident Tribunal 3 Passenger Claims The Japan Marine Accident Tribunal imposes disciplinary actions against Japanese-licensed seafarers who have caused marine 3.1 What are the key provisions applicable to the casualties. Seafarers without a Japanese licence are not subject to resolution of maritime passenger claims? the disciplinary actions, but could be investigated by the Tribunal. Japan has not ratified or acceded to the Athens Protocol 2002. Japan 2 Cargo Claims has no limitation regime for passengers’ claims in respect of loss of life or personal injury, while luggage claims of passengers are subject to the limitation of liability under the Act. 2.1 What are the international conventions and national laws relevant to marine cargo claims?

The Carriage of Goods by Sea Act (COGSA), which implements the Hague-Visby Rules, is applicable to the marine cargo claims. It

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4 Arrest and Security 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure? A claim of a bunker supplier for bunker price is secured by a maritime lien and it is possible for a bunker supplier to arrest a vessel under Japanese law. The claim should be against the vessel owner, demise A claimant may arrest a vessel to obtain security for a maritime charterer or time charterer of the vessel, and that against the bunker claim against a vessel owner. There are two kinds of ship arrest for trader may not be secured by a maritime lien. a maritime claim: one is enforcement of a maritime lien; and the Japan other is provisional attachment. The above is the summarised position of bunker suppliers in respect of a maritime lien under Japanese law, but if the bunker was supplied (i) Enforcement of a maritime lien outside Japan, the governing law of the supply contract was the law of Maritime liens arise with respect to claims for pilotage, towage, a foreign country, or the bunker was supplied to a foreign flagged ship, bunker expenses, crew wages, salvage remuneration and general there would arise an issue of conflict of laws. This issue has not yet average contribution, and also claims in connection with marine been settled in Japan. There are three major views on the application casualties. The claims should be against the vessel owner, demise of laws to a maritime lien in respect of a claim of bunker suppliers: charterer or time charterer of the vessel, and the maritime liens are (a) Apply both the law of the vessel’s flag and the governing law subject to a one-year time-bar. It should be noted that these maritime of the supply contract. Only if a maritime lien were admitted liens have priority over a ship mortgage. Sister or associated ship under both laws, could the bunker supplier arrest the vessel. arrest is not possible by enforcement of maritime liens. (b) Apply both the law of the bunker supply and the law of the A maritime lien holder is entitled to arrest a vessel without putting governing law of the supply contract. Only if a maritime up counter-security. In most cases, the vessel owner provides the lien were admitted under both laws, could the bunker supplier lien holder with security to release the ship, but if they do not, the arrest the vessel. holder is ultimately entitled to recover his claim from the proceeds (c) Apply only Japanese law as the law of the forum. If the of the judicial sale. claim is against the vessel owner, demise charterer or time charterer, the bunker supplier may arrest the vessel. The usual course of the enforcement of a maritime lien is as follows: In most cases, the governing law of the supply contract is U.S. federal (a) The maritime lien holder obtains a court order to take up the certificate of the vessel’s nationality and any other documents law, which recognises a maritime lien for a claim of a bunker supplier. necessary for her sailing before her arrival at a Japanese port. Thus, the law of vessel’s flag and the governing law of the bunker supply are key for a maritime lien to arise before Japanese courts. (b) Upon arrival, an enforcement officer confiscates the foregoing documents from the vessel so that she cannot sail out of the Bunker suppliers may also try provisional attachment to arrest a port. vessel if they cannot enforce a maritime lien. In such a case, the (c) Within five days of the documents being apprehended, the claim should be against the vessel owner, and the suppliers should holder must formally apply for commencement of the judicial put up security by cash deposit or bonds, as explained above. sale of the vessel to the court. (d) In response, the court decides to commence the judicial sale 4.3 Where security is sought from a party other than the proceedings and appoints a trustee to secure the vessel until vessel owner (or demise charterer) for a maritime completion of the sale. By this stage, the holder has to pay claim, including exercise of liens over cargo, what expected costs and expenses for the proceedings, which options are available? are recovered from the proceeds of the sale. The advance payment could be approximately JPY10,000,000 or more. A maritime claim against the vessel owner (or demise charterer) (e) The court sells the vessel by means of public auction, and the cannot be enforced against the assets owned by other parties. There dividends from the proceeds are distributed to the holder. would be no lien over cargo in respect of a maritime claim against It usually takes about six months from the commencement of the the vessel owner (or demise charterer). judicial sale to the distribution of the dividends.

(ii) Provisional attachment 4.4 In relation to maritime claims, what form of security is Claimants of maritime claims may arrest the vessel by provisional acceptable; for example, bank guarantee, P&I letter of attachment putting up counter-security. The claim should be against undertaking. the vessel owner, but can be of any type. The amount of counter- security is decided by the court’s discretion, taking the ship’s value, The usual course is: the vessel owner would provide a letter of certainty of the claim and the claim into account. It depends on undertaking issued by a competent P&I club or a bank guarantee to the particular case, but would be 10% to 30% of the ship’s value. the claimant, and in response the claimant would voluntarily release Counter-security may be put up by cash deposit or bonds issued by the vessel by withdrawing the arrest proceedings. banks or insurance companies, etc. In most cases, the vessel owner Another way to release the vessel arrested by a maritime lien is to provides the claimant with security to release the ship, but if they file a lawsuit requesting confirmation of non-existence of a maritime do not, the claimant will be required to file a suit against the vessel lien, and obtain an order of interlocutory injunction of the arrest owner. If the claimant can get a favourable judgment, the claimant proceedings, and then put up security in the amount of the claim plus may enforce the judgment, applying judicial sale of the ship. all estimated costs for the judicial sale. The court will accept cash Sister ships within the same ownership may be arrested by deposit or bonds by banks, insurance companies or P&I clubs, etc. provisional attachment. Associated ships owned by affiliates of the In order to release the vessel arrested by provisional attachment, the vessel owner may possibly be arrested by provisional attachment if vessel owner should put up security in the amount of claim or the the claimant is able to pierce the corporate veil, but it is generally value of the vessel, whichever is the lesser. The court will accept very difficult. only a cash deposit.

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At the initial stage of the proceeding, parties attend the court for a 5 Evidence hearing a few times (or many more, depending on the case), where written pleadings and evidence are submitted to the court and 5.1 What steps can be taken (and when) to preserve or exchanged between the parties. The hearings are held usually every obtain access to evidence in relation to maritime four to eight weeks until the parties rest their case. claims including any available procedures for the Upon completion of parties’ activity in documents, usually 10–18 preservation of physical evidence, examination of months after the filing of suit, examination of witnesses or experts witnesses or pre-action disclosure? is held. Our court usually permits a small number of witnesses, so that the examination can be made in a day or half-day, and the time

Japan A court may, upon application by a party, permit the preservation of allowed for examination per person is considerably limited. evidence or the carrying out of an examination of evidence before filing or during a suit, if it is expected that the utilisation of such A losing party may appeal to a higher court within 14 days from the evidence at later stage would become difficult. next day of receiving service of the judgment. The time schedule of a higher court is very speedy and many of the cases are completed Preservation of evidence would include obtaining statements from by document examination only, without hearing from witnesses. An witnesses, taking pictures or videos and collecting documents from appeal to the Supreme Court is strictly limited to such cases that holders. A party who wishes to preserve evidence before filing a suit would involve material legal disputes or defects. must apply to a competent court for its permission. (ii) Arbitration Arbitration at the Tokyo Maritime Arbitration Commission 5.2 What are the general disclosure obligations in court (TOMAC) of the Japan Shipping Exchange, Inc. is popular for proceedings? maritime disputes. Candidates for the role of arbitrator are specialised in shipping, and arbitration fees are quite reasonable. The time We do not have an extensive discovery or disclosure rule as in the schedule of the proceeding varies depending on the complexity of US or UK, and parties of a suit may enjoy submitting only such the case. As English documents are accepted as they are, the parties evidence as is favourable to their position, which tactics are allowed are released from the obligation to have these translated. under the adversary system. (iii) Mediation / alternative dispute resolution. In a court proceeding, a party often asks the other party to submit further evidence or to clarify obscure facts on which he/she may In Japan, judges and arbitrators who preside over the proceeding rely. In such a case, a judge usually instructs him/her to make it may mediate the disputes which are pending before the court or clear. However, even if he/she does not satisfactorily respond to arbitration before giving a judgment or award. A formal mediation it, no specified penalty will be imposed, and it is subject tothe procedure is seldom used for maritime claims. principle of “free evaluation of evidence” by a court. A party may apply for a court order requesting a document’s holder 6.2 Highlight any notable pros and cons related to your to submit specified documents, but our law allows a wider excuse jurisdiction that any potential party should bear in for “a document for exclusively own use”. If a document’s holder mind. is ordered by a court to submit specified documents, he/she must follow it. If not, the court may take an applicant’s assertion in In our court practice, recovery of legal costs is not expected, respect of the description of such documents to be true. particularly in contract disputes. In tort cases, about 10% of the claims allowed have been accepted by courts as a part of damages, but generally no more than this. 6 Procedure Under the arbitration rule of TOMAC, a legal fee is allowable at the discretion of arbitrators, according to the nature and merit of a case. 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or 7 Foreign Judgments and Awards commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution. 7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments. (i) National courts

Neither courts nor judges are specialised in shipping, and maritime Foreign final and binding judgments are automatically recognised if claims are dealt with by general judges at civil courts. For serious they satisfy all the requirements of the law, as follows: (i) the foreign claims in special or technical fields including shipping matter, our court had proper jurisdiction; (ii) the losing defendant was properly courts sometimes appoint a technical adviser to hear expert views as given service or appeared without service; (iii) the judgment and to disputes or evidence. the proceedings made in the foreign country are not against public Except for small claims of less than JPY1,400,000, the competent policy in Japan; and (iv) recognition of Japanese judgments is also district court (placed in each administrative district) has jurisdiction guaranteed in the said foreign country on a reciprocal basis. over maritime claims. In order to actually enforce a foreign judgment in Japan, the winning Service of a plaintiff’s complaint is made to a defendant under the party must file a suit for execution of judgment before a competent strict control of the court and must not be made by the plaintiff or its court, where the above issues are examined but no propriety of the attorney. If overseas service is required, the court proceeds through foreign judgment shall be investigated. a diplomatic channel, which usually takes several months or longer. If a Japanese attorney has been retained by a defendant, such attorney can receive service from the court by submitting a power of attorney.

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7.2 Summarise the key provisions and applicable 8 Updates and Developments procedures affecting the recognition and enforcement of arbitration awards. 8.1 Describe any other issues not considered above that may be worthy of note, together with any current trends Japan is a member of the Convention on the Recognition and or likely future developments that may be of interest. Enforcement of Foreign Arbitral Awards (New York Convention). For enforcement of an arbitration award here, a party must apply to The draft “amendments to the Commercial Code”, including the a competent court for a recognition order. A certified true copy of part relating to maritime law, was submitted to the National Diet in the arbitration award must be submitted, together with its Japanese October 2016 and is being deliberated there. The points of amendment Japan translation. include: the shipper’s obligation to notify as to dangerous goods is newly provided; a carrier’s liability arising from a seaworthiness warranty is deregulated to one relating strictly to negligence; the time- bar of a ship collision is extended to two years; and so on.

Norio Nakamura Taichi Hironaka Yoshida & Partners Yoshida & Partners 4th Fl., Suitengu-Hokushin Bldg. 4th Fl., Suitengu-Hokushin Bldg. 1-39-5 Nihonbashi-Kakigaracho 1-39-5 Nihonbashi-Kakigaracho Chuo-ku Chuo-ku Tokyo 103-0014 Tokyo 103-0014 Japan Japan

Tel: +81 3 5695 4188 Tel: +81 3 5695 4188 Email: [email protected] Email: [email protected] URL: www.japanlaw.co.jp/en URL: www.japanlaw.co.jp/en

Norio Nakamura has dealt with all aspects of maritime law since joining Since joining Yoshida & Partners in 2002, Taichi Hironaka has handled a Yoshida & Partners, including charterparties, ship finance, ship sale, number of maritime cases. In light of his knowledge, understanding and shipbuilding, collision, salvage, cargo recovery or defence, marine keen interest in technical aspects, he has also dealt with many disputes insurance, personal injury, ship arrest, bankruptcy and marine pollution. involving engineering matters relating to engine, hull structure and He was made a partner in 2002 and has been involved as an arbitrator sometimes offshore construction (wind farms). He has been engaged of the Japan Shipping Exchange. in advisory work for insurance companies and vessel operators. He became a partner in 2017. Mr. Hironaka graduated from Kyoto University in 2001 with a Bachelor of Engineering degree, majoring in architecture. He was called to the Bar in 2002, and, in 2013, received his LL.M. from the University of Southern California – Gould School of Law.

Yoshida & Partners, one of the leading law firms in Japan specialising in maritime cases, also deals with other areas of practice such as trade, commerce, logistics and other international and domestic business law. It was originally founded in 1924 in Kobe. The firm is known as a leader in training maritime lawyers and has a team of attorneys-at-law, marine counsels and consultants specialised in the shipping industry.

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Korea Choon-Won Lee

JIPYONG Dahee Kim

Another Act relevant to marine pollution is the Marine Environment 1 Marine Casualty Management Act, which restricts the discharge of waste, oil and noxious liquid substance from vessels (Article 22). The 1.1 In the event of a collision, grounding or other major Minister of Oceans and Fisheries shall impose charges/fees for casualty, what are the key provisions that will impact acts of discharging pollutants from the vessels exceeding the limit upon the liability and response of interested parties? prescribed by the Enforcement Decree for the Act (Article 19). In particular, the relevant law / conventions in force in The relevant international conventions currently in force in Korea relation to: include the International Convention on Civil Liability for Oil Pollution Damage 1969 and its 1992 Protocol, the International (i) Collision Convention on the Establishment of an International Fund for The provisions of the Korean Commercial Act (“KCA”) pertaining Compensation for Oil Pollution Damage 1971 and its 1992 and to collisions between vessels (Articles 876–881) are applicable to 2003 Protocols, and the International Convention on Civil Liability “collisions between sea-going vessels or collisions between sea- for Bunker Oil Pollution Damage 2001. going vessels and vessels of inland navigation” (Article 876). The (iii) Salvage / general average KCA categorises collision into four cases according to the cause of the collision, and prescribes the rule on liability of the relevant Salvage parties (i.e., the owners of the vessels involved in the collision) for A section in the KCA exclusively addresses the issue of salvage each case. The four categories include: (i) collision due to force (Articles 882–895). Korea is not a party to any international majeure; (ii) collision due to fault of one party; (iii) collision due conventions on salvage, but the provisions in the KCA (e.g., the to fault of both parties; and (iv) collision due to the fault of the Articles on special compensation and salvage contracts) are pilot. Under the KCA, a statutory time bar of two years from the generally interpreted as an implementation of major aspects of the date of the collision is applicable to claims for damages arising from International Convention on Salvage 1989. collision between vessels (Article 881). It is possible for the parties General Average to extend the time bar by mutual consent. The KCA has a section devoted to general average (Articles 865– For cases of collisions which do not fall within the scope of the KCA 875), which is mostly based on the York-Antwerp Rules of General (e.g., collisions between vessels of inland navigation, or collisions Average 1950. It may be said that the provisions of the KCA are between a vessel and a dock), the general tort principle under the outdated in comparison with the York-Antwerp Rules of General Korean Civil Code (Article 750) will be applicable instead of the Average 1994. In practice, the provisions of the KCA are seldom abovementioned provisions of the KCA (i.e., Articles 876–881). applied, as the relevant contracts such as time charterparties of the On the other hand, it may be noted that Article 12 of the Seafarers’ vessels generally contain a provision applying the York-Antwerp Act imposes responsibility on masters of the vessel involved in the Rules of General Average 1994. collision to take all necessary measures to rescue human lives and (iv) Wreck removal the vessel, and to provide the other vessel involved in the collision There are multiple statutes in Korea that regulate wreck removal. with the following information: name of the vessel; owner of the Firstly, the Act on Vessels Entering and Departing Port provides that vessel; port of registry; port of departure; and port of arrival. masters, owners or occupants of any object that causes or may cause As for the international conventions related to collisions of vessels, a hindrance to vessels’ navigation (which includes shipwreck) are the Convention on the International Regulations for Preventing obliged to remove such object or bear the costs and expenses for Collisions at Sea 1972 is currently in effect in the Republic of Korea its removal (Article 40). Secondly, the Public Waters Management (hereinafter referred to as “Korea”). On the other hand, Korea is not and Reclamation Act prohibits the act of abandoning or leaving the a party to the International Convention for the Unification of Certain vessel in derelict condition on public waters, which includes the Rules of Law with respect to Collisions between Vessels (the “1910 sea, seashores and state-owned rivers and lakes (Article 5). This Collision Convention”). Nevertheless, the provisions of the KCA Act also consists of provisions on shipwreck removal (Article 6). related to collision are influenced by the 1910 Collision Convention. Thirdly, the Maritime Safety Act mandates that the master, owner, (ii) Pollution and operator of the vessel which created obstacles to navigation The Compensation for Oil Pollution Damage Guarantee Act shall inform other vessels of the obstacles and remove the obstacles, prescribes the liability of owners of the oil tanker which contributed which includes shipwreck removal (Article 28). Fourthly, the to oil pollution. Marine Environment Management Act dictates that a master of a

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vessel which causes pollutants to be emitted into the sea is obliged of crew/vessel regulations, etc.), the Korea Prosecutors’ Office will to report to the relevant authority, prevent further emission, remove have the authority to investigate the matter, with the preliminary the emitted pollutants, and bear the costs and expenses of such investigation generally conducted by the Korea Coast Guard. operation (Articles 63–65), which will be applicable in case of the shipwreck emitting pollutants. (v) Limitation of liability 2 Cargo Claims General Limitation While Korea has not ratified the Convention on Limitation of Liability 2.1 What are the international conventions and national for Maritime Claims (“LLMC”), the level of the shipowners’ global laws relevant to marine cargo claims? limitation matches the 1976 LLMC levels. Also, Korea adopted a Korea substantial part of the LLMC Protocol 1996 for limitation levels Korea is not a party to the Hague Rules or Hague-Visby Rules, but in respect of passenger claims (Articles 769–776 of the KCA). In the KCA adopts substantial parts of the Hague Rules and Hague- accordance with Article 776 of the Act, a special act titled “the Act Visby Rules regarding carriage of cargo. on the Procedure for Limiting the Liability of Shipowners, etc.” was enacted to set out the procedures for limiting liability. 2.2 What are the key principles applicable to cargo claims Package Limitation brought against the carrier? Although Korea has not ratified the Hague-Visby Rules, package limitation under the KCA is identical to that of the Hague-Visby It can be said that the Korean law position in this respect is generally Rules. The carrier’s liability is limited to 666.67 special drawing similar to that in the Hague-Visby Rules. The carrier is responsible rights (“SDRs”) per package/unit or 2 SDRs per kilogram, whichever to conduct due care for carriage of the cargo, and shall be liable is higher (Article 797). for damages, loss and/or delay unless the carrier proves that he has Oil Pollution conducted due care or there is an indemnity event (navigational accident or peril, force majeure, insufficiency of packing, latent The Compensation for Oil Pollution Damage Guarantee Act limits defect, etc.). the liability of the owners of the oil tanker which caused pollution (Article 8), and the limitation amount is identical to that of the 1992 Civil Liabilities Convention. The Act also establishes a special 2.3 In what circumstances may the carrier establish procedure for the owners/insurers of the oil tanker to secure such a claims against the shipper relating to misdeclaration limitation on their liability (Article 32). of cargo? (vi) The limitation fund There is no specific provision in the KCA about the carrier’s claim The constitution of and distribution from the limitation fund is against the shipper relating to misdeclaration of cargo. However, regulated by the Act on the Procedure for Limiting the Liability of Article 853-(3) of the KCA stipulates that: “A shipper shall be Shipowners, etc. (Articles 11–15, 27 and 65–79) and, in the case of deemed to have certified to a carrier the correctness of the kind, the oil tanker which caused pollution, by the Compensation for Oil weight or volume of cargo, and the classification, number and mark Pollution Damage Guarantee Act (Articles 21–31 and 34). of packing notified in writing by the shipper.” While there are not clearly established precedents, our view is that 1.2 What are the authorities’ powers of investigation / misdeclaration of cargo should be treated pursuant to the general casualty response in the event of a collision, grounding principles. First, the carrier’s claim against the shipper relating to or other major casualty? misdeclaration of cargo will be established pursuant to the provisions of the contract of carriage, including the terms and conditions of the In the event of a collision, the relevant authorities (which include bill of lading. In the event that there are no such clear provisions, the Korean Coast Guard and the Ministry of Oceans and Fisheries) terms and/or conditions in the contract of carriage, Article 853-(3) may order the master or shipowner to take necessary measures to of the KCA will apply, and misdeclaration of cargo is likely to quickly control the marine accident and secure the safety of marine be deemed as a breach by the shipper in light of Article 853-(3). traffic (Article 43 of the Maritime Safety Act). Also, in the event Therefore, the carrier may establish claims against the shipper for that there exist obstacles to navigation due to such marine accident, such breach, provided that the carrier has suffered damages due to the relevant authorities may order the master, shipowner or ship the breach, and they are reasonably linked. operator to remove such obstacles to navigation. If such orders are not complied with, the authorities may directly remove the obstacles to navigation and the costs shall be borne by the responsible party 3 Passenger Claims (Article 28 and 29 of the Maritime Safety Act). There are similar provisions in the Marine Environment Management 3.1 What are the key provisions applicable to the Act (Articles 64 and 68), which applies to pollution arising from resolution of maritime passenger claims? marine accidents. As for investigation, the Maritime Safety Tribunals are established The KCA deals with maritime passenger claims in Articles 817– under the jurisdiction of the Minister of Oceans and Fisheries 826. Under these provisions, a carrier is liable for the death or pursuant to the Act on the Investigation of and Inquiry into Marine personal injury of passengers, unless the carrier is able to show that Accident. The Tribunals have investigators, who have authority the carrier or its employees were not negligent. To determine the to conduct investigation matters, including summoning and quantum of damages, the court shall take into account the conditions questioning relevant parties and inspecting ships (Articles 16 and 37 of the victim and the victim’s family (Articles 148 and 826). of the Act on the Investigation of and Inquiry into Marine Accident). Korea is not a party to the Athens Convention relating to the In addition, when the marine accident constitutes a criminal case (for Carriage of Passengers and their Luggage by Sea, or its Protocols. example, personal injury or death, sinking of ship, pollution, breach

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4 Arrest and Security 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what 4.1 What are the options available to a party seeking to options are available? obtain security for a maritime claim against a vessel owner and the applicable procedure? Under Korean law, the creditor may seek security by way of exercising a possessory lien over the cargo. Under Korean law, a creditor who has a pecuniary claim against a debtor may apply for pre-judgment attachment of an asset owned Korean law acknowledges three types of possessory lien. Firstly, there is a carrier’s possessory lien – a carrier is entitled not to deliver Korea by the debtor. Therefore, a party may apply for pre-judgment attachment of a vessel insofar as (i) he has a pecuniary claim the cargo unless the freight, demurrage, incidental expenses, etc. are against the shipowner, and (ii) there is a need for securing his claim paid, and may apply for auction of the cargo in order to receive (generally, the fact that the debtor has failed to pay the claim, and no payment (Articles 807 and 808 of the Korean Commercial Act). other easily attachable assets owned by the debtor will prima facie Secondly, there is a general possessory lien provided in the Korean demonstrate such need). It is not required that the creditor’s claim Civil Act – if the possessor of a property belonging to another person be of a maritime nature, or related to the vessel, provided that the has any claim arising in respect of such property, and if payment of debtor is the owner of the vessel. the claim is due, he may retain possession of the property until the The creditor will first make an application to the court for pre- claim is satisfied, and may apply for auction of the property in order judgment attachment of the vessel. The application process will to receive payment of his claim (Articles 320 and 322 of the Korean generally proceed ex parte, i.e. based on the creditor’s application Civil Act). It may be noted that in these first two categories, the only, without summoning the debtor, unless the court sees a special property possessed/retained need not belong to the debtor. need otherwise. After reviewing the application documents, if the Thirdly and lastly, there is a mercantile possessory lien provided for court finds that the above two requirements have been prima facie in the Korean Commercial Act – if a claim that has arisen from a proved, the court will order the creditor to post counter-security. commercial activity between merchants has become due, the creditor The extent of counter-security will ultimately depend on all relevant may, until he/she obtains performance thereof, retain the property circumstances, including how well the creditor’s claim and the need belonging to the debtor that has come into his/her possession for security have been substantiated. Generally, for the pre-judgment through a commercial activity with the debtor. However, this shall attachment of a ship, the court will require the creditor to post counter- not apply in cases where there are other agreements between the security in the region of 10 per cent of the claim amount, which can parties (Article 58 of the Korean Commercial Act). As set out in the generally be paid either in cash or in the form of surety bonds issued provision, this mercantile possessory lien may be exercised on the by the Seoul Guarantee Insurance Company. If the creditor complies property belonging to the debtor only. with the order and posts counter-security accordingly, the court will If the respective requirements for any possessory lien are satisfied, issue the pre-judgment attachment decision. the creditor may seek security by exercising such possessory lien on One thing to note is that under Korean law, the court has jurisdiction the relevant property. only when the vessel is within the jurisdiction area. Therefore, the Korean court will not grant the pre-judgment attachment unless the 4.4 In relation to maritime claims, what form of security is vessel has entered and is staying within the port area. acceptable; for example, bank guarantee, P&I letter of undertaking. 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim Under Korean law, security shall be deposited in the form of cash or relating to bunkers supplied by them to that vessel? securities recognised by the court, or a guarantee insurance policy as prescribed by the Supreme Court Regulations (Article 122 of the Yes, bunker suppliers are able to arrest a vessel for claims relating Civil Procedure Act of Korea). In practice, the Korean court accepts to bunkers supplied by them to that vessel, but the method differs security in the form of cash or a bond issued by the Seoul Guarantee between bunker suppliers who hold a maritime lien over the vessel Insurance Company. One exception would be the limitation and those who do not. of liability proceeding, in which the applicant may file a motion The general rule under the Act on Private International Law is that requesting permission from the court to accept a deposit guarantee the law of the ship’s nationality governs the existence and priority of bond issued by a guarantor instead of a cash deposit (Article 13 of maritime liens. Therefore, if the law of the country where the vessel the Act on the Procedure for Limiting the Liability of Shipowners, is registered recognises a maritime lien for a bunker supplier’s claim etc.). The court generally accepts deposit guarantee bonds issued by relating to bunkers supplied to the vessel, then the bunker supplier protection and indemnity (“P&I”) clubs. may arrest the vessel in Korea by applying for the court’s decision for commencement of judicial auction sale of the vessel based on the 5 Evidence maritime lien. Our maritime team has successfully arrested vessels registered in Panama to secure claims of bunker suppliers, as the laws of Panama recognise maritime liens for the supply of bunkers. 5.1 What steps can be taken (and when) to preserve or However, the laws of Korea do not recognise maritime liens for obtain access to evidence in relation to maritime claims including any available procedures for the claims related to bunkers supplied to a vessel. Therefore, under preservation of physical evidence, examination of Korean law, a bunker supplier may arrest a vessel only when the witnesses or pre-action disclosure? requirements set out in question 4.1 above are satisfied. This means the bunker supplier has to file an application to the court for a pre- The Civil Procedure Act of Korea provides that, when deemed that, judgment attachment order, by showing that the bunker supplier has unless an examination of evidence is conducted in advance, there a monetary claim against the owner of the vessel. exist situations which cause any use of the relevant evidence to be

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difficult, the court may, upon motion of the parties, examine the Arbitration evidence (Article 375). This procedure is called the “preservation There is no arbitration board solely dedicated to maritime cases of evidence” (Section 8 in Chapter 3 of the Civil Procedure Act of in Korea. The Korean Commercial Arbitration Board deals with Korea), and the party may file a motion at any time necessary, either general commercial matters, including maritime cases. before or after filing the civil suit. To commence arbitration proceedings, the Claimant must submit the The preservation of evidence procedure is also available in the Request for Arbitration. The Secretariat will notify the Respondent, Maritime Safety Tribunals proceeding – where an investigator, a who has 30 days to submit an Answer. A tribunal will be constituted person involved in a marine accident, or an inquiry counsel deems it by the parties or the Secretariat and the tribunal will hold hearings. impracticable to admit material as evidence unless such material is Once the hearings have been concluded, an award is rendered by the preserved as evidence, and files an application for the preservation of tribunal. The Secretariat delivers the award to the parties, which Korea evidence, the competent Tribunal may conduct an inspection or hear has the same effect as a final and conclusive judgment of the court. expert opinions even before a request for inquiry is filed (Article 35 The parties cannot appeal the arbitral awards to the court – only the of the Act on the Investigation of and Inquiry into Marine Accident). setting aside of awards may be granted upon certain requirements. Mediation 5.2 What are the general disclosure obligations in court The parties may apply for mediation to the court before or after filing proceedings? a complaint for the litigation proceeding. Also, the court may refer the case to mediation at its discretion, before or during the litigation In Korean law, there is no particular process that corresponds process. At the mediation proceedings, a court-appointed mediator to disclosure obligations in the common law system. Parties in will hear the parties’ positions. If the parties reach a settlement in court proceedings bear their respective burden of proof to submit the mediation proceedings, the record of the mediation will have arguments and supporting evidence. As for documentary evidence, the same effect as a final and conclusive judgment rendered by the a party can file a motion for disclosure of documents possessed court. Even when the parties fail to bridge the gap between their by the counter-party, and the court may order the counter-party to positions in the mediation proceedings, the mediator may issue a produce documents if the court finds such a motion to be reasonable compulsory mediation decision if the mediator believes the case (Articles 344 and 347 of the Civil Procedure Act). will be better resolved by mediation. The compulsory mediation decision will become final and conclusive, as long as none of the 6 Procedure parties files an objection to the mediator’s decision within two weeks. If one of the parties files an objection within two weeks, the compulsory mediation decision is void and the case will be referred 6.1 Describe the typical procedure and timescale to the litigation proceedings at the court. applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist 6.2 Highlight any notable pros and cons related to your arbitral bodies); and iii) mediation / alternative dispute jurisdiction that any potential party should bear in resolution. mind.

National Courts Pros There is no specialised maritime court in Korea exclusively hearing The Korean dispute resolution system is one of the most efficient maritime cases. In a general court system, a civil action is commenced and digitised systems in the world. In Doing Business (“DB”), by filing a complaint with the court. Once the complaint has been issued annually by the World Bank Group, Korea was ranked first submitted by the plaintiff, service of the complaint will be made on in the world under the category “Enforcing Contracts” for two the defendant. The answer shall be filed within 30 days from the consecutive years (2017 and 2018). The ranking was determined by date the defendant received the complaint, or a default judgment taking into consideration various factors including the time and cost may be rendered in favour of the plaintiff. The court generally of litigation, and the quality of the judicial process (including court holds two to five hearings per case at roughly one-month intervals automation and alternative dispute resolution). According to the until the court decides that the case is mature enough to render a DB index, the time required to resolve a dispute (i.e., counted from judgment. The court generally delivers the judgment within two to the moment the plaintiff files the lawsuit in court until payment) four weeks from the closing of hearings. The authentic copy of the in Korea is 290 days, which is nearly two times shorter than the judgment is delivered to all the parties. The parties may lodge an average time required for dispute resolution in the OECD high- appeal within two weeks from the delivery of the first instance court income countries (577.8 days). The Korean E-Court system allows judgment. If the two-week period lapses without any final appeals for electronic filing of civil, commercial, administrative and family- being filed by the parties, judgment becomes final and conclusive. affairs cases. The computerisation of the Korean court system The appellate proceedings are similar to the proceedings at the court provides users with 24/7 access to registries, case information, court of first instance. The parties may lodge a final appeal within two documents and case law. weeks from the delivery of the appellate court judgment. If the Cons two-week period lapses without any final appeals being filed by the Under the Civil Procedure Act, when a foreign national or parties, the appellate court judgment becomes final and conclusive. corporation with no domicile, place of business or office in Korea Unless there are special circumstances, the Supreme Court does not files a lawsuit in a Korean court, the court, at the defendant’s hold a hearing, while the parties are allowed to present and exchange request, shall order the foreign national or corporation to furnish written submissions only. In general, only issues of law (as opposed security for the court costs (Article 117(1)). The defendant may to issues of fact) can be adjudicated at the Supreme Court. As the refuse to respond/participate in the court proceedings until the Supreme Court is the court of final appeal, its judgment is confirmed plaintiff provides the security for the court costs (Article 119). In and enforceable on delivery. the event that the plaintiff fails to comply with such an order of the

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court, the court can dismiss the case without giving the plaintiff a hearing. It may be said that such a requirement to deposit security 7.2 Summarise the key provisions and applicable for court costs imposes a burden on foreign entities filing suit in procedures affecting the recognition and enforcement of arbitration awards. Korean courts; however, our understanding is that many countries have a similar system. Korea is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York 7 Foreign Judgments and Awards Convention”). Korea enforces arbitral awards issued in a New York Convention Member State, pursuant to the New York Convention (Article 39(1) of the Arbitration Act). The party seeking recognition Korea 7.1 Summarise the key provisions and applicable or enforcement of a foreign arbitral award must file a separate procedures affecting the recognition and enforcement complaint to the court for a recognition judgment or an enforcement of foreign judgments. judgment (Article 37(1) of the Arbitration Act).

A final and conclusive foreign judgment will be recognised in Korea, With regard to arbitral awards issued from a non-contracting state only when the following requirements are met: (i) the international of the New York Convention, the party seeking recognition or jurisdiction of such foreign court is recognised under the principle enforcement of the arbitral award must file a separate complaint to of international jurisdiction pursuant to the statutes or treaties of the court for a recognition judgment or an enforcement judgment, in Korea; (ii) the defendant has been lawfully served (excluding accordance with Article 217 of the Civil Procedure Act and Articles service by public notice) with a written complaint or a document to 26 and 27 of the Civil Enforcement Act, as explained in detail in the same effect, the notification of the date of the hearing or order, question 7.1 above. and was allowed sufficient time to defend the case, or the defendant responded to/participated in the lawsuit even without having been 8 Updates and Developments served such documents; (iii) recognition of such final judgment does not violate the public policy of Korea in light of the contents of such final judgment, etc. and judicial procedures; and (iv) there is a 8.1 Describe any other issues not considered above that mutual guarantee, or the standards by which foreign judgments are may be worthy of note, together with any current recognised and enforced in that foreign country are not significantly trends or likely future developments that may be of different in major aspects from the standards in Korea and are not interest. excessively onerous in comparison (Article 217(1) of the Civil Procedure Act). There is growing consensus calling for the establishment of a specialised maritime court in Korea. In 2017, four bills purporting In order to enforce a foreign judgment in Korea, one must obtain to establish a maritime court were proposed and put before the an “execution judgment” from a court of Korea through a separate National Assembly. It is yet to be determined if such efforts will lawsuit. Such a suit will be dismissed if the foreign judgment is materialise into the actual establishment of a maritime court in the not final and conclusive, or lacks the requirements enumerated in near future. Article 217(1) of the Civil Procedure Act specified above (Article 26 and 27 of the Civil Execution Act).

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Choon-Won Lee Dahee Kim JIPYONG JIPYONG 10F, KT&G Seodaemun Tower 10F, KT&G Seodaemun Tower 60 Chungjeong-ro 60 Chungjeong-ro Seodaemun-gu Seodaemun-gu Seoul 03740 Seoul 03740 Korea Korea

Tel: +82 2 6200 1910 Tel: +82 2 6200 1911 Email: [email protected] Email: [email protected] URL: www.jipyong.com URL: www.jipyong.com Korea

Choon-Won Lee is the head and leading partner of the Shipping Dahee Kim is a senior associate of the Shipping and Maritime Practice and Maritime Practice Team at JIPYONG, which handles various Team at JIPYONG, which handles various instructions from both instructions from both Korean and foreign shipowners, charterers, Korean and foreign shipowners, charterers, shipyards, cargo owners, shipyards, cargo owners, P&I clubs, maritime insurers and air carriers. P&I clubs, maritime insurers and air carriers. Her practice area includes He started his practice at Lee & Ko, and worked as a partner at Choi & accidents at sea, including collisions, sinking, oil spillage, fires and Kim. He is one of Korea’s leading maritime lawyers, and his practice explosions; bills of lading; cargo loss and damage; attachments and spans across: accidents at sea, including collisions, sinking, oil arrests; bankruptcy and rehabilitation; charterparties and contracts spillage, fires and explosions; bills of lading; cargo loss and damage; of affreightment; negotiation and dispute resolution; enforcement of attachments and arrests; bankruptcy and rehabilitation; charterparties maritime liens and ship mortgages; ship sale and purchase contracts; and contracts of affreightment; negotiation and dispute resolution; shipbuilding and ship repair contracts; P&I club defence; international enforcement of maritime liens and ship mortgages; ship sale and trade and commodities; and aviation. purchase contracts; shipbuilding and ship repair contracts; P&I club defence; international trade and commodities; and aviation.

JIPYONG’s Shipping and Maritime Practice is one of Korea’s leading maritime law practice groups, and the team’s experience extends across the full spectrum of shipping, maritime, international trade, insurance and aviation law. The team’s capabilities and experience include: accidents at sea, including collisions, sinking, oil spillage, fires and explosions; bills of lading; cargo loss and damage; attachments and arrests; bankruptcy and rehabilitation; charterparties and contracts of affreightment; negotiation and dispute resolution; environmental and pollution issues; enforcement of maritime liens and ship mortgages; ship sale and purchase contracts; shipbuilding and ship repair contracts; international trade and commodities; P&I club defence; and general long-term insurance matters. The team handles a variety of instructions from shipowners, charterers, shipyards, cargo owners, P&I clubs and maritime insurers. The Shipping and Maritime Team also regularly counsels major Korean and foreign air carriers in aviation matters. The team has experience in handling major air disasters involving multi-district litigations and international law. The team has been retained to defend major domestic airlines in numerous cases involving cargo and baggage claims, delays, denied boarding and turbulence.

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Malta Dr. Tonio Grech

Dingli & Dingli Dr. Fleur Delia

Merchant Shipping Act gives the Minister responsible for shipping, 1 Marine Casualty including any person acting under his authority, power to remove any vessel which is sunk, stranded or abandoned on or near the coasts 1.1 In the event of a collision, grounding or other major within the territorial jurisdiction of Malta, if it is the opinion of the casualty, what are the key provisions that will impact Minister that the vessel is, or is likely to become, an obstruction or upon the liability and response of interested parties? danger to navigation. In particular, the relevant law / conventions in force in (v) Limitation of liability relation to: The limitation of liability vis-à-vis maritime claims is regulated by the Maritime Claims Regulations, 2004 (Subsidiary Legislation (i) Collision 234.16) and these Regulations give effect to the Convention on The Convention on the International Regulations for Preventing Limitation of Liability for Maritime Claims, 1976, as amended by Collisions at Sea, 1971 has been implemented in Maltese law through the Protocol of 1996. the Merchant Shipping (Prevention of Collisions) Regulations, 2003 (vi) The limitation fund (Subsidiary Legislation 234.20). The issue of a limitation fund is governed by the Merchant Shipping (ii) Pollution (Limitation of Liability for Maritime Claims) Regulations, 2003 which The International Convention for Pollution from Ships, 1973 came into force on 1 March 2004. These Regulations make applicable (MARPOL), as amended by the 1978 Protocol, is given force of law to Malta the Convention on Limitation of Liability for Maritime in Malta through the Merchant Shipping (Prevention of Pollution Claims signed in London on 19 November 1976, as amended by the from Ships) Regulations, 2004 (Subsidiary Legislation 234.32). Protocol of 1996 thereto, signed in London on 2 May 1996. MARPOL Annex IV relating to the prevention of pollution by sewage and MARPOL Annex VI relating to the prevention of air pollution 1.2 What are the authorities’ powers of investigation / have both been implemented in Malta (Subsidiary Legislation 234.47 casualty response in the event of a collision, grounding and Subsidiary Legislation 234.33) with effect from June 2011. or other major casualty? Malta has acceded to the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended by the 1992 Protocol, This is regulated by Part VII of the Merchant Shipping Act, articles as well as the International Fund for Compensation for Oil Pollution 312 to 317, which deals with inquiries and investigations as to Damage, 1971, as amended by the 1992 Protocol through the shipping casualties, covering both preliminary inquiries by such Enactment of the Oil Pollution (Liability and Compensation) Act, person as is appointed by the Minister of Shipping, as well as formal 1999, Chapter 412. The Bunkers Convention has been implemented investigations as to shipping casualties under the authority of the in Maltese law by virtue of the Merchant Shipping (Liability for Court of Magistrates. Bunker Oil Pollution Damage) Regulations, 2009 (Subsidiary Legislation 234.46). 2 Cargo Claims (iii) Salvage / general average Under Maltese law, salvage is governed by the provisions of the Merchant Shipping Act, 1973 (Chapter 234 of the Laws of Malta), 2.1 What are the international conventions and national in particular articles 342 to 346, and also by the Commercial Code laws relevant to marine cargo claims? (Chapter 13 of the Laws of Malta). General average is covered by the provisions in Title IV of the Malta is a party to the Hague Convention and the Hague Rules are applied by the Maltese Courts with regard to marine cargo claims by Commercial Code (Chapter 13 of the Laws of Malta). virtue of the Carriage of Goods by Sea Act, 1954. The Hague-Visby (iv) Wreck removal Rules are applied by Maltese Courts when dealing with a dispute Malta has acceded to the Nairobi International Convention on relating to a bill of lading incorporating those Rules. Malta has not the Removal of Wrecks, 2007. The Nairobi Convention has been yet acceded to the Rotterdam Rules. implemented in Maltese law by virtue of the Merchant Shipping Malta is also a party to the CMR Convention (Convention on the (Wreck Removal Convention) Regulations (Subsidiary Legislation Contract for the International Carriage of Goods by Road, Geneva, 234.53). This Convention will also apply to vessels located within 19 May 1956) which applies by virtue of the International Carriage the territorial waters of Malta. Furthermore, article 339 of the of Goods by Road Act, 2006.

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Convention. The law provides for a precautionary, as well as for 2.2 What are the key principles applicable to cargo claims an executive, warrant of arrest. Creditors seeking to arrest a ship in brought against the carrier? security of a claim which is not yet judicially acknowledged must have recourse to the precautionary warrant. Judgment creditors The carrier is seen as a depository for cargo during carriage and is and other creditors being in possession of an enforceable executive therefore responsible for its safekeeping as a bonus paterfamilias. title or of an Authentic Instrument pursuant to the provisions Needless to say, the carrier can use the applicable clauses of the bill of Regulation (EC) No. 805/2004 (such as a Mortgagee) may of lading in his defence. immediately proceed to issue an executive warrant. With respect to the ‘demise clause’ in bills of lading, under Maltese Ships may be arrested in Malta both in security of maritime ‘in law, there is no relevant provision recognising or rejecting such a rem’ claims as mentioned above, whenever the ship concerned is Malta clause and Malta does not embrace the doctrine of binding judicial physically present within the territorial jurisdiction of the Maltese precedent. The only Maltese case that we are aware of where the Courts, as well as in security of ‘in personam’ claims in those Court of Appeal considered, but did not apply, the demise clause, instances where the ship owner may be personally subject to was Advocate Dr. Philip Manduca nomine v Sun Maritime Limited, the ordinary jurisdiction of the Maltese Courts. Ships may also decided on 26 June 2009. The Court held that the teaching of the be arrested in Malta pursuant to the provisions of article 35 of House of Lords in The Starsin (2003) was substantially compatible Regulation (EU) No. 1215/2012, dealing with provisional, including with the system of Maltese mercantile law. protective measures, in cases where the Courts of another Member The incorporation of charter party provisions into a bill of lading is State have jurisdiction as to the substance of the matter. However, valid and enforced by the Maltese Courts. However, just a reference in all of these cases, the ship must always be arrested in virtue of the to a charter party containing an arbitration clause is not enough for warrant of arrest, which remains the only way in which a ship may that arbitration clause to be enforced. The arbitration clause must be arrested in Malta. be inserted in the bill of lading. In the case of a “quality or quantity A total number of 25 maritime claims giving rise to in rem jurisdiction unknown” clause, the carrier would be provided with a defence are provided for under paragraphs (a)–(y) of article 742B of the insofar as the quality or quantity of the goods is concerned. The Code of Organisation and Civil Procedure. These follow closely the time limit to sue the carrier under Maltese law is the one-year period British Supreme Court Act, 1981 but also incorporate both the Arrest in accordance with the Hague Rules. Convention of 1952 and that of 1999, even though Malta is not yet It is possible to sue the carrier in tort, in the case of damages caused a signatory to either. The basic head of claim may be summarised by the ship in non-contractual circumstances. as follows: a) claims to possession/ownership/title of a ship; b) questions arising between co-owners; c) claims in respect of mortgage/ 2.3 In what circumstances may the carrier establish claims hypothec/charge on a ship; d) claims arising out of a contract against the shipper relating to misdeclaration of cargo? of sale; e) claims for damages received by a ship; f) claims for damage caused by a ship; g) claims for loss of life/personal The carrier has an action against the shipper for damages suffered injury caused by a ship; h) claims for loss of or damage to by the carrier due to the misdeclaration of cargo. This would be the goods caused by a ship; i) claims arising out of agreement for case if the shipper does not declare to the carrier dangerous goods or carriage of goods/use or hire of a ship; j) claims for salvage; goods subject to international sanctions. k) claims for damage to the environment by a ship; l) claims relating to wrecks; m) claims for towage; n) claims for The carriage of dangerous goods is covered in articles 284 to 291 of pilotage; o) claims for supplies/services rendered to a ship; the Merchant Shipping Act. p) claims for construction/repair/conversion/equipping a ship; q) claims for port/dock/harbour dues; r) claims by crew for wages/repatriation; s) claims for disbursements made; t) 3 Passenger Claims claims for commissions/brokerage/agency fees; u) claims arising out of a general average act; v) claims arising out of bottomry; w) claims for forfeiture of a ship; x) claims for 3.1 What are the key provisions applicable to the insurance premiums; and y) claims for fees due to registrar/ resolution of maritime passenger claims? tonnage dues. In cases concerning any one of the maritime claims listed in a), b) Malta is a party to the Athens Convention. Maritime passenger and c) above, an action in rem may only be brought against that ship claims are regulated by the Merchant Shipping (Limitation of in connection with which the claim arose. Liability for Maritime Claims) Regulations, 2003 which provide a regime of limitation of liability for maritime claims and give effect In all other cases concerning the remaining maritime claims listed to the Athens Convention. in d) to y), an action in rem may be brought against (i) that ship, where the person who would be liable on the claim for an action in personam (the “Relevant Person”) was, when the cause of action 4 Arrest and Security arose, an owner or charterer of or in possession or in control of the ship if, at the time when the action is brought, the Relevant Person is either an owner or beneficial owner of that ship or the bareboat 4.1 What are the options available to a party seeking to charterer of it, and/or (ii) any other ship of which, at the time when obtain security for a maritime claim against a vessel the action is brought, the Relevant Person is the owner or beneficial owner and the applicable procedure? owner in respect of all the shares in it. Malta is not a signatory to the 1952 and 1999 Arrest Conventions. In these cases, therefore, sister ship and associated ship arrest is Ships are arrested in Malta by a warrant of arrest issued on any one possible. of the grounds listed in article 742B of the Code of Organisation and The requirement that the Relevant Person is the owner or beneficial Civil Procedure giving rise to the in rem jurisdiction of the Maltese owner of the ship or the bareboat charterer at the time when the Courts. These include all maritime claims recognised under the action is brought does not apply in regard to those maritime claims

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secured by a special privilege in accordance with article 50 of the Merchant Shipping Act, which survive the voluntary sale of the 6 Procedure vessel for up to one year from when such sale is recorded in the ship’s register. 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or 4.2 Is it possible for a bunker supplier (whether physical commercial courts); ii) arbitration (including specialist and/or contractual) to arrest a vessel for a claim arbitral bodies); and iii) mediation / alternative dispute relating to bunkers supplied by them to that vessel? resolution.

Malta Yes, it is possible. A bunker supply is a maritime claim giving rise to (i) In Malta, the competent Courts taking cognisance over in rem jurisdiction. It is privileged in the scenario envisaged under maritime disputes are the ordinary Civil Courts. article 50 (g) and (m) of the Merchant Shipping Act. Bunkers are (ii) Maritime claims can also be decided by arbitration held privileged under article 50 (g) if they are supplied after the vessel’s under the auspices of the Arbitration Centre. last entry into port. They are privileged under article 50 (m) if they (iii) Maltese law does not provide for mediation/alternative are supplied previously to the departure of the vessel on her last dispute resolution with respect to maritime claims. voyage.

6.2 Highlight any notable pros and cons related to your 4.3 Where security is sought from a party other than the jurisdiction that any potential party should bear in vessel owner (or demise charterer) for a maritime mind. claim, including exercise of liens over cargo, what options are available? Ship arrest in Malta is a quick and efficient procedure with relatively inexpensive judicial costs. This, however, is to be followed by an The creditor of a cargo owner can request the Court to issue a action on the merits in relation to which the Court registry costs are warrant of seizure of the cargo in security of his claim. worked out ad valorem by the registrar of Courts in accordance with Similarly, the ship owner can seek security for a claim for freight by an official tariff. Only judicial costs are recoverable and interest on the issuance of a warrant of seizure of the cargo. the claim amount is due at 8% per annum.

4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of 7 Foreign Judgments and Awards undertaking. 7.1 Summarise the key provisions and applicable The Maltese Courts normally accept a deposit of funds in the Court procedures affecting the recognition and enforcement registry or a bank guarantee as adequate security. However, most of foreign judgments. Maltese maritime lawyers usually advise their clients to accept a P&I letter of undertaking. With respect to foreign judgments delivered by a Court within the EU, Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the 5 Evidence recognition and enforcement of judgments in civil and commercial matters (recast) will apply. If the judgment is delivered by a Court 5.1 What steps can be taken (and when) to preserve or which is not within an EU Member State, the ordinary procedural obtain access to evidence in relation to maritime rules for the recognition and enforcement of foreign judgments claims including any available procedures for the found in article 826 of the Code of Organisation and Civil Procedure preservation of physical evidence, examination of will apply. witnesses or pre-action disclosure?

Evidence, whether testimonial or documentary, can be preserved 7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement through the intervention of the Courts in accordance with the of arbitration awards. relative provisions of the Code of Organisation and Civil Procedure (Chapter 16 of the Laws of Malta). Foreign arbitration awards are awards to which any of the following treaties, namely the Protocol on Arbitration Clauses, 5.2 What are the general disclosure obligations in court Geneva, 1923, the Convention on the Execution of Foreign Arbitral proceedings? Awards, Geneva, 1927, and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958, The Code of Organisation and Civil Procedure does not contain are applicable and, upon their registration by the Malta Arbitration general provisions with regard to the parties’ disclosure obligations. Centre, shall be enforced by the Courts of Malta in the same manner In this scenario, the disclosure of facts and documentation is as if such awards were delivered in domestic arbitration. Such obtained through the examination and/or the cross-examination of awards, therefore, when registered, are enforceable as an executive witnesses. title, thereby allowing the award creditor to issue any executive acts against the award debtor, including an executive warrant of arrest against a vessel and an application for judicial sale by auction in respect of an arrested vessel.

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conditionally approved, under EU State aid rules, the said tonnage tax 8 Updates and Developments scheme for a period of 10 years, subject to certain amendments which at the time of writing have been put into effect by Malta. 8.1 Describe any other issues not considered above that Maltese shipping companies may apply to the Maltese authorities may be worthy of note, together with any current for the vessels which they own or operate to be declared as tonnage trends or likely future developments that may be of tax ships, upon certain conditions being satisfied. The vessel in interest. question must be involved in shipping activities, being principally the international carriage of cargo or passengers, and separate accounts Reference should be made to the statutory amendments introduced in have to be maintained by the shipping company in question to ring-

2006 and further fine-tuned in 2008 with regard to ship arrest. These fence activities exempt under the tonnage tax system, since only Malta amendments reformed the system regulating judicial sale by auction income deriving from the ownership and operation of its tonnage tax of ships, as well as introducing the concept of Court-approved sales vessel in its carriage of cargo or passengers is exempt from income tax. for ships. Court-approved sales have proved to be very popular. Whilst certain categories of vessels could never have qualified as Mention should also be made of article 37 of the Merchant Shipping tonnage tax ships, the new tonnage tax regulations specifically Act, by virtue of which any person claiming a right in or over a ship exclude these – such as fishing vessels and non-propelled barges – may apply for an order to the Maltese Court prohibiting any dealing whilst the new tonnage tax regulations permit certain vessels – such with a Maltese-registered ship or any share therein for a specified as cable- and pipe-laying ships, as well as crane vessels and research time. Such an order would be entered in the vessel’s register by the vessels – to qualify as tonnage tax vessels, provided they are involved Registrar of Shipping. Any claim (i) based on a right of ownership, in the international carriage of goods or passengers and satisfy the (ii) secured by a mortgage, (iii) secured by a registered encumbrance, criteria laid down in the new regulations. The new regulations also (iv) secured by a privilege or lien over the ship arising by operation indicate the circumstances in which towage and dredging activities of Maltese law or the law applicable to the claim, or (v) based on any could qualify under the Maltese tonnage tax regime. other claim which gives rise to a claim in rem against a vessel under Bareboat income will qualify as tonnage tax in two scenarios, being Maltese law, would give the claimant the right to apply for this caveat (a) intragroup bareboat, or (b) short-term over-capacity limited to a on the ship’s register. Such an order only affects the register of the maximum period of three years, provided in this latter case that the net ship and does not affect the commercial operation of the vessel. tonnage operated by the group does not exceed 50% of the shipping Following the European Commission’s investigation into Maltese group’s fleet. tonnage tax, initiated in 2012, the Commission, on 19 December 2017,

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Dr. Tonio Grech Dr. Fleur Delia Dingli & Dingli Dingli & Dingli 18/2 South Street 18/2 South Street Valletta, VLT 1102 Valletta, VLT 1102 Malta Malta

Tel: +356 21 236 206 Tel: +356 21 236 206 Fax: +356 21 240 321 Fax: +356 21 240 321 Email: [email protected] Email: [email protected] URL: www.dingli.com.mt URL: www.dingli.com.mt Malta

1979–1984: Read law at the University of Malta and graduated as a 1999–2005: Read law at the University of Malta and graduated as a lawyer. lawyer. 1984–1989: Practised as an advocate at the Attorney General’s 2005: Joined Dingli & Dingli law firm as an associate. Office dealing, inter alia, with transport matters as counsel to the 2012: Appointed as a senior associate. Ports Department and the Department of Civil Aviation. Attended international conferences on civil aviation and drafted laws to update Member of the Chamber of Advocates and the Malta Maritime Law civil aviation legislation in Malta. Drafted the Eurocontrol Act which Association. was enacted by Parliament in February 1989. 1989–present: Practising as a private litigation lawyer, dealing mainly with civil, commercial and maritime court cases, in particular where protection and indemnity matters are involved. 2001: Joined Dingli & Dingli law firm as a partner. 2004: Successfully completed a course on the Law and Administration of Trusts organised by the Malta Financial Services Authority. Became a member of the Institute of Financial Services Practitioners.

Dingli & Dingli is a Maltese law firm established in 1982 with its offices at 18/2 South Street, Valletta, VLT 1102. Although by Malta’s standards it is a medium-sized firm, it enjoys a solid reputation for efficiency and effectiveness, leading to successful results. The firm handles all types of legal work, and in completely new areas of practice, it is ready to learn quickly. The firm is fluent in Maltese, English, Italian, French and Spanish, having also a basic understanding of German and Russian. Malta’s entry as a Member of the European Union has opened a window of opportunity, and the firm leaves no stone unturned to face the future with confidence and expectation. The firm is particularly active in the areas of maritime law, corporate law, taxation and international tax planning, financial services, aviation law, intellectual property law, investment, residency, real estate, succession and trusts. The firm is often involved in the major maritime cases brought before the Courts of Malta or the Malta Arbitration Centre. To mention a couple of these cases, we refer to the Normand Carrier case, which involved a collision in the Grand Harbour in Malta; and the Nuria Tapias case, a collision between the Nuria Tapias and the Junior M in the Black Sea, which resulted in the limitation fund being set up in Malta.

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Mexico

FRANCO, DUARTE, MURILLO, ARREDONDO Rafael Murillo

the coordination role of the authorities, limits to compensation when 1 Marine Casualty rendered by port tugs within port premises, and specific issues of liability of the parties. 1.1 In the event of a collision, grounding or other major The matter of general average (GA) is also envisaged in the LNCM, casualty, what are the key provisions that will impact which provides for the application of the York-Antwerp Rules, but upon the liability and response of interested parties? allows parties to agree otherwise and also provides for the role of the In particular, the relevant law / conventions in force in Mexican marine authorities and certain duties of the parties in the relation to: administrative sphere, which have an impact on GA. (i) Collision Mexican law also provides for special salvage and GA proceedings, with very specific provisions on how to lawfully exercise a lien. All maritime matters are governed by the Mexican Ley de Navegación y Comercio Marítimos (Law of Maritime Navigation (iv) Wreck removal and Commerce – LNCM by its acronym in Spanish, which is the Wreck removal is dealt with in the LNCM and calls for the official language of Mexico) and the applicable international treaties application of other laws such as LEGEPA, LEFRA and the Law to which Mexico is a party. Thus, the Mexican law applicable in on Dumping in Mexican Marine Zones, as well as Regulations cases of collision is the LNCM, as well as the COLREGS and concerning the prevention of marine pollution. Each of these laws the Convention for the Unification of Certain Rules of Law with is enforced by different government offices such as the Navy, the Respect to Collisions between Vessels (international treaties). Ministry of the Environment, the Ministry of Communications, etc.; (ii) Pollution the LNCM provides for a scheme of coordination amongst them. The main laws made by the Mexican congress dealing with The chapter of the LNCM on wreck removal also provides for the marine pollution are the LNCM, the Ley General del Equilibrio application of LLMC 1976. Ecológico y la Protección al Ambiente (LEGEPA – General Law (v) Limitation of liability of Ecological Equilibrium and Environmental Protection), the Ley Limitation of liability is envisaged in the LNCM in such a way Federal de Responsabilidad Ambiental (LEFRA – Federal Law of that it provides for special judicial proceedings for all international Environmental Liability), the Ley de Vertimientos en Zonas Marinas treaties dealing with limitation of liability and specifically provides Mexicanas (Law on Dumping in Mexican Marine Zones) and the that these procedural rules will apply to CLC and its protocols as Ley de la Agencia Nacional de Seguridad Industrial y de Protección well as LLMC 1976, to which Mexico is a party (excluding its al Medio Ambiente del Sector Hidrocarburos (Law on the National Protocols). The latter is probably the treaty that has been most Agency of Industrial Safety and Environmental Protection of the tested in Court, where the Mexican Supreme Court of Justice has Hydrocarbons Sector). ruled in such a way that it requires very special attention in order Mexico is also a party to international treaties dealing with to properly put forward the case to be heard, and to specify in great the prevention, handling and compensation regimes of marine detail how it would apply in cases where a sea-going vessel causes pollution, and also: OILPOL 1954; CLC 1969 and its 1976 and damages to a fixed platform. Also, in a sui generis interpretation 1992 Protocols; MARPOL 1973; INTERVENTION 1969 and its of Article 15.5.b), Mexican Courts have ruled that the LLMC will 1973 Protocol; the London Convention 1972 and its 1996 Protocol; not apply in cases where a floating platform is damaged by a sea- OPRC 1990; Antifouling 2001; and Ballast Water 2004. going vessel. Amazingly, the Travaux Préparatoires show that The Mexican government has also implemented a National the subject provision was once mistakenly understood in this way Contingency Plan to deal with major marine pollution casualties, when the treaty was being discussed at the International Maritime which calls for the action of the Navy and other Ministries of Organization (IMO), until discussions led to the criteria that the the Mexican government, as necessary. This plan also includes LLMC applies in all cases where a sea-going vessel causes damages. cooperation between the Mexican and United States governments, if This remains an evolving discussion in Mexican Courts. so required by the circumstances, under the MEXUS plan created as (vi) The limitation fund per OPRC 1990. This plan was recently updated, in October 2016. Mexico is a party to the Fund Convention 1971 and its 1992 (iii) Salvage / general average Protocols. Mexico is a party to the Salvage Convention 1989. The LNCM and its regulations provide further details with regard to salvage issues,

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1.2 What are the authorities’ powers of investigation / 2.3 In what circumstances may the carrier establish casualty response in the event of a collision, grounding claims against the shipper relating to misdeclaration or other major casualty? of cargo?

In all ports, the main authority shall be the Harbour Master’s Office Cases of misdeclaration of cargo have been ruled by the Mexican (HMO). The LNCM provides that a protest must be rendered to the Courts in line with the provisions of the Hague-Visby Rules. It HMO by the Master of a vessel involved in an incident. The lodging is noteworthy that cases of misdeclaration of dangerous cargo are of the protest triggers an investigation where the HMO may involve severely sanctioned by the authorities, which entitle a carrier to other authorities as necessary. claim against the shipper. Mexico In addition, the HMO may order measures to be taken in the event of a casualty, for which they may coordinate with civilian, Coast 3 Passenger Claims Guard or Naval vessels. In cases where circumstances require, the HMO shall coordinate with the Coast Guard, the Navy and other authorities as necessary in 3.1 What are the key provisions applicable to the terms of the National Contingency Plan and in bilateral cooperation resolution of maritime passenger claims? with the United States. The LNCM provides for a compulsory regime where passengers The HMO used to be managed by the Ministry of Communications are ensured a proper compensation, and seeks balance by limiting and Transport and as from June 18, 2017 they have been transferred liability within the bounds of the LNCM and the Mexican Federal to the Navy, in their capacity as National Maritime Authority, Civil Code. therefore officers formed in the Navy are now trained to take on a non-military role running the HMO. New laws have also given the National Maritime Authority the role of a Coast Guard, as opposed 4 Arrest and Security to playing the role of a purely military institution.

4.1 What are the options available to a party seeking to 2 Cargo Claims obtain security for a maritime claim against a vessel owner and the applicable procedure?

2.1 What are the international conventions and national The LNCM contains a chapter providing for special maritime laws relevant to marine cargo claims? proceedings for the arrest of ships. The provisions of the LNCM contain a numerus clausus catalogue of claims which may be Mexico is a party to the Hague-Visby Rules. made pursuant to the subject proceedings. If a particular type of Mexico is also a party to the United Nations Convention on claim should not be included in the catalogue, proceedings must be International Multimodal Transport of Goods 1980 but its brought in terms of the Code of Commerce. application has proven to be ineffective in cargo claims, where A key element to bear in mind is that while Mexican law affords a it is normally ruled that carriage is segmented, therefore the laws Plaintiff the right to arrest a vessel and obtain security in Mexican applicable to the stage of carriage where the loss has taken place Courts and have a competent Court of Claimants’ choice retain shall apply. Nonetheless, this is matter that is presently being jurisdiction, the Claimant must produce proof acceptable to the discussed by the High Courts of Mexico, on which developments Mexican Court that proceedings are being heard by the competent are being awaited by the market. Court. This requirement should be met within five business days The inland carriage of goods, whether by road or rail, is subject to under the LNCM special maritime proceedings, or three business a limitation of liability for 15 Units of Measure per tonne, which is days if the rules of the Code of Commerce apply; failure to comply equivalent to approximately US$60.00 per tonne. leads to the arrest being lifted, which may entitle the Defendant to a claim for wrongful arrest. 2.2 What are the key principles applicable to cargo claims Counter-security is also a requirement. Nonetheless, in specific brought against the carrier? cases where the Plaintiff applies for the arrest while exercising a lien, such as salvage claims, the Plaintiff may be excused from As per the Hague-Visby Rules, a key principle is that, prima facie, posting counter-security. cargo has been delivered in good order and condition or in the same order and condition as received on board, unless cargo interests 4.2 Is it possible for a bunker supplier (whether physical make a claim upon discharge or three days after discharge at the and/or contractual) to arrest a vessel for a claim latest. relating to bunkers supplied by them to that vessel? Limitation of liability in road or rail carriage is a common discussion, which has been tested in Court confirming the validity of bill of Yes. It is possible under an in personam claim brought by the lading clauses providing for the application of the laws governing bunker supplier against the party in default. This poses a matter to the stage of carriage where the loss took place. be reviewed before making the arrest, in the sense that the Plaintiff Law and jurisdiction clauses are valid and enforceable in Mexico, must ensure that the arrest will not cause damages to third parties, although their writing should be clear in the sense that the parties who could claim for the lifting of the arrest and claim damages for submit to a specific law and jurisdiction and waive any others. the wrongful detention or arrest of their property.

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didactic purposes, judicial proceedings, in the First Instance, can be 4.3 Where security is sought from a party other than the divided into five different stages, namely (i) complaint, (ii) response, vessel owner (or demise charterer) for a maritime (iii) production and evaluation of evidence, (iv) allegations, and claim, including exercise of liens over cargo, what (v) judgment. Second Instance proceedings are based on appeals options are available? and subsequently follow Amparo and Revision proceedings. First Instance proceedings will normally last between nine and 12 months, These types of claims are covered in the arrest of vessels chapter appeals may last two months, and Amparo and Revision proceedings of the LNCM, and the procedural rules are the same as in question another three months. It will really depend on the opposition of the 4.1, including the possibility of being excused from posting counter- parties and the complexity of the case. security if the claim arises out of the exercise of a maritime lien. Mexico 6.2 Highlight any notable pros and cons related to your 4.4 In relation to maritime claims, what form of security is jurisdiction that any potential party should bear in mind. acceptable; for example, bank guarantee, P&I letter of undertaking. The Power of Attorney required under Mexican law to prove standing is a rather complex document, which requires time and effort to The general rule is that only cash deposits or bonds issued by a prepare. The standard of evidence to be produced in Court is burdened Mexican bonding company are acceptable. In specific cases, Letters by formalities. This may or may not be an advantage, depending on of Undertaking issued by a Protection and Indemnity (P&I) Club legal argumentation and the ability to meet procedural formalities. or fixed premium underwriters will be acceptable as well, provided always that the issuer of the Letter of Undertaking is recognised While Mexico does not have specialised Maritime Courts, all by the Mexican government, through the General Direction of the maritime matters should be heard by Federal Courts, which have been Merchant Marine, as able to do so in Mexico. It is recommended that the subject of continued education programmes and anti-corruption underwriters seek recognition well in advance and on a permanent controls that favour fair proceedings, and where the parties are heard basis if their insured vessels are calling at Mexican ports. and the rulings are vastly reasoned before being delivered, based on the legal argument made by the parties.

5 Evidence 7 Foreign Judgments and Awards

5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime 7.1 Summarise the key provisions and applicable claims including any available procedures for the procedures affecting the recognition and enforcement preservation of physical evidence, examination of of foreign judgments. witnesses or pre-action disclosure? All judgments should meet certain requirements of law, as follows: The Mexican procedural rules for admission and evaluation of I. Compliance with formalities as per applicable international evidence are burdened by formalities. Thus, the safest options are treaties and compatible with the Mexican Code of Commerce. always to involve authorities or public officers such as notaries in II. Proof that the Defendant was served with process in strict the collection of evidence. The practice of carrying out joint surveys regard of his right to be heard, and production of a defence in is also helpful in rendering the collection of evidence effective, as the proceedings. long as the parties agree on the findings. III. That the obligation claimed by the Plaintiff not be contrary to Mexican Public Order. 5.2 What are the general disclosure obligations in court IV. That the judgment be apostilled. proceedings? V. Proof should be produced evidencing that these types of judgments are enforced in the place where they were The rules for disclosure impose limited obligations in the sense delivered. that the party demanding disclosure bears the burden to accurately The judgment must be filed with the Court, which will verify that all describe the type of evidence demanded from the other. Interrogation requirements are met in order to rule on its enforcement in Mexico. of witnesses is supervised by the Court, which approves or rules out the questions prior to and during the interrogation as per the somewhat strict procedural rules. 7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards. 6 Procedure Although the rules for enforcement of an arbitration award seem less strict than the rules applicable to judgments, the Courts will 6.1 Describe the typical procedure and timescale tend to demand that the requirements for the enforcement of applicable to maritime claims conducted through: i) judgments be met by the applicant. In addition, the Defendant may national courts (including any specialised maritime or oppose the enforcement of the award if he proves that the applicable commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute rules of the arbitration at issue were not properly met. The Court resolution. will be rather focused on whether the Defendant’s right to produce a defence was regarded by the Arbitration Tribunal. It is advisable While alternative dispute resolution is allowed and encouraged by to involve Mexican counsel in the arbitration proceedings and have Mexican law and practice, it is still not a popular alternative. Judicial foreign and Mexican lawyers go through a mutual education process proceedings are the most usual means of resolving disputes. For that can ease the process of enforcement at the appropriate time.

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8 Updates and Developments Rafael Murillo FRANCO, DUARTE, MURILLO, ARREDONDO 8.1 Describe any other issues not considered above that Paseo de las Palmas 755 Piso 6 may be worthy of note, together with any current trends Lomas de Chapultepec or likely future developments that may be of interest. 11000 Ciudad de México México

Mexican maritime laws have been evolving and modernising at a Tel: +52 55 19975948 rather rapid pace in the last few years. The LNCM was enacted in Email: [email protected] 2006 and has been amended in several parts throughout the years to URL: www.fdma.mx Mexico better deal with several issues, especially environmental and security Mr. Murillo studied law in the Universidad Iberoamericana, Mexico City matters. The efforts of the Mexican government have been fruitful in Campus, graduating with distinction with a thesis on wreck removal. the sense that the maritime, environmental and naval authorities are His professional experience was gained as from 1991, working in the better equipped and educated to enforce the reformed laws. area of civil and commercial litigation. He started his maritime career in 1993 in the areas of government contracts with Pemex, ship finance, The legal reforms of maritime laws and regulations – which came into charter parties, P&I claims and FD&D claims. He has successfully effect in June 2017 – plus the reforms in energy and fiscal laws, have handled high-profile maritime cases involving salvage, collisions, brought about encouraging changes for the Mexican maritime milieu, wreck removal, large claims for government liability, environmental damages, charter party disputes, reorganisation and bankruptcy of which offer the opportunity for the legal maritime community to work marine companies, and has served as an expert witness on Mexican together with authorities and Courts to craft or amend criteria, to the law in several Courts and arbitration proceedings in the United States, benefit of the international maritime community investing in Mexico. London and Hong Kong. Mr. Murillo received training in maritime law in Houston and in New York, and took the Loss Prevention and P&I course delivered in Newcastle by the North of England P&I Association and South Tyneside College. He has written articles on arrest of ships and subrogation. In addition, he has taught maritime law on courses for large maritime companies at the Tecnológico de Monterrey and at the Navy’s CESNAV postgraduate school.

Our firm has always held the point of view that laws are aimed at solving or dealing with the problems faced by society or an industry. We have strived to earn the trust of our growing list of clients in Mexico, the Americas, Europe and Asia by approaching their business with a philosophy aimed at preventing or expeditiously solving their problems cost-effectively. We thank them for their valued trust and loyalty throughout 18 years, which we will celebrate in December of 2018. As a response to the demands of the market and the trust of our clients, in April 2016 we began a transformation process. We are thrilled about this process, which has satisfactorily served the purpose of transforming the firm into a full-service law firm, where we now offer a variety of legal services beyond maritime and insurance law, such as fiscal, corporate, finance, antitrust and telecommunication. This expansion is our response to the demands of the market, for which we are most appreciative. Our practice is based on values and a high standard of ethics and has been devoted to rendering legal advice in matters concerning marine companies from their birth, dealing with corporate and fiscal matters, maritime, ports, insurance, environmental and customs law, as well as litigation concerning tax law, civil, commercial, constitutional and administrative proceedings in judicial and arbitration forums. As a result of our transformation, we have opened a tax law practice led by well-reputed attorneys which we have brought on board from prestigious firms. Our Insurance practice has specialised in the handling of maritime claims and coverage issues for P&I Clubs, as well as for fixed-premium liability and Hull & Machinery underwriters.

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Mozambique João Afonso Fialho

Vieira de Almeida | Guilherme Daniel & Associados José Miguel Oliveira

gas reserves found offshore Mozambique, Decree 45/2006, of 30 1 Marine Casualty November 2006 also details the activities that, due to their potential harm to the environment, fall within the oversight of the maritime 1.1 In the event of a collision, grounding or other major authority, such as the loading, offloading and transfer of cargo, tank casualty, what are the key provisions that will impact cleaning and discharge of water waste in the sea. The carrying out upon the liability and response of interested parties? of such activities (except in the cases expressly provided for in the In particular, the relevant law / conventions in force in Decree 45/2006 of 30 November 2006) may result in heavy fines. relation to: Furthermore, the Regulation on Environmental Quality and Emission of Effluents (Decree 18/2004, of 2 June 2004, as amended by Decree (i) Collision 67/2010, of 31 December 2010) also establishes environmental The following international conventions are enforceable in quality and effluent emission standards for the purpose of controlling Mozambique: and maintaining the acceptable levels of pollutant concentrations in ■ 1910 International Convention for the Unification of Certain environmental components. Rules of Law Related to Collision Between Vessels; Both of the above-mentioned statutes are complemented by the ■ 1952 International Convention for the Unification of Certain Conventions and Protocols signed by Mozambique, such as the: Rules concerning Civil Jurisdiction in Matters of Collision; ■ 1985 Convention for the Protection, Management and ■ 1952 International Convention for the Unification of Certain Development of the Marine and Coastal Environment of the Rules relating to Penal Jurisdiction in Matters of Collision or Eastern African Region, and Related Protocols; other Incidents of Navigation; and ■ 1973 International Convention for the Prevention of Pollution ■ 1972 International Regulations for Preventing Collisions at from Vessels (“MARPOL 73/78”) and Annexes I/II, III, IV Sea (“COLREGS”). and V; The above conventions and regulations are supplemented, in some ■ 1990 International Convention on Oil Pollution Preparedness, cases, by domestic statutes, notably on rules of traffic within port Response and Cooperation (“OPRC 90”); areas, inland navigation, among others. ■ 1992 Protocol to Amend the 1969 International Convention (ii) Pollution on Civil Liability for Oil Pollution Damage (“CLC 1969”); The Environmental Law (Law 20/97, of 1 October 1997), as and amended by Law 16/2014, of 20 June, sets out the general provisions ■ 1992 Protocol to Amend the International Convention on the pertaining to the protection of the environment and imposes an Establishment of an International Fund for Compensation for environmental impact assessment process (which is governed by the Oil Pollution Damage (“FUND”). Regulations on the Environmental Impact Assessment Procedure, (iii) Salvage / general average approved by Decree 54/2015, of 31 December 2015) on companies Salvage is governed by the 1910 Salvage Convention and, where carrying out activities which may have direct or indirect impact applicable, the provisions of the 1888 Commercial Code (Article on the environment. In a nutshell, the Environmental Law sets 676 et seq.). forth the legal basis for a proper management of the environment, General average is governed by the provisions of the 1888 cumulatively with the development of the country. It applies to Commercial Code (Article 634 et seq.). both private and public entities pursuing activities with a potential (iv) Wreck removal impact on the environment. Core principles such as the “polluter pays” principle, rational management and use of the environment Mozambique is not a signatory of the Nairobi International and the importance of international co-operation are referred to and Convention on the Removal of Wrecks, 2007. The removal of wrecks integrated in the Environmental Law. must therefore be dealt with in light of the domestic law, namely the Environmental Law and ancillary statutes and regulations. In order to specifically protect marine life and limit pollution resulting from illegal discharges by vessels or from land-based sources along (v) Limitation of liability the Mozambican coast, the Government enacted Decree 45/2006, Both the 1924 International Convention for the Unification of of 30 November 2006. It should be noted that this Decree prevents Certain Rules relating to the Limitation of the Liability of Owners of pollution arising from maritime activity, particularly from oil tankers Seagoing Vessels and the 1957 International Convention relating to and very large crude carriers (“VLCCs”). Considering the prospective the Limitation of the Liability of Owners of Seagoing Vessels apply.

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(vi) The limitation fund of lading. In this respect, it is noteworthy that when in the presence The limitation fund can be established in any way admitted in the of a: (i) straight bill of lading, the right to bring a claim remains law and is dependent on the filing of a proper application before the with the named consignee; (ii) order bill of lading, only the latest relevant court. The application must identify/list: endorsee is eligible to sue; and (iii) bill of lading to bearer, it is up to the rightful holder at a given moment to sue. ■ the occurrence and damages; In addition to the above, rights under a contract of carriage may also ■ the amount of the limitation fund; be validly transferred to third parties either by way of assignment ■ how the fund will be established; of contractual position or subrogation of rights (which is typically ■ the amount of the reserve; and the case when insurers indemnify cargo interests and then seek ■ the known creditors and the amount of their claims. reimbursement from the carrier), as long as the relevant rules The application must be filed along with the vessel’s documents provided in the Civil Code are met. Mozambique supporting the calculation of the amount of the fund (e.g., a tonnage certificate). 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo? 1.2 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty? In light of Article 3.5 of the Hague Rules, the shipper shall indemnify the carrier against all loss, damages and expenses arising The National Maritime Institute (Instituto Nacional da Marinha or resulting from inaccuracies regarding the information (marks, – “INAMAR”), in its role as the Maritime Authority, is the number, quantity and weight) on the cargo to be transported. governmental body in charge of investigating and responding to any maritime casualty. In performing its duties, INAMAR is assisted by 3 Passenger Claims the Harbourmaster with jurisdiction over the area where the casualty took place. In addition, the National Institute of Hydrography and Navigation (“INAHINA”) has an ancillary role on maritime safety. 3.1 What are the key provisions applicable to the In this respect, it is worth mentioning that Mozambique has recently resolution of maritime passenger claims? ratified, by means of Decree 71/2017, of 31 December 2017, the International Code of Protection of Vessels and Port Facilities Mozambique is not a party to the Athens Convention relating to (“ISPS”), which makes governments, shipping companies, shipboard the Carriage of Passengers and their Luggage by Sea. Generally, personnel and port facility personnel responsible for detecting carriage of passengers is governed by the Commercial and Civil security threats and taking preventative measures against security Codes and the Consumer Law, in addition to the individual terms of incidents affecting ships or port facilities used in international trade. the contract of carriage. Carrier’s liability is mostly fault-based. In the event of delays, unexpected changes of route, damages or loss of carriage, passengers are entitled to claim compensation for losses 2 Cargo Claims and damage caused by an action attributed to the carrier, regardless of its wilful misconduct.

2.1 What are the international conventions and national laws relevant to marine cargo claims? 4 Arrest and Security

The 1924 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, also known as the Hague 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel Rules, applies. Under the Hague Rules, the carrier is liable vis-à-vis owner and the applicable procedure? the consignee in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods. Contracts of carriage are The 1952 Convention for the Unification of Certain Rules relating to therefore governed by the terms of the Hague Rules and the 1888 the Arrest of Seagoing Vessels (“1952 Convention”) is applicable in Commercial Code (Article 538 et seq.), in the absence of detailed Mozambique. Under the 1952 Convention, any person alleging that provisions set out in the relevant contract. it holds a maritime claim is entitled to seek the arrest of a ship. A It is important to note that if the shipment (i.e., loading and place “maritime claim” is deemed to be a claim arising out of one or more of destination) takes place between two countries party to the of the situations named under Article 1.1 of the 1952 Convention. Hague Rule, these rules shall apply. However, if the country of Outside the scope of the 1952 Convention, i.e., for the purposes destination of the goods is not a signatory to the Hague Rules, then of obtaining security for an unlisted maritime claim (e.g., arrest the applicable law would be determined by Mozambican courts in for a ship sale claim, unpaid insurance premiums, protection and accordance with the lex rei sitae principle. indemnity (“P&I”) dues, amongst others) or to seek the arrest of a vessel sailing under the flag of a non-contracting state, the claimant 2.2 What are the key principles applicable to cargo claims must make use of the provisions of the Mozambican Code of Civil brought against the carrier? Procedure (“CPC”). In this case, and aside from the jurisdiction issue that needs to be properly assessed, in addition to providing As a general principle, any party to a contract of carriage who evidence on the likelihood of its right/credit, the claimant shall holds an interest over the cargo and can demonstrate that it has also produce evidence that there is a risk that the debtor/arrestor suffered losses or damages arising from the carrier’s actions and/or may remove or conceal the ship (security for the claim) or that the omissions is entitled to sue for losses or damages. Taking the above ship may depreciate in such a way that, at the time that the final into consideration, the rights to sue under a contract of carriage judgment is handed down in the main proceedings, the ship is no therefore assist (1) the shipper, and (2) the rightful holder of the bill longer available or has substantially decreased in value.

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Before ordering the arrest, the arrestee is granted the opportunity The relevant motion can be lodged whenever deemed suitable, the to oppose/challenge the arrest application. Please note, however, applicant always being required to provide due grounds for its request. that if the arrest application is properly filed and duly documented, the court may order the detention of the vessel before summoning 5.2 What are the general disclosure obligations in court the arrestee or granting the arrestee the chance to oppose the proceedings? arrest application. The arrestee has 10 days to oppose the arrest application/order. As a general rule, it is up to the parties to establish the object of With the arrest in place, the claimant is required to file the initial their claim/proceedings and the judge cannot go beyond the limits claim for the main proceedings, of which the injunction will form of the claim as put forward by the parties. In addition, parties have an integral part, within 30 days as of the arrest order. During the the burden of presenting the facts of their interest and producing proceedings, the parties are free to settle by agreement and withdraw evidence in respect thereof. The court will take into account the Mozambique the claim. If the main claim should be filed with a foreign court, evidence produced/requested by the parties, but it is not limited to then the judge dealing with the arrest application must set out the this. In fact, the court is also allowed to request and compel the period within which the claimant must commence proceedings on parties to disclose all evidence deemed necessary to the discovery of the merits in the appropriate jurisdiction. The defendant is entitled the truth and/or to the best resolution of the dispute. to post a security before the relevant court in the amount of the claim brought by the claimant, and seek the release of the vessel pending foreclosure and auction. 6 Procedure

4.2 Is it possible for a bunker supplier (whether physical 6.1 Describe the typical procedure and timescale and/or contractual) to arrest a vessel for a claim applicable to maritime claims conducted through: i) relating to bunkers supplied by them to that vessel? national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist A claim arising from a bunker supply may be considered as a arbitral bodies); and iii) mediation / alternative dispute maritime claim under Article 1.k of the 1952 Convention. resolution.

With the enactment of Law 5/96, specialised courts in maritime and 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime shipping matters were established in the most important cities of the claim, including exercise of liens over cargo, what country, such as Maputo, Inhambane, Beira, Quelimane, Nacala and options are available? Pemba. These are independent courts exercising jurisdiction over all sorts of maritime contracts (from engineering, procurement and Assets (e.g., bunkers) belonging to the arrestee may be subject to construction contracts for vessels, to bareboat charters) and disputes. arrest, provided that it is possible to establish ownership in respect In general, Mozambican courts will find themselves competent to thereof. In addition, the carrier is entitled to exercise a possessory rule on claims where the parties in dispute and the claim itself have lien over cargo. In this regard, please be advised that pursuant to a close connection/link to Mozambique. Mozambican law, a lien is only enforceable by operation of the law As regards legal procedures before national courts, these can be and not merely by contract. By way of illustration, Article 755 of the generally described as follows: Civil Code provides that any debts resulting from shipping services ■ Proceedings commence with the filing of an initial written entitle the carrier/creditor to retain goods in its possession until the complaint before the court. In addition to listing the facts and full discharge of those debts. arguments sustaining the claim, the claimant is required to list its witnesses and request the other evidence proceedings, 4.4 In relation to maritime claims, what form of security is such as inspections or surveys. acceptable; for example, bank guarantee, P&I letter of ■ Service is made by the clerks, in person. Shipping agents undertaking. represent owners’/disponent owners’/managers’ interests and can receive documentation on their behalf. Typically, cash deposits (at the court’s order) and bank guarantees are ■ Generally, the defendant has 30 days to challenge and oppose the most effective forms of security. Letters of undertaking (“LoUs”) the claim. If it fails to present its defence, the facts presented are acceptable in very limited situations and their acceptance is by the claimant are deemed proven (exceptions apply). always dependent on the other party’s agreement. ■ With the opposition lodged, the judge will summon the parties and will try to resolve the dispute amicably or, that not being possible, prepare the final hearing. 5 Evidence ■ At the final hearing, the witness will be examined and cross- examined by the lawyers representing each party, and the judge may intervene whenever it is deemed necessary. At the end, 5.1 What steps can be taken (and when) to preserve or lawyers are required to issue their final arguments verbally. obtain access to evidence in relation to maritime claims including any available procedures for the ■ The judge will then prepare and issue the judgment which, preservation of physical evidence, examination of depending on the amount of the claim, can entail an appeal. witnesses or pre-action disclosure? As to the duration of maritime proceedings, as with any other legal proceedings, this is highly unpredictable. In our experience, Whenever there is a serious risk of loss, concealment or dissipation excluding arrests and any other interim measures, it should not be of property or documents, as well as when it becomes impossible or expected to take less than one year to 18 months, as it depends on almost impossible to obtain testimony or certain evidence by way several variables, such as the court’s current caseload. of inspection, parties are free to start an action and file a motion The primary source of domestic law relating to arbitration is the requiring it to be enlisted by the court or taken prior to the hearing. Law on Arbitration, Conciliation and Mediation, commonly referred

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to as LACM (Law 11/99 of 8 July 1999). The LACM governs both was rendered, except in cases where, under Mozambican law, international and domestic commercial arbitration, recognises the New there is no need to notify the defendant, or in cases where the York and Washington Conventions but applies the rules set out in the judgment is passed against the defendant because there was CPC for arbitration proceedings. It is worth noting that the LACM no opposition. does not diverge from the UNCITRAL Model Law on International ■ The judgment is not contrary to the public policy principles Commercial Arbitration, and that it follows the general standards and of the Mozambican state. terms of the UNCITRAL Model Law for the conduct of proceedings, ■ The decision rendered against the Mozambican citizen/ tribunal composition and recognition of the award given. company does not conflict with Mozambique’s private law, In order to submit a dispute to arbitration, there must be an arbitration in cases where this law could be applicable according to the agreement (often a clause which is express, valid and enforceable). Mozambican conflict-of-law rules. Such agreement is required to be in a written format (in the contract After the application is filed, the court must serve notice of same on

Mozambique under which the dispute arises or in any correspondence exchanged the defendant. Once notice is served, the defendant may oppose the between the parties). exequatur if any of the above requirements are not met. As a final note, it is worth mentioning that the Government of If the defendant opposes the exequatur, the applicant may reply to Mozambique created the Centre for Arbitration, Conciliation and the defendant’s arguments. Afterwards, the case follows various Mediation (“CAMC”) to oversee and promote arbitration, as well procedural steps until the decision is made on whether to grant the as other alternative dispute resolution mechanisms. The CAMC is exequatur. The losing party may still appeal against the court’s headquartered in Maputo but also has branches in the cities of Beira decision. and Nampula. 7.2 Summarise the key provisions and applicable 6.2 Highlight any notable pros and cons related to your procedures affecting the recognition and enforcement jurisdiction that any potential party should bear in of arbitration awards. mind. Considering that Mozambique has acceded to the 1958 New York Despite the efforts of the Mozambican Government and the Convention, Mozambican courts are to give effect prima facie to achievements reached in the past few decades, the country needs to an arbitration agreement and award rendered in another signatory continue developing its infrastructure and support the training and country to the New York Convention. Where the arbitral award was qualification of its citizens. Bureaucracy and a lack of qualified not granted by another contracting state, to be enforceable it must technicians still continue to be some of the biggest challenges to have previously been reviewed and confirmed by Mozambique’s operating in the country. Despite the country’s high debt level, Supreme Court (see question 7.1 above). which has been a problem over the past few years, Mozambique’s economy is showing signs of recovery after the economic recession in 2016. 8 Updates and Developments

7 Foreign Judgments and Awards 8.1 Describe any other issues not considered above that may be worthy of note, together with any current trends or likely future developments that may be of interest. 7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement Since its independence in 1975, Mozambique has been steadily of foreign judgments. revising its laws and regulations, at the same time as ratifying and adhering to a number of international treaties and conventions. In this Articles 1094 and 1095 of the CPC set out that any judgment awarded respect, it is worth mentioning that a number of pivotal conventions by a foreign court is, as a rule, subject to review and confirmation by on maritime and shipping-related matters applicable in the country the Supreme Court in order to be valid and enforceable locally (i.e., date from the time when Mozambique was still a Portuguese overseas to obtain the “exequatur”). territory (e.g., the 1952 Arrest Convention). In fact, although after its independence Mozambique has not specifically adhered to The review and confirmation of foreign decisions under the CPC the treaties/conventions to which Portugal was already a party, as is mostly formal and should not involve a review of the merit/ formally required under the Vienna Convention on Succession of grounds of the judgment, but a simple re-examination of the Treaties, it is commonly accepted that the treaties ratified by Portugal relevant judgment and additional judicial procedure requirements. and extended to Mozambique over time still apply in light of Article The process must begin with the filing by the interested party of 71 of the Constitution, approved immediately after the country’s an application to that effect with the Supreme Court. In order for independence, which provided for the survival of any (Portuguese) the foreign decision to be recognised by the Supreme Court, the laws and regulations in force at the time of independence, as long as following set of requirements must be met: these did not conflict with the letter and spirit of the Constitution. ■ There are no doubts that the judgment is authentic and its More recently, the Government of Mozambique has been enacting content understandable. important domestic legislation to support the shipping industry, and ■ It must constitute a final decision (not subject to appeal) in paving the way for foreign and national investments. Significant the country in which it was rendered. steps have been made in this direction, with the setting up of ■ The decision must have been rendered by the relevant court maritime courts, the creation of an institute exclusively dedicated according to the Mozambican conflict-of-law rules. to regulating and overseeing the shipping industry (INAMAR) and ■ There is no case pending before or decided by a Mozambican the opening of cabotage activities to foreign vessels and owners. court, except if it was the foreign court which prevented the The Government has recently boosted its drive to set up a consistent jurisdiction of the Mozambican courts. legal regime for maritime and shipping activities, with the enactment ■ The defendant was served proper notice of the claim in of new regulations on the private use of the Mozambican maritime accordance with the law of the country in which the judgment space (Decree 21/2017, of 24 May 2017) and the new regulations on

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port work (Decree 46/2016, of 31 October 2016). The ratification existing marine ports and the construction of new ones, aiming at of the International Code of Protection of Vessels and Port Facilities making the country’s infrastructure able to support the enhancement (“ISPS”), one of the world’s most important regulations on shipping of the shipping industry. activities, is also a clear indicator of the Government’s commitment to creating a more favourable environment for the development of shipping activities in Mozambique. Acknowledgment The liquefied natural gas project in Offshore Areas 1 and 4,and The authors would like to thank to Catarina Coimbra and Guilherme the setting up of a Logistic Corridor in Nacala, as well as other Daniel for their assistance in preparing this chapter. Catarina infrastructure projects that are expected in the near future, will ([email protected]) is an associate at VdA, and Guilherme (gdd@ certainly enhance the shipping industry in Mozambique in the coming guilhermedaniel.com) is the founder of Guilherme Daniel & years. In addition to the legislative initiatives, the Government Associados (the exclusive Mozambican member of VdA Legal is currently investing in the refurbishment and expansion of the Partners). Mozambique

João Afonso Fialho José Miguel Oliveira Vieira de Almeida Vieira de Almeida Rua Dom Luís I, 28 Rua Dom Luís I, 28 1200-151 Lisbon 1200-151 Lisbon Portugal Portugal

Tel: +351 21 311 3400 Tel: +351 21 311 3400 Fax: +351 21 311 3406 Fax: +351 21 311 3406 Email: [email protected] Email: [email protected] URL: www.vda.pt URL: www.vda.pt

João Afonso Fialho joined VdA in 2015. He is head partner of VdA’s José Miguel Oliveira joined VdA in 2015. He is a managing associate Oil & Gas practice. of VdA’s Oil & Gas practice. Before joining the firm, he worked for six years at Miranda Correia Amendoeira. In 2008, he was seconded With more than 20 years of practice in the transport sector, his to the Corporate and Commercial Law Department at Eversheds experience in shipping includes contracts in international transport, International LLP’s London office. From 2002 to 2008 he worked at providing advice, in particular, to owners, charterers, P&I Clubs and Barrocas Sarmento Neves. port operators, as well as commodities traders and various industry brokers. João advises on most legal matters relating to the shipping Over the years he has amassed extensive experience within the industry, including the bunkering sector, as well as assistance and international shipping industry, particularly across African jurisdictions, salvage at sea, ship arrest, customs and maritime litigation. where he has been particularly active in assisting all sorts of industry players, from owners, charterers, P&I Clubs, shipbrokers, João also has an extensive track record with construction contracts and ship managers, ship agents, freight forwarders, port operators and ship acquisition, charterparties, bills of lading, ship finance, mortgages stevedores, to commodities traders on all types of wet and dry shipping and insurance. matters. In addition, he provides regular advice on regulatory matters He has particular expertise in shipping activities associated with the oil to oil companies and service providers to the offshore oil & gas industry, & gas sector, including wreck removal and environmentally sensitive notably in respect of the use and employment of rigs, FPSOs, support issues. and multipurpose vessels. He also holds a deep knowledge of the bunkering industry, having assisted major players in the setting up of their local structures, securing licences and deals (cargo and bunkering contracts). José is dual-qualified (Portugal and Angola) and his regular presence in Angola and Mozambique allows him to have an in-depth understanding of the local and neighbouring industries and the respective legal environments.

With over 40 years in the making, Vieira de Almeida (VdA) is a leading international law firm, notable for cutting-edge innovation and top-quality legal advice. A profound business know-how coupled with a highly specialised cross-sector legal practice enable the firm to effectively meet the increasingly complex challenges faced by clients, notably in the aerospace, distribution, economy of the sea, green economy, energy, finance, real estate, industry, infrastructure, healthcare, public, professional services, information technology, emerging technologies, telecoms, third, transport and tourism sectors. VdA offers robust solutions based on consistent standards of excellence, ethics and professionalism. The recognition of VdA as a leading provider of legal services is shared with our team and clients and is frequently acknowledged by the major law publications, professional organisations and research institutions. VdA has consistently and consecutively received the industry’s most prestigious awards and nominations. Through VdA Legal Partners clients have access to a team of lawyers across 12 jurisdictions, ensuring wide sectoral coverage, including all African members of the Community of Portuguese-Speaking Countries (CPLP), and several francophone African countries, as well as Timor-Leste. Angola – Cabo Verde – Chad – Congo – Democratic Republic of the Congo – Equatorial Guinea – Gabon – Guinea-Bissau – Mozambique Portugal – São Tomé and Príncipe – Timor-Leste

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Netherlands Vincent Pool

Van Traa Advocaten N.V. Jolien Kruit

iii) Salvage / general average 1 Marine Casualty a. Salvage The Netherlands are a party to the Salvage Convention 1989, which 1.1 In the event of a collision, grounding or other major provisions have also been incorporated in the DCC. Under Dutch casualty, what are the key provisions that will impact law, the salvage remuneration shall be due exclusively by the owner upon the liability and response of interested parties? of the vessel (art. 8:563(3) DCC). However, parties are allowed to In particular, the relevant law / conventions in force in relation to: make deviating agreements, for example on the basis of the Lloyd’s Open Form (“LOF”). i) Collision b. General average The Netherlands are a party to the Collision Convention 1910 (for The Dutch legislation contains only a very brief regulation on general seagoing vessels) and to the Geneva Convention 1960 (for inland average, including a definition, the relevant parties for general waterway navigation). The Conventions’ provisions are directly average purposes, time bars and provisions on the confirmation of applicable and, in addition, have been incorporated in the Dutch the adjustment. In respect of the adjustment, the York-Antwerp Civil Code (“DCC”). Rules 1994 and the Rhine Rules IVR 1979 are incorporated in the DCC by reference (art. 8:613 resp. 8:1022 DCC). However, parties The owner of a ship which was at fault is obliged to compensate the may contractually agree the applicability of other adjustment rules. damage (art. 8:544 DCC). Pursuant to the Dutch Supreme Court, there is ‘fault of the vessel’ (arts. 3 and 4 Collision Convention iv) Wreck removal 1910/art. 8:542 DCC) if the damage results from: The Netherlands are a party to the Nairobi International Convention a. a fault of the owner itself or a person for whom the owner on the Removal of Wrecks 2007. This Convention has been of the vessel is liable, such as its servants and independent implemented in Dutch law by the “Maritime Accident Response contractors acting within the scope of their employment; Act” (in Dutch: Wet Bestrijding Maritieme Ongevallen), giving the b. a fault by a person performing work in the interest of Dutch State authority to order the registered owner of a seagoing the vessel or the cargo, for instance a fault by stevedores vessel that is wrecked or stranded in the Dutch Exclusive Economic appointed by charterers; or Zone and causing danger to shipping, to remove the vessel or have c. a (inherent) defect of the vessel. the vessel removed (arts. 10 and 13 of the Maritime Accident Dutch Supreme Court 30 November 2001, NJ 2002, 143; S&S Response Act). For wrecked inland waterway vessels, the Dutch 2002, 35 (De Toekomst/Casuele). State has a similar authority based on art. 10 of the “Wrecks Act” (in Dutch: Wrakkenwet). These rules of law with regard to collision cases also apply to v) Limitation of liability allision cases, i.e. when damage has been caused by a vessel without there having been a collision between two vessels (art. 8:541 DCC). The Netherlands are party to the London Limitation of Liability ii) Pollution Convention (“LLMC”) 1976 plus Protocol 1996 (including the amended limitation amounts which are applicable since 8 June Pollution issues, including liability for and prevention of damage, 2015), as well as to the Strasbourg Convention on the Limitation of are regulated by various international instruments, which have Liability in Inland Navigation (“CLNI”) 1988. The CLNI 2012 has (also) been incorporated in the DCC. The Netherlands, inter alia, not yet been ratified by the Netherlands. In respect of the LLMC are a party to: the CLC plus Protocol 1992 as well as the IFC plus and CLNI, the Netherlands have made reservations as per art. 18, Protocol 2003; the Bunker Oil Pollution Convention 2001; the inter alia for claims for removal of wrecks and cargo. In case of European Agreement concerning the International Carriage of seagoing vessels, liability for costs in respect of wreck removal can Dangerous Goods by Inland Waterways (“ADN”); and the revised only be limited by putting up a separate wreck removal fund as per Convention for Rhine Navigation. In addition, the implementation art. 8:752 DCC, regardless of the ground on the basis of which such of EU Directive No 2005/35 on ship-source pollution and on the claim is brought. (Dutch Supreme Court, 2 February 2018; RvdW introduction of penalties for related infringements, i.e. the “Act on 2018, 220 and 221.) the Prevention of Pollution by vessels” (in Dutch: Wet voorkoming vi) The limitation fund verontreiniging door Schepen) and the Water Act (in Dutch: Waterwet) may apply. In order to invoke limitation, a fund must be put up as per arts. 642(a)–642(z) of the Dutch Code of Civil Procedure. A fund can be

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put up either by making a cash deposit, or by providing a guarantee the lawful holder from the moment the b/l comes into its possession from a reputable underwriter or bank. (Dutch Supreme Court 29 November 2002, NJ 2003, 374; S&S Pursuant to case law of the Dutch Supreme Court (29 September 2003, 62 (Ladoga 15)). 2006, NJ 2007, 393; S&S 2007, 1 (Seawheel Rhine/Assi Eurolink)), The b/l holder, in order to receive the goods, has to hand over the b/l judgments from other European courts allowing the institution of a to the carrier (art. 8:481 DCC). Only the lawful holder of a b/l has property fund under the LLMC for a wreck removal claim should be title to sue and is entitled to claim damages, even if the b/l holder has recognised in the Netherlands, and a separate wreck removal fund not suffered any damage himself (art. 8:441(1) DCC). no longer has to be constituted in the Netherlands. ii) Identity of carrier In cases where a b/l has been issued, more than one person may 1.2 What are the authorities’ powers of investigation / become the carrier under the b/l (art. 8:461 DCC). Each of these

casualty response in the event of a collision, grounding carriers can be sued for cargo claims. Carriers under a b/l can be: Netherlands or other major casualty? 1. The person who signed the b/l or the person on whose behalf the b/l was signed. Dutch criminal law applies to all vessels and crew within Dutch 2. The person whose form was used for the b/l (this is a special territorial waters. In addition, it applies outside territorial waters to feature of Dutch law). Dutch vessels, their crew and even to pirates taken on board such 3. If a master b/l has been issued: vessels as well as to Dutch citizens, even on board foreign flag a. The owner or – if the master is in the service of a bareboat vessels. Dutch criminal law gives the authorities extensive powers charterer – the bareboat charterer. for investigation into criminal acts. b. The last time charterer or voyage charterer in the chain of Besides the criminal law aspect, the Dutch Board for Transport contracts of carriage who concluded a contract of carriage Safety has extensive powers with regard to Dutch vessels anywhere with the (this is also a special feature under in the world, to investigate incidents such as collisions, groundings, Dutch law). etc. and gather information in respect of these incidents. In some 4. Only the owner or bareboat charterer, with the exclusion of cases, the master and/or crew members have to appear before the other carriers under a b/l, if any, is regarded as a bill of lading Maritime Disciplinary Tribunal. carrier if such owner or bareboat charterer is clearly identified (name and address) in the b/l. iii) Incorporation of charterparty provisions in the b/l 2 Cargo Claims A clear incorporation clause including a reference to the arbitration clause in the charterparty in principle is valid under Dutch law (art. 2.1 What are the international conventions and national 8:415 DCC). Special requirements apply for the incorporation of laws relevant to marine cargo claims? jurisdiction clauses, inter alia pursuant to the EC Brussels I (bis) Regulation. In respect of carriage of goods under bills of lading (“b/l”), the iv) Time limits Netherlands are a party to the Hague-Visby Rules (“HVR”) The HVR provide for a time bar of one year after the goods have including the SDR-Protocol. Their provisions have direct effect, if been delivered or should have been delivered (art. III-6 HVR). The the requirements set out in arts. I and X HVR have been complied DCC contains a statutory time limit for all contracts of carriage with (art. 8:371(3) DCC). The Netherlands have also incorporated of goods by sea, including charterparties, of one year (art. 8:1711 the HVR in Book 8 Dutch Civil Code (arts. 8:382–386 and art. DCC). This time bar can be extended by contract between the 8:1712 DCC). parties (art. 8:1701 DCC). Parties are allowed to agree specific and In respect of cargo damage during inland waterway transportation, separate contractual time bar periods, as long as they do not violate the Budapest Convention on the Contract for the Carriage of Goods mandatorily applicable law. by Inland Waterway (“CMNI”) is applicable. Inland waterway A prescription of a right of action (i.e. a cargo claim time bar) claims will not be further discussed below. may also be interrupted by a written communication in which the The DCC also contains a regulation for time and voyage charters, claimant clearly states and claims that he suffered damage (art. 3:317 including provisions on liability, laytime, demurrage, etc. These DCC). Such notice from the cargo claimant is a unilateral legal act rules, however, are not mandatorily applicable. Contractually and no consent of the debtor (carrier) is needed. However, such agreed provisions, in principle, prevail. interruption of the time bar is not possible when the claim lapses, which is the case in respect of bills of lading. In such situations, 2.2 What are the key principles applicable to cargo claims time has to be protected by a contractual extension of the time limit brought against the carrier? between the b/l carrier and the lawful b/l holder or by initiating legal proceedings (art. 8:1712(3) DCC). i) Title to sue v) Limits of liability There are three types of bills of lading: the order b/l; the bearer b/l; The DCC has taken over the limits of liability set out in art. IV-5(a) and the b/l to a named consignee (straight b/l) (art. 8:412 DCC). HVR, i.e. 666.67 SDR per package/unit, or 2 SDR per kilogram of The HVR may apply to all of these types of b/l (see also question the damaged goods, whichever shall be higher (art. 8:388(1) DCC). 2.1 above). The carrier may not limit its liability, when it is proven that the The lawful holder under an order b/l is the person to whose order this damage has arisen from an act or omission of the carrier (that is the b/l has been endorsed. An endorsement in blank changes the order carrier itself, the alter ego of the carrier, and it does not include its b/l into a bearer b/l; the person who holds such order b/l endorsed in servants) done either with the intent to cause damage or recklessly blank becomes the lawful holder. and with the knowledge that damage would probably result The lawful holder under a straight b/l is the consignor as long as this therefrom (art. 8:388(5) DCC). consignor (or its bank) holds the b/l. The named consignee becomes

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It should be noted that it follows from case law of the Dutch The Athens Convention contains a two-tier liability system: Supreme Court that ‘conscious recklessness’ comes very close to ■ ‘risk’ liability up to an amount of 250,000 SDR per passenger intent (Dutch Supreme Court 5 January 2001, NJ 2001, 391 and (art. 3(1) Athens Convention); or 392; S&S 2001, 61 and 62). ■ ‘fault’ liability of the carrier limited to 400,000 SDR per vi) Non-contractual claim against the carrier passenger (art. 7(1) Convention). The LLMC plus Protocol It is possible under Dutch law for the owner of the goods to claim 1996 (see under question 1.1(v)) with its passenger fund may still apply in certain cases, depending on the number of in tort against the carrier, except for a cargo claim under a b/l: only passengers the vessel may carry. the lawful b/l holder has title to sue; see question 2.2(i). However, it is argued in legal literature that the position should be changed. carriers are obliged to maintain insurance or other financial security in respect of liability for death and personal injury Book 8 DCC contains a complicated set of rules in case of claims in (art. 4 (bis) Athens Convention).

Netherlands tort (arts. 8:361–365 DCC), boiling down to the following concept: A carrier against whom a claim in tort has been instituted, shall be liable towards the claimant no further than he would be if he were 4 Arrest and Security a party to the actual contract of carriage which has been entered into by the claimant itself (art. 8:363 DCC) or – if the claimant is 4.1 What are the options available to a party seeking to the owner of the goods and not the contracting shipper – the last obtain security for a maritime claim against a vessel contract of carriage in the chain of contracts of carriage of the goods owner and the applicable procedure? (art. 8:364 DCC). In short: “The claimant gets a taste of its own medicine.” i) Arrest of ships The Netherlands are a party to the Arrest Convention 1952. In 2.3 In what circumstances may the carrier establish Dutch case law, the Convention’s jurisdiction provision has been claims against the shipper relating to misdeclaration held to also apply to vessels which are not registered in a contract of cargo? State (District Court of Rotterdam 14 March 2012, S&S 2012, 86 (“Kaliakra”/“UK 143”)). Art. 3(1) Arrest Convention allows for the In general, the shipper is liable towards the carrier for damage caused arrest of a sister ship, i.e. a ship owned by the same owner. Art. by the goods or the handling thereof unless the damage has been 3(4) Arrest Convention applies the same rule to maritime claims caused by a fact which a prudent shipper has been unable to avoid against a bareboat charterer. The particular ship in respect of which and the consequences of which such shipper has not been able to the maritime claim arose may be arrested, even though the owner prevent (shipper’s force majeure; art. 8:397 DCC). It is specifically of that vessel is not the debtor of the maritime claim (art. 8:360 provided that the shipper is deemed to have guaranteed the accuracy DCC) or a vessel owned by the bareboat charterer may be arrested of the cargo description (marks, number, quantity and weight) and is for such claim. The Dutch Supreme Court has held that the second liable to the carrier for provision of incorrect information (art. III-5 sentence of art. 3(4) should be interpreted in a broad sense, meaning HVR; art. 8:411 DCC). However, a shipper is not liable for damage that when a time or voyage charterer is liable for a maritime claim, a caused without an act, fault or neglect of the shipper or his agents or vessel owned by such charterer may be arrested for this claim which servants (art. IV-3 HVR; art. 8:383(3) DCC). was related to the chartered vessel and not related to the arrested The liability for dangerous goods has been regulated separately vessel (Dutch Supreme Court 9 December 2011, NJ 2012, 243; S&S (inter alia, in art. 8:398 DCC; art. IV-6 HVR). The reference to 2012, 24, European Transport Law 2012-1, p. 24 (Costanza M)). ‘dangerous goods’ has to be taken in a broad sense. It concerns The Netherlands made the reservation allowed for in art. 10 Arrest “goods which a prudent carrier would not have wished to receive Convention. This means that arrest of a sister ship for a mortgage for carriage, had he known that, after taking receipt thereof, they claim is possible under Dutch national law. could constitute a risk”. All IMDG-Code goods will be considered ii) Outline of arrest procedure dangerous, but also non-IMDG-Code goods can be a dangerous An arrest of a vessel may be made within a couple of hours. In good in the sense of art. 8:398 DCC, for instance solidified resin the arrest application, inter alia the claim (amount and legal basis), in drums (not being a dangerous good under the IMDG) becoming the creditor and debtor have to be described, supported by some liquid because of external heat and leaking out of the drums. The documentation. Usually, no countersecurity is required from the same might be true if the goods fall under international sanctions applicant for arrest. The court, in principle, decides after a marginal and the shipper has not informed the carrier about the sanctions. review of the application without hearing the debtor. After the court As soon as the goods become dangerous, as described in art. 8:398(1) has granted leave to arrest, the bailiff makes the arrest on board the DCC, the carrier may unload, destroy or otherwise render harmless vessel. The bailiff’s official report is the evidence that the arrest has such goods, and the shipper is liable for all costs and damage. been made. The debtor of the claim for which the arrest was made may request the court in summary proceedings to lift the arrest. Dutch law provides for (strict) liability for wrongful arrest (inter 3 Passenger Claims alia, District Court of Rotterdam 9 July 1993, S&S 1994/4 cf. 26 June 1997, S&S 1998/86 (Yukon)). Whether the arrest was wrongful 3.1 What are the key provisions applicable to the depends on the validity of the underlying claim. resolution of maritime passenger claims? iii) Attachment of assets Attachment of assets other than vessels, such as ‘bank accounts’, Passenger liability is regulated by the Athens Convention (as containers or third-party attachments (i.e. the attachment of assets incorporated in the EC Regulation 392/2009), which provisions that are owned by the debtor but are held by another party), is also are also incorporated in the DCC. A reservation has been made in possible and relatively easy under Dutch law. The procedure is the respect of limitation of liability for death and personal injury (in same as set out above. accordance with section 2.2 of the IMO Guidelines).

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iv) Arrest/attachment of assets out of the jurisdiction demand in court (even if no proceedings on the merits are pending) Under the Brussels I Regulation Recast (EC 1215/2012), Dutch inspection or copies of documents from another party with whom Courts have been willing to give permission to make an arrest/ the applicant has a legal relationship. The applicant should clearly attachment on assets which are in other EU Member States. indicate which documents he would like to inspect and prove his legitimate interest; ‘fishing expeditions’ are not allowed. Pre-examination of witnesses (art. 186 DCCP) and experts (art. 202 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim DCCP) is possible under Dutch procedural law. In addition, it is relating to bunkers supplied by them to that vessel? possible to attach evidence. More concretely, the court’s permission can be obtained to have the bailiff make copies of all documents and electronic data on board the vessel. In order to be able to arrest a vessel, the claim in respect of which

the arrest was made has to be recoverable against the vessel. This Netherlands means that there either must be a direct liability to pay the bunkers 5.2 What are the general disclosure obligations in court for the shipowner, or the claim must be recoverable against the proceedings? vessel otherwise, i.e. the claim must be recoverable against the vessel both under the law applicable to the claim and under the law In the Netherlands, there are no disclosure proceedings as in common of the vessel’s place of registration. law jurisdictions. However, art. 21 DCCP provides that a party is under a duty to assert the relevant facts fully and truthfully, and art. 22 DCCP provides that in all instances and in all stages of the 4.3 Where security is sought from a party other than the dispute, the court may order the parties to provide information or to vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what submit records. If parties do not provide the required information or options are available? records, the court may draw the conclusion that it deems appropriate to decide the dispute. Arrest/attachment of assets In principle, the court must accept as established all facts asserted by the one party that are acknowledged by the other party or When security is sought from a party, assets belonging to that party insufficiently contested by the latter. When a party has exclusive may be arrested/attached. access to particular evidence, it can be held against this party, when For example, in case of a claim against the time charterer, the he does not provide the same (see, for example, Court of Appeal bunkers owned by the time charterer can be arrested. When bunkers Arnhem-Leeuwarden 27 September 2016, S&S 2017, 27). have been arrested on board, the vessel is not allowed to sail, and As set out in question 5.1 above, a party with a legitimate interest can if no security is put up, the bunkers may have to be pumped out of also ask the court to order a party to provide specific documentation. the vessel. Lien over cargo 6 Procedure Under Dutch law, the carrier may exercise a right of retention (lien) over the goods for unpaid freight and other costs in connection with a contract of carriage, like general average contributions (art. 6.1 Describe the typical procedure and timescale 8:489(2) DCC). This lien over the cargo can be invoked against applicable to maritime claims conducted through: i) third parties, such as the owner of the goods not being a party to the national courts (including any specialised maritime or contract of carriage. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute The parties to the contract of carriage can agree to a contractual right resolution. of retention (lien), for example, for unpaid freight and costs with regard to earlier contracts of carriage between such parties. Since 1 January 2017, the District Court of Rotterdam and the Court of Appeal of The Hague have exclusive jurisdiction in maritime 4.4 In relation to maritime claims, what form of security is matters in the Netherlands (art. 625 et seq. DCCP). acceptable; for example, bank guarantee, P&I letter of Commencement/service out of jurisdiction undertaking. Proceedings start with a writ of summons. Writs of summons initiating legal proceedings in the Netherlands may be served to any If the debtor provides sufficient security in the form of a cash deposit party inside or outside the Netherlands. Service within the EU takes or a guarantee of a suitable guarantor (for example, a guarantee place pursuant to the EC Service Regulation 1393/2007. Service issued by a member of the International Group of P&I Clubs), the outside the EU is regulated by the Hague Service Convention arrest must be lifted (art. 6:51 BW cf. District Court of Rotterdam, 1 1965 in respect of Member States of this Convention. If neither April 2010, S&S 2010, 134). the EC Regulation nor the Hague Convention apply, service out of jurisdiction in general is regulated by arts. 54, 55 and 56 DCCP which give rules to serve the writ of summons to a party with no 5 Evidence known place of business in the Netherlands or to a party with a known place of business outside the Netherlands. 5.1 What steps can be taken (and when) to preserve or Recognition of jurisdiction clauses obtain access to evidence in relation to maritime Jurisdiction clauses referring to an EU jurisdiction are recognised claims including any available procedures for the by the Dutch courts according to the requirements of art. 25 of the preservation of physical evidence, examination of Brussels I Regulation Recast (EC1215/2012); cf. the case law of the witnesses or pre-action disclosure? European Court of Justice. Bill of lading holders, in principle, are bound by jurisdiction clauses referring to an EU Member State or Art. 843a Dutch Code of Civil Procedure (“DCCP”) regulates the to a Lugano Convention jurisdiction (EU Member States, Denmark, right of access to information. A party with a legitimate interest may Iceland, Norway, and Switzerland).

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In case of a jurisdiction clause for a court outside an EU or EVEX Arbitration jurisdiction, the Netherlands have a particular rule on jurisdiction in The Dutch arbitration institute for maritime and transport law maritime matters. Art. 629 DCCP states that in case of a contract is Transport And Maritime Arbitration Rotterdam-Amsterdam of carriage of goods by sea to the Netherlands between a carrier (“TAMARA”); see https://www.tamara-arbitration.nl. and a consignee who was not the shipper, the District Court of On this website, the arbitration rules can be downloaded, as well as Rotterdam will be the competent court. This rule cannot be set aside the hourly fee of the arbitrator and the administrative costs, based contractually, unless the contract of carriage contains a jurisdiction on the claim amount in a graduated scale (https://www.tamara- clause which declares competent the court of a named place in the arbitration.nl/arbitrage/arbitragereglement/#c81). country where either the carrier or the receiver of the goods has its place of business. Arbitration clauses are recognised according to the requirements 6.2 Highlight any notable pros and cons related to your Netherlands jurisdiction that any potential party should bear in of the New York Arbitration Convention 1958 and the extensive mind. rules on arbitration in Book 4 of the Code on Civil Procedure (arts. 1020–1076 DCCP). Are costs recoverable? Pleadings/submission See under question 6.1, ‘Costs rules’. The writ of summons has to include the claim submissions. It has What interest is payable on claims? to contain, inter alia, a description of the claim and the claimed amount, the nature of the dispute, an overview of the relevant facts, See under question 6.1, ‘Interest on claims’. the claim’s legal basis and the grounds for the claim, the arguments Specialist knowledge/experience raised by the defendant, if any, and an offer to provide evidence to Maritime and transport law is considered a highly specialist field of support the claim. law. For this reason, maritime matters are, in principle, dealt with The defendant replies with a written statement of defence after exclusively by specialised judges of the District Court of Rotterdam which the court may order a personal appearance of the parties to and the Court of Appeal of The Hague. An exception has been held give information or to try to reach a settlement. If the defendant to apply in case of international jurisdiction clauses for other Dutch is challenging the court’s jurisdiction, he must do so in his first courts. Questions of law can also be asked to the Supreme Court statement. If no settlement is reached, judgment can be delivered or (see also ‘Rights of appeal’ below). Proceedings before the District the claimant may continue with a written statement of reply and the Court of Rotterdam may be conducted in the English language, if all defendant reacts with a written statement of rejoinder. Depending parties agree thereto. on the complexity of the case, a party or both parties may ask for The Grotius Academy, a collaborative venture of Dutch Law an oral hearing. The court may allow parties to exchange further Faculties, organises nine-month postgraduate courses on maritime written statements before the court will render a judgment. and transport law. The diploma for this course is highly regarded. Exchange of evidence Most Dutch lawyers (“advocaten”) acting in the shipping industry Documents, survey reports, etc. evidencing the facts as written down are members of the Dutch Transport Law Association. in the statements (submissions) are usually submitted in concert with Litigation delays the particular statement. See also under question 6.1, ‘Indicative timescale’. Exchange of documents before trial has started is unusual in the Serious litigation delays may occur when evidence (documents, Netherlands. witnesses) has to be gathered from countries abroad, in particular Indicative timescale from non-English or non-German speaking countries. How long a trial will last very much depends on the complexity of the Rights of appeal case and the number of statements exchanged. A judgment may be Judgments rendered by a District Court (the court of first instance), delivered within six months after the writ was issued, but it may easily in principle, can be appealed in the Court of Appeal. Exceptions take a year or more in complex cases before a judgment is given. are made, for example, for cases with a financial value of less than Interest on claims €1,750. Statutory legal interest starts to run from the day that the damage An appeal generally has to be made within three months after a occurred and it is compound interest (art. 6:119 DCC). The judgment is rendered. However, in case of limitation proceedings, statutory interest is fixed by regulation and amounts, at the moment, an appeal has to be instituted within two weeks after the court’s to an interest rate of 2% per year. For contractual claims, a higher decision, whereas for judgments rendered in summary proceedings statutory or contractually agreed interest rate may be applicable. the period for appeal is four weeks. Costs rules Unless the judgment of the District Court has been declared The winning party is awarded the fixed court fee which depends on provisionally enforceable, an appeal will suspend the enforceability the amount at stake and which fee has to be paid by the claimant as of the judgment. well as the defendant before proceedings have started. In addition, A judgment of the Court of Appeal may be appealed to the Supreme the winning party is awarded a fixed fee for other expenses, Court. Generally, an appeal has to be lodged within three months including costs of lawyers. The latter fee is based on a graduated from the day on which the judgment is rendered, but shorter time scale depending on the amount at stake, the number of submissions periods may apply in specific matters. The Supreme Court in exchanged and whether or not oral hearings took place. In practice, principle deals with issues on the interpretation and application of these fees usually cover only a (small) part of the lawyers’ fees. the law and with the non-compliance of procedural rules only. Mediation/ADR Evidential issues There is no such rule (yet) that mediation/ADR is required before Documents on evidence do not have to be notarised. Only in case parties go to court. Mediation has become more popular in the of verification of a signature may a notarial deed be required. Netherlands, but not so much yet in maritime and transport cases.

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Translations of documents which are in the English or German Netherlands are a party. The New York Convention contains a more language are generally not required. favourable right provision, allowing the applicant to benefit from Cross-examination of witnesses the domestic laws if these laws are more favourable to recognition and enforcement than the New York Convention (see also arts. 1075 Whenever witnesses are heard in court, the judge as well as both and 1076 DCCP). An award will generally be recognised by the parties’ lawyers (“advocaten”) may ask questions. The judge court in the exequatur procedure. In exceptional cases only (for summarises what has been said and writes it down in the record of example, in case of the absence of a valid arbitration agreement the witness examination. Such record is not a verbatim account of between parties or when recognition is against the public order), an what has been said. award will not be recognised.

7 Foreign Judgments and Awards 8 Updates and Developments Netherlands

7.1 Summarise the key provisions and applicable 8.1 Describe any other issues not considered above that procedures affecting the recognition and enforcement may be worthy of note, together with any current of foreign judgments. trends or likely future developments that may be of interest. Judgments from EC or EVEX countries are recognised and enforced in accordance with the rules of the Brussels I Regulation (Recast) or All the Conventions mentioned in this overview have direct effect. EVEX Convention. Pursuant to the Brussels I Regulation (Recast), The Dutch courts are bound to apply the authentic text (usually all judgments from courts of EU Member States must, in principle, English) of the Convention and construe the meaning of the wording be recognised without any special procedure in the other EU Member in accordance with arts. 31–33 of the Vienna Convention of the Law States. As a matter of European law, the courts are not allowed to of Treaties 1969. Much weight is given to the uniform interpretation review the foreign judgment as to the substance. Only after being of (maritime) Conventions. declared enforceable by the Dutch Court, in accordance with the Brussels I Regulation (Recast), can the foreign judgment be enforced. It should be noted that the Netherlands are well-known for their easy and fast way to arrest vessels, other property and evidence. Outside the EU/EVEX, if there is no treaty between the Netherlands A title for arrest may even be obtained in respect of property in and the State in whose court the judgment was given (for instance, other jurisdictions. In the Netherlands, it is also possible to auction between the Netherlands and the USA), the dispute between the a vessel relatively easily. parties in theory should be dealt with again by the Dutch Court (art. 431 DCCP). In practice, however, foreign judgments will generally In general, the specialised maritime judges of the District Court be recognised and enforced without going into the merits of the case of Rotterdam have exclusive jurisdiction in maritime matters. In if such judgment meets three minimum requirements: urgent matters they can be approached at short notice. It is possible to conduct proceedings in the English language if all the involved a. the foreign court had jurisdiction on an internationally parties agree thereto. respected basis; b. the foreign judgment is a final and binding judgment in the In early 2018, the Dutch Supreme Court held that a wreck removal State where the judgment was delivered; and fund must be formed according to Dutch law in order to be able to limit liability for recourse claims in respect of the raising and c. the foreign judgment should not be in conflict with (Dutch) public order and the principles of fair trial. removal of vessels and their cargo, and that liability for such claims cannot be limited with a property fund. In addition, in order to ensure that vessels sailing the Dutch flag 7.2 Summarise the key provisions and applicable can protect themselves against piracy attacks in high-risk areas, the procedures affecting the recognition and enforcement of arbitration awards. Dutch House of Representatives has accepted a legislative proposal which allows private armed guards to be positioned on board vessels sailing the Dutch flag in such areas. Arbitration awards made outside the Netherlands can be recognised and enforced under the New York Convention 1958 to which the

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Vincent Pool Jolien Kruit Van Traa Advocaten N.V. Van Traa Advocaten N.V. Meent 94 Meent 94 3011 JP Rotterdam 3011 JP Rotterdam The Netherlands The Netherlands

Tel: +31 10 224 5528 Tel: +31 10 224 5511 Mob: +31 6 227 11627 Mob: +31 6 4600 4043 Fax: +31 10 414 5719 Fax: +31 10 414 5719 Email: [email protected] Email: [email protected] URL: www.vantraa.nl URL: www.vantraa.nl

Vincent Pool heads Van Traa’s transport, shipping and logistics Jolien Kruit joined Van Traa after successfully completing the Civil Netherlands team. He graduated from Erasmus University Rotterdam in 1999. and Business Law (Leiden 2004 cum laude) and the Maritime Law His expertise is in transport law, including all aspects of charterparty (Soton 2005) Master’s programmes. Jolien assists companies in the and bill of lading disputes, multimodal carriage and related logistic national and international shipping trade in respect of both the dry services. Vincent is an excellent litigator, renowned for his very and wet sectors of shipping law. In February 2017, she completed practical, effective approach. In The Legal 500 he is commended for her Ph.D., titled: “General Average, Legal Basis and Applicable Law his “great knowledge” and described as a “wonderful sparring partner”. – The overrated significance of the YAR”. In The Legal 500, Jolien is He is fluent in English and German. indicated as a next-generation transport lawyer.

Van Traa is a boutique law firm that specialises in international trade, transport & logistics and insurance & liability. Since its foundation in 1898, the firm has built up extensive experience in advising on maritime issues, both on the dry and the wet side. With approximately 30 lawyers, Van Traa is very well-suited to dealing with larger cases that require a specialised team. On the other hand, it is also of a size where everyone knows each other well, and where know-how is shared and passed on from the older generation to the younger. As mentioned in the 2017 edition of The Legal 500, Van Traa is “particularly strong in high-end liability cases in the transport sector” and “excels in related insurance and trade matters”. Chambers indicates that Van Traa is “second to none in the area of transportation, in terms of strength, depth and expertise”.

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Norway Gaute Gjelsten

Wikborg Rein Advokatfirma AS Morten Lund Mathisen

by the wrongful acts of a public authority in connection with the 1 Marine Casualty maintenance of navigational aids. The shipowner may have a right to limit his liability for pollution 1.1 In the event of a collision, grounding or other major damages; see point (v) below. casualty, what are the key provisions that will impact Compensation claims for pollution damage may in certain cases be upon the liability and response of interested parties? In particular, the relevant law / conventions in force in brought directly against the shipowner’s liability insurer. relation to: (iii) Salvage / general average The provisions concerning salvage are found in Chapter 16 of the (i) Collision NMC, which incorporates the 1989 International Convention on Liability for damages following a collision between ships is Salvage. determined by the 1994 Norwegian Maritime Code (NMC) chapter The starting point is that a salvage award is contingent upon the 8, sections 161–164. Chapter 8 is based on the 1910 Brussels salvaged property being “in danger” or “wrecked”. NMC section Convention. 445 sets forth a “no cure, no pay” principle, aiming to encourage When a collision between ships causes damage to ships, cargo or salvage. The salvage award is limited (upwards) to the value of persons and the fault lies entirely with one party, that party is fully the salvaged property. Relevant circumstances when determining liable for all losses. If both parties are at fault, they shall cover the the size of the salvage award are listed in NMC section 446. The losses in proportion to the faults committed on each side. If no basis salvage award is to be paid by the shipowner and the owners of other exists for determining a definite proportion of fault, the losses are salved objects in proportion to the respective salved values. apportioned equally. Special compensation may be awarded for environmental salvage. An assessment of the rules of the 1972 Convention on the Unless otherwise agreed, the 1994 York-Antwerp Rules govern International Regulation for Preventing Collision at Sea determines allowance in general average of damages, losses and expenses and whether a party is at fault. the apportionment thereof; cf. NMC section 461. Pursuant to NMC section 501, a collision claim will be time-barred (iv) Wreck removal two years from the day on which the relevant damage was caused. The 2009 Harbours and Fairways Act section 35 and the 1981 (ii) Pollution Pollution Act section 37 both concern wreck removal from Chapter 10 of the NMC incorporates the 2001 International Norwegian waters. Pursuant to the Harbours and Fairways Act, the Convention on Civil Liability for Bunker Oil Pollution Damage, the authorities may order wreck removal when the wreck constitutes 1992 International Convention on Civil Liability for Oil Pollution e.g. a hazard to navigation. Damage, the 1992 Fund Convention, and the 2003 Supplementary In practice, the Pollution Act is most frequently relied upon by the Fund Protocol. Rules incorporating the 2010 International Convention authorities, pursuant to which necessary clean-up shall be arranged on Liability and Compensation for Damage in Connection with the if the wreck constitutes a threat or inconvenience to the environment Carriage of Hazardous and Noxious Substances by Sea have not yet or is considered unsightly. come into force. The shipowner may be held liable for the costs of measures taken by Pursuant to the 1981 Norwegian Pollution Act, there is a general the authorities to remove the wreck. The shipowner’s right to limit duty to avoid unlawful pollution. The polluter is responsible for his liability for claims arising from wreck removal is governed by ensuring that measures are taken to prevent or minimise the effects NMC sections 172a/175a. of unlawful pollution. Norway is considering ratifying the 2007 Nairobi International The starting point under Norwegian law is, thus, that owners of ships Convention on the Removal of Wrecks. and floating offshore installations are strictly liable for pollution (v) Limitation of liability damage caused by oil escaping or pollutive substances being discharged from the ship or installation, including costs arising Limitation of liability for owners, charterers and managers is from preventative measures. Sections 184 and 192 of the NMC governed primarily by NMC chapter 9. The rules on limitation are contain exemptions of liability; examples include damage caused complex, and only the main structure is provided below. by force majeure events and damage wholly caused by a third party. Section 172 sets out the right to limit liability for, i.a., claims Liability may also be excluded if the damage was wholly caused in respect of loss of life or personal injury, or loss or damage to

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property, as well as claims in respect of loss resulting from delay in and performing carrier. The provisions in NMC 285–287 set forth the carriage of cargo. The provision is based on the rules of the 1976 principles of joint and several liability between the contractual carrier London Convention on Limitation of Liability on Maritime Claims, and the performing carrier for the parts of the voyage performed by the as amended by the 1996 Protocol. performing carrier. “Identity of carrier” clauses are not enforceable The basis for the limits of liability is specific fixed sums, increasing under Norwegian law. in accordance with a ship’s gross tonnage and/or the number of In respect of liability for cargo damage, sections 275 and 276 of passengers; see NMC section 175. the NMC are the main provisions. The carrier is liable for losses Norway is among the states that have made a reservation in the resulting from the goods being lost or damaged while in the carrier’s ratification of the 1996 Protocol with regard to claims in respect of custody on board or ashore, unless the carrier can prove that the loss clean-up costs and wreck removal. Claims subject to NMC section was not due to any personal fault or neglect of the carrier himself Norway NMC 172a have a limitation of 2,000,000 special drawing rights or of anyone for whom he is responsible. The burden of proof rests (SDR), with a further increase based on the ship’s gross tonnage; on the carrier. see section 175a. NMC section 276 provides exceptions from the liability of the The shipowner’s liability for oil spill from a tanker is limited by the carrier. The carrier is not liable if the loss was caused by failure specific rules in the NMC chapter 10 part II, which incorporates,i.a. , or neglect in the navigation or management of the ship by its the 1992 Convention on Civil Liability for Oil Pollution Damage. operator, crew or others performing work in service of the ship. The The registered owner of the ship is liable for loss or damage caused customary “fire exception” also applies. The carrier is nevertheless outside the ship by contamination of leaked oil or discharge from liable for damage caused by unseaworthiness of the vessel, unless the ship, irrespective of fault. Liability is limited to 4.51 million the carrier proves that due diligence was exercised to make the SDR for ships with a tonnage not exceeding 5,000 tonnes. For vessel seaworthy at the commencement of the voyage. larger ships, the liability increases by 631 SDR per tonne over 5,000 Pursuant to section 280 of the NMC, the carrier’s liability shall not tonnes, but with a maximum of 89.77 million SDR. exceed 667 SDR for each package or other unit of the goods or 2 SDR (vi) The limitation fund for each kilogram of the gross weight of the goods lost, damaged or The procedural aspects of limitation funds are primarily governed by delayed. For Norwegian domestic trade, there is a higher limit, and NMC chapter 12, which contains provisions aiming to coordinate all the carrier is also liable for damage resulting from fire or failure or claims and distribution of the fund. The court must determine the neglect in the navigation or management of the ship. initial establishment of the fund and the fund’s necessary total amount. Section 288 of the NMC concerns notice of damage or loss. If the If the court finds it appropriate, a trustee of the fund may be appointed goods have been delivered and the receiver has not notified the to register any claims directed towards the fund and compose reports carrier in writing of any loss or damage which the receiver had or for fund hearings. The courts must decide all disputes arising in ought to have discovered, and of the nature of the loss or damage connection with the fund. When all claims have been sufficiently in question, all the goods will be, where nothing to the contrary is established, the fund will be distributed among the claimants. proved, regarded to have been delivered in the condition described in the bill of lading. If the loss or damage was not apparent at the 1.2 What are the authorities’ powers of investigation / time of delivery, the same applies if written notice is not given at the casualty response in the event of a collision, grounding latest three days after the delivery. or other major casualty? The assessment of quantum for loss of or damage to the goods is governed by section 279 and is based on the value of comparable Major casualties at sea usually lead to the involvement of the goods at the time and place of delivery or discharge. Specific indirect Norwegian Coast Guard and the Norwegian Coastal Administration. and consequential losses may be recoverable from the carrier. If an oil spill or other significant pollution incident has occurred or threatens to occur, the Norwegian state will immediately initiate a Detailed rules on jurisdiction and arbitration are set out in sections state-led operation. All major oil clean-up operations have been state- 310–311. Any prior agreement which restricts the claimant’s right led. The police are responsible for conducting criminal investigations. to have legal disputes relating to the carriage of general cargo settled The governmental commission of inquiry for transport, the Accident by litigation, is as a starting point invalid insofar as it limits the Investigation Board Norway, normally conducts safety investigations. claimant’s right to bring proceedings before the court of the place where: the defendant’s place of business is located; the contract of carriage was concluded; receipt of the goods was agreed to take 2 Cargo Claims place; or delivery according to the contract of carriage took place or was agreed to take place. The provision may be superseded by contradictory provisions in the 2007 Lugano Convention, and the 2.1 What are the international conventions and national parties may agree to settle disputes by arbitration. laws relevant to marine cargo claims? Cargo claims are time-barred one year after the day on which the Marine cargo claims against the carrier are governed by NMC goods should have been or actually were delivered; see section 501. chapter 13. The provisions incorporate the 1968 Hague-Visby Rules, but also incorporate the 1978 Hamburg Rules where possible. These 2.3 In what circumstances may the carrier establish rules are predominantly mandatory in favour of the cargo owner. claims against the shipper relating to misdeclaration Charterparties are regulated in chapter 14 of the NMC, and the of cargo? provisions therein apply unless the parties agree otherwise. Section 296 contains rules on what information the bill of lading shall contain, which are based on the Hamburg Rules article 14 no. 2.2 What are the key principles applicable to cargo claims 3 and article 15 no. 1; cf. also Hague-Visby article 3 no. 3. The brought against the carrier? carrier will in many cases be held liable if this information, which is inserted in the bill of lading, is incorrect. Norwegian law allows for claims to be directed at both the contractual

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Pursuant to NMC section 301, the shipper is strictly liable towards The starting point is that a ship may only be arrested in order to the carrier for the accuracy of the information the shipper has secure a “maritime claim”; cf. the list in NMC section 92. Broadly provided about the goods. If the shipper has undertaken to speaking, claims secured by a maritime lien are included in the list, indemnify the carrier for losses arising from the issuance of a bill but also certain claims which are not secured by maritime liens (e.g. of lading containing inaccurate information or no reservation, the claims in connection with deliveries to a ship) are included. shipper is nevertheless not liable if the issuance was intended to NMC section 91 allows for vessel arrest without the restrictions of mislead an acquirer of the bill of lading. Neither is the shipper in the Arrest Convention, which apply to a) arrest of vessels not subject such a case liable for inaccurate statements relating to the goods. to mandatory registration, b) arrest which does not involve physical Additionally, the sender, which may or may not be the same retention of the ship pursuant to the rules of NMC section 95, c) person as the shipper, may in certain cases be held liable towards arrest which is requested after a basis for enforcing the claim has Norway the carrier for losses incurred as result of the sender’s failure to been established (e.g. judgments and arbitration awards), or d) arrest provide information on dangerous goods or the failure to provide to secure public law claims such as taxes. information on how to handle goods that need to be treated with Pursuant to NMC section 93, ship arrest can only be effected against: special care; cf. sections 257–258 and 290–291. a) the ship to which the maritime claim relates; b) if the owner of the ship to which the maritime claim relates is personally liable for the claim: other ships owned by that person at the time when the claim 3 Passenger Claims arose; or c) if someone other than the owner of the ship to which the maritime claim relates is personally liable for the claim: other ships owned by the person personally liable for the claim. 3.1 What are the key provisions applicable to the resolution of maritime passenger claims? For claims secured by a lien in the ship, the right of arrest is expanded: arrest of a particular ship may be granted without a particular ground The key provisions applicable to maritime passenger claims are for arrest when the request is by a claimant who has an overdue set out in NMC chapter 15. The provisions are mostly based on mortgage claim against the ship, cf. the Civil Procedure Act, section the 1974 Athens Convention relating to the Carriage of Passengers 33-2, third sub-section. and their Luggage by Sea, the EEA Agreement Appendix XIII no. In order to make an arrest, the claimant must send an application to 56x (Regulation (EC) no. 392/2009) and the 2002 Athens Protocol. the court where the ship is located or expected to arrive. A new set of rules, the EEA Agreement Appendix XIII no. 56y The effect of an arrest is that the debtor loses the right to physically (Regulation (EU) no. 1177/2010 concerning the rights of passengers or legally dispose of the arrested asset so as to damage the position when travelling by sea and inland waterway), is also incorporated in of the claimant. Arrested ships will normally be prevented from NMC chapter 15. leaving berth until a forced sale has been completed, but may be The carrier is, as a starting point, strictly liable up to 250,000 SDR allowed to continue trading if certain conditions are fulfilled. The per passenger for death or injury in shipping incidents covered by court may demand security from the claimant for the purpose of the Athens Protocol, whereas the upper limit for the carrier’s liability covering harbour costs and losses. The shipowner may avoid an towards one passenger on each distinct occasion is 400,000 SDR. arrest by putting up security. The limit for liability for delay is set at 4,694 SDR per passenger. There are detailed provisions concerning compulsory insurance 4.2 Is it possible for a bunker supplier (whether physical which the carrier must put in place as cover for passengers’ claims and/or contractual) to arrest a vessel for a claim for compensation. relating to bunkers supplied by them to that vessel?

As a starting point, one cannot arrest the shipowner’s vessel under 4 Arrest and Security Norwegian law based on a claim against the bareboat charterer. However, one may be able to take arrest in the bunkers and thus, in practice, the vessel. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel For a claim against a time charterer, it may be possible to arrest the owner and the applicable procedure? charterer’s bunkers. This may, for instance, be appropriate, as a consequence of non-payment of a bunker delivery or similar non- The default rules for obtaining security for a claim against a debtor performance. are set out in the Civil Procedure Act, chapters 32 and 33. A party which has a monetary claim – whether due or not – can arrest a 4.3 Where security is sought from a party other than the debtor’s assets if a) the debtor’s behaviour gives reason to fear that vessel owner (or demise charterer) for a maritime enforcement of the claim otherwise will be lost or made significantly claim, including exercise of liens over cargo, what more difficult, or b) enforcement otherwise has to take place outside options are available? of Norway (cf. Civil Procedure Act section 33-2). It is not necessary to meet normal standards of evidence; it would be sufficient for the In order to obtain security for payment of freight and other expenses creditor to prove by a preponderance of the evidence that he has a for which the cargo owner may be liable, the carrier has the option claim and a ground for obtaining security. of retaining the goods. In addition, there are provisions providing for a maritime lien on the cargo for certain claims in NMC chapter 3. Norway is party to the 1952 Arrest Convention, which limits the Both salvage awards and general average contributions are secured type of claims which may provide a basis for arresting a vessel; by such maritime liens on the cargo. A cargo owner will also benefit please refer to NMC chapter 4. from a maritime lien should his cargo be sold for the benefit of other Arresting a ship or other assets in Norway is relatively straight- cargo owners. Furthermore, the carrier will have a maritime lien forward and can be arranged urgently and at a reasonable cost. on the cargo for a claim arising out of the chartering agreement, for It should be noted that the Norwegian courts are provided with example a claim for freight or demurrage, insofar as the claim can discretion as to whether or not an arrest shall be granted. be brought against the person demanding delivery.

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There are rules in the NMC that allow the carrier to sell cargo in certain instances as a self-help remedy. However, enforcement of 6 Procedure maritime liens on the cargo would generally require the involvement of the courts. 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or 4.4 In relation to maritime claims, what form of security is commercial courts); ii) arbitration (including specialist acceptable; for example, bank guarantee, P&I letter of arbitral bodies); and iii) mediation / alternative dispute undertaking. resolution.

According to the Civil Procedure Act section 33-5, posting security Norway Maritime claims are normally heard by national courts or arbitration can avoid or lift an arrest. The security shall be posted according to tribunals. There are no specialised or commercial courts available the terms set forth in the Civil Procedure Act section 32-12 and in for maritime claims; however, the Nordic Offshore and Maritime the Enforcement of Claims Act section 3-4. Arbitration Association (“NOMA”) was established 28 November Acceptable securities are locked deposits in or guarantees from 2017 on the initiative of the Danish, Finnish, Norwegian and Norwegian banks and guarantees from certain other entities carrying Swedish Maritime Law Associations. NOMA provides streamlined out licenced financial activity in accordance with Norwegian law. arbitration services to commercial parties on an institutional basis, A Protection and Indemnity (P&I) Club Letter of Undertaking and is primarily aimed at the shipping sector where at least one party (LOU) will not automatically be accepted by the courts as sufficient is Nordic. It is also common for parties to settle disputes through security. If the LOU is from one of the most reputable P&I Clubs, it private negotiations. is, however, common practice that the claimant voluntarily accepts If a claim amounts to less than NOK 125,000, or if the parties such security. have not been assisted by legal counsel, then legal proceedings must be initiated before the Conciliation Board. The Conciliation Board will, as a starting point, only issue a judgment if both parties 5 Evidence agree, and may choose to discontinue the proceedings if it does not consider them suitable for conciliation proceedings. This is often 5.1 What steps can be taken (and when) to preserve or done with maritime claims, which are considered too complex for obtain access to evidence in relation to maritime such proceedings. claims including any available procedures for the If it is not required to proceed to the Conciliation Board, or if preservation of physical evidence, examination of the proceedings there have come to an end, proceedings may be witnesses or pre-action disclosure? commenced before the District Court, which is the court of first instance. Court-led mediation is voluntary and not common, due to Chapter 28 of the Civil Procedure Act contains rules on preservation the normal procedure of attempting a settlement prior to initiating of evidence outside court proceedings. Preservation of evidence may a claim. be requested if the evidence may be of importance in a subsequent legal dispute. It is a further requirement that there is an immediate The court normally sets a date for a main hearing within 8–12 risk of the evidence being lost or significantly weakened unless months after the writ has been served. The judge will usually render preserved by the court, or if other reasons make it of particular judgment within 4–6 weeks after concluding proceedings. importance to preserve the evidence in question prior to the court A full appeal is possible in civil cases. The Courts of Appeal case. Such measures require an application to the court, and are adjudicate appeals against decisions from the District Courts in based on the court’s discretion. The preservation of evidence may their respective circuits. The main hearing in Court of Appeal is include recording of witness testimony in court or preservation very similar to that in the District Court, with all evidence being of technical evidence. There are no provisions requiring general presented again to the court. A judgment is usually made within disclosure of evidence prior to commencement of legal proceedings. 8–12 months after the appeal is filed. A Court of Appeal judgment can be appealed to the Supreme Court 5.2 What are the general disclosure obligations in court but requires leave from the Supreme Court. The screening process proceedings? to the Supreme Court is strict, and only cases raising legal questions of a principled nature will be granted leave. Sections 5-3 and 21-4 of the Civil Procedure Act require that the parties provide information relating to important evidence of which 6.2 Highlight any notable pros and cons related to your they are aware, and of which they cannot expect the opposite party jurisdiction that any potential party should bear in to be aware. The obligation remains irrespective of which legal mind. position the evidence may support. Exceptions to this rule are set forth in chapter 22 of the Civil Certain requirements must be met for a Norwegian court to have Procedure Act, and consist of, for example, information subject to jurisdiction over a dispute between two foreign parties; see the lawyer/client confidentiality. Civil Procedure Act. Should the 2007 Lugano Convention, which Norway has ratified, not be applicable, section 4-3 contains an implied requirement of a “minimum connection” with Norway in order for a Norwegian court to have jurisdiction. Norwegian courts do not encourage forum shopping.

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7 Foreign Judgments and Awards 7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards. 7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments. Norway has ratified the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. Provisions governing recognition and enforcement of arbitration awards are set forth in the According to the Civil Procedure Act section 19-16, Norwegian law 2004 Arbitration Act. Arbitral awards are recognised if the parties normally does not recognise or enforce foreign judgments unless have agreed to arbitration, irrespective of the award’s country of being bound by treaty to do so. Unless a treaty provides otherwise,

origin; see section 45. Norway enforcement proceedings follow the same rules as enforcement of Norwegian judgments. The 2007 Lugano Convention represents The original or a certified copy of the award must be presented a practical exception permitting direct enforcement of foreign to the court and, unless the award is in English or a Scandinavian judgments. Section 19-16 of the Civil Procedure Act further provides language, it must be translated. that a judgment rendered by a foreign court with jurisdiction based The procedure for enforcing arbitrational awards is similar to on the parties’ agreement is enforceable in Norway when final and that which applies to the enforcement of foreign court judgments. enforceable in the country of origin. Certain exemptions for recognition and enforcement are set forth The proceedings for enforcement of judgments are set out in the in section 46 of the Arbitration Act; for example, exceptions for Enforcement Act. A difference compared to enforcement of enforcement if the arbitral tribunal was incorrectly constituted, domestic judgments is that the initial ex parte decision on whether or if the arbitral award is contrary to public policy (ordre public). enforcement should be initiated is taken by the local District Courts, Exceptions are applied restrictively. instead of the local enforcement and execution commissioner. The usual procedure for enforcing foreign judgments is to submit 8 Updates and Developments to the court the final judgment, providing relevant documents supporting the grounds for the foreign judgment. The court will present the petition to the counterparty prior to rendering its decision 8.1 Describe any other issues not considered above that on enforcement. may be worthy of note, together with any current trends or likely future developments that may be of interest.

No further issues or trends are currently anticipated.

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Gaute Gjelsten Morten Lund Mathisen Wikborg Rein Advokatfirma AS Wikborg Rein Advokatfirma AS Dronning Mauds gate 11 Dronning Mauds gate 11 0250 Oslo 0250 Oslo Norway Norway

Tel: +47 22 82 76 31 Tel: +47 22 82 76 75 Email: [email protected] Email: [email protected] URL: www.wr.no URL: www.wr.no Norway Gaute Gjelsten is a Partner at Wikborg Rein’s Oslo office and Global Morten Lund Mathisen is a Partner at Wikborg Rein’s Oslo office and Head of the firm’s Shipping Offshore practice. Mr. Gjelsten specialises is part of the firm’s Shipping Offshore practice where he also heads in international shipping and offshore law, including maritime, energy, the Global Maritime and Offshore Emergency Response Team. He is insurance and conflict of laws. He has extensive litigation experience a maritime and offshore lawyer specialised in international maritime before Norwegian courts and in arbitration proceedings. Mr. Gjelsten law, particularly related to casualty work, assisting Norwegian and is an examiner and lecturer for the Nordic Institute of Maritime Law international clients; in particular, P&I Clubs, hull underwriters and and the Institute of Private Law in Oslo, Norway. He has worked at ship and offshore unit owners. After initially working in the Oslo office, Wikborg Rein’s office in London and later managed the firm’s office in he headed the Kobe office for five years before moving to England, Kobe for three years, whilst also acting as Norwegian Consul General where he headed Wikborg Rein’s London office from 1997 to 2008. for Kobe/Osaka. Mr. Gjelsten is ranked in Band 1 by Chambers and Mr. Lund Mathisen is recommended by The Legal 500 as a “Leading Partners within the category “Shipping: Litigation – Norway”. He is also individual” within the category “Maritime law”. Mr. Lund Mathisen is recommended by The Legal 500 within the categories “Insurance”, also recommended by Chambers and Partners within the category “Maritime law” and “Offshore construction and shipbuilding”. “Shipping: Litigation – Norway”. Mr. Lund Mathisen has nearly 30 years of experience in his field and, during this period, has handled some of the largest and most complex casualties worldwide.

Wikborg Rein is an international law firm with over 230 lawyers located in Oslo, Bergen, London, Singapore and Shanghai. Our unique and long- standing presence overseas enables us to offer our clients the benefit of our extensive international expertise. Headquartered in Oslo, Norway, we offer a full range of legal services to our domestic and international clients. Our extensive international experience and expertise is unique, with many of our partners having spent time working with clients both abroad and in-house. Wikborg Rein’s broad range of legal services includes the following: corporate; dispute resolution; real estate and construction; banking and finance; shipping and offshore; trade, industry and public sector (including technology, media and telecommunications); and energy and natural resources. In the shipping and offshore fields, together with banking and finance, the firm is able to provide services under both Norwegian and English law. The firm has a dedicated team of tax lawyers with notable experience in cross-border taxation matters. In addition, the firm regularly advises on the application of European law and on all aspects relevant to Norway’s position as a member of the EEA.

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Panama

Arias, Fábrega & Fábrega Jorge Loaiza III

Article 210. Every act of assistance or salvage leading to a useful 1 Marine Casualty result will give rise to equitable remuneration. If the help provided leads to no such result, no remuneration is due. 1.1 In the event of a collision, grounding or other major In no case will the amount payable exceed the value of the objects casualty, what are the key provisions that will impact salvaged. upon the liability and response of interested parties? Article 211. Persons who have taken part in assistance activities In particular, the relevant law / conventions in force in despite an express and reasoned prohibition by the vessel assisted relation to: will not be entitled to any remuneration. (i) Collision Article 212. The tug will not be entitled to remuneration for helping or salvaging the vessel that she tows or her cargo, unless she has Panama has adopted the Convention on the International Regulations provided special services that cannot be considered as fulfilment of for Preventing Collisions at Sea, 1972 (“COLREGS”), by means of the towing contract. Law 7 of 1973, as well as the Amendment of 1974 by means of Law Article 213. An indemnity will also be payable even when the 15 of 1975. assistance or salvage takes place between vessels having the same Law 55 of 2008 on Maritime Trade (“Law 55”) expressly provides: owner. Chapter I Article 214. The amount of the remuneration will be fixed by COLLISION OF VESSELS agreement between the parties and, in default of this, by the judge. Article 208. For the purposes of this Chapter, the statutes of the The same procedure will apply as regards the proportion in which Convention on International Regulations to Prevent Collisions at the remuneration is distributed among the salvors. Sea executed in London in 1972 and ratified by the Republic of The distribution between the owner, Master and other persons at Panama on March 14, 1979 will apply. the service of each one of the salvors’ vessels is governed by the (ii) Pollution nationality of the vessel. Panama has adopted a number of conventions, such as: Article 215. Any agreement for help and salvage concluded at the time and under the conditions of the danger present may, at the ■ MARPOL 73, Protocols of 1978 and 1997. Law 30 of 2003. instance of one of the parties, be annulled or modified by the judge, ■ 1969 Convention on Contamination of the Sea by if the latter rules that the conditions agreed upon are inequitable. Hydrocarbons. Law 96 of 1998. In all cases, if it appears that the agreement of one of the parties is ■ Protocol of 1992, providing for the Constitution of a Fund for vitiated by fraud or deception, or if the remuneration is excessive on Contamination of the Sea by Hydrocarbons. Law 91 of 1998. one side or the other, and disproportionate to the service rendered, ■ Protocol related to contamination from terrestrial sources – the agreement may be annulled or modified by the judge at the within the Caribbean region, adopted in Aruba, and adopted instance of the interested party. by Law 26 of 2003. Article 216. The remuneration will be fixed by the judge: ■ Convention for the cooperation for the sustainable 1. According to the circumstances, taking as a basis the development of marine zones of the Northeastern Pacific, success obtained, the efforts and expertise of those who have made in Guatemala (2002) and adopted by Law 28 of 2003. provided the assistance, the danger facing the vessel assisted, ■ Convention on Contamination of the Sea by Bunkers (2001). its passengers and crew, its cargo, salvors and the salvors’ (iii) Salvage / general average vessel, the time spent, the expenses and damage incurred, the There are two Chapters within Law 55 covering these, as follows: responsibilities and risks assumed by the salvors, the value of the equipment utilised by the latter; taking into account, if Chapter II arising, the degree to which the vessel rendering assistance is SALVAGE suitable for salvage operations. Article 209. The provision of assistance and salvage for vessels 2. The value of the items salvaged. in peril, the effects on board, the freight and passengers, together The same provisions apply for the distribution envisaged in the with services of the same nature provided between sea ocean vessels above Article. The judge may reduce or cancel the remuneration if navigating inland waters, remain subject to the provisions of this it emerges that the salvage or assistance became necessary through Chapter, without distinction between the two types of service and the culpable actions of the salvors, or that the latter have engaged in without regard to the waters where the service is provided. thefts or other fraudulent acts.

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Article 217. No remuneration shall be payable for the rescue of Arrival expenses are not to be included in the rule and account persons, subject to the legal provisions of the vessel’s nationality for adjustment regardless of how long the cause that determined the case in question. the same shall last. The salvors of human lives in the course of their intervention in 8. Extraordinary laytime expenses at a port of call, whenever the mishap giving rise to the salvage or assistance are entitled to the proximity of an enemy shall prevent the vessel from sailing from it. an equitable share of the remuneration granted to the salvors of the vessel and of its cargo and accessories. 9. Damages and expenses caused in defending the vessel and her cargo against enemies and pirates, including medical Article 218. Action to claim payment of the remuneration is time- assistance, funeral expenses and the amount of indemnities barred at two years, running from the date on which the salvage or payable whenever the crewmembers are injured or die

Panama assistance operations took place. defending the vessel. Reasons for suspending or interrupting this time bar will be 10. Assistance indemnity. determined by the laws of the jurisdiction of the court dealing with 11. Expenses resulting from collection of moneys made during the matter. the voyage to pay for general averages, as well as those Article 219. Every vessel’s Master has an obligation to render incurred in the liquidation thereof. These expenses include assistance to any person found in danger of being lost at sea, the loss of goods sold during the voyage, prize and interest on bottomry bond and the insurance premium for the amounts even though he may be an enemy, providing he can do so without employed, as well as the cost of the expert witness required seriously endangering his vessel, crew or passengers. to prepare the bill for such averages. The owner of the vessel is not responsible in respect of controversies Article 225. Goods placed on deck and those with respect to which of the above provision. no Bill of Lading is issued and which are not listed in the Cargo Article 220. The provisions of this Chapter do not apply to war Manifesto or Record, as well as rigging or instruments not recorded vessels or those belonging to the State and used exclusively for in the inventory, will not be included as general averages, except public service. when the law allows this form of carriage. Chapter III Article 226. General averages may be allocated according to GENERAL AVERAGE contribution, whenever the vessel or her cargo is salvaged in whole or in part. Article 221. General or common averages are governed by the laws of the country of registry of the vessel where they occurred. It is not necessary for the successful result to be brought instead of proceeding directly from the sacrifice, or produced as a result of Particular averages are governed by the laws applicable to the independent circumstances. charter party of the goods suffering the same. Article 227. The total of general average contributory values Article 222. In the absence of special conventions expressly consists of: contained in charter parties or Bills of Lading, averages will be paid according to the dispositions of this Law. 1. The comprehensive net value at the time and place of unloading of the things sacrificed, including any freight paid Article 223. Extraordinary expenses and sacrifices made voluntarily in advance. by the Master or by order thereof for the common good or salvation 2. The comprehensive net value at the same place and time of of the vessel and her cargo are construed to be general averages. the things salvaged, including those specified in Article 223, Article 224. General averages are the following: including any freight paid in advance, as well as the amount 1. Damages resulting from the sacrifice of goods, masts, engines, of the damages caused by general salvage. riggings and, in general, any object being part of the vessel or 3. Any freight or ship fare remaining unpaid, from which there her cargo. These damages comprise not only the value of the will be deducted any expenses that would have been avoided things being sacrificed, but also any wear and tear suffered by if the vessel and her cargo had been totally lost at the time the vessel and her cargo, provided that they are a direct and when the general average was brought about. immediate consequence of sacrificing the things. Personal effects of the crew, passengers’ luggage, war ammunition They include damages caused to objects employed for use and food and drink, to the extent that they are necessary for the other than that which they were destined for, and likewise voyage, do not contribute to general averages, without prejudice to deriving from the excessive use thereof even when which they will be reimbursed, as the case may be, by contribution. conforming to the use that they were destined for, such as forcing the sails or engines. Article 228. The total subject to general average contribution 2. Damages caused by voluntary grounding to avoid the total consists of: loss or arrest of the vessel or cargo, and those resulting from 1. The comprehensive net value at the time and place of setting the vessel afloat, as well as any expenses originating unloading of the things sacrificed, without deducting the therefrom. freight. If the thing sacrificed is part of the vessel, the value 3. Damages caused to the vessel and her goods not subject to will be fixed in the amount of the repairs, deducting, if fire damage during fire-fighting operations on board. applicable, the difference from new to old, or the proceeds from the sale of any old objects being replaced. 4. Damages caused to the vessel and her cargo in preventing the same from capsizing. 2. The difference between the comprehensive net worth of the damaged things at the same time and place and the value that 5. Sacrifices made in order to avoid collision. they would have, had no damage been suffered. 6. Expenses of extraordinary lightening and transshipping and, in 3. Extraordinary expenses made according to Article 223. case of voluntary grounding or stranding or forced arrival, any expenses involving the cargo, the storage and reinstallation on Article 229. Rules pertaining to general averages also apply board of the cargo, as well as damages that are an immediate whenever the danger, caused directly by sacrifice or expense, shall and direct consequence of these occurrences. result from the fault committed by the Master, the crew or any 7. Expenses of forced arrival pertaining to the vessel, including person interested in the cargo or by an inherent flaw of the vessel crew salaries and food during the same. or the goods.

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The remedy that may be exercised by reason of the fault or inherent not inured in the benefit or common use of all parties interested in flaw is separate from the regulation of general averages. the vessel and her cargo and, especially, the following: Article 230. Successive general averages will be regulated and 1. Damages suffered by the cargo from its loading to its liquidated at the end of the voyage, as if they should constitute a unloading due to accidents at sea or force majeure, and any single one. expenses incurred to avoid and repair the same. Article 231. Regulations governing averages will be enforced at the 2. Damages and expenses incurred by the vessel in her hull, rigging, arms and gear for the same causes and motives, port of destination. since she set sail at the port of departure until she moored and Article 232. Averages will only be allocated and liquidated if the anchored at destination. vessel and her cargo or either one is salvaged in all or in part. 3. Damages suffered by the goods carried on deck. Panama Article 233. To make the expenses and undertake the relevant 4. Salaries and food for the crew, whenever the vessel is damages corresponding to the general average, a resolution will be detained or attached by legitimate order or force majeure, if issued by the Master, following consultation with the pilot and other the charter is contracted for a portion of the voyage. officers of the vessel, and a hearing will be held with the parties 5. Any necessary expenses of arriving at port for repairs or interested in the cargo in attendance. provisioning. If they oppose the same and the Master and officers making up the 6. The lowest value of the goods sold by the Master upon forced majority or the Master, breaking away from the majority, consider arrival to pay for food and salvage of the crew and incurred it necessary to adopt certain measures, these may be executed under to cover any other necessity of the vessel. his responsibility, without prejudice to the shippers’ right to exercise 7. Food and salaries of the crew while the vessel is in quarantine. their own right against the Master before a competent judge, 8. Any damage suffered by the vessel or her cargo for the provided that they can prove that there was malice, inexperience or collision or fouling being accidental and inevitable. carelessness involved. 9. If the accident occurs due to fault or carelessness of the Master, If the opinion of the parties in attendance on the vessel interested the latter will be responsible for all the damage caused. in the cargo is not heard, they will not contribute to the general 10. Any damage suffered due to fault, carelessness or fraud of the average, imputable in this respect to the Master, unless the urgency Master or the crew, without prejudice to the owner’s right to of the case was such that there was no time for prior consultation. the corresponding indemnity against the Master, vessel and freight. Article 234. The agreement adopted to incur the damages that constituted the general average must necessarily be recorded in the (iv) Wreck removal log book, stating the motives and reasons supporting the same, the Panama has adopted the Nairobi International Convention on the votes to the contrary, and the basis for such dissidence, if any, and Removal of Wrecks 2007, by means of Law 26 of 2015. Law 57 what irresistible and urgent causes the Master was answering to, if entitles the Merchant Marine Administration (“MMA”) to handle acting by himself. related matters and to formally evaluate and declare a vessel as a “shipwreck”. In the first case, the note must be signed by any literate persons present, if possible, prior to proceeding to its execution and, if not, at (v) Limitation of liability the first opportunity. In the second case, by the Master and officers The limitations of liability are set in Article 583 of Law 8 of 1982 of the vessel. which contains and constitutes the “Code of Maritime Procedure” in The minutes, and then the agreement, will circumstantially state all Panama (“Law 8”), the contents of which are set out under “Claims the objects cast overboard and will refer to the imperfections caused Subject to Limitation” below. to those kept on board. The Master will be under the obligation to According to Article 576 of the Code of Maritime Procedure, the deliver a copy of the minutes to the judicial maritime authority at the limitations are available to shipowners and salvors. Article 577 first port of arrival, within 24 hours following arrival, and to ratify defines the “shipowner” as either a charterer, the manager, or the the same later, under oath. operator of a seagoing vessel. It is therefore necessary to determine if the Slot Charterer qualifies as a charterer in order to have a right Article 235. The Master will direct the jettison and have the effects to ascertain the limitations. cast overboard in the following order: All relevant provisions of Law 8 are translated as follows: 1. Those found on deck, beginning with those obstructing the manoeuvres or damaging the vessel, giving preference if Title VIII possible to the heaviest and least useful and valuable ones. Complementary Provisions 2. Those found under the upper deck, beginning always with the Chapter I heaviest and least valuable ones, keeping only such quantity or number thereof as shall be absolutely essential. Substantive Provisions Which Regulate Limitation of Liability of the Shipowner Article 236. In order to be computed as general average and for st the owners of the effects to be entitled to indemnity, it is necessary 1 Section in regards to the cargo for the relevant Bill of Lading to prove their Persons Entitled to Limit Liability existence on board, and as to effects belonging to the vessel, these Article 576. Shipowners and salvors, as hereinafter defined, may must also be checked against the inventory taken prior to departure. limit their liability in accordance with the rules of this Title for Article 237. To lighten the vessel during a storm or to facilitate her claims set out in the 2nd Section of this Chapter. entry into port or a sheltered anchorage area, part of the cargo may Article 577. The term owner shall mean the owner, charterer, be transshipped to launches or barges and, if lost, the owner of that manager and shipowner of an oceangoing vessel. part will be entitled to indemnity, as if the loss had originated by Article 578. Salvor shall mean any person rendering services in general average. direct connection with aid or salvage operations. Article 238. As a general rule, simple or particular averages are any Salvage operations shall also include operations referred to in expenses or damages caused to the vessel or her cargo which have subsections 4 and 6 of Article 583.

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Article 579. If any claims set out in Chapter II are made against servants, the shipowner or salvor is not entitled to limit his any person for whose act, neglect or default the shipowner or salvor liability in respect of such claims, or if he is by such law only are responsible, such person shall be entitled to avail himself of the permitted to limit his liability to an amount greater than that st limitation of liability provided for in this Title. provided in 1 Section, Chapter II of this Title. th Article 580. In the present Law, the liability of a shipowner shall 4 Section include liability in an action brought against the vessel herself. Conduct Barring Limitation Article 581. Any insurer of liability for claims subject to limitation Article 586. The person liable shall not be entitled to limit his in accordance with the rules of the present law shall be entitled to liability if it is proved that the loss resulted from his personal act or the benefits of this Law to the same extent as the assured himself. omission, committed with the intent to cause such loss, or recklessly

Panama Article 582. The act of invoking limitation of liability shall not and with knowledge that such loss would probably result. constitute an admission of liability. 5th Section 2nd Section Recommendations Claims Subject to Limitation Article 586. When a person entitled to limitation of liability under Article 583. Subject to that set out in the 3rd and 4th Sections of this the rules of the present Title has a claim against the claimant arising Chapter, the following claims, whatever the basis of liability may out of the same occurrence, their respective claims shall be set off be, shall be subject to limitation of liability: against each other and the provisions of the present Title shall only apply to the balance, if any. 1. claims in respect of loss of life or personal injury or loss of or damage to property (excluding damage to harbour works, Chapter II docks, waterways, bridges, canals, aids to navigation and Limitation of Liability facilities of the Panama Canal), occurring on board or in direct st connection with the operation of the vessel or with salvage 1 Section operations, and consequential loss resulting therefrom; General Limits 2. claims in respect of loss resulting from delay in the carriage Article 588. The limits of liability for claims, and those being by sea of cargo, passengers or their luggage; different than those mentioned in the 2nd Section of this Chapter, 3. claims in respect of other loss resulting from infringement arising on any distinct occasion, shall be calculated as follows: of rights other than contractual rights, occurring in direct 1. In respect of claims for loss of life or personal injury: connection with the operation of the vessel or salvage a) 333,000 units of account for a vessel with a tonnage operations; not exceeding 500; and b) for a vessel with a tonnage not 4. claims in respect of the raising, removal, destruction or the exceeding said limit (sic), the following amounts in addition rendering harmless of a vessel which has sunk, wrecked, to those mentioned: for each ton from 501 to 3,000 tons, 500 stranded or been abandoned, including anything that is or has units of account; for each ton from 3,001 to 30,000 tons, 333 been on board such vessel; units of account; for each ton from 30,001 to 70,000 tons, 250 5. claims in respect of the removal, destruction or the rendering units of account; and for each ton in excess of 70,000 tons, harmless of said cargo of the vessel; and 167 units of account. 6. claims of a person, other than the person liable, in respect of 2. In respect of any other claims: a) 167,000 units of account for measures taken in order to avoid or minimise loss for which a vessel with a tonnage not exceeding 500 tons; and b) for a the person liable may limit his liability in accordance with vessel with a tonnage in excess thereof, the following amount the provisions of the present Law, and further loss caused by in addition to that mentioned in 1): for each ton from 501 to such measures. 30,000 tons, 167 units of account; for each ton from 30,001 to 70,000 tons, 125 units of account; and for each ton in excess Article 584. The claims set out in Article 583 shall be subject to of 70,000 tons, 83 units of account. limitation of liability even if brought by way of recourse or for indemnity under a contract or otherwise. However, the claims set Article 589. Where the amount calculated in accordance with out under paragraphs 4, 5 and 6 of Article 583 shall not be subject to subsection 1) of Article 588 is insufficient to pay the claims limitation of liability to the extent that they relate to remuneration mentioned therein in full, the amount calculated in accordance under a contract with the person liable. with paragraph 2) of said Article shall be available for payment of the unpaid balance of claims under paragraph 1) and such unpaid rd 3 Section balance shall have the same priority as claims mentioned under Claims Excepted from Limitation paragraph 2). Article 585. The rules of the present Title shall not apply to: Article 590. Without prejudice to what has been set forth in 1. claims for aid or salvage or contribution in general average; Article 589 on the right to claim for loss of life or personal injury, 2. claims for oil pollution damage within the meaning of the claims for damage to port installations, coves, waterways and aids International Convention on Civil Liability for Oil Pollution to navigation shall have the priority the Law sets for claims under Damage, dated November 29, 1969, or of any amendment or paragraph 2) of Article 588. Protocol thereto which is in force; Article 591. The limits of liability for any salvor not operating from 3. claims subject to any international convention or any national any vessel, or for any salvor operating solely on the vessel to, or in legislation governing or prohibiting limitation of liability for respect of which he is rendering salvage services, shall be calculated nuclear damage; according to a tonnage of 1,500 tons. 4. claims against the owner of a nuclear vessel for nuclear Article 592. For the purposes of the present Chapter, the vessel’s damage; and tonnage shall be the gross tonnage calculated in accordance with the 5. claims by servants of the shipowner or salvor whose duties tonnage measurement rules contained in Annex 1 of the International are connected with the vessel or the aid or salvage operations, Convention on Tonnage Measurement of Ships, 1969 approved by including claims of their heirs, dependants or other persons entitled to make such claims, if under the law governing the Law 6 of October 27, 1977. contract of service between the shipowner or salvor and such

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2nd Section with interest thereon from the date of the occurrence giving rise to Limit for Passenger Claims the liability until the date of the constitution of the fund. The fund thus constituted shall be available only for the payment of claims in Article 593. In respect of claims arising on any distinct occasion respect of which limitation of liability can be invoked. for loss of life or personal injury to passengers of a vessel, the limit of liability of the shipowner shall be an amount of 46,666 units of Article 599. The fund may be constituted either by depositing the account multiplied by the number of passengers which the vessel sum or by producing a guarantee which is acceptable and which the is authorised to carry according to the vessel’s certificate, but not court or other competent authority considers to be adequate. exceeding 25 million units of account. Article 600. The fund constituted by one of the persons mentioned Article 594. For the purposes of this Section, “claims for loss of in paragraphs 1, 2 and 3 of Article 596 or in Article 597, or by its life or personal injury to passengers of a vessel” shall mean any insurer, shall be deemed constituted by all persons mentioned in said Panama such claims brought by or on behalf of any person carried in that paragraphs or Articles. vessel, travelling: 2nd Section a) under a contract of passenger carriage; or Distribution of the Fund b) who, with the consent of the carrier, is accompanying a Article 601. Save for what is set forth in Articles 588, 589, 590, vehicle or live animals which are covered by a contract for 593 and 594, the fund shall be distributed among the claimants in the carriage of goods. proportion to the amount of the claims which have been respectively 3rd Section admitted as being chargeable to the fund. Unit of Account Article 602. If before the fund is distributed, the person who is Article 595. The unit of account referred to in the 1st and 2nd Sections liable or his insurer has settled a claim which is chargeable to the of this Chapter is the “Special Drawing Right” as defined by the fund, such person shall subrogate, to the totality of the amount he International Monetary Fund. The amounts mentioned in the 1st paid out, all the benefits the person to be compensated would enjoy and 2nd Sections of this Chapter shall be converted into the national according to the present title. currency of the State in which limitation is sought, according to the Article 603. The right of replacement stipulated in Article 606 may value of that currency at the date the limitation fund shall have been be exercised also by persons other than those mentioned therein in constituted, or payment is made, or security is given which under respect of any amounts paid by them as indemnity, but only insofar the law of that State is equivalent to such payment. as the applicable national legislation allows such a subrogation. 4th Section Article 604. When the liable person or any other person proves Claims Accrued they may be obligated to pay at a later date, the total or a part of the indemnity in respect of which said person could have exercised its Article 596. The limits of liability determined in accordance with subrogation right as conferred in Articles 606 and 607 if the indemnity the 1st Section of this Chapter shall be applied to the aggregate of all would have been paid before the fund was distributed, the court may claims which may arise on any distinct occasion: order to provisionally reserve an amount sufficient so that said person 1. against the person or persons mentioned in the 2nd Section of may, at the relevant later date, enforce its claim to the fund. Chapter I and any person for whose act or neglect he or they are responsible; 2. against the owner of a vessel who gives salvage service 1.2 What are the authorities’ powers of investigation / from such vessel and the salvor or salvors who operate the casualty response in the event of a collision, grounding same, and any person for whose act or neglect he or they are or other major casualty? responsible; or 3. against the salvor or salvors who are not operating only on General provisions of Law 57 of 2008 on the Merchant Marine the vessel to which or in respect of which salvage is being (“Law 57”) allow officials from the MMA to intervene and attend to given, and any person for whose act, neglect or default he or all matters pertaining to these types of event: they are responsible. General Provisions Article 597. The limits of liability fixed in accordance with the Article 114. The General Directorate of the Merchant Marine may provisions of the 2nd Section of this Chapter shall apply to the execute and implement any measures and controls deemed necessary aggregate of all claims subject thereto which may arise on any distinct to ensure that vessels registered in Panama, regardless of their location, occasion against the person or persons mentioned in Article 577 in or vessels of any nationality, navigating in waters subject to the respect of the vessel referred to in the 2nd Section of this Chapter and jurisdiction of Panama, comply with all maritime safety regulations. any person for whose act, neglect or default he or they are responsible. In the exercise of this power, it shall be obligatory to provide any (vi) The limitation fund information required to comply with any maritime regulations and The “limitation fund” is likewise regulated in Law 8, as follows: international conventions ratified by the Republic of Panama. Fund for Indemnities Any vessel carrying passengers in waters subject to the jurisdiction 1st Section of Panama or abroad, and carrying more than 12 passengers, shall secure an insurance policy for liability against accidents which shall Constitution of the Fund cover loss of life and loss to property, as well as the risk of marine Article 598. Any person alleged to be liable may constitute a fund pollution. The minimum coverage and the decision as to whether with the court or other competent authority in any State in which the policy shall be submitted at the time that the vessel is registered legal proceedings are instituted in respect of claims subject to shall be determined by the General Directorate of the Merchant limitation. Marine. The fund shall be constituted in the sum of the amounts set out in This Directorate may require similar financial cover for other types st nd the 1 and 2 Sections of Chapter II of Title VIII of this Law that are of ships operating in waters subject to the jurisdiction of Panama, applicable to claims for which that person may be liable, together or operating abroad, with the purpose of covering any damage

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provided for in international conventions, particularly in connection The carrier will be responsible for loss or damage to the goods with pollution, damage suffered, and loss of life at sea. caused by delays in delivery due to the fault or negligence of the In case of national vessels, and depending on the seriousness of the carrier, except for those resulting from causes for which the carrier event, the MMA may delete the vessel ex officio. shall not be responsible under the relevant provisions of this Chapter. Article 59. The carrier shall not be responsible for loss or damage suffered by the goods while under the responsibility of the carrier, 2 Cargo Claims due to any of the following causes: 1. Fault of the Master or members of the crew or pilot or employee of the carrier in the navigation or administration 2.1 What are the international conventions and national of the vessel, not pertaining to the obligations referred to in

Panama laws relevant to marine cargo claims? Article 54. 2. Fire, unless caused by fault or negligence of the carrier. Panama has not adopted the usual conventions on this subject matter and relevant provisions are contained in Law 55 of 2008. 3. War or armed conflicts. 4. Acts of government or competent authorities, quarantine restrictions or detention on account of judicial process. 2.2 What are the key principles applicable to cargo claims 5. Strikes, labour detentions or restrictions. brought against the carrier? 6. To save or attempt to save lives or property at sea. Law 55 provides as follows: 7. Acts of the shipper, owner of the goods or his agents. Carrier’s Responsibility 8. Defects involving or inherent to the goods. Article 53. The carrier will be responsible for the goods carried in 9. Inadequate packaging or insufficient or illegible markings. containers while remaining under his custody, as from the time of 10. Latent defects of the vessel not revealed by due diligence. receipt to the time of delivery. The carrier will be responsible for 11. Any other cause arising without fault or negligence of the non-containerised goods while under his custody, from the time of carrier, his agent or employee. loading to the time of unloading. Unless otherwise provided in this 12. Acts of God or force majeure, dangers, accidents at sea or in Section, the carrier will be responsible for loss or damage to the navigable waterways. cargo while under his custody. 13. In being released from responsibility pursuant to the The dispositions of the above Article will not prevent the carrier dispositions of the above points, except for the causes of point from entering into a contract pertaining to his responsibility in 2 of this Article, the carrier will have the burden of proof. connection with non-containerised goods, prior to their loading on Article 60. The carrier will not be responsible for loss or damage and following their unloading from the vessel. to live animals resulting from special risks inherent to their carriage. Article 54. The carrier shall be under the obligation, prior to and at However, the carrier will be under the obligation to prove his the start of the voyage, to take reasonable action to: compliance with any special shipper requirements with respect to the transportation of live animals and, under the circumstances of 1. Make the vessel seaworthy. carriage by waterways, any loss or damage occurring due to special 2. Adequately man, equip and supply the vessel. risks inherent to such carriage. 3. Prepare and maintain in good condition any holds, cold and Article 61. If the carrier attempts to carry goods on deck, the refrigerated chambers, as well as any other areas of the vessel carrier’s consent must be obtained and the customs of trade or where goods are carried in order to make their reception, applicable statutes or regulations must be complied with. transportation and conservation safe and satisfactory. Without prejudice to the obligations of the carrier contained in this Article 55. Neither the carrier nor the vessel will be responsible for Chapter, whenever the goods are shipped on deck according to the any losses or damages deriving or resulting from the vessel being dispositions of the above paragraph, the carrier will not be responsible unseaworthy, unless imputable to lack of due diligence on the part for loss or damage caused by special risks inherent to such carriage. of the carrier to make the vessel seaworthy or to provide the vessel with the necessary crew, equipment and supplies, or to make the If, in violation of the dispositions of first paragraph of this Article, holds, cold and refrigerated chambers and other areas of the vessel the carrier ships the goods on deck and the goods suffer loss or where goods are carried adequate and safe for their reception, damage as a result of this, the carrier will be responsible. transportation and conservation. In the event of loss or damage Article 62. Whenever any loss, damage or delay in delivery occurs occurring due to unseaworthy condition, the burden of proof in due to causes for which the carrier, employee or agent is entitled to regards to such due diligence will be on the carrier or any other exoneration, together with any other causes that do not contemplate person claiming exoneration under this Article. such exoneration, the carrier shall only be responsible to the extent that such loss, damage or delay in delivery is attributed to causes for Article 56. The carrier will proceed properly and carefully to the which the carrier is not entitled to exoneration from responsibility; loading, handling, stowing, carriage, custody, care and unloading of however, the carrier will have the burden of proof with respect to the goods carried. loss, damage, or delay in delivery resulting from such other cause. Article 57. The carrier will carry the goods to the unloading port Article 63. The amount of indemnity for loss of goods will be in the agreed manner and by the usual or most geographically direct calculated based on the value of the goods, while those due to route. damage to the goods will be calculated on the basis of the difference Deviations for the purpose of saving lives or property in waterways between the value of the goods before and after the damage or based or other reasonable detours will not be construed to be a deviation in on repair expenses. accordance with the dispositions of the above Article. The aggregate amount due shall be calculated based on the value of Article 58. Delays in delivery will occur whenever the goods are not the goods at the place and time where they were unloaded according delivered at the designated unloading port and within a reasonable to the contract, or at the place and time where they should have been period, unless the parties agree to a specific term. unloaded.

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The value of the goods is determined by stock exchange quote or, Shipper’s Responsibilities if not listed, according to regular market price or, in the absence Article 70. The shipper will have the goods properly packaged and of stock exchange quote or regular market price, according to the ensure the accuracy of their description, brand, number of packages regular value of goods of the same nature and quantity. or pieces, weight or quantity of goods at time of loading, and The carrier’s responsibility for loss or damage to the goods shall be indemnify the carrier against any loss resulting from poor packaging limited to an amount equal to 666.67 units of account per package or inaccuracies in the above-mentioned information. or other shipping unit or 2.0 units of account per kilogram of gross The carrier’s right to indemnity set forth in the above paragraph will weight of the goods lost or damaged, whichever is higher, except not affect the carrier’s obligation under the contract for the carriage whenever the nature and value of the goods is declared by the of goods vis-à-vis any person other than the shipper. shipper prior to loading and stated in the Bill of Lading, or whenever Panama an amount larger than the liability limit stated in this statute is agreed to between the carrier and shipper. 3 Passenger Claims Whenever a container, pallet or similar transportation device is used to consolidate the goods, the number of packages or other shipping 3.1 What are the key provisions applicable to the units listed in the Bill of Lading as packaged in said transportation resolution of maritime passenger claims? device shall be construed to be the number of packages or shipping units. Carriage of Passengers is regulated under Articles 141 et seq. of Whenever the transportation device does not belong to or has been Law 55 of 2008, as follows: provided by the carrier, the transportation device will be construed Chapter IV to be a package or shipping unit. Contract for the Carriage of Passengers by Waterways Article 64. Whenever the execution of the carriage or part thereof is entrusted upon an actual carrier, the carrier shall continue to be Article 141. The contract for the carriage of passengers by sea shall liable for the entire carriage according to the dispositions of this conform to what is agreed upon by the parties, and, in the absence of Chapter. In connection with the carriage executed by an actual such an agreement, the dispositions of this Chapter. carrier, the carrier will be liable for any act or omission by the actual Article 142. The passenger shall be deemed a shipper in regards carrier and his employee or agent acting under the scope of his to the luggage and other effects carried on board and the Master employment or agency. will not answer for anything that the passenger keeps under his Notwithstanding the dispositions of the above paragraph, whenever a immediate and personal custody, unless the damage shall in fact be contract for the carriage of goods by sea expressly states that a specific caused by the Master or the crew. part of the carriage covered by the contract is to be executed by an Article 143. If no ship fare is agreed upon and if either of the parties actual carrier other than the carrier, the contract may provide that the requests that a fare be fixed, the fare will be fixed summarily by the carrier will not be liable for any loss, damage or delay in delivery judge of the place where the contract is executed, with the advice arising from an occurrence taking place while the goods remain under of experts. the custody of the actual carrier during said part of the carriage. Article 144. A vessel chartered solely for the carriage of passengers Article 65. Dispositions contained in this Chapter regarding the shall carry them directly, regardless of the number involved, to carrier’s responsibility are applicable to the actual carrier. If a their port of destination, making the stops announced in the charter claim is filed against an employee or agent of the actual carrier, the contract or those of common usage. dispositions contained in the 2nd Section of this Chapter will apply. Article 145. If the passenger is not on board at the scheduled hour Article 66. A special agreement whereby the carrier assumes or abandons the vessel without the Master’s permission, when she obligations or waives rights conferred in this Chapter will be is ready to leave port, the Master may undertake the voyage and binding upon the actual carrier, provided that they are accepted by demand the ship fare in full. the latter in writing. Article 146. Tickets issued in the name of the passenger may not be Dispositions of such special agreement are binding upon the carrier, transferred without consent by the Master or consignee. whether or not the actual carrier gives his consent. Article 147. If the passenger dies before undertaking the voyage, Article 67. Whenever the carrier and actual carrier are responsible, his heirs will only be liable for half of the agreed fare and the Master they will be jointly responsible. will reimburse them for the relevant portion. Article 68. If claims for loss or damage are duly filed against the If food and lodging expenses were included in the agreed price, carrier, the actual carrier and his employees or agents, separately, the judge, at his/her discretion and with the advice of experts, will the aggregate compensation amount shall not be greater than the determine the amount due in favour of the vessel on such account. limit established by law. If another passenger takes the place of the deceased, there will be Article 69. The dispositions contained in Articles 64, 65, 66, 67 no amount due. and 68 of this Law will not affect the rights between the carrier and Article 148. If the voyage is suspended before it starts for the Master’s the actual carrier. or shipping company’s own fault, the passenger will be entitled to full reimbursement of the fare and to the payment of damages; however, if 2.3 In what circumstances may the carrier establish claims the suspension is due to an Act of God or force majeure or any other against the shipper relating to misdeclaration of cargo? cause not related to the Master or shipping company, the passenger will only be entitled to reimbursement of the fare. Article 70 of Law 55 provides for the obligation of the shipper Article 149. If a trip is suspended after it has begun, passengers will to properly describe the damage arising from reliance on such only be liable to pay the fare pro rata to the distance covered and description that could revert on the liability of the carrier, and which will not be entitled to the payment for damages if the interruption could be claimed back by the carrier against the shipper. is due to an Act of God or force majeure, but will be entitled to an

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indemnity if the interruption is due exclusively to the Master. If the A defendant is considered outside Panamanian jurisdiction interruption is due to breakdown of the vessel and the passenger is when its effective domicile for business is outside the willing to wait for repairs to be made, there will be no increase in the Republic of Panama, even if the corporation is Panamanian or, ship fare, but the passenger will be required to pay for his own food if it is foreign, is registered in Panama, or has branch offices or and lodging during the stay. affiliates in Panama, or the ship is registered in Panama. 3. To physically attach property susceptible to arrest in order to If the vessel’s departure is delayed, the passengers may remain on assert privileged maritime liens, maritime encumbrances or board and will be fed at the expense of the vessel, unless such delay any other claim which, according to the Law applicable to the is due to an Act of God or force majeure. proceedings, allows addressing the complaint directly against If the delay is in excess of 10 days, the passengers who file a claim these. Arrest shall have the effect of giving personal notice on the sued property.

Panama will be reimbursed for the fare and, if the delay is due solely to the fault of the Master or shipping company, will be able to claim for The petition for arrest may be included in the complaint, or otherwise payment of damages. be sought after the proceedings have begun, including the rules on Article 150. If the contract is revoked, before or after the trip starts, how to proceed, which are as follows: the Master may claim whatever was provided to the passengers, if Article 167. The petition for arrest may be formalised in the such revocation was not his fault. complaint or may be filed in a writ during the process, and it shall Article 151. In all matters pertaining to the preservation of order clearly state the information that the petitioner has with regard to the and policing on board, passengers will submit themselves without place, date and time the arrest may be carried out if same is directed distinction to the dispositions of the Master. against a vessel, its cargo, freight or bunker. Article 152. For the convenience of or to please the passengers on In the event of arrests ordered subsequently to the commencement board, the Master may put in at a port or enter an area deviating the of the proceedings or after the defendant has appeared in court, the vessel from its course, or stop where it was scheduled or required to practice and purpose of the arrest shall be analysed and dealt with as if it was filed with the lawsuit. In this case, and as long as the arrest stop for more time than is required for navigation purposes. is not executed, it shall be dealt with in a separate book, which will Article 153. Unless otherwise agreed, the passengers’ sustenance be added to the main file once the said formality concludes. during the trip is included in the ship fare, but if passengers pay for In no case shall the defects of form in the complaint impede the their own food, the Master shall be under the obligation to provide execution of the arrest, nor shall they constitute a cause for lifting the sustenance required at a reasonable price and at the regular rate, the same, as long as it clearly and precisely states the nature of in case of need. the plaintiff’s motion and the corresponding warranty, if it may be Article 154. To collect ship fare and sustenance expenses, the Master determined by the interested party. may withhold any personal effects belonging to the passenger and, Article 168. The petition for arrest must be presented by the plaintiff if these are sold, will have preference over other creditors, as in the with guarantee security of one thousand balboas (B/.1,000.00) in case of collection of freights. order to respond to the damages that the arrest may cause. However, Article 155. If a passenger dies during the trip, the Master is in cases of arrest as per point 1 of Article 166, the guarantee security authorised to take, with respect to the corpse, any measures required shall be fixed by the judge, at his discretion, and shall not be less by the circumstances, carefully storing any documents and effects than twenty per cent (20%) or more than thirty per cent (30%) of the found on board and belonging to the passenger. amount in the complaint. The Master will also take care with the safekeeping of the documents Notwithstanding the guarantee security provided as per the above and belongings of the crewmember who died on board, taking a paragraph, the party requesting an arrest shall consign to the order of detailed inventory thereof with the assistance of two witnesses. the Marshal a sum not exceeding two thousand five hundred balboas (B/.2,500.00), as an advance for the expenses brought about in the conservation and custody of the arrested property, as well as the 4 Arrest and Security required expenses for its execution and release. In the event that the property arrested is a vessel, this advance shall always be two thousand five hundred balboas (B/.2,500.00). 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel In the cases provided in subsections 2 and 3 of Article 166, and owner and the applicable procedure? notwithstanding the provision in the first paragraph of this Article, the judge shall request the arrester, as a condition to order the arrest, to furnish circumstantial or prima facie evidence to prove the Law 8 provides for the arrest of vessels for the following purposes: legitimacy of its right. Article 166. The arrest decreed by the Maritime Courts shall have Article 169. The Marshal may request from the sequestrating as its purpose: party, at any time, additional sums of money in order to cover the 1. To prevent the proceedings from having illusory effects and expenses incurred in the conservation, maintenance and custody of keep the defendant from disposing, transferring, diminishing, the arrested property if he deems it necessary. encumbering or dissipating assets susceptible to said measure. Article 170. The arrest shall proceed without hearing the defendant, 2. To bring to the competence of Panamanian Maritime Courts to once the Secretary of the Court acknowledges the sufficiency of the try causes of action arising outside the national territory, as a security, the security offered has been constituted, and the expenses result of facts or acts related to navigation when the defendant is outside of the jurisdiction, and in causes of action arising requested by the Marshal have been received, as follows: within the national territory when the plaintiff opts to arrest an 1. The Marshal of the Court shall travel to the place where the asset of the defendant for purposes of serving the same with property is found and immediately give notice to the person notice of the complaint. In both cases, an arrest constituted in in charge and having custody of the same about the order for accordance to what is established in this subsection shall have arrest. In the event of arrest of cargo located in a port and not the effect of giving personal notice of the complaint; however, found on board a vessel, it shall be understood that the person the plaintiff would have to comply with the process provided in charge of its custody is the corresponding customs or port for in the last paragraph of Article 403. authority.

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2. The Marshal shall affix the arrest order on the navigation right he shall suffer immediate or irreparable peril, may request bridge of the vessel for as long as it is effective when the from the judge the most appropriate conservatory or protective vessel, its cargo or its bunker are subject to the arrest. measure as to provisionally secure, depending on the circumstances, 4. When the arrested property is cargo not found on board a the results of a judgment on the merits. The petitioner shall file his vessel, the arrest order shall be affixed on that cargo insomuch motion accompanying the preliminary evidence and, furthermore, as possible. the corresponding security for damages, which in no case shall be 5. In the event that vessels or other assets registered in the less than one thousand balboas (B/.1,000.00) or more than fifty Public Registry are arrested, the Secretary of the Court thousand balboas (B/.50,000.00). In case of prohibitions to transfer shall notify the registry’s official of the order to insert or encumber vessels or other assets, the bond shall not be less than the corresponding marginal notation and to abstain from ten thousand balboas (B/.10,000.00).

recording any transaction that had been verified or that is Panama verified by the defendant after the arrest has been constituted. The motion shall be processed and decided pursuant to the rules of Such transaction or the registration made after such moment, this Chapter on arrest. notwithstanding the prohibition, shall be null. The order of arrest must be signed by the judge or, in his absence, by the 4.2 Is it possible for a bunker supplier (whether physical Secretary of the Court, witnessing the authenticity of said and/or contractual) to arrest a vessel for a claim order issued by the judge. relating to bunkers supplied by them to that vessel? The order of arrest shall be communicated by electronic means to transmit documents to the Administrator of the Port where the From a Panamanian substantive law perspective, the bunkers vessel has arrived or will arrive, when the arrest is not made in the supplied to a vessel would be considered necessaries and qualify as domicile of the court, and the Administrator shall act as Marshal for a maritime lien over the vessel as per Article 24 of Law 55, ranking this purpose until the Marshal takes custody of the arrested property. 9th in order of priority. Article 171. The Marshal of the Court may request the participation It is also relevant to say that a Panamanian court would also allow the of the National Police or the air or maritime service in order to ensure arrest based on the substantive laws that may be deemed applicable its performance in an orderly manner and effect the arrest, and shall to the bunker supply contract, if under such laws the claim for bunker be able to utilise all the means necessary in order to comply with supply constitutes a maritime lien against the vessel, regardless of and enforce his orders, including the assistance of administrative what the law of the registry of the vessel, albeit that it is expressly authorities and holders of concessions of public services. In no case stated in Law 8 (Article 566 on conflict of law rules) that the laws may the latter deny access to the Marshal and those accompanying which apply to determine the maritime liens against the vessel are him to the State premises that are operating under concessions by those of the country where the vessel is registered. administrators or private companies, public or joint enterprises. The judge may, in the arrest, order the physical ruling on persons 4.3 Where security is sought from a party other than the that impede the Marshal from executing the duties provided in this vessel owner (or demise charterer) for a maritime law, according to Article 617. claim, including exercise of liens over cargo, what Article 172. In case of vessels, even those of Panamanian options are available? registry, and of other chattel property, the arrest shall be deemed accomplished when the order from the court has been received by The arrest of cargo is also possible. the person in charge of the custody of the asset or responsible for its Additionally, the bunkers can be arrested to give the court possession or delivery of the same. jurisdiction over its owner; for instance, a bareboat or time charter. When the arrest is to attach vessels of Panamanian registry, the marginal notation contemplated in point 4 of Article 170 shall 4.4 In relation to maritime claims, what form of security is proceed only when arrest has been accomplished with prior physical acceptable; for example, bank guarantee, P&I letter of attachment of such vessels. undertaking. Notwithstanding the above, at the request of an interested party, the court may issue a request to the Director of the Public Registry to The party whose property is arrested may put up security by way of: insert a marginal notation made against the ownership title of the cash (and purchase of a certificate of judicial deposit); insurance bond; vessel as evidence that a complaint has been filed against it before bank guarantee; or certain negotiable instruments from the State. the Maritime Court. It is also possible for the parties to negotiate other types of security, The notation referred to in the paragraph above shall be included in including P&I undertakings. every certification that the Registry issues in respect of the vessel. Article 173. In cases where the property being arrested is real estate 5 Evidence property, the arrest shall be considered to have been accomplished when the court order is written in the Log of the Public Registry. Article 174. The existence of previous arrests, of any nature, shall 5.1 What steps can be taken (and when) to preserve or not impede the order of new arrests over the same property as long obtain access to evidence in relation to maritime as the new arrests are grounded on maritime liens. claims including any available procedures for the preservation of physical evidence, examination of Another option is to pursue an injunction against the vessel, witnesses or pre-action disclosure? commonly known as “flag arrest” and which is based on Article 206 of Law 8, to wit: Law 8 provides for a number of options, including pre-trial Conservatory Measures or of General Protection inspections, as well as discovery motions such as requests for Article 206. In addition to regulated cases, a person with reason the production of documents, disclosure of information, written to believe that during the time prior to a judicial recognition of his interrogatories and on-site inspections. These were adapted from certain United States Federal Rules on Discovery.

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We can briefly summarise the stages of the maritime proceedings 5.2 What are the general disclosure obligations in court as follows: proceedings? a. COMPLAINT – ARREST. b. ANSWER TO THE COMPLAINT (30 DAYS FROM Law 8 provides the general principles by way of evidence that can NOTIFICATION). be produced or requested, of which we would refer to the following basic ones, to wit: In in rem proceedings and where the arrest has been made for claims against the owner, the same shall have the effect Chapter VII of notification of the complaint. In the latter case, where Evidence the owner is not deemed present in the jurisdiction, separate st notice would have to be served to the defendant.

Panama 1 Section c. DEFENCES (i.e. EXCEPTIONS) AND SPECIAL General Principles MOTIONS. Article 207. Documents, confessions, sworn statements, depositions ■ Some may be included in the answer to the complaint. of a party and of witnesses, judicial inspections, expert opinions, ■ The arrest may be challenged whilst the same remains in reports, indications, scientific means and any other rational means effect. which aid the judge in rendering judgment may be utilised as evidence, provided that they are not expressly prohibited by law, ■ Some may involve a special hearing. nor contrary to moral or public order. ■ The ruling may be appealed. Replicas, reproductions, photographs of objects, documents and d. DISCOVERY. places and drawings, as well as other methods of reproduction of 1. Interrogatories. sounds, images, etc., may be utilised as evidence. 2. Request for information, documents or recognition of In order to ascertain whether an act can or cannot be performed in a facts. given manner, the reconstruction of the same may be allowed. If the 3. Judicial inspections. judge deems it necessary, the act may be recorded in photographic 4. Filing evidence. or electromagnetic form. e. PRETRIAL CONFERENCE. In cases where the evidence is to be submitted in this manner, The judge should schedule a pre-trial conference in order the obtaining of x-rays, radioscopies and haematological and that the parties can prepare for the actual/ordinary hearing, bacteriological analysis and the performance of any other scientific which date would also be fixed at such point, for the purposes experiment may be requested or ordered. of narrowing down the issues in the dispute, including Testimony taken down or given out of court shall not be admissible applicable substantive law, and the possibility of agreeing on except if it has been so agreed by the interested parties or if the party facts and evidence, as well as to determine the number and area of expertise of witnesses to be called during the hearing, against whom the testimony is being presented does not object, including expert testimony. unless the said party has had the opportunity to perform a cross- examination. f. HEARING. g. JUDGMENT. The foregoing shall not be applicable to the procedure established in Chapter V of Title V. h. APPEAL. Article 208. The evidence must be assessed as a whole, in conformity with the rules of constructive criticism, without 6.2 Highlight any notable pros and cons related to your prejudice to the formalities prescribed in the substantive law for the jurisdiction that any potential party should bear in existence or validity of certain acts. mind. The judge shall reasonably disclose the elements establishing the evidence and the merits corresponding to them. Some rules – in particular, conflict of law provisions contained in Law 8 – have been subject to the interpretation of the courts and The judge may dismiss outright those methods of adducing evidence practising laws, further confirmed by the Supreme Court, which in which are prohibited by law, notoriously dilatory or brought with some instances end up contradicting the law as to the substantive the purpose of obstructing the progress of the proceeding, and may law applicable to determining maritime liens and other issues. also dismiss the submission of irrelevant or ineffective evidence.

7 Foreign Judgments and Awards 6 Procedure

7.1 Summarise the key provisions and applicable 6.1 Describe the typical procedure and timescale procedures affecting the recognition and enforcement applicable to maritime claims conducted through: i) of foreign judgments. national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute In general, and pursuant to Article 1419 of the Judicial Code, any resolution. final judgment obtained in the courts of a foreign jurisdiction should be recognised and enforced without retrial or re-examination of the Panamanian law provides for ordinary maritime proceedings, as well merits of the original action, provided that (i) in the jurisdiction of as mixed proceedings (in personam and in rem may be combined said courts the same treatment is given to judgments by the courts so long as the claims are based on similar grounds) as well as of the Republic of Panama, and (ii) the following requirements have special enforcement proceedings for maritime liens and a particular been duly satisfied: summary proceeding for enforcement of a naval mortgage, which a) the judgment is based on a personal cause of action; covers both national and foreign vessels.

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b) personal service of process is made on the defendant or on its agent appointed for such purpose within the jurisdiction of 8 Updates and Developments the court rendering judgment; c) the judgment is not rendered in default; 8.1 Describe any other issues not considered above that d) the performance of the obligation sought to be enforced is may be worthy of note, together with any current lawful in the Republic of Panama; and trends or likely future developments that may be of e) the judgment is authenticated in the country of origin. interest. This is a validation process done through the Fourth Chamber of Other than the issues described above, there are no particular trends General Affairs of the Supreme Court of Panama and it is known to highlight at this moment.

as “exequatur”. Panama

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

The aforesaid Article 1419 of the Judicial Code also applies to arbitral awards, but we would add that Article 1421 imposes certain Jorge Loaiza III limitations to the enforcement thereof, in the sense that, subject to Arias, Fábrega & Fábrega ARIFA Building, 10th Floor, West Boulevard the granting of an exequatur by the Panama Supreme Court, the Santa Maria Business District courts of Panama would recognise and enforce a foreign, definitive Panama City and final arbitral award, provided that: Republic of Panama a) the parties subject to the arbitration proceedings were not Tel: +507 205 7000 subject to some incapacity under the laws governing the Email: [email protected] applicable arbitration clause or under the laws of the place URL: www.arifa.com where the arbitration was held, and that such accord is not illegal under the laws of Panama or under the laws of the Jorge Loaiza joined ARIFA in 1990 and became a partner in 2014. place where the arbitral award was granted; From 2000 to 2005, he was the London office’s resident lawyer. He is b) the condemned party was duly notified of the appointment the head of the firm’s Shipping and Transportation Group and an ARIFA of arbiters or of the arbitration proceedings and had the Compliance Committee member. opportunity to defend itself in the arbitration proceedings; Jorge stands as one of the leading shipping lawyers in the country. c) the foreign arbitral award referred to a matter which was within He has handled and is currently attending to numerous standard the scope of the arbitration clause and did not include decisions administrative tasks in the areas of registration and mortgage filing which exceeded the scope of the arbitration clause; and procedures. He has also assisted and represented clients in complex sale and purchase deals, inventive ship security models, drafting of d) the constitution of the foreign arbitration tribunal and the maritime contracts, under-construction ship finance structuring, technical procedure followed comply with what the parties agreed upon aspects and compliance under international maritime conventions, in the arbitration clause or, in the absence of any provision to and innovative maritime litigation strategies. He was one of the main that effect in an arbitration clause, with the laws of the place contributors to a newly adopted Law for Promotion of Maritime Project where the arbitration was held. Financing. He has been involved in maritime litigation and has promoted the creation of judicial precedents on asset arrests and flag arrests of Furthermore, Panama has ratified the 1958 New York Convention ships, administrative filings, and other unconventional procedures. on the Recognition and Enforcement of Foreign Arbitral Awards.

Established in 1914, Arias, Fábrega & Fábrega (ARIFA) has been at the forefront of the legal profession, advising leading international financial institutions and multinational corporations, as well as some of the largest companies in Panama, for over 100 years. Its shipping practice group has been regarded for decades as a premier team for ship financing in Panama, and regularly assists shipowners, ship operators, banks and port operators around the world in the financing of vessels as well as platforms registered in Panama. ARIFA is a registered agent in Panama for hundreds of vessels registered under the Panamanian flag. Through its own network of offices in London, Hong Kong and Panama, and a highly specialised staff and automated systems, the firm facilitates the registration and mortgaging of vessels for clients around the world. ARIFA also has an important maritime litigation practice and its lawyers have been instrumental in the drafting of major pieces of legislation on ship registration and maritime court procedures.

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Peru Francisco Arca Patiño

Estudio Arca & Paoli Abogados Carla Paoli Consigliere

For oil and other substances, we mainly apply the aforementioned 1 Marine Casualty Supreme Decree. These rules and regulations are performed by the General Directorate of Captaincies (DICAPI) and the Supervisory 1.1 In the event of a collision, grounding or other major Body of Investment in Energy and Mining (OSINERGMIN), casualty, what are the key provisions that will impact respectively. upon the liability and response of interested parties? As a complement to the said Supreme Decree, Peru applies Resolutions In particular, the relevant law / conventions in force in issued by the Peruvian Agency for Environmental Assessment and relation to: Enforcement (OEFA) ascribed to the Ministry of Environment. The said Agency is essentially responsible for the assessment, supervision, (i) Collision enforcement and sanction of environmental matters. Peru is a Party to the Convention on the International Regulations (iii) Salvage / general average for Preventing Collisions at Sea (1972). In respect of national law, collision is regulated in Section IV, Chapter III of the Peruvian Peru is not a Party either to the Brussels Convention for the Code of Commerce and in the Law of Control and Surveillance of Unification of Certain Rules with respect to Assistance and Salvage Maritime, River and Lake Activities. at Sea (1910), nor to the International Convention on Salvage (1989). Nonetheless, salvage activities/operations are governed Despite the fact that Peru is not a Party to the Convention for the through the Regulations on the Law of Control and Surveillance of Unification of Certain Rules of Law with Respect to Collisions Maritime, River and Lake Activities. between Vessels (1910), most of its rules had already been established in the Peruvian Code of Commerce (1902). For General average is governed by the rules adopted in Section IV, instance, the actions of recovery of damages are time-barred after a Title I of the Peruvian Code of Commerce. Pursuant to Article 824, period of two years from the date of the casualty, and the liability is “intentionally caused general average” refers to all damages and apportioned equally in cases where two or more vessels are at fault. expenses caused to save the vessel, its cargoes, or both, from any Where collision is caused by the fault of one of the vessels, liability existing risk listed in the aforementioned Section. to amend the damages attaches to the one that has committed the (iv) Wreck removal fault; rules governing accidental and force majeure collision, et al., Peru is not a Party to the Nairobi International Convention on the are applicable. Removal of Wrecks (2007). Nevertheless, the rules governing wreck (ii) Pollution removal activities are established in Sub-Chapter V of the Law of Peru is a Party to the International Convention for the Prevention of Control and Surveillance of Maritime, River and Lake Activities. Pollution from Ships (MARPOL 73/78) and its Annexes. Further, (v) Limitation of liability Peru is also a Party to the International Convention for the Safety Peru is a Party to the International Convention on Civil Liability for of Life at Sea (SOLAS 74) and its Protocols, and the International Oil Pollution Damage (CLC 92), by which shipowners are entitled Convention on Civil Liability for Oil Pollution Damage (CLC 69) to limit their liability to an amount determined by the size of the and its Protocols. vessel. Despite the fact that Peru is not a Party to the International Conven- Concerning the Carriage of Goods by Sea, the limitation of liability tion on Civil Liability for Bunker Oil Pollution Damage (2001), stated in Section 4.5 of the International Convention for the some of its provisions are duly incorporated into Peruvian laws Unification of Certain Rules of Law relating to Bills of Lading is through the Regulations on the Law of Control and Surveillance of applicable (the Hague Rules of 1924). Maritime, River and Lake Activities. As for national law, the Code of Commerce states that the limitation Concerning national legislation on pollution, Peru applies several of liability for carriers with regard to collisions will not exceed the laws related to this matter. One of the most important laws is commercial value of the vessel with all its belongings as well as the the Regulations – approved by Supreme Decree – of the Law of freight accrued since the commencement of the voyage. Control and Surveillance of Maritime, River and Lake Activities. In (vi) The limitation fund connection with this law, it is also important to mention the Safety Peru is not a Party to any Convention related to limitation funds. In Regulation for the Transportation of Hydrocarbons. particular, it is not a Party to the CLC 92.

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extension of liability of the maritime carrier as it would have been 1.2 What are the authorities’ powers of investigation / agreed in terms house-to-house. This interpretation is still being casualty response in the event of a collision, grounding challenged before the Constitutional Court. or other major casualty? Also, according to Section 600 of the same Code, the shipowner is civilly liable for the indemnities in favour of third parties caused by In Peru, the General Directorate of Captaincies (DICAPI), through the conduct of the Master who has custody of the cargo. Based on its Port Captaincies in each port, is the authority in charge of the said Section, cargo interests always sue shipowners, contractual administrative proceedings and investigations related to collisions, carriers, ship managers, and operators, alleging that all of them groundings, and any casualty arising from an incident within are liable in solidum. These arguments, in most cases, are upheld

Peruvian territorial waters. Peru by Peruvian Judges, although wrongly; Peruvian Courts have jurisdiction over cargo claims when the destination is Peru. Any 2 Cargo Claims jurisdiction or arbitration clause inserted in the Bill of Lading, stating the jurisdiction of any other Court or tribunal is, in most cases, dismissed by Peruvian Judges, because they consider the Bill 2.1 What are the international conventions and national of Lading to be a contract of adhesion where the consignees have laws relevant to marine cargo claims? not negotiated its terms. We are fighting against this reasoning and the one related to the solidum liability explained above. Peru is a signatory Party to the International Convention for the Clauses of “quality/quantity unknown” or similar in a Bill of Lading Unification of Certain Rules related to Bills of Lading of 1924 have no value for Peruvian Judges, based also on the fact that the (hereinafter, the Hague Rules), signed in Brussels on 25 August Bill of Lading is deemed to be a contract of adhesion. 1924, which was incorporated by Peru into its domestic legislation The Peruvian Code of Commerce, Section 963 provides that the by means of Supreme Resolution No. 687 of 16 October 1964. time bar is one year from the moment the cargo was delivered in Indeed, the instrument containing the Peruvian adhesion to the the port of destination, or should have been delivered in those cases said Convention, i.e. the instrument which obliges Peru before the where the cargo never arrived. other High Contracting Parties, was deposited before the Belgian Subrogation by insurance companies is recognised and fully Government on 29 October 1964; therefore, the Convention came into force for Peru on 29 April 1965. executed in Peru. The national law is the Peruvian Code of Commerce, which was enacted in 1902. 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration Regarding limits of liability, we can only invoke the one contained of cargo? in the Hague Rules, because the Peruvian Code of Commerce does not contain any stipulation regarding limitation of liability, save for According to Section 3, Paragraph 5 of the Hague Rules, the shipper collision cases. shall be deemed to have guaranteed to the carrier the accuracy at the According to Article 4, Section 5 of the Hague Rules, carriers are time of shipment of the nature, quality, number of packages, quantity entitled to limit their liability to 100 pounds sterling per package or or weight as furnished by him at the loading declaration, and the unit. However, this monetary unit shall be deemed in its gold value shipper shall indemnify the carrier against all losses, damages and (Article 9, Hague Rules). The value of the pound sterling shall be expenses arising or resulting from inaccuracies in such particulars. obtained considering the gold quotation on the free market. As per The right of the carrier to such indemnity shall in no way limit his the last calculation made at the beginning of the present year, 2016, responsibility and duties under the contract of carriage to any person the said value is about USD 32,100.00 per package. other than the shipper. In spite of the fact that Peru is a Party to the Hague Rules, apart from two historical decisions of Peruvian Courts by which the limitation of liability of the Hague Rules was upheld, we are unaware of any 3 Passenger Claims recent decisions from the Supreme Court upholding the said defence. In Peru, it is not mandatory for Judges to follow jurisprudence in this area; therefore, they are free to construct it or apply the Hague 3.1 What are the key provisions applicable to the Rules in any way they see fit. resolution of maritime passenger claims? In some cases, Judges have tended to construct it as a contract of The Peruvian Code of Commerce governs the contract of carriage adhesion as embodied in a Bill of Lading, in pursuance of Section of passengers and their luggage. Also, the Law of Promotion of 1398 of the Peruvian Civil Code, which sets out that stipulations the National Merchant Fleet contains some stipulations regarding in a contract granting limitations or exonerations of liability to the this topic. benefit of whoever drafted it, are invalid. We are contending said criteria. Regarding liabilities of the carrier, the rules of the Peruvian Civil Code should be applied since the previous ones do not contain any stipulation in this respect. 2.2 What are the key principles applicable to cargo claims brought against the carrier? Two matters should be proved in order for the carrier to be liable: i) that the incident which caused the damages occurred in the course of the carriage; and ii) that it was caused by the fault or neglect of According to Section 632 of the Peruvian Code of Commerce, the the carrier. Master is responsible for the cargo from the moment he receives it at the berth or beside the vessel at the port of loading, until the moment There are no limitations of liabilities regarding passenger claims – he delivers it at the port of discharge, unless otherwise agreed. neither to the passenger nor to his luggage. Unfortunately, due to a bad interpretation by the Peruvian Supreme Peru is not a Party to the Athens Convention relating to the Carriage Court, the term “FCL/FCL” is considered by Peruvian Judges as an of Passengers and their Luggage by Sea (1974).

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4 Arrest and Security 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure? All of the above is at the claimants’ discretion. It should be mentioned that Section 85 of the Regulations on the Law of Control and Surveillance of Maritime, River and Lake Activities states that Peru, as with some other countries of the Andean region, is a Party any commercial vessel which arrives at a national port must certify to the Andean Pact, and as such ought to abide by the Decisions

Peru that, among others, it has an insurance policy issued by members of or Resolutions issued by the relevant Authority (the Andean the International Group of P&I Clubs. Community Commission). In particular, the following Decision is applicable for the arrest of vessels: Decision No. 487, which the Andean Community 5 Evidence Commission issued on 7 December 2000, incorporating the provisions of both the International Convention on Maritime Liens and Naval Mortgages (1993) and the International Convention 5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime on the Preliminary Arrests of Vessels of 1999 (incorporated into claims including any available procedures for the Peruvian Legislation on 22 May 2017), plus adding a few Sections, preservation of physical evidence, examination of namely its own legislation on the matter. witnesses or pre-action disclosure? According to the second Paragraph of Section 37 of the said Decision, applicants seeking the preliminary arrest of a vessel are Administrative procedures in Peru related to maritime claims should entitled to ask Peruvian Courts for the arrest of a vessel only in be started with a letter of protest before the Port Captain of each respect of maritime credits, which are listed in Section 1 of such jurisdiction where the incident occurred. In this procedure, experts Decision. may be nominated and the examination of witnesses may also take Consequently, plaintiffs would be entitled to ask Peruvian Courts place. for the preliminary arrest of a vessel, provided that the person who In order to preserve evidence related to general average and was the owner of the vessel at the time when the maritime credit particular average caused or suffered by a ship, Sections 864 and arose, and who is bound under the said credit, is the owner of the 882 of the Peruvian Code of Commerce are applicable. carrying vessel at the time of the attachment of a preliminary arrest, Before filing Court proceedings, documents, examination of pursuant to Section 41 of the said Decision only. witnesses and a surveyors’ report may be ordered by a Judge as Also, under Section 42, Sub-Section c) of the said Decision, evidence in anticipation. plaintiffs would be entitled to ask for the preliminary arrest of any other vessel or vessels, i.e. sister ships, provided that at the time of 5.2 What are the general disclosure obligations in court the arrest, the vessels belong to the person who is personally bound proceedings? under the relevant maritime credit, and that at the time when the credit arose, said person was the owner of the vessel in respect of Our procedural rules do not include disclosure proceedings. which the maritime credit had arisen. In order to perform this right of preliminary arrest, applicants should file their Applications together with the relevant supporting 6 Procedure evidence set out by Sections 608, 610 and 613 of the Peruvian Civil Procedural Code, which includes the putting up of a counter guarantee. The arrest shall be served upon owners only after the 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) carrying out of the attachment, as set out in Section 636 of the said national courts (including any specialised maritime or Code. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution. 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? i) In the Peruvian judicial system, proceedings are classified into two large groups: “contentious”; and “non-contentious” proceedings. In this regard, maritime claims are processed Yes. In pursuance of Section 1.12 of the Decision 487 of the Andean within the so-called contentious proceedings, which, in turn, Community, any claim related to the bunker provided to a vessel is are sub-classified into: cognisance proceedings; summary qualified as a maritime credit. Thus a vessel can be arrested. proceedings; expeditious proceedings; and proceedings based on a claimed amount. 4.3 Where security is sought from a party other than the The typical procedure characterising maritime claims in vessel owner (or demise charterer) for a maritime these kinds of legal proceedings is the following: claim claim, including exercise of liens over cargo, what (lawsuit); preliminary pleas and points of defence; replying options are available? preliminary pleas; hearing of evidence and controversial issues; allegations; and judgment. In accordance with Sections 678, 679 and 680 of the Commercial The timescale is between three and five years in the High Code, the carrier cannot retain the cargo in the case of lack of Court, mainly due to an excess of lawsuits. payment of freight or other expenses. Nevertheless, the carrier is The legal basis governing the various judicial proceedings entitled to proceed with the embargo of the cargo and later sell it and their respective timescales are stipulated in the Peruvian in order to recover the amount due and the costs and fees incurred. Civil Procedural Code (from Sections 475 to 607).

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ii) The Peruvian arbitration system has been strengthened due Requirements of Exequatur (Section 2104 of the Peruvian Civil to the crisis that is passing through the traditional justice Code): system. It is the most commonly used method of deciding 1. The proceeding does not solve matters of Peruvian a maritime case provided that a valid arbitration clause is in competence. force. 2. The foreign Court must have been competent to take The timescale for the final resolution is about eight months. cognisance of the subject, in accordance with the rules of The legal basis governing both the proceeding and timescale Private International Law and the general principles of in the arbitration is stipulated in Executive Decree No. 1071 international procedural competence. – Law Governing Arbitration, which has been in force and 3. The defendant must have been notified according to the law of

included in the Peruvian legal system since 1 September the place where the proceeding takes place, a reasonable term Peru 2008. However, in the case of institutional arbitration to appear must have been granted, and procedural guarantees proceedings, for example through the Lima Chamber of must have been granted to exercise his/her defence. Commerce (CCL) or the American Chamber of Commerce of Peru (AMCHAM), they are regulated by their respective 4. The judgment has the authority of res judicata in the concept regulations of arbitration and additionally by the above- of the laws of the place where the proceeding takes place. referenced Arbitration Law and the Civil Procedural Code, in 5. There is no pending trial in Peru between the same parties that order of preference. and on the same matter, which must have been initiated prior iii) Conciliation is a previous step that claimants must follow to to the filing of the claim that gave rise to the judgment. be able to start a legal action afterwards. A solution in this procedure, in maritime matters, is rare. 7.2 Summarise the key provisions and applicable With regard to the timescale applied to maritime claims in procedures affecting the recognition and enforcement conciliation proceedings, it is necessary to specify that the of arbitration awards. proceeding lasts approximately one month. The legal basis governing both the proceeding and timescale For arbitration awards, provisions of the Executive Decree No. 1071 in the conciliation is stipulated in Law No. 26872 – Law of – General Arbitration Law – shall be applicable as per the provisions Conciliation, in force in Peru since 13 November 1997, and of Section 2111 of the Peruvian Civil Code. Supreme Executive Decree No. 004-2005-JUS – Regulations of the Conciliation Law. According to the said law, the foreign arbitration awards would be recognised and executed, taking into consideration: a) The Convention on Recognition and Enforcement of Foreign 6.2 Highlight any notable pros and cons related to your Arbitration Awards, approved in New York on 10 June 1958. jurisdiction that any potential party should bear in mind. b) The Inter-American Convention on International Commercial Arbitration, approved in Panama on 30 January 1975. The pro is: c) Any other treaty on recognition and enforcement of arbitration awards to which Peru is a Party. ■ The costs are recoverable from the Party to be blamed for the claim and the judicial costs are not excessive like in other The timescale is about six months. jurisdictions. Afterwards, the execution of the foreign arbitration awards, solely The cons are: recognised by the Peruvian tribunal, should be followed in our ■ The slow progress in the development of the legal Judiciary. proceedings. ■ The lack of predictability of maritime judgments. 8 Updates and Developments

7 Foreign Judgments and Awards 8.1 Describe any other issues not considered above that may be worthy of note, together with any current trends or likely future developments that may be of 7.1 Summarise the key provisions and applicable interest. procedures affecting the recognition and enforcement of foreign judgments. In 2009, a new law was enacted for the development of Peruvian merchant shipping; aimed specifically at Peruvian flag vessels Exequatur is a legal proceeding whereby a foreign judgment is sailing for coastal trade. The law provides that only corporations recognised and enforced in our judicial system. This proceeding, of Peruvian nationality (i.e. those with a 51% Peruvian majority which in Peru is a “non-contentious” one, does not involve the among their investors) may operate, vessels are to be manned with review of the contents of said judgment. Peruvian crew, especially their Master, and the time charter of The Exequatur procedure must be initiated considering the foreign vessels is allowable for six months only, in defect or non- effectiveness of international rules (treaties, Conventions) binding existence of Peruvian flagged vessels. on Peru and the State in which the Court issued the respective After eight years of the successful re-building of Peruvian merchant judgment. shipping for coastal trade, with heavy investment, among other In cases where any treaty exists on the matter, the legal proceeding achievements, there are at present several proposals before the is followed according to the terms thereof. Parliament to change the law; in particular, so that foreign shipping In the absence of any treaty, the Judge will verify the reciprocity that companies (liners) may be allowed to discharge and load cargo exists in the country where the judgment was issued with regard to in coastal trade, and also to allow Peruvian shipping companies the application of Peruvian judgments in that country. to time-charter vessels for three or, alternatively, up to five years.

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This destroys the original purpose of the law, but it would allow Decree No. 005-2017 (published on 20 March 2017) and its foreign flag vessels to be part of the success, without risking foreign procedures (by Directorial Resolution No. 028-2017-MTC/13) investment and other requirements of the law. exceptionally allowing Peruvian Navy and foreign flag vessels to In other developments, a fact of international impact is that Peru perform coastal trade in any cargo and passengers for a maximum ratified Annex VI of MARPOL 73/78, by Supreme Decree No. 029- of 30 calendar days. It also includes, exceptionally, the carriage of 2013-RE, dated 25 June 2013. The said Supreme Decree includes cargoes by registered fishing vessels. the use of a Bunker Delivery Note (BDN), a document which The reason behind this legal device is to prevent the shortage of evidences the delivery and quality of fuel to a ship by the supplier goods of primary necessity in the areas which have suffered the of bunkers in Peru. most; but it might also demonstrate the benefits of coastal trade and Peru Finally, and due to the latest natural disasters and flooding hence re-open the discussion of the need for a permanent Coastal experienced along our coast as a consequence of the “El Niño” Trade regulation allowing foreign flag vessels to trade through phenomenon, the Peruvian Government has issued Emergency coastal navigation.

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Francisco Arca Patiño Carla Paoli Consigliere Estudio Arca & Paoli Abogados Estudio Arca & Paoli Abogados Calle Virtud y Union 160 Calle Virtud y Union 160 Urb. Corpac, San Isidro Urb. Corpac, San Isidro Lima Lima Peru Peru

Tel: +51 1 475 2930 Tel: +51 1 475 2930 Email: [email protected] Email: [email protected] URL: www.arcalaw.com.pe URL: www.arcalaw.com.pe Peru

Francisco Arca Patiño, a Peruvian national, has an LL.M. in Maritime Carla Paoli Consigliere, a Peruvian national, has a Law degree from Law from the University of Southampton, England. He also has a Universidad de Lima. She trained in Marine Insurance in the Standard Law degree from the Pontificia Universidad Católica del Perú. He is Steamship Owners’ Protection and Indemnity Association (Bermuda) licensed to practise Law in Madrid, Spain, with a qualifying degree Ltd. in the London offices of their manager, Charles Taylor and Co. from Universidad Complutense de Madrid, Spain. ■■ Partner of Estudio Arca & Paoli Abogados. ■■ Chairman and General Manager of Estudio Arca & Paoli. ■■ Member of the Board of Interlog Servicios S.A.C., Commercial ■■ Member of the Board of Interlog Servicios S.A.C., Commercial Correspondent in Peru to International Protection & Indemnity Correspondent in Peru of the International Protection & Indemnity Associations (P&I Clubs). Associations (P&I Clubs). ■■ Attorney, Legal Representative of Peruvian Firms. ■■ Member of the Lima Bar (Colegio de Abogados de Lima). ■■ Member of the Lima Bar (Colegio de Abogados de Lima). ■■ Member of El Callao Bar (Colegio de Abogados de El Callao). ■■ Member of El Callao Bar (Colegio de Abogados de El Callao). ■■ Member of the Peruvian Maritime Law Association – past ■■ Member of the Peruvian Maritime Law Association. President. ■■ Former Director of Publications of the Board of Directors of the ■■ Titulary Member of the Comité Maritime International. Peruvian Maritime Law Association. ■■ Member of the Committee of Maritime Law of the Lima Bar. ■■ Former Member of the Board of Directors of the Peruvian Maritime ■■ Former Lecturer of Maritime Law, Faculty of Law, University of Law Association. Lima. ■■ Former Professor’s Assistant on the Course on Company Law, ■■ Alumnus of United Nations Asia and Far East Institute for the Faculty of Law, University of Lima. Prevention of Crime and the Treatment of Offenders, related to ■■ Former Member of the Committee of Maritime Law of the Lima Bar. Crime Prevention for Insurance Companies, Tokyo. ■■ Former Arbitrator of the National and International Conciliation and Arbitration Centre of the Lima Chamber of Commerce.

Estudio Arca & Paoli Abogados was established on 1 May 1980, under the name of ESTUDIO FRANCISCO ARCA PATIÑO, ABOGADOS, and changed to the current name in 2004. From the beginning, we have provided specialised legal services to commercial firms, associations and institutions, both national and foreign. Estudio Arca & Paoli Abogados has considerable experience in providing an effective service in the following areas of legal practice: ■■ Maritime, including Air, Land and Multimodal Transportation and Marine Insurance. ■■ International Trade, including, among others, International Sales and Purchases, and Financing and Guarantees (Securities). ■■ Customs. ■■ Port Concessions. ■■ Administrative; among others, obtaining permits of operation, concessions, authorisations and licences from the General Directorate of Water Transport, the National Port Association, the General Directorate of Captaincies and Port Captaincies, the Organization for Security and Co- operation in Europe (OSCE), Indecopi (national intellectual property institute), OSITRAN (national infrastructure investment regulator), etc. ■■ Corporate. ■■ Commercial, with an emphasis on Companies and Contracts. ■■ Civil. ■■ Civil Procedures (Legal Actions). ■■ Arbitration. Estudio Arca & Paoli Abogados has a qualified team of selected lawyers, all of whom are trained to provide legal services according to the highest standards of ethics and performance. The principal characteristic of our organisation is a full identification with the clients, to whom we provide a personalised service with the greatest dedication.

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Poland Maciej Grudziński

Rosicki, Grudziński & Co. Piotr Rosicki

from the carriage of goods, the operation of the vessel, or the 1 Marine Casualty dumping of waste and other matter at sea. This liability is strict and generally cannot be avoided unless the pollution was caused 1.1 In the event of a collision, grounding or other major by an act of God, the exclusive wilful misconduct of a third party casualty, what are the key provisions that will impact or the party that suffered the loss, or the improper maintenance of upon the liability and response of interested parties? lights or other navigational devices by the responsible authorities. In particular, the relevant law / conventions in force in The liability for pollution is wide and includes damage suffered relation to: and the loss of profits, as well as the obligation to reimburse for various unavoidable costs related to the pollution. The authorities (i) Collision can additionally order the liable party to restore the environment to Whether or not Polish substantive law applies to a particular its original state prior to the damage. collision is primarily determined by Regulation (EC) No. 864/2007 Poland is also a contracting state to the International Convention on the law applicable to non-contractual obligations (in particular, on Civil Liability for Oil Pollution Damage (CLC) as amended by article 4). the 1992 Protocol (London), as well as the International Convention Poland is a contracting state to three important pieces of legislation on the Establishment of an International Fund for Compensation regarding collisions: (1) the Convention for the Unification of Certain for Oil Pollution Damage (FUND Convention), including the latest Rules of Law with respect to Collisions between Vessels (Brussels 2003 Protocol. Additionally, the International Convention on Civil 1910); (2) the 1972 Convention on the International Regulations for Liability for Bunker Oil Pollution Damage (BUNKER, London Preventing Collisions at Sea (COLREGs); and (3) the Convention on 2001) operates in Poland. All these legal acts have been additionally Certain Rules concerning Civil Jurisdiction in Matters of Collision incorporated into the Polish Maritime Code. (Brussels 1952). Conversely, the 1987 Lisbon Rules, drafted by the Various domestic laws also apply, such as the 1995 Statute on the Comité Maritime International (CMI), are technically only persuasive Prevention of Pollution from Ships, which, for example, allows the since they are not law and are regarded purely as a set of guidelines authorities the possibility of imposing fines on shipowners of up to that a court or tribunal might wish to take into consideration. 1 million SDR. The provisions of the 1910 Collision Convention have been largely (iii) Salvage / general average incorporated into the Polish Maritime Code, which, in addition to The Polish Maritime Code contains a separate chapter on salvage, but collisions between sea-going vessels or between sea-going vessels in most cases, the provisions of the 1989 International Convention and vessels of inland navigation, also applies to collisions with on Salvage are applied since Poland has been a contracting state seaplanes. to this Convention since 2006. The Code is generally in line with A vessel’s liability for a collision is, both under the 1910 Convention the Convention and contains only minor differences (e.g., property and Polish Maritime Code, based on fault; however, the Code under the Code includes not only freight at risk, but also passenger additionally provides specific examples of what should be regarded fees). Claims for salvage reward and the reimbursement of expenses as the fault of the vessel (a violation of the COLREGs, or negligence are subject to a two-year limitation period from the date on which in equipping the vessel, etc.). It is worth noting that collisions with the salvage operation was finished. objects such as wrecks, buoys or dolphins are generally not regarded There is also a separate chapter in the Code on the General Average, as collisions as far as the Maritime Code is concerned and are thus and the provisions therein are largely based on the York-Antwerp out of the scope of the application of the Code. In such cases, the Rules (as drafted by the CMI). Where no contract was made Polish Civil Code usually applies, and the vessel’s liability will regarding the adjustment of the general average, article 255 § 2 of the almost always be strict (no-fault liability). Code refers to “the rules commonly accepted in international trade”. (ii) Pollution This regulation is deemed to be a reference to the Rules. Under the In terms of the liability for pollution damage, there are separate Code, claims resulting from the general average are subject to a two- regulations that apply to (i) oil pollution, (ii) bunker pollution, and year time-bar, which is interrupted when the notification of a claim (iii) general pollution (other than from oil and bunker). is given to the general adjuster. Liability for general pollution is, in principle, governed by the (iv) Wreck removal Polish Maritime Code, which makes the vessel’s actual operator Poland is not a contracting state to the 2007 Nairobi International (rather than the registered owner) liable for the pollution resulting Convention on the Removal of Wrecks. The Polish Maritime Code,

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and other acts, give the Polish maritime authorities the power to, In addition, the Polish Maritime Code contains regulations regarding e.g., order a wreck removal at the expense of the owner or sell the a carrier’s liability (hence, also including cargo claims) which are wreck and use the proceeds to recover certain costs. The owner mainly based on the provisions of the HVR. of the wreck is under a general obligation to notify the authorities (within six months from the day of the sinking) of the planned final 2.2 What are the key principles applicable to cargo claims date by which the wreck will be removed. brought against the carrier? (v) Limitation of liability Poland is a party to the 1976 Convention on the Limitation of Liability Cargo claims can usually be brought by the person entitled to for Maritime Claims (LLMC) as amended by the 1996 Protocol. The receive the cargo. That person can either be the charterer, the person

Convention has also been incorporated into the Polish Maritime Code, nominated by the charterer (where no bill of lading (B/L) has been Poland which additionally regulates domestic matters, e.g., it prohibits the issued) or the “legitimate holder” of a B/L. According to article 144 operation of Polish vessels that do not have a certificate of insurance § 3 of the Polish Maritime Code, the legitimate holder of a B/L is: confirming cover in respect of maritime claims. The Code also ■ in the case of a straight B/L – the consignee named in the B/L; requires the Polish authorities to check (during a ship’s inspection) ■ in the case of an order B/L – the person to whom the order of whether such certificate is on board a vessel calling at a port in Poland. the B/L has been made out, or the endorsee; or (vi) The limitation fund ■ in the case of a bearer B/L – the bearer of the B/L. Limitation funds can be established in accordance with the Cargo claims are made against the carrier envisaged in the contract provisions of the above-mentioned acts and the Polish Maritime of carriage, or (more often) those named in the B/L. If the B/L Code. These funds comprise: does not indicate the carrier, article 136 § 2 of the Maritime Code ■ a fund created in accordance with the LLMC; provides the presumption that the ship’s operator is the carrier. If it ■ a fund based on the FUND Convention; and is proved that the B/L names the carrier inaccurately or falsely, the ■ an additional fund created on the basis of the 2003 Protocol to ship’s operator is responsible towards the consignee of the goods for the FUND Convention. any loss or damage resulting therefrom, but the operator will have recourse, in this respect, against the carrier. The Code provides for the exclusive jurisdiction of the District Court in Gdańsk to conduct proceedings in relation to limitation The other rules set out in the Code are also generally in line with the funds proceedings. HVR, including: ■ the list of excepted perils (as in article 4(2) HVR); 1.2 What are the authorities’ powers of investigation / ■ the paramount obligation to exercise due diligence to provide casualty response in the event of a collision, grounding a seaworthy vessel; or other major casualty? ■ the exemption of the carrier from any liability for loss or damage to the goods, if the nature or value thereof has been Poland has recently established an investigative body, the Marine knowingly misstated by the shipper in the B/L; Accidents Investigation Commission (somewhat similar to the UK’s ■ the compensation for the lost/damaged goods being calculated MAIB). The Commission was created to fulfil the requirements by reference to the value of such goods (as per article IV(5) of Directive 2009/18/EC concerning the principles governing the (b)); and investigation of accidents in the maritime transport sector. The ■ the carrier being entitled to limit its liability (the limits being Commission carries out investigations regarding marine accidents 666.67 SDR per package, or unit, or 2 SDR per kilogram of and incidents on a “no-blame” basis, and has a very wide authority gross weight of the goods lost or damaged, whichever is the (including its access to evidence), but does not deal with the higher) when the value of the goods was not inserted into the B/L. apportionment of liability. It is worth noting that when a B/L is issued for a particular carriage The second authority that could be involved is the Maritime of goods, the carrier cannot limit or contract out of the liability as Chamber, which often considers the cause of accidents, and the defined in the Code. If, however, a B/L has been issued for cargo possible apportionment of blame. It acts as a quasi-judicial body and shipped under a charterparty, then this restriction applies from the issues final decisions upon the completion of proceedings (which moment when the B/L was endorsed to the third party. can include evidence provided by witnesses, and the examination of log books, voyage data recorder (VDR) records, etc.). The Maritime Code provides a general two-year time-bar in relation to claims under the contract of carriage. However, cargo claims Where loss of life, personal injury, or significant damage to the against a carrier based on a B/L are subject to a one-year time-bar environment occurs, the investigative and prosecuting authorities from the date of the delivery of the goods, or the date when the can also become involved (in particular, the Police, Border Force, goods should have been delivered. or Public Prosecutor). The carrier is generally entitled to the defences and limits of liability provided for in the Maritime Code, even if the claim for the loss or 2 Cargo Claims damage to the goods is made in tort.

2.1 What are the international conventions and national 2.3 In what circumstances may the carrier establish claims laws relevant to marine cargo claims? against the shipper relating to misdeclaration of cargo?

Poland is a party to the Hague-Visby Rules (HVR) and has also The carrier can hold the shipper liable for any loss or damage ratified the 1979 Protocol (SDR). The 2008 UN Convention on resulting from inaccuracies or errors in the documents concerning Contracts for the International Carriage of Goods Wholly or Partly the cargo which are necessary in order to perform the carriage, by Sea (the Rotterdam Rules) was signed by Poland in 2009, but has as well as for any losses resulting from a delay in providing such not yet been ratified. documents (article 123 § 2 of the Code).

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More importantly, the carrier can hold the shipper liable for any loss or damage caused through an inaccurate or false declaration 4 Arrest and Security regarding the nature or character of the cargo. The shipper’s liability is strict. If such a misdeclaration was made by a third party, 4.1 What are the options available to a party seeking to which delivers the cargo in its own name but in fulfilment of the obtain security for a maritime claim against a vessel shipper’s obligation to deliver the cargo, then this party can also owner and the applicable procedure? be held liable by the carrier, but only if the misdeclaration resulted from that party’s fault. The security proceedings regarding all types of claims are generally Where the B/L was issued, the Polish Maritime Code (article 132 regulated by the Polish Civil Procedure Code (CPC), which offers a wide range of security measures comprising freezing injunctions

Poland § 2) generally incorporates the provisions of article III rule 5 of the HVR, and hence the shipper is under the obligation to indemnify the (including bank accounts), and mortgages and pledges. In carrier against all loss, damages and expenses arising or resulting particular, if a debtor owns a vessel which has been entered into the from any inaccurate or false statements as to the quantity, volume, Polish register of ships (also including a vessel under construction), number, weight, or marks of the cargo. then they could be encumbered with a compulsory mortgage if the creditor holds an enforceable judgment against the owner. In most If (i) goods of an inflammable, explosive or dangerous nature have cases, however, where the vessel’s owner has no assets in Poland been falsely declared by the shipper, or (ii) the carrier has not been except for their ship that is currently in Polish waters, the arrest of informed about the dangerous nature of such cargo and, based on the vessel is the most convenient solution. common knowledge about such goods, the carrier would not have been able to conclude that the cargo was dangerous, then the shipper Poland is a party to the 1952 International Convention Relating to will be liable for any loss or damage resulting from the loading and the Arrest of Sea-Going Ships (the Arrest Convention), but not to carriage of such cargo. This provision, established by article 127 § the later 1999 Convention. The Arrest Convention only applies to 1 of the Code, is generally based on article IV rule 6 of the HVR. maritime claims as listed in article 1(1). Upon the application of a claimant (subject to a remote court fee), the Polish court will issue a freezing injunction if it is held (i) that the claim is likely to exist (but 3 Passenger Claims not yet necessarily proven beyond doubt), and (ii) that it is probable that the claimant has a “legal interest” in obtaining the arrest order. The legal interest requirement means, in practice, that the claimant 3.1 What are the key provisions applicable to the has to convince the court that without the arrest their claim would resolution of maritime passenger claims? be impossible, or at least very difficult to recover (e.g., the ship most likely constitutes the only significant asset of the debtor). Poland is a party to the 1974 Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, as amended by the The practical annotation is that in order to have the application for 1976 Protocol. Poland has not ratified the 2002 Protocol; however, the vessel arrest recognised promptly, any foreign documents need it is bound by its provisions via Regulation (EU) No. 392/2009 (see to be translated in advance. Moreover, the court will almost always below). want to see the corporate documents of the claimant (e.g., excerpt from the commercial register) showing that their representative At the European level, the following key regulations operate in the Polish “arrest” proceedings is authorised to act by persons concerning the rights and obligations relating to passengers: having the capacity to grant such an authorisation. Failure to do so ■ Regulation (EC) No. 392/2009 of the European Parliament can cause major delays in obtaining the arrest. and of the Council of 23 April 2009 on the liability of carriers of passengers by sea in the event of accidents. It The arrest of a ship can be obtained in Poland even if the Polish should be noted that since Regulation (EC) No. 392/2009 courts do not have jurisdiction in the main proceedings. It should implements the text of the 2002 Athens Protocol directly into be noted, however, that the court in Poland will give the claimant no the European Union Member States from 31 December 2012, more than 14 days to commence legal proceedings (either in Poland the Protocol’s provisions apply to the extent envisaged by the or abroad), if they have not already been started. Regulation. ■ Regulation (EU) No. 1177/2010 of the European Parliament 4.2 Is it possible for a bunker supplier (whether physical and of the Council of 24 November 2010 concerning the and/or contractual) to arrest a vessel for a claim rights of passengers when travelling by sea and inland relating to bunkers supplied by them to that vessel? waterways, and amending Regulation (EC) No. 2006/2004.

At the domestic level, and to the extent that these matters are not Such arrest of the vessel is generally possible, either under the regulated by Regulation (EU) No. 1177/2010, the provisions of the 1952 Arrest Convention (e.g., based on article 1(1)(k) viz. a claim Polish Maritime Code apply, especially including articles 172–187. arising out of supply of goods or materials for a ship’s operation or The Code additionally regulates issues which are outside the scope maintenance), or under the general provisions of the CPC, which of the international and European regulations (e.g., certain rights give the right to basically secure any kind of claim that can be of carriers in relation to stowaways) and, among others, provides a pursued in court. The Arrest Convention facilitates the arrest, as it two-year time-bar for claims not covered by the Convention or the also provides for the right to arrest a vessel operated by the demise Regulation, such as, for instance, passengers’ claims resulting from charterer. delays in carriage, or claims for ticket refunds in the case of voyage The physical supplier may have difficulty in proving his claim cancellations. against the vessel if the supplier is not a party to the contract with the vessel. In such cases, the claim would most likely be brought on a non-contractual basis (e.g. unjust enrichment). However, according to the CPC rules, the arrest procedure in its first phase is done on an ex parte basis, i.e., a shipowner would not have the chance to respond before the court makes its decision with regard

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to the arrest. Therefore, it is possible – on a prima facie basis – to always cease to exist (regardless of the court or creditor’s view) convince the court as to the existence of a claim against the vessel if the debtor deposits the full amount of the security (as indicated and successfully arrest the ship. in the motion for the security) in the bank account of the Ministry It is worth noting that, very often, arresting a vessel in Poland of Finance. If this is not done, the debtor can only negotiate an will not automatically mean that the Polish courts will have the alternative security (bank guarantee, P&I letter of undertaking, etc.) jurisdiction to decide on the merits of the claim. Such jurisdiction with the claimant in order that the claimant agrees to withdraw the will be established if (i) the domestic law of Poland would give motion for security. The creditor, however, does not have to consent jurisdiction to Polish courts, or (ii) the supplier’s claim would fall to such an alternative security. into any of the categories mentioned in subsections (a)–(f) of article

7(1) of the 1952 Arrest Convention. 5 Evidence Poland A claim resulting from the bunker supply will usually not give rise to a maritime lien as far as Polish law is concerned, and this makes it slightly more difficult to prove the claim for the purposes 5.1 What steps can be taken (and when) to preserve or of arrest. Poland is a party to the 1926 International Convention obtain access to evidence in relation to maritime for the Unification of Certain Rules relating to Maritime Liens and claims including any available procedures for the preservation of physical evidence, examination of Mortgages, and has not signed any of the later conventions. Article witnesses or pre-action disclosure? 2 of the 1926 Convention provides an exhaustive list of claims giving rise to maritime liens. It should be noted that a very similar According to article 310 of the CPC, evidence can be secured if list of maritime liens is later repeated in the Polish Maritime Code there is the potential risk that obtaining the evidence later will be in article 91. The last (fifth) category provides for a maritime lien impossible or very difficult, or if, for any other reason, it is necessary for claims resulting from contracts entered into or acts done by to determine the present facts. Evidence is secured by the court. the master, acting within the scope of his authority away from the Prior to the proceedings, this can be done only upon the party’s vessel’s home port, where such contracts or acts are necessary for request; but once the proceedings have commenced, the court can the preservation of the vessel or the continuation of its voyage. If also secure further evidence on its own initiative. the contract for the supply of the bunkers was entered into by the master in the above-mentioned circumstances, it may be easier for Where proceedings are subject to the Criminal Procedure Code the claimant to arrest the ship in Poland (as it is justified by the (i.e., in the Maritime Chamber), the parties can also apply to the possible enforcement of the lien against the vessel). authorities in charge to collect and secure certain evidence.

4.3 Where security is sought from a party other than the 5.2 What are the general disclosure obligations in court vessel owner (or demise charterer) for a maritime proceedings? claim, including exercise of liens over cargo, what options are available? Article 3 of the CPC (which applies to most commercial disputes in shipping) imposes a general obligation on the parties to the In general, the CPC contains a wide range of security measures civil proceedings to act with decency and provide true information comprising freezing injunctions (including bank accounts), and regarding the case without concealing anything. Witnesses are mortgages and pledges. obliged to testify truthfully, and perjury is subject to prosecution. In addition, article 149 of the Polish Maritime Code gives the The same penalty applies to parties if they provide false statements carrier the statutory right to refuse delivery and retain possession while under oath. of the cargo until the consignee covers the amounts relating to the Parties are obliged not to impede the process of obtaining evidence carriage for which they are liable, e.g., freight, as well as part of the and must comply with court orders regarding the delivery of certain salvage award and a share in the general average attributable to the documents. A failure to do so entitles the court to decide how this cargo interests. The carrier will not be able to claim these amounts behaviour should be interpreted depending on the facts of each case from the shipper/charterer once they have released the cargo to the (but usually leading to a conclusion that is disadvantageous to the consignee. party responsible for such failure). The Code also provides for the list of specific claims which are The court can, in addition, order any third parties to disclose and secured by a lien on the cargo. The list includes claims for the legal deliver certain documents; refusal to do so is only possible in very and enforcement costs payable to the state, claims resulting from exceptional cases. damages caused by the cargo, and the carrier’s claims related to the carriage of these particular goods. Claims secured with a lien on the cargo have priority over other claims, including those secured with 6 Procedure mortgages (whether established by contract or the court’s decision). However, the lien will be extinguished once the cargo has been 6.1 Describe the typical procedure and timescale delivered to the consignee. applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist 4.4 In relation to maritime claims, what form of security is arbitral bodies); and iii) mediation / alternative dispute acceptable; for example, bank guarantee, P&I letter of resolution. undertaking.

National courts Once security has been granted by a Polish court (e.g., the vessel has been arrested), the debtor can apply for a cancellation or a change Maritime claims, as well as most transport-related disputes, are of the decision concerning the security, although this will always recognised by the commercial divisions of the regional or district be subject to the court’s discretion. However, the security will courts (depending on the amount in dispute). Typically, the

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proceedings are started with a lawsuit being filed in the court and carried out in days rather than hours, but this can in fact be seen by then served to the defendant (the latter moment being decisive for shipowners as an advantage. preventing concurrent proceedings which are started in a different court or jurisdiction). The CPC invokes a system of preclusion, meaning in practice that parties need to present evidence and 7 Foreign Judgments and Awards statements as early as possible, otherwise the court might not take them into consideration later. 7.1 Summarise the key provisions and applicable The court will often order the parties to exchange further writs before procedures affecting the recognition and enforcement scheduling a hearing, in order to narrow down the proceedings to only of foreign judgments.

Poland the disputed issues. At a later stage, witnesses will be heard, and the opinion of experts will be ordered (if required). The first instance Poland has been an EU Member State since 1 May 2004; therefore, proceedings are rarely closed within three months (save for judgments the recognition and enforcement of judgments given in other EU by default) and can take from six months to two years, largely Member States is primarily regulated by the provisions of Regulation depending on the complexity of each case and the involvement of the (EU) No. 1215/2012 of 12 December 2012 on jurisdiction and the parties. Each first instance judgment can be appealed, but the second recognition and enforcement of judgments in civil and commercial instance proceedings are usually shorter and are often concluded after matters (this Regulation replaced Regulation (EC) No. 44/2001 on the first hearing. Depending on the court of appeal, these proceedings 10 January 2015). Therefore, judgments given in an EU Member will usually take no more than a few months. State (except for Denmark, which has a separate agreement with the Arbitration EU) are recognised in Poland without any special procedure being required. Accordingly, a judgment given and enforceable in an EU Arbitration in Poland is still uncommon in maritime cases, and Member State will also be enforceable in Poland without having arbitration clauses from the standard forms (typically referring to to obtain any declaration of enforceability from a Polish court. London arbitration) usually remain unchanged. There is, however, However, please note that this is different from Regulation (EC) No. the International Court of Arbitration based in Gdynia, which is 44/2001, which still requires a declaration of enforceability to be associated with the Polish Chamber of Maritime Commerce and issued in Poland, and this Regulation still applies to the enforcement predominantly deals with maritime disputes. of judgments issued before 10 January 2015. Arbitration proceedings, unless arranged on an ad hoc basis, will In the case of the recognition and enforcement of judgments from usually be regulated by the terms and procedures of each tribunal, outside the EU, various international conventions and agreements and the CPC will additionally apply (regulating, inter alia, the apply, both bilateral (e.g., with Russia, Ukraine, Belarus, etc.) procedure for appealing from the award to the court). and multilateral (e.g. the 2007 Lugano Convention, which applies Mediation / ADR between the EU States – including Poland – and Denmark, Iceland, Mediation and ADR have been promoted over the last few years Norway and Switzerland). and presently the courts strongly encourage parties to use mediation Where EU or international law on the recognition/enforcement of after the legal proceedings have been commenced. It is often the judgments applies, the CPC will only have an ancillary application case that at an early stage in the proceedings, the judge will ex officio to a procedure. issue an order requesting the parties to try to reach a compromise In the case of judgments given in a state from outside the EU which, through mediation within a given time. Whilst participating in in addition, does not have any bilateral (or multilateral) agreement the mediation is not compulsory, disputes are increasingly being with Poland, the recognition and enforcement of such a judgment resolved this way. One of the incentives of mediations is that will be primarily governed by the CPC. This act generally provides reaching a settlement this way can entitle the claimant to the return that all foreign judgments in civil cases are recognised unless one of of 100% or 75% of the court fee. Detailed regulations on mediation the circumstances specified in article 1146 of the CPC occurs (e.g., have been adopted into the CPC. if such recognition is manifestly contrary to public policy, or if the party was deprived of its right to a defence). Similar rules apply 6.2 Highlight any notable pros and cons related to your to the enforcement of such judgments, and such enforceability is jurisdiction that any potential party should bear in confirmed by the Polish court at the request of the interested party. mind.

Poland offers relatively low litigation costs, with low court fees 7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement (usually 5% of the amount in a dispute) and reasonable attorneys’ of arbitration awards. fees. Additionally, costs such as translations, commuting, etc., are considerably lower than in most Western European jurisdictions. Poland is a contracting state to the Convention on the Recognition and As an EU Member State, Poland shares a great deal of common Enforcement of Foreign Arbitral Awards (New York, 1958). Thus, legislation with other European countries; therefore, Polish arbitral awards given in other contracting states are recognised and judgments are quickly enforceable in Europe and vice versa. enforced in Poland in accordance with the New York Convention. Commercial courts have also improved over the last decade, since Arbitral awards, as well as settlements made in arbitration they have been dealing with more and more transport-related cases, proceedings in countries which are not a party to the Convention, usually concerning parties from different jurisdictions. Most of are recognised and/or enforced in accordance with the CPC. A the important registers (register of companies, land register, etc.) proper application has to be filed along with the original or officially operate online and are easily accessible. certified: (i) award/settlement; and (ii) arbitration agreement (arbitral The rather formal approach of Polish courts to procedural issues is clause). If either of these documents is not in Polish, a certified one of the disadvantages that exist, but can usually be dealt with if translation must also be provided. The decision on the enforcement the legal proceedings have been prepared in advance. In terms of is given after a compulsory court hearing. speed, Polish courts are at Europe’s average level. Vessel arrests are

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The CPC provides that the recognition and/or enforcement of an other fiscal reliefs, to the shipping industry (including an alternative award or settlement will be mandatorily refused by a Polish court to corporate tax). This new law, widely referred to as the “shipyard if (i) according to Polish law, such dispute cannot be recognised in statute”, is intended to restore ship construction business in Poland arbitration proceedings, or (ii) the recognition or enforcement of the and assist existing companies. It is worth mentioning that Polish award/settlement is contrary to the public policy of Poland. There shipyards are heavily involved in constructing new vessels and is a list of defences provided by the CPC to prevent the enforcement steel sections, as well as carrying out repairs of existing vessels and of an award/settlement. attracting shipowners from all over the world. One of the new priorities in multimodal transport in Poland is the 8 Updates and Developments development of inland navigation. In particular, efforts are being

made to revitalise three major waterways, one of them linking the Poland Baltic Sea, through the river Oder, with the south of continental 8.1 Describe any other issues not considered above that Europe. Thus, it can be anticipated that, in the next few years, may be worthy of note, together with any current brown-water shipping will be a new important part of transport in trends or likely future developments that may be of Poland, in addition to existing road haulage under the Convention on interest. the Contract for the International Carriage of Goods by Road (CMR).

As of 2017, a new piece of legislation on shipbuilding is in force in Poland. It provides some important VAT exemptions, as well as

Maciej Grudziński Piotr Rosicki Rosicki, Grudziński & Co. Rosicki, Grudziński & Co. al. Papieża Jana Pawła II 35 / 2 al. Papieża Jana Pawła II 35 / 2 70-453 Szczecin 70-453 Szczecin Poland Poland

Tel: +48 608 58 6800 Tel: +48 888 77 0407 Email: [email protected] Email: [email protected] URL: www.rgcolegal.com URL: www.rgcolegal.com

Maciej is a qualified solicitor specialising in shipping law, marine Piotr is a solicitor who qualified in Poland, having previously spent insurance, inland navigation, and the carriage of goods by road several years abroad living and studying in both London and (CMR). He studied maritime law at the University of Southampton Rotterdam. Since 2004, and before joining Rosicki, Grudziński and has considerable knowledge of English shipping law, including the & Co., Peter worked for one of the leading law firms in the West carriage of goods by sea and marine insurance. Pomeranian Region, where he was chiefly responsible for all matters related to maritime law (including legal assistance to Poland’s leading Over the last 10 years, Maciej has furthered his experience by working shipowners) and corporate law. In both of these fields, he took an for P&I correspondents and then as a claims handler for a major active role in many pioneering projects, including establishing the legal shipowner, dealing with both Hull & Machinery and P&I insurance. He terms of the development and operation of offshore investments on also worked for a mid-size law firm where he was involved in many the Baltic Sea. aspects of shipping, including the sale of ships, ship financing and cargo claims, etc. Piotr has wide expertise in civil contracts and agreements, and his practice includes complex lease and sale contracts, including Maciej regularly handles cases related to transport and in particular agreements relating to marine vessels, maritime mortgages and cases concerning contractual disputes (claims under charterparties, service contracts in all areas of business (e.g., forwarding, transport, insurance claims and CMR claims), as well as claims in torts insurance and banking), as well as agreements regarding long-term (collisions and ship sinkings, wreck removals and oil pollution). He cooperation or investments between business partners. also takes care of security and enforcement proceedings, including vessel arrests.

Rosicki, Grudziński & Co. is a Polish law firm advising clients mainly on transport law, in addition to insurance and international trade. Our expertise is largely focused on shipping law and inland navigation and road carriage, as well as all types of disputes arising therefrom. Our firm provides comprehensive legal services for the maritime and manufacturing sectors. We are also proud to maintain a highly effective litigation team which assists in legal disputes and the enforcement of foreign judgments and awards, as well as in the recovery of claims. Our lawyers provide legal assistance within Poland, including Warsaw and all of the major Polish ports (Gdańsk, Gdynia, Świnoujście, and Szczecin). The firm also frequently acts outside Poland in international disputes and negotiations through a wide list of corresponding lawyers in Europe and other jurisdictions.

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Portugal

Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL Ana Cristina Pimentel

vessel. Security may be provided by way of a bank guarantee or by 1 Marine Casualty an insurance company and shall cover for possible damages until the removal of the vessel. The owner is ordered to present to the 1.1 In the event of a collision, grounding or other major Harbourmaster for approval, within a maximum of 30 days after the casualty, what are the key provisions that will impact incident, a suitable plan for the removal of the vessel. upon the liability and response of interested parties? In cases where there is a risk of pollution, and if the vessel is not In particular, the relevant law / conventions in force in immediately removed, the authorities are allowed to choose the most relation to: suitable entity to remove the bunkers or other polluting substances on board the vessel. The owner or disponent owner of the vessel (i) Collision is liable for the payment of expenses incurred with the removal of Portugal is a party to the 1910 Brussels Convention for the unification bunkers, polluting substances or others. of certain rules of law relating to collision between vessels. (v) Limitation of liability Portugal is also a party to the 1952 Brussels Convention for the Portugal was a party to the 1957 Brussels International Convention unification of certain rules relating to penal jurisdiction in matters Relating to the Limitation of Liability of Owners of Seagoing of collision or other incidents of navigation, as well as to the 1952 Ships as amended by the Brussels Protocol of 21 December 1979, Brussels Convention on certain rules concerning civil jurisdiction in but in June 2017 the Government approved for accession the 1976 matters of collision. Convention on Limitation of Liability for Maritime Claims (LLMC) (ii) Pollution and the 1996 Protocol, which entered into force in January 2018. The International Convention for the prevention of pollution from (vi) The limitation fund ships (MARPOL), as amended by the 1978 Protocol, has been Decree-Law No. 49029, dated 26 May 1969, determines the adopted by Portugal. procedural rules for the establishment of the limitation fund. Portugal adopted the CLC 1992 (Convention on civil liability for oil The applicant will have to justify the reasons for establishing the pollution damages), as well as the 1992 International Convention on limitation fund, the amount calculated based on the applicable the establishment of an international fund for compensation of oil Convention, how the fund will be established, and must list all the pollution damage and the subsequent 2003 Protocol. known creditors and amounts claimed. In 2006, Portugal also adopted the OPCR 1990 (the International Convention on oil pollution preparedness, response and cooperation) and the 2000 OPCR-HNS Protocol to the OPCR Convention, and in 1.2 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding 2015 it adopted the 2001 Bunkers Convention. or other major casualty? (iii) Salvage / general average Portugal is a party to the 1910 Brussels Convention for the unification In case of a maritime casualty, the Harbourmaster of the geographical of certain rules of law relating to assistance and salvage at sea. area where the accident occurred has the necessary powers to In 1998, with the publication of Decree-Law No. 203/98, the rules coordinate the response and thereafter investigate the accident, applicable to salvage were updated in line with the new 1989 obtaining statements from the intervening parties, crew or others, as Salvage Convention. The criteria for fixing the salvage reward were well as all documents or additional evidence necessary depending updated and enlarged in a way similar to those referred to in the on the accident under investigation. 1989 Convention, and a special compensation for situations where At the end of the investigation, the Harbourmaster closes the file and there is a threat of damage to the environment was also included. if he considers that the accident was due to the non-fulfilment of any General average is ruled by the provisions of the old 1888 Commercial applicable rule regarding navigation or other matters, the file is sent Code. Provisions on the bill of lading (B/L) referring to the York- to the General Attorney for further public prosecution; otherwise, Antwerp rules are considered applicable under the rules of the B/L. the file comes to an end. (iv) Wreck removal In 2012, within the implementation of Directive 2009/18/CE, dated 23 April 2009, establishing the principles governing investigation of Wreck removal is ruled by Decree-Law No. 64/2005, dated 15 March 2005. The owner of the vessel is requested, within four days accidents in the maritime transport sector, a new independent body after the incident, to put up security considered adequate by the was created, now called GAMA, with the aim of preventing and authorities, taking into account the particular characteristics of the investigating maritime accidents.

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The shipper is responsible for the damages resulting from the non- 2 Cargo Claims disclosure or incorrect or insufficient identification to the carrier of any relevant information on the cargo to be transported, particularly 2.1 What are the international conventions and national where dangerous goods are concerned. laws relevant to marine cargo claims? 3 Passenger Claims The Hague Rules (1924 Brussels Convention for the unification of certain rules of law relating to bills of lading) apply in the case of marine cargo claims. 3.1 What are the key provisions applicable to the National Decree-Law No. 352/86, dated 21 October 1986, is applicable resolution of maritime passenger claims? Portugal to those situations not covered by the Brussels Convention. The main new rules introduced by this national Decree-Law, besides Portugal ratified the 2002 Protocol to the 1974 Athens Convention the clarification of some words used on the Hague Rules, concern relating to the carriage of passengers and their luggage. the definition of maritime carriage as covering the period from port Regulation (EC) No. 392/2009 of the European Parliament and to port, the extension to carriage on deck of the provisions of the Council, dated 23 April 2009, is also relevant to establish the limits Brussels Convention regarding exoneration clauses and limits of of liability of the carrier. liability and the extension of the time limit to act against the carrier to two years. It is also relevant to mention the possibility to sue directly the vessel involved in those situations where the carrier 4 Arrest and Security is not identifiable through the B/L and when the B/L is issued by someone that is not the carrier. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure? 2.2 What are the key principles applicable to cargo claims brought against the carrier? Portugal is a party to the 1952 Brussels Convention relating to The shipper and the receiver mentioned on the B/L are entitled to the arrest of sea-going ships. Vessels sailing under the flag of a act against the carrier. contracting state may be arrested for any of the claims listed under Article 1 of the said Convention. Vessels sailing under the flag of The provisions on the B/L apply to the contract of carriage. a non-contracting state may be arrested for any of the maritime Charterparty clauses, if not expressly incorporated in the B/L, only claims listed in the Convention and for any other claim, providing apply to the parties entering the charterparty. that besides the evidence on the probable existence of the claim, the Clauses such as “said to contain” or “shippers load and count” are arrestor also provides evidence on the need for the arrest as the only acceptable, providing that it is reasonable to expect that the carrier possible means of obtaining a payment guarantee from the debtor. is not able to check all the information provided by the shipper to be included on the B/L, namely when the container is delivered to the Only the assets of the debtor may be arrested, and it is necessary carrier stowed, closed and sealed. to provide evidence on the ownership of the vessel to be arrested. According to the provisions of the 1924 Brussels Convention (Article The vessel that gave rise to the credit may, in principle, always be 4 No. 5), as updated by the above-mentioned Decree-Law No. arrested; to arrest a sister ship, it is necessary to provide evidence 352/86, the limit of liability of the carrier corresponds to the amount that such vessel is registered in the name of the same debtor. of EUR 498.80 per package or unit mentioned on the B/L; when The arrest application is submitted to court once the vessel has the goods are carried in containers, the number of packages or units entered the port. identified on the B/L are considered for the calculation of the limit Within the next 24 hours (after-hours periods, holidays and weekends of liability unless the value of the goods is declared by the shipper, are not included), after analysing the arrest application, the judge accepted by the carrier and included on the B/L before shipment. gives a first detention order preventing the vessel from leaving the The time limit to act against the carrier as stated on the 1924 port; this detention order is immediately sent to the Harbourmaster Brussels Convention is one year after delivery of the goods or the of the port where the vessel is staying. If the judge considers that the date when the goods should have been delivered; extensions of the file does not have all the supporting documents and further evidence time limit are acceptable, providing that the carrier has granted the is necessary, the witnesses appointed by the arrestor are heard by the necessary permission. judge (normally within the next five days) to confirm the facts of the The time limit to act is two years when the loss or damage occurred case, and the arrest order is given thereafter. before the cargo was charged on board at the port of origin or after The arrestee then has 10 days to oppose to the arrest, submitting discharge at the port of destination; civil liability provisions apply written arguments and a list of witnesses if appropriate. to such damages. After the hearing of the witnesses for the arrestee, the arrest decision is either confirmed, dismissed or eventually changed (e.g. a reduction 2.3 In what circumstances may the carrier establish of the amount may be granted) in view of the new evidence put claims against the shipper relating to misdeclaration forward before the judge. of cargo? To release the vessel from arrest, either: (i) the parties reach any The shipper is obliged, under the provisions of Article 3 No. 5 of the kind of acceptable agreement, the request for the release of the 1924 Brussels Convention, and of Article 4 of the above-mentioned vessel is submitted to court by the arrestor and the arrest application national Decree-Law, to deliver to the carrier the list of cargo to be is withdrawn; (ii) if agreement is not reached, the arrestee may shipped on board, properly identifying the nature of the goods to be deposit the funds claimed within the court order and obtain the transported as well as any particular requirements of the cargo (e.g. immediate release of the vessel; or (iii) the arrestee may present a temperature). bank guarantee and, providing that the wording is accepted by the

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arrestor and/or the judge, the vessel is released from arrest, and the travel abroad) or the verification of certain facts by way of inspection, main proceedings on the merits will then have to follow. it is possible to obtain such testimony or inspection in advance. The competence of the Portuguese courts to deal with the main Such proceedings may be requested whenever the applicant considers proceedings depends on the situation giving rise to the arrest; suitable, within a court case which has already commenced, or when jurisdiction clauses are generally accepted. proceedings have yet to commence, even abroad. Counter-security is normally not required. The applicant will have to justify before the court the need for such Attachment or freezing of other assets is not possible; any change evidence to be produced in advance, identifying the parties against regarding the arrested vessel is only possible with the agreement of which the evidence obtained will be used (such parties will be called the arrestor. to the proceedings), identifying, in addition, the persons to be heard or the assets to be inspected and the facts on which evidence will Portugal have to be obtained. 4.2 Is it possible for a bunker supplier (whether physical The evidence thus obtained is recorded on tape or on a written and/or contractual) to arrest a vessel for a claim document. relating to bunkers supplied by them to that vessel? The evidence thus obtained is considered valid and may be used Yes, the arrest is possible as bunkers supplied may be considered against the identified parties that took part in the evidence-gathering maritime credits under Article 1 letter k) of the 1952 Brussels Arrest procedure. Convention. 5.2 What are the general disclosure obligations in court proceedings? 4.3 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what Generally speaking, the party putting forward an argument has to options are available? produce evidence thereof by way of documents, oral testimonies or other means. The arrest of assets other than a vessel is possible under the The court considers all the evidence produced, whether presented by provisions of national law regarding arrest, where besides producing the alleging party or the opposite party. evidence on the existence of the credit, it is also necessary to It is possible to obtain an order from the court for the opposite party provide evidence on the need for the arrest as the only possible way to disclose documents or other necessary evidence items that are not of obtaining security for the payment of the debt. voluntarily disclosed. The documents to be disclosed need to be Bunkers may be arrested, providing that it is possible to establish identified by the requesting party. ownership thereof and that they belong to the arrestee. Similar rules apply to third parties that may be compelled by the The carrier is entitled to retain the cargo transported as a guarantee court to disclose documents or other pieces of evidence in their for payment of the amounts in debt referring to the carriage. possession. According to recent national rules, shipping agents may also retain At the request and initiative of the judge, the parties involved in the cargo as a guarantee for payment of their own credits, as well as the litigation, or third parties, may also be compelled to disclose of the credits of the agent’s principal, thus including the carrier and documents or other items to the court. enlarging the retention rights to previous unpaid transports. 6 Procedure 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking. 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) Security may be provided in the form of a cash deposit at the court’s national courts (including any specialised maritime or order; this would be the quickest and most effective form of security, commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute giving rise to the immediate release of a vessel under arrest. A resolution. bank guarantee is the most commonly used form of security; if the wording is not previously discussed and accepted by the opponent, In Portugal, there is one maritime court (located in Lisbon) with it will be submitted to the judge for approval. Protection and competence for all the continental territory, excluding the islands of indemnity (P&I) letters of undertaking are only acceptable if they Madeira and Azores where maritime matters are dealt with by the obtain the agreement of the other party. local civil courts. Maritime courts are competent to deal with cases referring to the 5 Evidence various aspects of shipping, such as: purchase, sale and repair of vessels; maritime transport including charter contracts, maritime insurance contracts, arrest of vessels, maritime accidents, tugging 5.1 What steps can be taken (and when) to preserve or and pilotage, pollution and salvage; as well as any other questions obtain access to evidence in relation to maritime claims including any available procedures for the generally linked with maritime commercial matters. preservation of physical evidence, examination of Proceedings are engaged through a formal written request, sent witnesses or pre-action disclosure? to the court by a Lawyer, via an electronic database, stating all the arguments and attaching all supporting documents; a list of According to Article 419 of the Code of Civil Procedure, in cases witnesses to be heard and any other acceptable evidence-gathering where there is a risk that it will become very difficult or impossible procedure, such as the inspection by experts of assets or documents, to obtain the testimony of certain persons (e.g. because of illness or should also be requested.

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Service of documents is made by the court by way of a registered annum; for commercial credits, the interest rate is established every letter with acknowledgment of receipt or eventually, in some cases, six months and is 8% per annum for the first semester of 2018. direct contact from a court clerk or appointed agent.

The shipping agent of the vessel is entitled, according to national 6.2 Highlight any notable pros and cons related to your law, to receive service of documents on behalf of the owner, jurisdiction that any potential party should bear in disponent owner or managers of the vessel. mind. After service of documents, the defendant has a limited period (30 consecutive days) in which to present a defence paper, stating all the Oral evidence by witnesses given before the judge is still very counter-arguments and attaching supporting documents including a important for the conviction of the judges and decision of the case; list of witnesses to be heard. witnesses will have to confirm before the judge the contents of documents already attached to the court file as only official public Portugal Thereafter, the judge may summon the parties for a hearing aiming documents are considered full and complete evidence for the alleged at obtaining a settlement for the case, or if settlement is not possible, facts. preparing the file for judgment identifying the main questions under dispute and the issues on which evidence will have to be produced Essentially, each party has to pay for its own legal costs, as by the parties during the judgment hearing to be scheduled on the recoverable costs correspond roughly to the amount of court fees same occasion, if possible. paid in advance to the court. During the judgment hearing, the witnesses are examined and cross- examined by the Lawyers for the parties; the judge may intervene 7 Foreign Judgments and Awards at any moment and ask any questions considered necessary. The hearing ends with the final oral arguments from the Lawyers. 7.1 Summarise the key provisions and applicable The file is then presented to the judge for the preparation ofthe procedures affecting the recognition and enforcement decision. of foreign judgments. Depending on the amount of the claim, the parties may be allowed to appeal to the Appeal Court and eventually, in certain situations, a As Portugal is a member of the European Union, Regulation (EC) second degree of appeal may also be possible, to the Supreme Court No. 1215/2012 of 12 December 2012 on jurisdiction, recognition and of Justice. enforcement of judgments in civil and commercial matters applies. As for the timescale, this will depend mainly on the judge’s agenda. Judgments obtained outside the EU are subject to the procedure More or less two years to obtain the first instance decision should of recognition of foreign judgments by the Appeal Court before be an average for a file that moves on without excessive delay. being suitable for enforcement. This recognition procedure aims at Lawyers do not control the court’s agenda. verifying: (i) the authenticity of the foreign judgment; (ii) that the Court costs are calculated by the court accounting clerk at the very decision is final and not subject to appeal; (iii) that the defendant end of the proceedings. has been regularly served; (iv) that the decision does not contain any provision contrary to the principles of international public order in The losing party has to pay for court costs; the judge establishes the force in Portugal; and (v) that the decision does not concern matters percentage of costs to be paid by each party based on the final result within the exclusive competence of Portuguese courts. of the case. Lawyers’ fees are not included, at least in full, as the maximum amount of Lawyers’ fees to be reimbursed to the winning party by 7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement the losing party is about 50% of the amount of court fees paid by of arbitration awards. both parties to the court as advance payments (roughly an amount equal to court fees paid by the party claiming reimbursement). Portugal is a party to the 1958 New York Convention on the When submitting the first papers to court, it is necessary topay Recognition and Enforcement of Foreign Arbitral Awards. for court costs as an advance payment; the final court fee amount referred to above is only calculated at the very end of the procedure. Mediation and alternative dispute resolution depends on the 8 Updates and Developments agreement of the parties. Mediation or arbitration clauses are accepted, providing that they 8.1 Describe any other issues not considered above that were expressly agreed by the parties in advance, or after the dispute may be worthy of note, together with any current has started. trends or likely future developments that may be of interest. In cases where the parties do not reach an agreement regarding the appointment of an arbitrator, the Appeal Court may be requested to Jurisdiction clauses inserted in the bill of lading have generally been appoint an arbitrator on behalf of the parties or of the default party. accepted as valid by the Portuguese courts, but recent decisions, There are no specialist arbitration panels or procedures relevant to already confirmed on appeal by the President of the Appeal Court maritime claims. (single judge decision), have considered that such clauses do not Interests on claims may be obtained based on the contract signed apply, essentially because the B/L is not signed by the parties and/ by the parties. Legal interests may be claimed from service of or the shipper has not accepted or been expressly informed of the documents. The general legal interest rate is currently 4% per contents of such jurisdiction clause inserted in the B/L.

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Ana Cristina Pimentel Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL Av. Elias Garcia, 176 – 2º Esq. 1050-103 Lisbon Portugal

Tel: +351 21 781 99 90 Email: [email protected] [email protected] URL: www.acpadv.pt Portugal Ana Cristina Pimentel obtained her degree in Law in 1991, in Belgium, at the Université Catholique de Louvain-la-Neuve. Since then, she has been working actively in shipping, as well as in road and air transport and insurance, representing various national and international entities in those areas of activity. In 2003, she obtained her postgraduate diploma in Maritime Law at London Metropolitan University, United Kingdom. She is a Lawyer and has been a member of the Portuguese Bar Association since 1994. Since 2004 she has been an invited teacher at the Escola Superior Náutica Infante D. Henrique, the Portuguese Maritime College, giving lectures on different subjects of Maritime Law and Transport Law.

Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL is a Portuguese law firm incorporated in 1999. The law firm covers all areas of shipping, road and air transport as well as insurance law, representing national and foreign shipowners, cargo interests, shipping agents, forwarding agents, port authorities, insurance companies and P&I clubs, on the various aspects of cargo claims, marine casualties, purchase, sale and repair of vessels. The law firm has been very active in the arrest of vessels, being a member of the Shiparrested.com organisation.

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Russia

LEX NAVICUS CONCORDIA Konstantin Krasnokutskiy

Internal regulations also set requirements for oil response plans for 1 Marine Casualty ships and ship-operating companies, and contain other environmental requirements. 1.1 In the event of a collision, grounding or other major (iii) Salvage / general average casualty, what are the key provisions that will impact Russia is a party to the International Convention on Salvage, 1989. upon the liability and response of interested parties? In particular, the relevant law / conventions in force in Russian law relating to salvage may be found in Chapter XX relation to: “Salvage of Vessels and Other Property” of the MSC, and is based on the Salvage Convention, 1989. (i) Collision Provisions relating to general average may be found in Chapter XVI Russian law in respect to collision of seagoing vessels can be found of the MSC, which is based on the York-Antwerp Rules, 1994. Most in Chapter XVII of the Merchant Shipping Code, 1999 (articles of the provisions in the said chapter are non-mandatory and parties 310–315), the provisions of which are based on the Collision are free to agree to any version of the York-Antwerp Rules. Convention, 1910. The COLREGS, 1972 apply in case of collision; (iv) Wreck removal however, their practical application in cases of collision in ice and Wreck removal is regulated mainly by Chapter VII of the MSC on the Northern Sea Route is somewhat peculiar. (articles 107–114). The obligation to remove the wreck is placed upon (ii) Pollution the shipowner. Article 109 of the MSC provides that the owner of the The relevant conventions in force are: vessel is obligated to raise and remove her wreck upon the order of the local harbour master if the wreck presents a threat to safe navigation ■ the UN Law of the Sea Convention, 1982; or poses a risk of damage to the marine environment, or obstructs ■ the SOLAS, 1974 and Amendments thereto; fishing activities or the normal functioning of a port. The Federal ■ the MARPOL, 1973/1978 and Protocols (Annexes I–VI); Law on the accession of the Russian Federation to the 2007 Nairobi ■ the Intervention Convention, 1969, and the Protocol, 1973; International Convention on the Removal Wrecks is scheduled to be ■ the OPRC Convention, 1990; considered by the Russian Duma in September 2018. Russia will ■ the CLC Convention, and the Protocol, 1992; most likely accede to the said Convention at the end of 2018. ■ the FUND Convention, and the Protocol, 1992; (v) Limitation of liability ■ the Bunkers Convention, 2001; and In 1999, Russia acceded to the Protocol, 1996 to amend the Convention on Limitation of Liability for Maritime Claims, 1976 ■ the Anti-Fouling Convention, 2001. with some reservations. A number of the said Conventions are implemented into Russian The limitation of liability is regulated in Chapter XXI of the MSC domestic legislation, in particular the Merchant Shipping Code (articles 354–366), where the provisions of the said Convention are (MSC). Chapter XVIII of the MSC, which is based on the CLC implemented. Article 355 of the MSC contains a list of maritime Convention, regulates liability for oil pollution and provides for claims subject to limitation, which is based on article 2 of the the liability limits as adopted by the IMO Resolution LEG.1(82). Convention. As of July 2016, the applicable liability limits are Chapter XX.1 of the Code implements the provisions of the Bunkers those set by the 2012 Amendments to the Convention, which are Convention. implemented into article 359 of the MSC. There are numerous internal legislative acts regulating pollution Similarly, the MSC implements provisions relating to the limitation and maritime pollution. The starting point is the Federal Law on of shipowners’ liability with respect to oil pollution, bunker Protection of Environment, as well as other federal laws followed pollution, cargo claims, and passenger claims, which are based on by governmental decrees and regulations enacted by the Russian the respective international conventions. administrative bodies, such as the Ministry of Transport and (vi) The limitation fund Ministry of Natural Resources and Ecology. The limitation fund may be established by placing a cash deposit Contrary to the provisions of the CLC Convention, national legislation with, or by providing, a bank guarantee or liability insurer’s letter provides for compensation for the spill of oil (or other pollutants) of undertaking to the state commercial court dealing with the claim based on a formula, in which the size of the compensation depends subject to limitation. P&I Clubs’ LOUs are occasionally accepted. on the amount of oil spilled. Nevertheless, in cases falling under the scope of the CLC, the CLC shall prevail over national legislation.

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The carrier shall not be entitled to limit his liability if it is proven that 1.2 What are the authorities’ powers of investigation / the loss of or damage to the goods, or delay in the delivery thereof, casualty response in the event of a collision, grounding resulted from his personal act or omission committed intentionally or other major casualty? or with gross negligence. The shipper and/or the charterer are liable for any damages caused The state bodies which have the authority to investigate incidents at to the carrier, unless they prove that the damage was not caused by sea for the promotion of maritime safety, are the Federal Transport their fault. Supervision Authority and its branch offices in the Russian sea ports. A shipowner, in the case of a maritime incident, e.g. collision, capsize or grounding, has the obligation to inform the authority at the port 2.3 In what circumstances may the carrier establish Russia and present evidence for investigation. The investigation of incidents claims against the shipper relating to misdeclaration of cargo? with Russian flag vessels is conducted in accordance with the Order of Ministry of Transport N308/2013. Whenever at least one foreign flag vessel is involved in the incident, the investigation shallbe Where goods of an inflammable, explosive or dangerous nature accomplished in accordance with the IMO Casualty Investigation were misdeclared and the carrier could not establish their nature Code (Resolution MSC.255(84)). and character upon receipt of the goods by external inspection, such goods may at any time be unloaded, destroyed or rendered The law enforcement bodies have very wide authority for investigation innocuous by the carrier without compensation. The shipper of if there are signs of administrative and/or criminal offence, for such goods shall be liable for all damages and expenses directly or example, in cases of oil spill, serious casualties resulting in loss of life, indirectly arising out of, or resulting from, such shipment. etc., in order to identify and bring a charge against the liable persons. The freight for the carriage of such goods shall not be returned. As far as casualty response is concerned, the Ministry of Emergency Where the freight had not been paid at the shipment of the goods, Response interacts in cases of major casualties and participates in the carrier is entitled to recover it in full. the casualty response. In some specific cases, for example, oil spills, the salvage/response companies, whether state-owned or private, act in accordance with the shipowners’ oil pollution plan and contract 3 Passenger Claims with the shipowner for emergency response. Such salvage/response companies will participate in the casualty response along with the authorities from Ministry of Emergency Response. 3.1 What are the key provisions applicable to the resolution of maritime passenger claims?

2 Cargo Claims Russia is a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974 and the Protocol, 1976.

2.1 What are the international conventions and national In terms of Russia’s internal legislation, articles 186–196 of the laws relevant to marine cargo claims? MSC regulate the liability of the shipowner and its limitation.

The Hague-Visby Rules apply. Most of the provisions of the 4 Arrest and Security Hague-Visby Rules are implemented in Chapter VIII of the MSC. However, some provisions of the Hamburg Rules have also been implemented in Chapter VIII of the Code, although Russia is not a 4.1 What are the options available to a party seeking to party to the Convention on the Carriage of Goods by Sea, 1978 (the obtain security for a maritime claim against a vessel Hamburg Rules). owner and the applicable procedure? Russian law relating to carriage of goods by sea is rather complicated as some of the Hague-Visby Rules relating to the contract of carriage Russia is a party to the Arrest Convention, 1952. The provisions of covered by a bill of lading are extended to cover carriages under Russian law regarding arrest of ships are given in Chapter XXIII of charterparties. the MSC. It must be noted the Russia is not a jurisdiction convenient for arrest. Most of the arrest applications are denied. At the same time, a number of wrongful arrests are imposed each year. 2.2 What are the key principles applicable to cargo claims brought against the carrier? A ship may be arrested only in respect of a maritime claim if: (a) the claim is secured by maritime lien; The time bar for cargo claims is one year. The cargo claims may be (b) the claim is based on mortgage or hypothecation of the ship; brought against the carrier who, according to Russian law, may be (c) the claim relates to the ownership or possession of the ship; the shipowner, a bareboat or time charterer, a ship operator or some or other person who entered into the contract for carriage of goods in (d) in respect of another maritime claim, provided that the person his own name with the shipper. who owned the vessel at the time when a maritime claim The list of grounds for exemption of the carrier from liability for arose is liable in respect of such claim, and is its owner at the cargo damage, shortage or loss is similar to article IV of the Hague- time when the arrest procedure begins, or such person was Visby Rules. the bareboat charterer of the ship liable for the claim at the time when such claim arose and at the time when the arrest The liability of the carrier for any loss of or damage to, or in procedure begins, is the bareboat charterer or owner of the connection with, the goods, is limited to the equivalent of 666.67 ship. Russian law also recognises the arrest of sister ships. units per package or 2 units per kilo of gross weight of the goods lost or damaged, whichever is the higher, provided that the nature The list of maritime claims, in respect of which a vessel may be and value of the goods had not been declared by the shipper before arrested under Russian law, also includes the maritime claims shipment and inserted in the bill of lading. specified in article 1 of the Arrest Convention, 1952, as well as some

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maritime claims from the 1999 Arrest Convention, such as claims entitled to arrest the vessel if he has no contractual relations with the for insurance premiums, commissions, brokerages or agency fees shipowner. In order to arrest a vessel, the procedure described in payable in respect of the ship. question 4.1 above shall be followed. Article 6 of the Arrest Convention, 1952 provides for the arrest Nevertheless, despite the fact that ship arrests are generally procedure to be governed by the law of the state in which the uncommon in Russia, a number of wrongful arrests occur arrest is sought. In Russia, most arrest cases are considered by the each year, where Russian courts grant arrest orders to physical Russian commercial courts in accordance with the arrest provisions bunker suppliers, who do not have contractual relations with the contained in Chapter 8 (“Measures to secure a claim”) of the Russian shipowners. The court’s reasoning is based on misinterpretation of Code of Procedure in Commercial Cases (CPC). article 4 (3), par. 2 of the Arrest Convention, 1952; the courts find

Under articles 90 and 99 of the CPC, arrest of property (including that the physical bunker supplier may arrest the vessel based on the Russia arrest of a ship) can be granted by the Russian commercial courts sole fact that a bunker supply claim is a maritime claim against the at any stage of already pending proceedings or enforcement vessel, regardless of the fact that his contractual counterpart is not proceedings in respect of a judgment or arbitral award, and also the shipowner (e.g. bunker trader). Sometimes, physical bunker before any proceedings are instituted on the merits of the dispute. suppliers, for the purposes of obtaining an arrest, mislead the court In order to obtain an arrest order, the applicant must persuade the by asserting that they are the contractual bunker suppliers. court that: (1) without arrest, it will be “difficult or impossible to enforce” 4.3 Where security is sought from a party other than the the judgment or the arbitral award on the merits of the vessel owner (or demise charterer) for a maritime dispute, or that it may become necessary to enforce the court claim, including exercise of liens over cargo, what judgment outside the territory of the Russian Federation; or options are available? (2) arrest is applied for in order to prevent “considerable damage” on the part of the applicant. Any type of security from any liable party is possible pursuant to It is at the judge’s sole discretion to assess the arguments of the the provisions of the Commercial Procedure Code. The party applicant with due regard to rationality and proportionality of the seeking arrest of cargo, bunkers, etc., or requesting another form of claim and potential damages that may be caused to the shipowner. security for securing its claim against a party other than the vessel’s Providing counter-security, which is not mandatory, raises the chances owner, shall prove to court, on a probability basis, the risk of non- of obtaining an arrest, but will not lead to arrest automatically. enforcement of the future judgment on the merits of the dispute, or that it will suffer considerable damages unless the security is granted. In cases where arrest has been granted by the court before the proceedings on the merits of the dispute are started, the applicant shall, within 15 days of the arrest order, file his claim with the 4.4 In relation to maritime claims, what form of security is court that ordered the arrest or present evidence that proceedings acceptable; for example, bank guarantee, P&I letter of on the merits of the dispute have been commenced before another undertaking. competent court or arbitration; failing which, the arrest will be lifted. Russian procedural law does not contain a comprehensive list of The arrest may be lifted upon request of the shipowner if he provides securities, and various forms of securities are acceptable. The most security for the claim in the form of a cash deposit, bank guarantee or common types of security would be a cash deposit to the court’s a P&I letter of undertaking, otherwise the arrest will remain in force account and a bank guarantee. Letters of undertaking of Russian throughout the proceedings on the merits and until the completion of fixed-premium insurers are also commonly accepted. the enforcement proceedings by forced sale of the vessel. P&I letters of undertaking are occasionally accepted, but would have An arrest application shall be filed with the commercial court which has jurisdiction over the port of entry of the vessel, or with a court of to be substantiated by additional evidence of the Club’s financial general jurisdiction if the arrest is sought to secure a claim for death, status along with an explanation of the nature of the P&I Club, as personal injury or wages. The applicant shall present evidence that most Russian judges are not familiar with this type of security; the vessel is within the jurisdiction of the court (typically, this would nevertheless, it is accepted. Russian courts may be reluctant to be a confirmation from the harbour master) and evidence relating to accept a Club’s LOU in cases where Russian state-owned entities the maritime claim and its amount, as well as evidence with respect (and/or their subsidiaries), affected by US and EU sanctions, are to the ownership of the vessel and the party liable for the maritime involved in the proceedings. In 2017 and 2018 the state commercial claim and other evidence. courts had specifically referred to sanctions when refusing accept Clubs’ LOUs as security for lifting arrest. Under article 93 of the CPC, an arrest application is considered by a single judge without notification of the parties. The decision as to whether or not to grant the application shall be taken on the day 5 Evidence following the date on which the arrest application was filed with the court, and if that falls on a Saturday, Sunday or a public holiday, then on the day following immediately thereafter. 5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime claims including any available procedures for the 4.2 Is it possible for a bunker supplier (whether physical preservation of physical evidence, examination of and/or contractual) to arrest a vessel for a claim witnesses or pre-action disclosure? relating to bunkers supplied by them to that vessel? There are no special provisions with respect to securing evidence A bunker supply claim is a maritime claim. A bunker supply claim in relation to maritime claims. Russian procedural law generally is not secured by a lien. Russian law recognises only in personam provides for the possibility to secure evidence prior to or after the claims. Only a contractual bunker supplier can arrest the vessel to commencement of proceedings. A party who has justifiable reasons secure his claim to the contractual counterpart, if the latter is the to believe that a specific piece of necessary evidence will become shipowner (see question 4.1(d) above). A physical supplier is not impossible or difficult to present may apply to court and request the

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court to secure the evidence. Such party shall explain to the court the parties aimed at delaying the matter), but it is not very likely the facts which will be proven by the evidence in question, and the to delay longer than a year, as the judges tend to consider the cases reasons why this evidence needs to be secured. promptly and rather superficially. The Commercial Procedure Code provides that the procedure for A judgment of the first instance court enters into force 30 days after securing evidence shall be in accordance with the rules governing the the day on which it was delivered in the final form, unless it was procedure for security measures (e.g. imposing arrest). Practically, appealed. In the case of appeal, the entry into force of the judgment this means that the court will issue a ruling ordering the evidence will be postponed until the case is heard by the appellate court. This to be collected and, for example, placed for secure storage. Such usually takes around two months from the day on which the appeal court ruling will be executed by the bailiffs, who will be authorised to is filed.

Russia obtain access to collect evidence and, for example, place it for secure Once the appellate court rules on the matter, the judgment will storage for further delivery, to court or experts appointed by court. enter into force immediately and the court will issue a writ of According to Chapter XX of the federal law on notaries, a notary execution. The writ of execution may then be presented to a bank or public may secure evidence. The notary is authorised to question court bailiffs for forced recovery of the money adjudged or forced witnesses, inspect written and physical evidence. execution of non-monetary obligations, e.g. redelivery of a vessel. Chapter XXIV of the MSC and Chapter XIX of the federal law on A further opportunity to appeal the judgment remains. The judgment notaries refer to the Act of Sea Protest which, according to Russian may be appealed to one of the Federal Courts of Cassation (the third law, shall be made by the notary public based on the statement of the instance courts). The Courts of Cassation may in some cases rule vessel’s master, data from the ship’s logbooks, and the interrogation to send the matter for a new trial to the first instance court, and the of the master and at least two senior and two junior officers of case will be considered from the start. The consideration of the case the ship by the notary. The application for making the Act of Sea by the Court of Cassation usually takes around two months from Protest may be submitted to the notary public within 24 hours from the day on which the appeal was filed. If the case was sent for a the moment of the vessel’s entry into port. new trial to the first instance court, the case will be heard from the start with the possibility of further appealing the judgments in all instances. 5.2 What are the general disclosure obligations in court proceedings? The court of final appeal in Russia is the Supreme Court ofthe Russian Federation, but the grounds for appeal are very narrow and Under Russian procedural law, the starting point is to send a copy specific and only a small number of appeals to the Supreme Court of of the statement of claim along with all the evidence/supporting the Russian Federation have actually been accepted. documents to the counter-party (and other parties to the future A specialised maritime arbitration tribunal in Russia is the Maritime proceedings) by registered mail. Evidence that a copy of the claim Arbitration Commission at the Chamber of Commerce and Industry statement and supporting evidence have been sent to the counter- of the Russian Federation in Moscow. parties must be presented to the court upon filing of the claim. The procedure for enforcement of arbitral awards, rendered by an The claim will be left without movement until such evidence is arbitral tribunal, is regulated by the CPC and is, in general, the presented. same as the procedure for recognising and enforcing foreign arbitral At further stages of proceedings in the first instance court, new awards under the New York Convention on the Recognition and evidence may be presented in accordance with the rule stipulated Enforcement of Foreign Arbitral Awards, 1958, to which Russia is a in article 65 of the Commercial Procedure Code, where a party to party. Upon recognition of an arbitral award, the state commercial proceedings is obliged to disclose the evidence to other parties prior court would issue a writ of execution for forced enforcement by the to the start of the court hearing, unless a different term was specified bailiffs. by the judge. Failing to do so may limit the party’s ability to refer to Mediation is possible in Russia, but it is not popular, and hardly any the non-disclosed evidence in support of its position. maritime disputes are referred to mediation.

6 Procedure 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind. 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or Commercial litigation in Russia is fast and relatively cheap. One commercial courts); ii) arbitration (including specialist may expect to receive a final judgment within one to one-and-a-half arbitral bodies); and iii) mediation / alternative dispute years from the day of filing the claim. However, the speedy nature resolution. of the litigation means, in many instances, that cases are considered very superficially, while the judges are overworked, especially in There are no special state maritime courts in the Russian Federation. the commercial courts of St. Petersburg and Moscow, where it is Commercial maritime disputes are generally within the scope of the common for the judges to have 40 to 70 court hearings a week. jurisdiction of the Russian commercial courts. Claims of natural In many cases, the judges rely heavily on incident investigation persons (crew, passengers, etc.) fall within the jurisdiction of the reports issued by administrative bodies, survey reports and expert Russian general jurisdiction courts. statements. The success of a party litigating in Russia will depend on There is one first instance commercial court in every subject of the ability of his lawyer to obtain evidence and work with experts in the Russian Federation, and 84 first instance commercial courts complex maritime disputes, such as collisions and other casualties, altogether. The first instance commercial court usually considers a as well as on the ability of the lawyer to present a complex maritime claim within six months and renders a judgment. The consideration case which is brief and simple to understand for the judge who may of the case may be delayed for longer (up to a year, sometimes have no, or very limited, experience in shipping matters. more, depending on the complexity of the case and the actions of

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Although there are a growing number of maritime cases considered In considering cases of recognition and enforcement of foreign by Russian courts every year, their percentage share is rather judgments from the Member States of the EU, Russian courts would insignificant, and most of the judges do not have an understanding also refer to the Human Rights Convention, 1950 (article 6) and the of shipping issues and are not experienced in maritime law. Agreement on Partnership and Cooperation Establishing a Partnership Nevertheless, there are a number of judges in the commercial between the Russian Federation, on the one part, and the European courts of Russia’s ‘marine regions’, e.g. St. Petersburg, Murmansk, Communities and their Member States, on the other part, 1994. Vladivostok, Krasnodar, Petropavlovsk-Kamchatsky, etc. who There have been a number of examples where UK, Dutch, English, would demonstrate a considerable understanding of maritime law. Korean and US commercial judgments were recognised and enforced Some of those judges have experience of working in the shipping in Russia on the grounds of comity and reciprocity. The recognition industry prior to their career as a judge. and enforcement of a foreign judgment may be denied if, inter alia, Russia The time bars and limitation periods under Russian law are rather evidence is presented to the Russian court that recognition of Russian short. The general limitation period under Russian law is three judgments is denied in the relevant foreign state. years and there are even shorter terms for most maritime claims. A one-year limitation period applies for cargo, towage, marine agency, 7.2 Summarise the key provisions and applicable time and bareboat charter claims, as well as general average claims, procedures affecting the recognition and enforcement and a two-year limitation period is set for passenger claims, marine of arbitration awards. insurance, collision and salvage claims. Russian courts may apply foreign law upon request of the parties The enforcement of arbitration awards is effected in accordance with to the litigation, if it is so provided by the agreement between the the New York Convention on the Recognition and Enforcement of parties, and in other cases provided for by the Russian rules on the Foreign Arbitral Awards, 1958, which is directly applied; enforcement conflict of laws and international conventions. of arbitration awards is, therefore, a relatively straightforward procedure and the number of successful recognitions is significant. 7 Foreign Judgments and Awards 8 Updates and Developments

7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement 8.1 Describe any other issues not considered above that of foreign judgments. may be worthy of note, together with any current trends or likely future developments that may be of interest. According to the general rule of the Russian procedural legislation, foreign judgments can be recognised and enforced in Russia, if an Since the enactment of the MSC in 1999, it has been amended 38 international treaty, to which the Russian Federation is a party, times; most amendments concerned public law provisions relating provides for the recognition and enforcement of such judgments. to ship registration, sea ports, harbour masters, Northern Sea Route Foreign court judgments can also be recognised and enforced in the navigation, etc. At the same time, the provisions of new international absence of an international treaty, on the grounds of such principles of conventions, such as the Bunkers Convention, have also been public international law as comitas gentium and reciprocity. promptly implemented into the MSC. It may be expected that The procedure and grounds for denying enforcement are set out in Russian maritime law, in general, will follow the international trends. Chapter 31 of the CPC and are, for the most part, identical to the Nevertheless, Russia has always been notorious for its lack of legal provisions of the New York Convention on the Recognition and certainty. It is occasionally known for the Commercial Courts to rule Enforcement of Foreign Arbitral Awards, 1958. completely differently on the same issue of law, thus it remains a challenging jurisdiction.

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Konstantin Krasnokutskiy LEX NAVICUS CONCORDIA 1 Orlovskaya Street Office 31 St. Petersburg, 191124 Russia

Tel: +7 812 640 0798 +7 495 640 0798 Email: [email protected] URL: www.navicus.ru Russia Konstantin is the founder and managing partner of Lex Navicus Concordia law firm, and specialises in maritime law and insurance, commercial litigation and arbitration. Konstantin started his legal practice in 2005 in commercial and maritime law and has, since then, been involved in Russia’s major maritime disputes, including those concerning oil spills and collisions in ice, with the involvement of nuclear ice-breakers on the Northern Sea Route, as well as the largest maritime casualty in recent Russian history, which concerned the collision of a vessel with an onshore oil terminal. Konstantin has advised P&I Clubs on changes in Russian law and has given presentations for Clubs’ staff. He has taken part in numerous shipping and legal conferences. Konstantin is an associate member of the Chartered Institute of Arbitrators (ACIArb), and speaks English, Russian and Greek.

Lex Navicus Concordia, or simply Navicus, is a St. Petersburg-based boutique specialising primarily in maritime and commercial law. The firm’s lawyers have extensive experience in commercial litigation and arbitration, international trade, transport, insurance, foreign investment, commercial disputes, corporate and financial crime. Although based in St. Petersburg, the firm also practises in Moscow and the Russian regions. Navicus has associated lawyers in Moscow, in the Russian Far East, and Rostov-on-Don. The firm has an associated office in Ukraine, Black Sea Law Company. Navicus is a member of the Shiparrested.com network (an affiliation of hundreds of top-practising lawyers from more than 100 countries) and hosted the 2017 annual members’ conference. The firm’s clients are predominantly foreign shipping, trade, venture companies, banks and P&I Clubs. Navicus aims to provide high-quality service, and the firm’s team has a profound knowledge of doing business in Russia. The firm’s professional standards comply with the International Code of Ethics of the International Bar Association. Navicus renders exclusive and complex services, delivering fast, effective and creative solutions for corporates and individuals covering various jurisdictions and branches of law.

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does not report the wreck to the Director of Marine (appointed under 1 Marine Casualty section 4 of the Merchant Shipping Act) without delay. (v) Limitation of liability 1.1 In the event of a collision, grounding or other major Part VIII of the Merchant Shipping Act (Cap. 179) governs limitation casualty, what are the key provisions that will impact of liability for maritime claims. The maritime claims are those set upon the liability and response of interested parties? out in section 3(1) of the High Court (Admiralty Jurisdiction) Act In particular, the relevant law / conventions in force in (Cap. 123) which includes loss of life and personal injury occurring relation to: on board a vessel. (i) Collision For an occurrence before 1 May 2005, the 1957 International Convention Relating to the Limitation of the Liability of Owners of The English Maritime Conventions Act 1911, the Merchant Shipping Sea-going Ships governs the limitation of liability. Act (Cap. 179) and the International Regulations for Preventing Collisions at Sea 1972 are the principal pieces of legislation governing For an occurrence after 1 May 2005, the Convention on Limitation collisions. of Liability for Maritime Claims 1976 applies. (vi) The limitation fund There is a two-year time bar for collision claims under the English Maritime Conventions Act 1911, which may be extended by agreement Limitation funds can be done by way of payment into court, a bank between parties or where there is no reasonable opportunity to arrest guarantee or a letter of undertaking issued by an international group the offending vessel within the two-year time bar. Protection and Indemnity (“P&I”) Club. (ii) Pollution The Merchant Shipping (Civil Liability and Compensation for 1.2 What are the authorities’ powers of investigation / Bunker Oil Pollution) Act (Cap. 179A) (“BOPA”), the Merchant casualty response in the event of a collision, grounding or other major casualty? Shipping (Civil Liability and Compensation for Oil Pollution) Act (Cap. 180) (“CLC”) and the Prevention of Pollution of the Sea Act (Cap. 243) (“PPSA”) are the main statutes in relation to pollution. There can be a statutory investigation, for example by the Ministry of Transport, to determine whether the International Regulations for The BOPA was enacted to give effect to the International Convention Preventing Collisions at Sea, or any other regulations, have been on Civil Liability for Bunker Oil Pollution Damage 2001. Under the breached. BOPA, a shipowner’s liability is strict but not absolute. A Marine Safety Investigation is also performed by the Maritime Port The CLC was enacted to bring into effect in Singapore the Authority in accordance with the International Maritime Organization International Convention on Civil Liability for Oil Pollution Damage (“IMO”) Code of International Standards and Recommended 1992 and the International Convention on the Establishment of an Practices for a Safety Investigation into a Marine Casualty or Marine International Fund for Compensation for Oil Pollution Damage 1992. Incident, which applies to all States that are signatories to the Safety Liability under the PPSA may be said to be strict. However, there are of Life at Sea Convention. exceptions that apply to different classes of pollutants and polluters. (iii) Salvage / general average 2 Cargo Claims Part IX of the Merchant Shipping Act (Cap. 179) and Part II of the English Maritime Conventions Act 1911 govern the law on salvage. There is a two-year time bar for salvage claims under the Merchant 2.1 What are the international conventions and national Shipping Act. laws relevant to marine cargo claims? The law on general average is governed by common law. The Carriage of Goods by Sea Act (Cap. 33) incorporates the Hague (iv) Wreck removal Rules, as amended by the Brussels Protocol 1968 (“Hague-Visby The Merchant Shipping (Wreck Removal) Act (Act 25 of 2017) Rules”). governs the law on wreck removal. The said Act gives effect to the The Hague-Visby Rules are a set of international rules for the Nairobi International Convention on the Removal of Wrecks which international carriage of goods by sea. was adopted by the International Maritime Organization in May The Bills of Lading Act (Cap. 384) also applies. It is based on the 2007. It makes it an offence if the master or the operator of a vessel UK Carriage of Goods by Sea Act 1992.

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1976. The limitation period for personal injury claims is three years 2.2 What are the key principles applicable to cargo claims from the date that the claim accrued or the earliest date on which brought against the carrier? the passenger had the necessary knowledge for bringing the action. Where the passenger claim arises from a collision, the English The cargo claimant may sue under the Bill of Lading Act (Cap. 384). Maritime Conventions Act 1911 provides a two-year limitation Section 2(1) of the Bill of Lading Act provides: period which may be extended by agreement between the parties, “2.—(1) Subject to the following provisions of this section, if there was no reasonable opportunity to arrest the offending vessel a person who becomes — within the limitation period or at the court’s discretion. (a) the lawful holder of a bill of lading; (b) the person who (without being an original party to the

Singapore contract of carriage) is the person to whom delivery of 4 Arrest and Security the goods to which a sea waybill relates is to be made by the carrier in accordance with that contract; or 4.1 What are the options available to a party seeking to (c) the person to whom delivery of the goods to which a obtain security for a maritime claim against a vessel ship’s delivery order relates is to be made in accordance owner and the applicable procedure? with the undertaking contained in the order, shall (by virtue of becoming the holder of the bill or, as the Whether security is available for a maritime claim depends on case may be, the person to whom delivery is to be made) have whether the maritime claim falls within a type of claim under the transferred to and vested in him all rights of suit under the contract of carriage as if he had been a party to that contract.” High Court (Admiralty Jurisdiction) Act (Cap. 123). The said Act embodies the admiralty jurisdiction in Singapore. The cargo claimant may also claim in bailment and tort. In order to determine if the claim attracts the admiralty jurisdiction If the charterparty terms are incorporated into the bill of lading of the court, the claim must fall within one of the types listed in contracts, the cargo claimant may also sue under contract. section 3(1) of the said Act. The party seeking arrest must also satisfy section 4 of the said Act. 2.3 In what circumstances may the carrier establish An admiralty action in rem must be begun by a writ in rem. The writ claims against the shipper relating to misdeclaration must be in the prescribed form. The normal practice is to name the of cargo? offending ship and the sister ships in one writ.

Article III Rule 5 of the Hague-Visby Rules provides: A warrant for arrest may be applied for after the writ in rem has been issued. An affidavit must support the application for issue “The shipper shall be deemed to have guaranteed to the carrier of warrant of arrest, which sets out all particulars including how the accuracy at the time of shipment of the marks, number, quantity and weight, as furnished by him, and the shipper shall the claim falls within the Act. There is a duty of full and frank indemnify the carrier against all loss, damages and expenses disclosure in an application for warrant of arrest. Failure to do arising or resulting from inaccuracies in such particulars. The so may result in the setting aside of the warrant and the award of right of the carrier to such indemnity shall in no way limit his damages for wrongful arrest. responsibility and liability under the contract of carriage to any A person who wishes to prevent the arrest of a ship can lodge a person other than the shipper.” caveat against arrest. Article IV Rule 6 of the Hague-Visby Rules also provides: “Goods of an inflammable, explosive or dangerous nature to 4.2 Is it possible for a bunker supplier (whether physical the shipment whereof the carrier, master or agent of the carrier and/or contractual) to arrest a vessel for a claim has not consented with knowledge of their nature and character, relating to bunkers supplied by them to that vessel? may at any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for Yes, it is possible. Such a claim falls under section 3(1)(l) of the all damages and expenses directly or indirectly arising out of or High Court (Admiralty Jurisdiction) Act (Cap. 123) which provides resulting from such shipment. If any such goods shipped with for claims in respect of goods or materials supplied to a ship for her such knowledge and consent shall become a danger to the ship operation or maintenance. The bunker supplier would then have to or cargo, they may in like manner be landed at any place, or satisfy section 4 of the said Act. If the requirements of section 4 destroyed or rendered innocuous by the carrier without liability are met, the bunker supplier may arrest either the vessel which was on the part of the carrier except to general average, if any.” supplied with the bunker fuel, or a sister vessel owned by the same On 1 July 2016, an amendment to the International Convention beneficial owner. for the Safety of Life at Sea (“SOLAS”) took effect, requiring From the recent case law, it appears that it is only possible for a verification of the gross mass of packed containers prior to loading contractual bunker supplier to arrest a vessel for a claim relating to on board ships. Singapore has implemented SOLAS Regulations bunkers supplied by them to the vessel. In Precious Shipping Public VI/2 on Verified Gross Mass of Containers to give effect to that. Company Ltd and Ors v OW Bunker Far East (Singapore) Pte Ltd and Ors and Other Matters [2015] 4 SLR 1229, the court held that 3 Passenger Claims a bunker supplier can arrest a vessel for unpaid bunker fuel supplied only if the shipowners or the demise charterers had contracted with the supplier to provide the fuel. The court rejected the claims from 3.1 What are the key provisions applicable to the the physical suppliers who did not contract with the shipowners or resolution of maritime passenger claims? the demise charterers of the vessel to which the bunker fuel was supplied. The limitation of liability for passenger claims is set out in Article 7 of the Convention on Limitation of Liability for Maritime Claims

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Generally, proceedings commenced in the High Court take about 4.3 Where security is sought from a party other than the nine to fifteen months from the date of commencement to completion vessel owner (or demise charterer) for a maritime of trial. This may vary depending on the circumstances of the case. claim, including exercise of liens over cargo, what options are available? ii) Arbitration International arbitrations are governed by the International Apart from arrest, the options are limited. A lien can be exercised Arbitration Act (Cap. 143A), while domestic arbitrations are over cargo by preventing the discharge or release of the cargo until governed by the Arbitration Act (Cap. 10). Maritime arbitrations can payment for freight is received. be administered by the Singapore Chamber of Maritime Arbitration or the Singapore International Arbitration Centre. Parties may agree on the arbitration timelines and procedures, such

4.4 In relation to maritime claims, what form of security is Singapore as the number of arbitrators. Alternatively, parties can adopt the acceptable; for example, bank guarantee, P&I letter of undertaking. timelines and procedures under the institutional rules. Some carry the view that arbitration can be a lengthier process than Forms of security that are acceptable include bank guarantees, proceedings in the courts. This could be due to greater flexibility payment into court and letters of undertaking from a bank or a P&I between parties to set the timelines. Club. iii) Mediation / alternative dispute resolution Mediation is increasingly popular in Singapore. In some proceedings, like matrimonial proceedings, it may be compulsory. 5 Evidence For proceedings commenced in the High Court, parties are to inform the court at an early stage if they are willing to attempt mediation 5.1 What steps can be taken (and when) to preserve or or alternative dispute resolution. If they fail to attempt mediation obtain access to evidence in relation to maritime or alternative dispute resolution, there may be costs implications. claims including any available procedures for the Mediation / alternative dispute resolution usually takes a few days. preservation of physical evidence, examination of witnesses or pre-action disclosure? 6.2 Highlight any notable pros and cons related to your A party can apply for pre-action disclosure pursuant to Order 24 of jurisdiction that any potential party should bear in mind. the Rules of Court. A party may also apply for an interlocutory injunction and interim Singapore provides a quick and efficient arrest and sale procedure measures for preservation of property pursuant to Order 29 of the which prevents the mortgagee’s costs from escalating during the Rules of Court. period until the sale of the ship takes place. One con is the strict rules of evidence in Singapore. Hearsay is Where there is a collision, an application can be made for a Mare generally non-admissible except in very limited circumstances. It Del Nord order against the shipowners to allow inspection of the is important to procure the attendance of factual witnesses at trial. vessel and preserve documents which are relevant to the casualty.

5.2 What are the general disclosure obligations in court 7 Foreign Judgments and Awards proceedings?

7.1 Summarise the key provisions and applicable General disclosure obligations are very strict. Parties in court procedures affecting the recognition and enforcement proceedings must disclose all relevant documents even where it of foreign judgments. adversely impacts their case. A failure to adhere to this may result in the striking out of a party’s claim or defence, or even committal A foreign judgment can be enforced in one of three ways: under the proceedings. Reciprocal Enforcement of Commonwealth Judgments Act (Cap. 264) (“RECJA”); the Reciprocal Enforcement of Foreign Judgments 6 Procedure Act (Cap. 265) (“REFJA”); or the common law. Which way depends on the origin of the judgment. Where the judgment is from a Commonwealth country, the judgment can be enforceable under the 6.1 Describe the typical procedure and timescale RECJA. Where the judgment is from a gazetted foreign country under applicable to maritime claims conducted through: i) the REFJA, the judgment can be enforceable under that. Presently, national courts (including any specialised maritime or only Hong Kong is gazetted. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute Under the RECJA and REFJA, an application can be made ex parte resolution. to the High Court to obtain leave to register the judgment. For a Commonwealth judgment under the RECJA, the application must i) National courts be made within twelve months after the date of the judgment, or such longer period as may be allowed by the Singapore court. For The Singapore judicial system comprises the Supreme Court and judgments under the REFJA, application can be made within six years the State Courts. The Supreme Court consists of the High Court and after the date of judgment. the Court of Appeal (the apex court). For claims above S$250,000, the High Court has jurisdiction over such claims. Admiralty Under the RECJA, registration may be refused if: jurisdiction is vested in the High Court. All admiralty matters may a. the original court acted without jurisdiction; only be commenced in the High Court. b. the judgment debtor, not being ordinarily subject to the jurisdiction of the foreign court, did not submit to its jurisdiction;

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c. the judgment debtor was not duly served with process of the For foreign arbitration awards which are made in countries signatory original court and did not appear; to the New York Convention, they are set out in the International d. the judgment was obtained by fraud; Arbitration Act (Cap. 143A). Singapore is a signatory to the New e. any appeal is pending, or the judgment debtor is entitled to York Convention and will enforce foreign arbitral awards pursuant appeal and intends to do so; and to the reciprocity reservation in Article 1(3) of the Convention. f. the judgment is in respect of a cause of action that, for reasons Awards may, by leave of the Singapore High Court, be enforced in of public policy or for some other similar reason, could not the same manner as a Singapore High Court judgment or an order have been entertained by the Singapore court. to the same effect. Where such leave is given, the Singapore High Under the REFJA, registration may be refused if: Court may enter judgment in favour of the winning party against the a. it has been wholly satisfied; or losing party in the same terms as the award to be enforced. Singapore b. it could not be enforced by execution in the country of the The losing party may resist the enforcement of the award. original court. The notice of registration must subsequently be served on the 8 Updates and Developments judgment debtor. The judgment debtor can apply to set aside the registration. For judgments that do not fall under the RECJA and REFJA, 8.1 Describe any other issues not considered above that enforcement can be done by common law. This involves commencing may be worthy of note, together with any current trends or likely future developments that may be of a common law action in Singapore on the foreign judgment. A interest. foreign judgment creates a fresh obligation to pay the judgment debt. The action to be commenced will be based on that obligation to pay. Among the key areas of concern for shipping companies today are As the judgment already determines a sum payable, it is likely that regulations like the IMO’s 0.5% fuel sulphur limit, set to come into the judgment debtor will not be able to raise a triable defence. The force in January 2020. party seeking enforcement can therefore expedite matters and apply for summary judgment. An important trend is the shipping industry’s embracing of automation, digital solutions and other technology. Our firm’s focus in the area of technology is to manage our clients’ exposure to losses 7.2 Summarise the key provisions and applicable following technology failure. In order to achieve the aforesaid, procedures affecting the recognition and enforcement we have recommended to our clients the possibility of widening of arbitration awards. the ambit of the force majeure clause in their standard terms and conditions so as to cover unexpected technology failure. The key provisions and applicable procedures depend on whether the arbitration award was obtained locally or is a foreign arbitration Separately, we foresee that as the shipping industry increasingly award. For local arbitration awards, the key provisions and embraces technology, its reliance on labour will dwindle. applicable procedures are set out in the Arbitration Act (Cap. 10).

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Peter Doraisamy Rafizah Gaffoor Peter Doraisamy LLC Peter Doraisamy LLC 22 Malacca Street 22 Malacca Street RB Capital Building #10-02 RB Capital Building #10-02 Singapore 048980 Singapore 048980

Tel: +65 6220 0325 Tel: +65 6220 0325 Email: [email protected] Email: [email protected] URL: www.pdlegal-maritime.com.sg URL: www.pdlegal-maritime.com.sg

Peter’s specialisation lies in marine, trade and energy law and he is Rafizah practises in the area of litigation and dispute resolution, with a Singapore recognised as a leading shipping law practitioner by The Legal 500 specialisation in shipping litigation. Rafizah is proficient in contentious Asia Pacific. and non-contentious practice areas, with a focus on shipping and commercial litigation. She is skilled in alternative dispute resolution Prior to establishing the firm, Peter was head of disputes at the and has experience in all areas of dispute resolution, from mediation Singapore office of a U.S.-based international law firm. to international arbitration. Peter has, over 18 years of practice experience as counsel, developed Rafizah has highly developed communication and advocacy skills, proficiency in the conduct of difficult and complex cases covering a having had experience in attending and arguing court matters, diverse mix of practice areas. Peter has litigated at all levels of the including trials and contested interlocutory applications. She also Singapore courts including the Singapore International Commercial advises Singapore and international companies, ship operators/ Court. He is regarded by clients as a practitioner with excellent managers and commodity traders. She advises in-house counsel and commercial awareness acumen, which enables him to find favourable companies on the drafting of arbitration and dispute resolution clauses outcomes in difficult cases. in contracts. She also assists foreign counsel in arbitrations at the Singapore International Arbitration Centre (“SIAC”) by advising on the SIAC rules and processes.

Peter Doraisamy LLC offers an established and sophisticated Marine, Trade & Energy practice characterised by exceptional legal services. Whatever the nature of the brief, the objective of the firm is to deliver partner-level service in an efficient and cost-effective manner. We are recognised by clients for our ability to find commercially viable solutions in complex cases. We possess multi-jurisdictional expertise and are therefore able to assist our clients on matters in Singapore and internationally. As an independent and conflict-free law firm, we are often briefed to take on matters against major institutions and corporations. By virtue of our independence and expertise, foreign law firms and other local law firms look to us to act as Singapore counsel. The leanness of the firm belies its in-depth expertise, sophistication and agility in providing exceptional legal services comparable to its larger contemporaries.

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Spain Jaime Soroa

Meana Green Maura y Asociados SLP (MGM&CO.) Edmund Sweetman

adventure”. The parties to the marine adventure are free to agree on 1 Marine Casualty the rules governing the adjustment of the GA. Nevertheless, the Shipping Act provides that in cases where the parties are not able to 1.1 In the event of a collision, grounding or other major get to an agreement, the latest version of the York-Antwerp Rules casualty, what are the key provisions that will impact shall apply. upon the liability and response of interested parties? (iv) Wreck removal In particular, the relevant law / conventions in force in relation to: Spain is not party to the Nairobi Convention 2015. The applicable regime on wreck removal in Spain is governed by the Shipping Act (i) Collision 2014, articles 369 to 383. (v) Limitation of liability Spain is a party to the 1910 Collision Convention and also applies the 1952 International Convention on Certain Rules concerning The 1976 London Convention on Limitation of Liability for Civil Jurisdiction in Matters of Collision as well as the International Maritime Claims as amended by the 1996 Protocol is implemented Convention for the Unification of Certain Rules Relating to Penal into Spanish domestic law by way of the provisions of the Shipping Jurisdiction in Matters of Collision or Other Incidents of Navigation. Act, articles 392 et seq. This is without prejudice to the specific The former three International Conventions as well as the Convention Limitation provisions for the carriage of passengers and cargo on the International Regulations for Preventing Collisions at Sea, carried under a Bill of Lading. 1972 are implemented into Spanish law by way of the provisions of (vi) The limitation fund the Spanish Shipping Act (Ley de Navegación Marítima) 14/2014 Article 403 of the Shipping Act provides for the constitution of the (hereinafter the Shipping Act). limitation fund as a condition precedent to the right to limit. The (ii) Pollution Claimant may constitute a Limitation Fund by making a payment into The Shipping Act 2014 provides the statutory domestic framework the Court or by providing sufficient guarantee. A Spanish Court may for Pollution in articles 384 to 391. Article 391 of the Act provides not accept a P&I Letter of Undertaking. for the preferential application of the International Conventions regarding Civil and Criminal liability to which Spain is a party. The 1.2 What are the authorities’ powers of investigation / following Conventions have been ratified and are mandatory in Spain: casualty response in the event of a collision, grounding 1) MARPOL Convention: The International Convention for the or other major casualty? Prevention of Pollution 1973 together with its Protocols of 1978 and 1997. According to the EU Directive 2008/18/EC, each Member State 2) The CLC Convention: The International Convention on Civil should have an impartial body competent in matters relating to marine Liability for Oil Pollution Damage 1992. casualties and incidents. In Spain, the competent body is the Comisión 3) The FUND Convention and Protocol: The 1992 Fund Permanente de Investigación de Accidentes e Incidentes Marítimos, Convention and the Supplementary Fund Protocol of 2003. also known as CIAIM. The involvement of the CIAIM is purely 4) The BUNKER Convention: The 2001 International Convention technical and is conducted in the interest of safety and loss prevention. on Civil Liability for Bunker Oil Pollution Damage. The CIAIM has no competence in determining, establishing or (iii) Salvage / general average apportioning liabilities resulting from a marine casualty. Criminal and civil liabilities are dealt with by the Criminal and Commercial Courts The provisions of the Salvage Convention 1989 are fully incorporated respectively. In the event of a collision, a fire or any other major into Spanish Domestic law by way of article 357 of the Shipping Act. casualty, the Criminal investigating judge competent in the territorial Further domestic provisions on salvage are regulated by articles 357 jurisdiction where the accident took place will become involved and to 368 of the Shipping Act. will coordinate efforts with the judicial police to secure evidence and The rules governing GA can be also found in the Shipping Act, articles take witness statements. The designated competent authority pursuant 347 to 356. The concept of GA that can be found in the Shipping Act to article 20 of EU Directive 2009/17/EC (accommodation of ships is very similar to that of the York-Antwerp Rules. The Shipping Act in need of assistance) in Spain is the Director General de la Marina provides that “there is a general average act when an extraordinary Mercante which has powers to direct a vessel to a port of refuge and to and intentional sacrifice or expenditure is made or incurred for the take such steps, in addition to the competent port authority, as may be purpose of preserving from peril the property involved in the maritime necessary for the management of a casualty.

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Article 298 of the Shipping Act establishes that the liability of the 2 Cargo Claims carrier in a passenger contract is governed, in any event, by the 1974 Athens Convention and its Protocols to which Spain may 2.1 What are the international conventions and national be a party to, any applicable European law and the Shipping Act. laws relevant to marine cargo claims? The rules contained in the Shipping Act are to apply, compulsorily, to any maritime passenger contract. Any contractual provision Cargo carriage under a Bill of Lading is regulated by articles 203 that attempts to avoid or decrease the liability of the carrier is et seq. of the Shipping Act. In particular, articles 277 et seq. of the to be considered null and void. These provisions apply both to Shipping Act, govern the liability of the carrier in case of loss of or international and cabotage carriage. damage to the cargo, as well as liability for delay. Spain Articles 277.1 and 2 establish that the carrier will be held liable for 4 Arrest and Security loss of or damage to the cargo, as well the delay in delivery, according to Section 9 of the Shipping Act which compulsorily applies to any maritime contract of carriage. Any clause, which directly or 4.1 What are the options available to a party seeking to indirectly may reduce the carrier’s liability, will be considered null obtain security for a maritime claim against a vessel and void. owner and the applicable procedure? Article 277 also provides that both international and cabotage Spain is a signatory of the 1999 Arrest Convention and as such, contracts of carriage of goods by sea, under a Bill of Lading, will be security for a maritime claim may be obtained by arrest of the governed by the Hague-Visby Rules. The application of the Hague- owner’s vessel for those claims specified as “maritime claims” Visby Rules by way of article 277 is mandatory. in accordance with article 1(1) of the Convention. Spanish law makes a legal distinction between “buques” (>24 metres) and 2.2 What are the key principles applicable to cargo claims “embarcaciones” (<24 metres) although the Arrest Convention brought against the carrier? applies equally to both. As detailed below, the standard of proof required to subtend an arrest by an alleged maritime creditor is As per above, the Hague-Visby Rules will apply to both, international very low although counter-security is required. Alternatively, an contracts of carriage of goods by sea as well as to cabotage contracts. application can be made for interlocutory injunctive relief under the When a claim arises in Spain under a Bill of Lading contract the civil procedural code to freeze certain assets of the vessel owner (but Courts will apply the HVR as well as the provisions of the Spanish not the vessel, unless the vessel/vessel owner is Spanish); however, Shipping Act. the test applicable for the granting of such relief is much stricter. The HVR defences and limitations shall apply in any action against Maritime claims under the 1999 Convention the carrier. As far as the new regime for liability of the carrier for One of the innovations of the 1999 Convention was to expand the delay in the delivery of the goods, the domestic law provides for a definition of maritime claims under article 1(1). While opting for specific limitation regime in its articles 280 and 283. a closed list, the list is much extended with a greater scope for interpretation afforded to the Courts in certain cases (such as for 2.3 In what circumstances may the carrier establish environmental damage, for instance). Amongst the new categories claims against the shipper relating to misdeclaration of maritime claims, arrest is possible, inter alia, for unpaid insurance of cargo? premiums, including mutual insurance calls, port agency fees/ship management fees, Scopic (special) salvage compensation, and “any The shipper is obliged to provide an accurate description of the cargo dispute arising out of a contract for the sale of a ship”. to the carrier under article 3 of the HVR. In accordance with article Applicable procedure 4.5 of the HVR the carrier will be able to claim damages against In order to apply for the arrest of a vessel, the maritime creditor the shipper for any loss resulting from inaccuracy concerning the applies ex parte to the Commercial Court of the Port where the Vessel description of the goods on the Bill of Lading. is moored/anchored or to the Spanish Court which has objective HVR article 4.6 further provides extensive rights to the carrier jurisdiction over the claim. This application must be made through with regards to the carriage of dangerous goods carried without a Spanish qualified lawyer and court agent. Essential requirements the consent of the carrier. In accordance with the rules, the carrier are the accreditation of a sufficient power for the representation of may, at any time before discharge, land, destroy or render innocuous the maritime creditor (for which a power of attorney, granted before the cargo without compensation to the shipper, and the shipper of a Spanish Notary, Consular official, or Notary Public/foreign notary such goods shall be liable for all damages and expenses directly or duly apostilled is necessary) and the availability of funds to lodge indirectly arising out of or resulting from such shipment. the required counter-security/bank guarantee. The mere assertion of a claim captured by one of the categories enumerated by Article 3 Passenger Claims 1(1) of the 1999 Convention is sufficient; no proof is necessary at ex parte stage. An arrest order will generally issue within a few hours of the application being made, once the counter-security is 3.1 What are the key provisions applicable to the lodged and an adequate power of attorney presented. Counter- resolution of maritime passenger claims? security is set at a minimum of 15% of the claim although this may vary and be revised depending on the capacity/size of the ship, Passengers’ liabilities are regulated in Spain by articles 287 to 300 the cost of keeping it in port, its daily rate of hire, whether it is of the Shipping Act 2014 and EU Regulation nº 392/2009 of 23rd in a liner trade and contractual engagements, etc. Once the arrest April. The latter incorporates into EU law the 2002 Protocol to the order is made, it is communicated using the most immediate form 1974 Athens Convention. possible to the Port Captain who makes the necessary arrangements for the immobilisation of the vessel. In circumstances where the

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arrest is for the provision of security only, and the substantive securing evidence via an investigating judge who may cause the litigation is adjudicated by an arbitral tribunal or a foreign Court, judicial police to seize certain items of evidence, and may examine the Commercial judge must fix a period between 30 and 90 days for witnesses and take statements. the initiation of the said claim before the other Court or Tribunal. If this option is not feasible, an application may be made to the Liability for wrongful arrest / counter-security Court for the holding of hearing to receive a particular item or In addition to the obligation to give the counter-security mentioned category of evidence prior to the hearing and/or the initiation of the above, the arrestor will be strictly liable for any loss or damage proceedings, where there are reasonable grounds for believing that caused as a result of the arrest where the maritime creditor’s claim such evidence will not be available at the hearing. An application fails, or where the arrest is lifted in certain other circumstances. for the receiving of such evidence is made to the same Court as Spain The burden of proof will be on the vessel owner in respect of such would be competent for the main action. The procedure provides damages, and there is a line of jurisprudence tending to limit the for the citation of the party who is to be sued, so they can participate in the hearing. Any evidence, whether documents or items of real liability of the arrestor to the damages which would have accrued evidence, shall be either kept safely or faithfully copied/recorded over the time which the vessel owner would reasonably have by the Court Registrar. An application may also be made to Court required to post security. seeking interlocutory orders preserving evidence, or the means of proof of certain issues, although counter-security may be required 4.2 Is it possible for a bunker supplier (whether physical by the party bearing the cost and inconvenience of the preservation and/or contractual) to arrest a vessel for a claim order, and such an order will only be granted where the Court relating to bunkers supplied by them to that vessel? considers it likely that the evidence is relevant and useful and that it will otherwise not be available for the parties at the hearing of the Yes, a bunker supplier may arrest a vessel for bunkers supplied, but case. Pre-action disclosure is available in certain circumstances (see the liability of the owner of the vessel or its demise charterer for immediately below). the bunkers must be established, and an arrest will not be possible where the bunkers have been ordered by a time charterer, and the 5.2 What are the general disclosure obligations in court contractual liability of the owner cannot be proven. proceedings?

4.3 Where security is sought from a party other than the There is no duty of disclosure such as exists in common law vessel owner (or demise charterer) for a maritime litigation. A party may, however, seek “pre-action disclosure” from claim, including exercise of liens over cargo, what the competent Court in certain circumstances, such as where certain options are available? information is necessary in order to determine, for instance, who is the correct defendant, or who is the third-party liability insurer of The new Shipping Act introduces a new procedure for claiming a wrongdoer. Another option available to a litigant, however, is to unpaid freight by exercising a lien over cargo which is onboard designate certain relevant documents, archives or files (such as bank the vessel, or has been unloaded and but not released. The vessel records) in the possession or power of the counterparty or a third owner may apply to a Spanish Notary for the purposes of depositing party, with a view to requesting the Court to order that the same be cargo/goods with a named trustee. The Notary calls on the receiver made available for the determination of a particular issue. of the cargo (or such other person nominated by the vessel owner/ carrier) to pay the freight, or lodge security in the amount of the same, failing which the goods are auctioned. Unless the owner/ 6 Procedure interested party in the goods challenges the claim, the vessel owner is paid from the proceeds after the necessary costs of sale have been discharged. 6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or 4.4 In relation to maritime claims, what form of security is commercial courts); ii) arbitration (including specialist acceptable; for example, bank guarantee, P&I letter of arbitral bodies); and iii) mediation / alternative dispute undertaking. resolution.

Unless the parties agree otherwise, a Spanish Court will only accept Maritime matters are dealt with before the Mercantile Courts in forms of security “recognised under Spanish law” being money Spain. The latter are specialised Courts located in every provincial lodged in Court, or a bank guarantee/bond. As such, unless the capital, and whose jurisdiction captures any matter where a arrestor agrees to the same, a Spanish Court may not accept a P&I resolution is required on the merits of any maritime regulation letter of undertaking. applicable in Spain, whether national or international. Such Courts will conduct proceedings in the same manner as any other legal proceedings. In other words, the Spanish Procedural Act 5 Evidence will apply in all its terms to any maritime dispute. This will typically include: (1) a writ of summons, that must contain a description of 5.1 What steps can be taken (and when) to preserve or the facts together with the applicable legal grounds and all relevant obtain access to evidence in relation to maritime documentation; (2) the defence submissions, which should include claims including any available procedures for the all facts and legal grounds alleged by defendants; (3) the case preservation of physical evidence, examination of management conference (also known as preliminary hearing) where witnesses or pre-action disclosure? parties’ lawyers have a meeting with the Judge in charge, and a decision is taken regarding the points in dispute and the evidence Depending on the context in which the need arises, consideration that each party will be allowed to use in the course of the trial; and may be given to making a criminal complaint, with a view to (4) the trial, where the examination and cross-examination of the

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witnesses and surveyors will take place. The trial is finalised with As against this, mention should be made of some old-fashioned the lawyers’ oral conclusions, after which the Judge will issue a requirements which continue to be applicable, such as the need for judgment within (normally) two to three months, depending on the originals of the documents and the compulsory translation of any Court’s workload and the complexity of the case. document submitted to the Courts. In general terms, a full first instance procedure would normally last between 10–12 months in Spain. 7 Foreign Judgments and Awards Parties have to be represented before the Court by a Court Agent who will be in charge of submitting all the documentation and receiving everything that is presented by the counterparty. Hence, a Power of 7.1 Summarise the key provisions and applicable Attorney, granting powers of representation in favour of the Court procedures affecting the recognition and enforcement Spain Agent and Lawyers, is always required, in order to be a party in the of foreign judgments. Spanish Jurisdiction. Such a Power of Attorney must be notarised and, if issued in a foreign country outside Spain, apostilled as per the Hague Given that Spain is a member of the European Union, Regulation (EC) Convention (assuming the same to be in force in the Country of issue). nº 1215/2012 of 12th December 2012, on jurisdiction, recognition and Parties, regardless of the amount at stake, are always allowed to appeal enforcement of judgments in civil and commercial matters, is fully any first instance decision before the competent Court of Appeal. Such applicable within the Spanish territory. a process merely requires appeal submissions and the opposition to This means that any judgment issued by a Court of Justice located in the appeal to be filed. Both writs are submitted to the Court of Appeal the European Union, will be immediately enforceable in Spain, just as which will make a decision on the merits. Its judgment is normally if it were a Spanish judgment. rendered within a time frame of two to three months but, again, this can There is a limited list of reasons for refusing enforceability (included vary depending on the number of files being dealt with by the relevant in European Regulation nº 1215/2012) but Spanish Courts have a very Court of Appeal and the complexity of the matter. restrictive criteria for the application of any of those. The party that loses the case will generally be condemned to pay the As regards judgments obtained outside the European Union or from a legal costs incurred, which will include the lawyers’ court agents’, and foreign country with which Spain has not signed a bilateral treaty (e.g. surveyors’ fees, together with reasonable witnesses’ travel expenses, in the case of the United States of America), the Act on International when required. Judicial Cooperation in Civil Matters (Act 29/2015 of 30th July) will Should the claim or the opposition not be fully successful, each party apply. will bear its own incurred costs. Also, should the Court find reasonable doubts about the resolution of the matter, it may decide not to condemn This Act deals with the recognition and enforcement of foreign any of the parties with counter legal costs. judgments, and sets out a procedure which, together with other minor requirements, merely requires that a foreign judgment be final, i.e. not On the other hand, arbitration is conducted in Spain either before subject to any further appeal. The Spanish Court in charge of such independent institutions or before ad hoc Tribunals. The regulation recognition and enforcement will not be allowed to analyse the merits of such proceedings is based on the Spanish Arbitral Act and the of the case. applicable Institution procedural rules, which normally echo those applied by International Institutions of arbitration. In case of ad hoc arbitration, parties are free to agree on the rules of the proceedings. 7.2 Summarise the key provisions and applicable An arbitral award is immediately enforceable before the Spanish procedures affecting the recognition and enforcement of arbitration awards. Courts, as if it were a judgment of the court. Arbitral proceedings are private and there is no automatic right of appeal. There are a very limited number of reasons why an award may be declared null and Spain is a signatory member of the 1958 New York Convention on void by a Judicial Court (very similar to those included in most other the Recognition and Enforcement of Arbitral Awards. This, together Jurisdictions), and the Court’s approach to this possibility is indeed with the above-mentioned Arbitration Act 29/2015, are the relevant restrictive. legal instruments applicable for the purpose of enforcing a foreign arbitral award in Spain. Finally, mediation to solve a dispute can be agreed among the parties, but in Spain this is not a popular dispute resolution alternative. Any In general terms, such a recognition will follow a similar course as settlement agreement reached by the parties by means of this procedure the one described for the recognition and enforcement of a foreign can, if signed in a public deed, be directly enforceable before the judgment from outside the scope of the European Union. Spanish Courts. 8 Updates and Developments 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind. 8.1 Describe any other issues not considered above that Despite an impression that Spanish proceedings might be overly may be worthy of note, together with any current bureaucratic (as is common in many civil law jurisdictions) it is true trends or likely future developments that may be of interest. that Spanish Commercial Courts are gaining a very relevant reputation and experience in dealing with maritime matters. The coming into force of the Shipping Act back in 2014 has caused It is also worth mentioning that, on the publication of the Shipping the emergence two relevant topics in the maritime sphere. Act back in 2014, the substantive law applicable to maritime First, we have the direct action against P&I Clubs. Although such matters is now clearer for the Courts, instead of the contradictions an action is not expressly contemplated against indemnity cover and inconsistencies which the previous legislation suffered. The (such as that provided by the P&I Clubs), the Spanish Supreme Shipping Act does not interfere with the International Conventions Court did confirm, obiter dicta, this possibility, in its judgment in to which Spain is a party, and is fully compatible with the European the Prestige case. Regulations.

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This is something which is currently being argued in some cases; Despite the above, it is also confirmed that such regulation will however, our understanding is that the obiter dicta of the Supreme not affect the provisions of any International Treaty or European Court will be confirmed by most Spanish Courts. Regulation applicable in Spain. In any event, several judgments from the Appeal Courts and from Accordingly, the validity of jurisdiction clauses referring the parties the Supreme Court will be required in order for the ruling to be to a Court of a European Union Member State, will be analysed in considered jurisprudence and, hence, fully applicable within the light of European Regulation nº 1215/2012 and its interpretation by Spanish Jurisdiction. the decisions of the European Court of Justice. The second topic refers to the validity of the arbitration and On the other hand, the validity of arbitration clauses which refer jurisdiction clauses included in any transport contract. In this the parties to arbitration in a country member of the New York Spain regard, the Spanish Navigation Act establishes a negative default Convention, will be interpreted according to the principles referred position, denying the validity of such clauses where they have not to in question 7.2 above. been agreed upon individually and separately by the parties. Those jurisdiction clauses referring the parties to judicial Courts It is additionally stated in the Act that the insertion of any such outside the EU and arbitration clauses referring the parties to clause in the printed terms and conditions of any contract for the arbitration in a country which is not a signatory party of the NY usage of a vessel will not constitute a valid proof of acceptance of Convention may face serious risks of not being respected by the the same. Spanish Courts.

Jaime Soroa Edmund Sweetman Meana Green Maura y Asociados SLP Meana Green Maura y Asociados SLP (MGM&CO.) (MGM&CO.) Calle Ferraz 3 Ciutat de la Justicia de Barcelona 1º Izquierda Edifici D., planta 2 28008, Madrid Av. Carrilet, 3. L’Hospitalet Llobregat Spain Barcelona Spain Tel: +34 91 432 38 75 Tel: +34 91 432 38 75 Email: [email protected] Email: [email protected] URL: www.meanagreenmaura.com URL: www.meanagreenmaura.com

Jaime is a dual-qualified Spanish lawyer and a Solicitor for England Edmund is a Barrister called in Ireland and England and Wales and he and Wales. Jaime joined MGM&CO. as a partner in April 2015 and is is also a practising Abogado based in Barcelona. Edmund graduated currently the managing partner of the firm. Jaime graduated in Law at with a Bachelor of Civil Law degree (Euro Legal Studies) in 1997 and the University of Madrid Carlos II with a major in European Law and he was called to the Irish Bar in 1999. In 2005 he was admitted to holds an LL.M. degree in International Maritime Law from the University practise as an Abogado by the Spanish Justice Ministry. He holds of Wales, Swansea. He commenced his professional career in Spain an LL.M. degree in Maritime Law from the University of London at MGM&CO. before becoming a shipping solicitor in the UK where and a Postgraduate Diploma in Civil Litigation from the Universitat he worked for two IG P&I Clubs and two boutique City firms, Jackson Pompeu Fabra, Barcelona. He is a visiting lecturer in Admiralty Law Parton Solicitors and Swinnerton Moore. He has lectured on law at at University College Cork. He joined MGM&CO. as Director of their universities and is a frequent speaker at Latin American and European Barcelona office in April, 2015 and was made partner of the firmin shipping events, including those hosted by the International Association December 2016. of Young Lawyers (AIJA). He has a mixture of wet and dry experience Edmund represents parties in both litigation and non-litigation maritime including but not limited to: marine insurance; collisions; fixed and work in Ireland and Spain as a Barrister and Abogado, respectively. He floating object (FFO) claims; pollution; crew personal injury; salvage; is the President of the Irish Maritime Law Association. He has chaired safe ports; cargo claims; charterparty disputes; and defence work sessions in international seminars on maritime law and has delivered generally. Jaime is also a Cambridge-qualified CELTA English teacher papers to the same. He is the “Rapporteur” of the International Working and speaks English, Spanish, Italian and has a basic knowledge of Group of the Comité Maritime International on the Nomenclature of French and Portuguese. Vessels and Wrongful Arrest of Vessels and he is a member of the international working group on the fair treatment of seafarers.

Meana Green Maura y Asociados SLP (MGM&CO.) was the first Spanish law firm to specialise in maritime law, leading the way in national and international legal practice. The firm has a solid team of highly qualified lawyers, including a dual-qualified solicitor and a barrister, providing legal advice on English, Spanish, and international law to clients of the firm. With five offices in Spain (Madrid, Bilbao, Barcelona, Algeciras and Castellón), MGM&CO. is able to cover all areas of maritime law, maritime insurance, pollution, recreational sailing, naval construction, land, road or air transport, multimodal transport, fishing rights, mercantile law, administrative law, mediation, arbitration, personal injury etc. all over Spain. The firm opened its first international office in Mexico back in September 2016 and now offers advice under Mexican law as well as Spanish, English and International law. In January 2018, the firm set up a UK desk to support its London Arbitration practice.

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Sri Lanka Jivan Goonetilleke

D. L. & F. DE SARAM Savantha De Saram

■ The protocol laid down by the International Oil Pollution 1 Marine Casualty Fund. (In force in Sri Lanka.) (iii) Salvage / general average 1.1 In the event of a collision, grounding or other major The AJA provides for the prosecution of claims in the nature casualty, what are the key provisions that will impact of salvage, including towage of vessels under distress. The AJA upon the liability and response of interested parties? is an effective piece of legislation, on account of its provision to In particular, the relevant law / conventions in force in effect arrest over not only vessels, but any other maritime property relation to: as security for general average contributions (as per the MV “Thermopylae Sierra” case (Action in Rem No. 10/2010)). (i) Collision (iv) Wreck removal The Director General of Merchant Shipping, under the powers vested in him and under the Merchant Shipping Act No. 52 of 1971 The SLPA is conferred with wide and far-reaching powers by statute, (“MSA”), together with the Sri Lanka Ports Authority (“SLPA”), in relation to the owning of port land and regulating all activities has recently issued a joint Circular, dated 23rd March 2016, laying in relation to matters falling within a port, including the right to down the procedure to be followed in safety investigations which carry out the removal of wrecks which obstruct or otherwise pose involve marine casualties and incidents. The laid-out procedure has a danger to navigation in port/outer port limits. The MEPA and the to be conducted in accordance with the Casualty Investigation Code Coast Conservation Authority are the other regulatory bodies which formulated on the United Nations Convention on the Law of the Sea act with the SLPA in matters of wreck removal. The provisions of (“UNCLOS”), the Reglations of the International Convention for the 2007 Nairobi Convention on Wreck Removal are not in force in the Safety of Life at Sea (“SOLAS”), the International Convention Sri Lanka. A limited fund cannot be enforced for wreck removal. for the Prevention of Pollution from ships (“MARPOL”) and the (v) Limitation of liability International Convention on Load Lines. The provisions of the Marine Pollution Prevention Act do not apply The Admiralty Jurisdiction Act No. 40 of 1983 (“AJA”), a specialised to vessels in other ownership or operation under the armed forces law enacted for the determination of maritime disputes, provides of Sri Lanka. Except in the case of a prosecution or claim by a Sri for the institution of action in relation to collisions, where a vessel Lankan regulatory authority, a Sri Lankan court will uphold and/or subject to the collision is within the territorial waters of Sri Lanka. otherwise take cognisance of limitation of liability clauses, subject to (ii) Pollution the unfair contract terms legislation of the law governing the dispute. The Marine Environment Protection Authority (“MEPA”) established (vi) The limitation fund by the Marine Pollution Prevention Act No. 35 of 2008 (which also The Convention on Limitation (Convention on Limitation of incorporates into domestic legislation provisions of MARPOL) is the Liability for Maritime Claims 1976) is not in force in Sri Lanka. State authority vested with the responsibility to prevent, control and However, it has been mooted by the Company of Master Mariners manage pollution of Sri Lanka’s marine environment. of Sri Lanka and the Professional Associations of Sri Lanka for Sri Lanka is also a signatory to the following international the provisions of the said Convention to be incorporated into the conventions relating to marine pollution: domestic law of Sri Lanka. At present, a limitation fund cannot be established for wreck removal. ■ MARPOL (Annex I – VI) / MARPOL 73/78. ■ The International Convention on Oil Pollution Preparedness, Response and Co-operation of 1990 (“OPRC”). 1.2 What are the authorities’ powers of investigation / ■ The International Convention on Civil Liability for Bunker casualty response in the event of a collision, grounding or other major casualty? Oil Pollution Damage of 2001 – this Convention was adopted to ensure that adequate, prompt and effective compensation is available to persons who suffer damage caused by spills of oil Please see the response to question 1.1, point (i) above. Further, when carried as fuel in ships’ bunkers. (Not in force.) in terms of the MSA and the Regulations issued thereunder, the ■ The International Convention on the Control of Harmful Director General of Merchant Shipping is empowered to conduct Anti-Fouling Systems on Ships. Marine Safety Investigations and has the right to obtain information ■ The Convention on Civil Liability for Oil Pollution Damage necessary to conduct such Investigations, which shall include but 1969. (In force in Sri Lanka.) not be limited to the following:

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i. Have free access to any relevant area, ship (including any US$35,000) including matters concerning the export and import place on the ship), as well as to the wreck of the ship. of merchandise and services of affreightment. Actions brought ii. Perform listing of items related to the marine casualty or under such regular regime will have to satisfy the jurisdictional incident (for example, polluting substances or ship parts) and requirements set out under the Civil Procedure Code, namely that collection for further analysis. the registered office of the carrier is situated within, or the contract iii. Have free access to any documents, including log book, expert sought to be enforced was entered into, or the cause of action should opinions, examination deeds of classification companies and be within the jurisdictional limits of such court. institutions performing control functions, as well as copy Section 2(1) of the AJA, which is a specialised Act to deal with and have use of these documents (entries made by electronic matters of admiralty, lists the “maritime claims” upon which an information carriers (for example, voyage data recorders admiralty action can be instituted, which include claims arising (“VDR”) and the Automatic Identification System (“AIS”)) Sri Lanka and an itemised list thereof, as well as audio recordings and out of any agreement relating to the carriage of goods on a ship. video recordings, all of which shall be deemed documents in For actions to be instituted in the Admiralty High Court (sitting in the sense of evidence). Colombo) under this Section, the vessel should be within or expected within the territorial waters of Sri Lanka, and the carrier should be iv. Interview witnesses in order to discover the causes of the relevant casualty or incident. either the owner or charterer or in possession or in control of the ship, whilst also being the beneficial owner or demise charterer of v. Make video recordings and audio recordings during the vessel at the time the action is brought (commonly known and investigative activities. referred to as the “personam link”). Where the Bill of Lading and/or other documents forming the 2 Cargo Claims contract of carriage contain an arbitration clause, the carrier can object to a Sri Lankan court exercising jurisdiction in respect of such dispute, on account of the arbitration clause as per Section 5 of 2.1 What are the international conventions and national the Arbitration Act No. 11 of 1995. However, in line with the Court laws relevant to marine cargo claims? of Appeal judgment in Colombo Commercial Fertiliser Limited v Motor Vessel “SCI Mumbai” (decided on 05.05.2014) and, as I. Hague Rules 1924 as amended by Hague/Visby Rules 1968. endorsed and followed in the recent case of the MV “Thermopylae II. Hamburg Rules 1978. Sierra” (Action in Rem No. 10/2010), the provisions of the III. Rotterdam Rules 2008. Arbitration Act will not derogate the jurisdictional powers of the IV. Conventions facilitated by the International Maritime Admiralty High Court in determining maritime claims under the Organization (“IMO”). AJA, which is recognised as specialised legislation governing the determination of maritime disputes “notwithstanding anything to V. Carriage of Goods by Sea Act No. 21 of 1982. the contrary in any other law”. VI. Admiralty Jurisdiction Act No. 40 of 1983. Demise Clauses and Himalaya Clauses are valid under Sri Lankan The Hague Rules 1924 were given statutory force and effect in Sri law (following English law on the matter). The carrier will also Lanka by the Carriage of Goods by Sea Ordinance No. 18 of 1926, enjoy the exclusions of responsibility/liability for the matters listed which was subsequently amended and repealed by the Carriage of under Article IV (2) of the Hague/Visby Rules. Goods by Sea Act No. 21 of 1986, which incorporated into local legislation the provisions of the Hague/Visby Rules 1968. The Hague/Visby Rules are included in their entirety as a Schedule to 2.3 In what circumstances may the carrier establish claims the Act. The package and kilo limitations are in terms of Article IV against the shipper relating to misdeclaration of cargo? (5) of the Hague/Visby Rules. It is the obligation of the shipper to make an accurate declaration of the cargo and the corresponding labelling of cargo (e.g. dangerous 2.2 What are the key principles applicable to cargo claims goods cargo). The carrier will be able to establish a claim against brought against the carrier? the shipper for any consequent loss and/or damage caused by misdeclaration of cargo. The maritime law of Sri Lanka is founded on English maritime As per the recent findings of the Admiralty Court in MV law. Section 12 of the AJA provides that, where there is a lacuna in “Thermopylae Sierra” (Action in Rem No. 10/2010), there is now law in any matter before the Admiralty High Court, the court shall a line of thought that a carrier may even institute in rem proceedings have the power to make such orders or to give such directions as the under the AJA for the arrest of cargo as security for the carrier’s court exercising admiralty jurisdiction in England would have the claim against the shipper. This remedy will be in addition to the power to make and give in like circumstances, insofar as such orders regular legal recourse available as per the jurisdictional requirements and directions shall not conflict with or be inconsistent with any set out above. provisions made by or under the AJA or any other enactment or rule. The establishment of a cargo claim against the carrier would initially require the foundation of a claim based on English commercial law, 3 Passenger Claims i.e. the establishment of a contract of carriage with the carrier and the breach of such contract resulting in loss and damage to the 3.1 What are the key provisions applicable to the contracting party. The next issue will be the forum before which resolution of maritime passenger claims? such claim can be actioned against the carrier. The District Courts of the provinces in Sri Lanka are vested with original jurisdiction Passenger claims will be governed and determined by either of the over civil claims, including marine cargo claims. The High Court of following: the Western Province (established in 1996 and sitting in Colombo, (a) Contractual liability, founded on a breach of contractual exercising civil jurisdiction) has jurisdiction over all commercial obligation by either the passenger or transporter, resulting in claims in excess of the value of LKR 5,000,000 (approximately financial loss.

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(b) Tortious liability. and Conditions of Sale of the bunker supplier. This provides for the Such actions can be founded by way of regular actions before construction of a contractual nexus between the vessel/owners of a Sri Lankan court, subject to satisfaction of the jurisdictional the vessel and the bunker supplier. As such, said contractual nexus requirements as set out hereinafter. A passenger claim against a would fulfil the “personam link” that is required in terms of section vessel could also be tantamount to a “maritime claim” listed under 3(4) of the AJA. This foundation has been used to great effect in Section 2(1) of the AJA where the aggrieved claimant may seek several arrests of vessels chartered by Hanjin Shipping in the wake arrest of the vessel as security for the claim. of the Hanjin financial turmoil. The liquidation of one-time international bunkering giants OW Group also saw an influx of arrest actions instituted in several 4 Arrest and Security jurisdictions by ultimate/physical suppliers, on account of non-

payment of bunker fees for bunkers supplied to the arrested vessels Sri Lanka ordered and procured through the OW entity. The admiralty 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel jurisdiction in respect of such a claim was invoked in the MV “Dong owner and the applicable procedure? Tho” case (Action in Rem No. 12/2014). In such case, the owner of the MV “Dong Tho” made an application for the liquidator of the A party seeking to obtain security for a maritime claim against a OW entity to be made a party to the action, on the basis that such vessel owner may file in rem proceedings under the AJA seeking party was a necessary party for determination of the action. ING the arrest of the vessel in the first instance. Section 2(1) of the AJA Bank, the receiver of the OW entity under liquidation thereafter, lists the “maritime claims” upon which an admiralty action can be filed appearance. However, the matter was subsequently settled instituted. administratively. In terms of Section 7(1) of the AJA, where the Judge is satisfied that the defendant vessel or property related to the action is in danger of 4.3 Where security is sought from a party other than the being removed from the territorial waters of Sri Lanka, the Judge vessel owner (or demise charterer) for a maritime may issue a Warrant for the arrest of the vessel/property, in addition claim, including exercise of liens over cargo, what options are available? to the issuing of summons. For the purposes of obtaining a Warrant of Arrest against a vessel situated within or expected to enter the territorial waters of Sri Lanka, an action in rem is maintainable In in rem arrest proceedings instituted against the vessel under the under the provisions set out in Section 3 of the AJA. The ingredients AJA, any party interested in the arrested vessel can file appearance for arrest, as listed under Section 3, are that: and deposit security for her release. As set out above, there is also provision to arrest cargo as security for a claim against a cargo (a) the relevant person was, when the cause of action arose, either the owner or charterer in possession or control of the interest holder. vessel; and The options for security would be in the form of sequestration (b) the relevant person was, at the time at which the action orders, which are remedies available under regular actions (i.e. not was instituted, the beneficial owner or charterer (charter by available under the AJA regime), where a party claimant/plaintiff demise) of the vessel. may seek an order sequestrating property of a party defendant This relationship between the person who is liable in personam and in satisfaction of judgment. However, the property sought to be the vessel is generally known as the “personam link” establishment, sequestrated will have to be within the territorial waters of Sri Lanka which is imperative for the purposes of instituting in rem proceedings and the plaintiff/claimant will have to demonstrate to the satisfaction in Sri Lanka. Section 3(4) also makes provision for “sister ship” of court, through affidavit or even viva voce evidence, that there arrests in Sri Lanka. are compelling reasons to believe that such party defendant will be leaving the jurisdiction of court or is taking steps to divest itself of Applications for arrest are straightforward and are led by the filing assets with the intention to default creditors. and supporting of an Affidavit to Lead Warrant containing the facts and documents in support of the claim. The application for arrest is supported ex parte and can be supported on the same day that arrest 4.4 In relation to maritime claims, what form of security is papers are filed in the Admiralty High Court. Once the Warrant of acceptable; for example, bank guarantee, P&I letter of Arrest and Writ of Summons are issued by the court, they are valid undertaking. for a period of 12 months from the date of issue. In terms of the AJA read with the High Court (Admiralty Jurisdiction) Rules 1991 (“HCR”), release of an arrested vessel pending final 4.2 Is it possible for a bunker supplier (whether physical determination of an action can only be obtained where: and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? (a) the claimed sum (including principal claim + interest + reasonable legal costs) is paid into court; or Yes. Such claims are common and are founded under Section (b) security is furnished in a quantum and mode acceptable to the 2(1)(l) of the AJA, i.e. goods and services rendered to a vessel for plaintiff (which through practice is the claimed sum + 40% thereon). her operation and maintenance. For the founding of such claim, it is necessary to satisfy the “personam link” as set out above. The form/mode of security can be any of the following: However, in recent times, in rem proceedings have been instituted (a) Bank Guarantee by a licensed commercial bank (preferred/ and Warrants of Arrest issued in matters where the subject bunkers standard option); have been supplied to the order of a charterer other than a demise (b) funds held in escrow, generally in an escrow bank account charterer. These actions have been formulated on the basis that the jointly controlled by the lawyers for the parties; or bunkers have been supplied on the faith and credit of the vessel itself, (c) protection and indemnity (“P&I”) letter of undertaking. emanating from the Bunker Delivery Notes, which generally provide for the supply and acceptance of the bunkers on the Standard Terms

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plaintiff/claimant, followed by an Answer by the party defendant. 5 Evidence Where either party defendant pleads a counter/cross-claim against the plaintiff, the plaintiff will be given an opportunity to file a 5.1 What steps can be taken (and when) to preserve or Replication addressing the counter/cross-claim. Thereafter, trial is obtain access to evidence in relation to maritime by way of leading evidence via witnesses through a trial process. claims including any available procedures for the At the conclusion of the trial process, the parties will file Written preservation of physical evidence, examination of Submissions. At the direction of court or on the motion of either of witnesses or pre-action disclosure? the parties, the court may even hear Oral Submissions on the matter. Legal arguments and matters of law will be at the Submission stage. Sri Lankan courts follow an adversarial process. In relation to As far as timelines are concerned, the completion of filing of

Sri Lanka maritime claims brought by way of regular proceedings before a pleadings can take between 5–12 months. The trial process can take Sri Lankan Court (i.e. not under the AJA), the Civil Procedure Code approximately 2–5 years, depending on the number of witnesses and (“CPC”) would govern the procedure of the action. As a general the complexity of the matter. The leading of Evidence in Chief by principle, it is the obligation of the party to produce evidence (i.e. way of Affidavit of witnesses may be allowed at the discretion of the documentary and oral testimony) to corroborate such party’s case. court, and is commonly allowed in commercial disputes to save the However, as pre-trial measures, the CPC provides for the following court time. However, there may be delays to the commencement of remedies: the trial process where pre-trial applications are made by the parties, (a) The service of interrogatories on a party – i.e. a list of as is more fully set out above. Judgment may take another 3–6 questions to be served on an adverse party, to be answered on months from the conclusion of the trial. oath (i.e. by Affidavit). In in rem proceedings under the AJA, it is common for arrest orders to (b) An application for inspection and discovery of documents in the possession of another party to the action. be sought upon the filing of the action. Suchin rem proceedings are deemed formally commenced on the service of the Writ of Summons The CPC also makes provision for injunctive relief, the first step on the defendant vessel. The arrest and release-from-arrest process of which is an Enjoining Order – a “preservation of status quo” (on either payment of the claimed sum into court or provision of application, pending the inter partes Inquiry as to whether an security) is followed by a regular trial process. In certain instances, Interim Injunction should be issued or not. owners of the defendant vessel also file pre-trial preliminary actions For actions under the AJA the HCR, whilst also providing for seeking a recall/rescission of the Writ of Summons served on the the service of interrogatories and inspection and discovery of vessel, and the dismissal of the action on account of a lack of legal documents, these rules also provide for parties proceeding to make basis to institute action against the defendant vessel. applications to court for: A skeletal procedure and timeline relative to in rem proceedings (a) the detention, custody or preservation of any property which under the AJA is set out below: is the subject matter of the action or as to which any question may arise; and (b) the taking of samples of any property which is the subject Approximate Stage Description matter of the action for the purposes of obtaining full Time information or evidence and/or for any observations to be made in relation to such property and/or any experiment to be ■ Filing of Petition, Answer and Replication (where the Answer tried thereon. contains a counter-claim (most notably for wrongful arrest)). From filing of 5.2 What are the general disclosure obligations in court ■ On the date Replication is filed, Petition to the 1 Pleadings proceedings? the matter is formally fixed for 1st date of trial: trial. The parties will be directed 3–5 months. to file their Suggested Admissions There is a general inherent obligation on the parties to make full and and Issues in the Court Registry frank disclosure to court. Any statement made by a party, either in on a date prior to the trial date an Affidavit or through oral testimony of a witness knowing it to be (generally 2 weeks prior). false, is liable to prosecution for contempt of court. ■ On the 1st date of trial, the The obligation cast on a party to make full and fair disclosure to Suggested Admissions and Issues court is even more stringently followed in the event of an ex parte are settled by counsel for the parties and the plaintiff will have application for interim relief. Where it is found that material to commence the case by leading information has been suppressed and/or misrepresented, any ex the plaintiff’s first witness or, parte interim relief is liable to be set aside. alternatively, with the leave of court (and as is generally the Trial process case), move for a date to file an may take 6 Procedure Affidavit containing the Evidence approx. 8–18 in Chief of such witness. months (largely 2 Trial ■ Where such Affidavit is depending on the number 6.1 Describe the typical procedure and timescale permitted (as is the general practice), the court will re-fix of witnesses applicable to maritime claims conducted through: i) the matter for further trial heard). national courts (including any specialised maritime or (approximately 2 months commercial courts); ii) arbitration (including specialist from such date) and direct the arbitral bodies); and iii) mediation / alternative dispute plaintiff to file its Affidavit in resolution. the Court Registry in the interim with Notice to the Defendant In maritime actions founded as regular actions (i.e. not under (generally 1 month before the next trial date). the AJA), the action will be instituted by filing of a Plaint by the

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Approximate Approximate Stage Description Stage Description Time Time

■ On the next trial date, the Oral witness will have to be present, Submissions: whereafter the Affidavit 2–6 weeks from containing the Evidence in Chief filing of Oral will be marked in evidence ■ Inquiry is by way of Oral Submissions. through such witness. 3 Inquiry Submissions followed by Written ■ After the Affidavit is marked Written Submissions. Submissions: in evidence, cross-examination 2–4 weeks from by counsel for the defendant will conclusion commence. Trial process of Oral Sri Lanka may take ■ Cross-examination will be Submissions. approx. followed by re-examination 8–18 months by counsel for the plaintiff (to ■ Matter will be fixed 2 Trial (contd.) (largely clarify matters that arose in for order on date Written depending on cross-examination). Submissions are filed, the number or alternatively fixed on 2–6 weeks from ■ This process will apply of witnesses 4 Order date Oral Submissions filing of Written to all witnesses produced. heard). are concluded, with court Submissions. Documentary evidence will have directing the parties to file to be produced through such Written Submissions in the witnesses. interim. ■ Once the plaintiff finishes leading its witnesses (i.e. Sri Lanka is a party to the New York Convention on Arbitration closes its case), the defendant will commence presenting its and the Sri Lankan Arbitration Act No. 11 of 1995 (“AA”), which witnesses, following the same gives legislative effect to the provisions of the Convention. In fact, procedure. Sri Lankan law recognises the freedom of the parties to select the number of arbitrators, rules, place, language and governing law of Oral such arbitral proceedings. Even though more administratively costly Submissions: ■ The legal arguments of both 4–6 weeks than the regular court process, arbitral proceedings are intended to be parties will be submitted at this from quicker and administratively more conducive to a swift determination stage, initially orally, followed conclusion of by Written Submissions. process. However, such arbitral awards as are obtained will have to be trial. enforced by way of separate proceedings in the relevant jurisdiction. ■ On the joint motion of the 3 Submissions Written parties or the court on its own Submissions: motion, it is possible to dispense 2–4 weeks 6.2 Highlight any notable pros and cons related to your with Oral Submissions and from jurisdiction that any potential party should bear in mind. direct the parties to file Written conclusion Submissions directly. of Oral Submissions. For the institution of maritime proceedings under the AJA in Sri Lanka, the only jurisdictional requirement is that the defendant vessel 1–2 months or maritime property against which such action is founded be within from the 4 Judgment ■ Will be delivered in court. the territorial waters of Sri Lanka. As the res of the vessel or property conclusion of arrested or, alternatively, the security provided for its release will be Submissions. available for satisfaction of judgment, the prosecution of maritime claims under the AJA is an effective mechanism for redress from such claims. Procedure where interim application is made by defendant challenging maintainability of the action: Alternatively, a judgment obtained from a court under regular procedure may require enforcement overseas where the judgment- debtor is a foreign party or does not have assets locally. The Approximate enforcement of Sri Lankan judgments in a foreign country will Stage Description Time require enabling local legislation of that country for enforcement. In this regard, the enforcement of an arbitral award obtained in Sri Lanka Can be filed any ■ To be filed by way will be more conducive to enforcement in a foreign jurisdiction, with date between of Motion, Petition and service of Writ most states being party to the New York Convention. Affidavit specifying a date 1 Application of Summons for Support (with notice of on Vessel and such application served on the commencement plaintiff). 7 Foreign Judgments and Awards of trial.

■ On the date the application 7.1 Summarise the key provisions and applicable is taken up for Support, the procedures affecting the recognition and enforcement plaintiff can move to file 2–8 weeks from of foreign judgments. formal Objections to such date of moving 2 Objections application. court to file ■ Objections are by way of a Objections. Sri Lanka is a signatory to the Hague Convention on the Recognition Statement of Objections and and Enforcement of Foreign Judgments in Civil and Commercial Affidavit. Matters of 1971. Though the said Convention has not been incorporated into local law by the Sri Lankan Parliament, Sri Lanka has enacted the Reciprocal Enforcement of Judgments Ordinance (hereinafter

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referred to as the “REJO”) No. 41 of 1921 – Cap. 79, which permits High Court for the enforcement of the award. The AA also lists the the reciprocal enforcement of foreign judgments in certain instances. limited circumstances in which the court can refuse the recognition The reciprocal enforceability of foreign judgments has been and enforcement of a foreign arbitral award. extended to several commonwealth jurisdictions. Section 3(2) of the REJO lays down the grounds on which the registration of such 8 Updates and Developments judgments shall be refused, and is exhaustive. Secondary legislation was enacted as Rules of Court by the Supreme Court under Section 5 of the REJO, setting out the procedure governing 8.1 Describe any other issues not considered above that such enforcement applications in the District Court of Colombo. may be worthy of note, together with any current trends or likely future developments that may be of interest. Sri Lanka 7.2 Summarise the key provisions and applicable As mentioned above, Sri Lanka follows a dualist approach, whereby procedures affecting the recognition and enforcement international conventions signed require the passing of enabling of arbitration awards. statutes for incorporation into domestic law. Whilst Sri Lanka is a signatory to several IMO conventions, hardly any of them have been The AA, which incorporates into local legislation the provisions incorporated into domestic law. of the New York Convention, provides for the recognition and enforcement of both local and foreign arbitral awards. Section 33 There are six new conventions to which Sri Lanka is expected to of the AA specifically provides that a foreign arbitral award shall be accede in the near future, mainly on the subjects of: air pollution recognised as binding, irrespective of the country in which it was (MARPOL Annex 6); ballast water management, which restricts the made, upon application by a party under Section 31 to the High discharge of sea water carried in ballast tanks by ships from one Court for enforcement under and in accordance with such Section. port to another introducing invasive marine species; the limitation of liability on maritime claims; bunker conventions on marine Section 31 provides that a party to an arbitration agreement pursuant fuel supplies; oil pollution prevention, response and control; and to which an arbitral award is made may, within one year after the hazardous noxious substance protocol. expiry of 14 days since the making of such an award, apply to the

Jivan Goonetilleke Savantha De Saram D. L. & F. DE SARAM D. L. & F. DE SARAM No. 47, C. W. Kannangara Mawatha No. 47, C. W. Kannangara Mawatha Colombo 7 Colombo 7 Sri Lanka Sri Lanka

Tel: +94 11 2695 782 Tel: +94 11 2695 782 Email: [email protected] +94 77 7891 696 URL: www.desaram.com Email: [email protected] URL: www.desaram.com

Jivan Goonetilleke joined D. L. & F. DE SARAM in 2008 as a Counsel/ Savantha De Saram joined D. L. & F. DE SARAM in 1998 and has Consultant and has been a Partner of the firm since 2014. His practice been a Partner of the firm since 2004. His practice mainly focuses includes extensive work done in the areas of Corporate, Commercial on matters relating to Corporate and Commercial Law. His practice and Labour Law. He also has experience in dealing with the arbitration also includes extensive work done in the areas of Project Finance process and other dispute resolution related practices in Sri Lanka. and Infrastructure, Securitisation Information Technology, Admiralty, Jivan is currently involved in a number of Admiralty and Shipping Shipping and International Trade. related matters where he acts as Counsel/Consultant on such matters. Savantha’s academic/professional qualifications include: Jivan’s academic/professional qualifications include: ■■ LL.B. (Hons), Holborn Law College London (1997). ■■ LL.B. (Hons), University of London (2005). ■■ Attorney-at-Law, Supreme Court of the Democratic Socialist ■■ B.A. (Bachelor of Arts Degree), University of Kelaniya, Sri Lanka Republic of Sri Lanka (1999). (2006). ■■ Barrister-at-Law, England and Wales (1998), Lincoln’s Inn. ■■ Postgraduate Diploma in Conflict Resolution, University of Colombo, Sri Lanka (2009). ■■ Attorney-at-Law, Supreme Court of the Democratic Socialist Republic of Sri Lanka (2008).

D. L. & F. DE SARAM is one of the oldest and largest law firms in Sri Lanka, founded in 1898, and has been consistently ranked as a top-tier legal firm byIFLR 1000, The Legal 500, Chambers Global and Chambers Asia Pacific. The firm provides cross-border legal services to major international firms in, inter alia, the United Kingdom, the United States, China, Europe and Australia. The firm has a legal team of highly qualified, versatile and experienced specialists who have a broad scope of practice, including, inter alia: Foreign Investment; Banking and Finance; Infrastructure and Development; Labour, Employment and Infrastructure; Real Estate; Intellectual Property; Information Technology; Admiralty and Shipping; Litigation and Dispute Resolution; and Family Law. The firm also provides Company Secretarial Services.

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Switzerland

ThomannFischer Stephan Erbe

■ The International Convention on Salvage of 28 April 1989. 1 Marine Casualty There are no rules on who may carry out salvage operations and there is no mandatory form. 1.1 In the event of a collision, grounding or other major (iv) Wreck removal casualty, what are the key provisions that will impact upon the liability and response of interested parties? Switzerland has ratified the Nairobi International Convention on the In particular, the relevant law / conventions in force in Removal of Wrecks of 18 May 2007. relation to: (v) Limitation of liability Switzerland has ratified the Convention on Limitation of Liability (i) Collision for Maritime Claims of 19 November 1976. Switzerland has ratified the following conventions: (vi) The limitation fund ■ The International Convention for the Unification of Certain Art. 48 through 62 of the Ordinance on the Swiss Shipping Rules of Law with respect to Collisions between Vessels of Act provides for detailed rules regarding the establishment of a 23 September 1910. limitation fund. ■ The International Convention on Certain Rules concerning Civil Jurisdiction in matters of Collision and the International General remark regarding all the above conventions: Under Swiss Convention for the Unification of certain Rules relating to Law, international treaties are directly applicable, if they are Penal Jurisdiction in matters of Collision or other Incidents self-executing. There is therefore no need for special legislation of Navigation, both of 10 May 1952. incorporating such treaties. Nevertheless, Arts. 48, 49, 120 and 121 ■ The Convention on the International Regulations for of the Swiss Shipping Act explicitly refer to the above conventions. Preventing Collisions at Sea of 20 October 1972. (ii) Pollution 1.2 What are the authorities’ powers of investigation / Switzerland has ratified the following conventions: casualty response in the event of a collision, grounding or other major casualty? ■ The International Convention for the Prevention of Pollution of the Sea by Oil of 12 May 1954. Under the Ordinance on the Safety Investigation of Transport ■ The International Convention for the Prevention of Pollution from Ships of 2 November 1973, including its 1978 Protocol. Incidents (OSITI; SR 742.161) the Swiss Transport Safety Investigation Board STSB will carry out an investigation on the ■ International Convention Relating to Intervention on the High technical, operational, human and systematic causes in the event of Seas in Cases of Oil Pollution Casualties of 29 November 1969 including its 1973 Protocol. an incident involving a ship under Swiss flag. Shipping incidents abroad will only be investigated if they take place in international ■ The International Convention on Civil Liability for Oil Pollution Damage of 29 November 1969 including its 1976 waters. An incident is defined pursuant to Art. 94 par. 1 no. 7 of and 1992 Protocols. the United Nations Convention on the Law of the Sea. The goal of the investigation is to avoid similar incidents in the future, but the ■ The International Convention on Civil Liability for Bunker Oil Pollution Damage of 23 March 2001. report will not opine on fault or the legal responsibility. The STSB has comprehensive powers and can take all measures necessary to ■ The International Convention on the Control of Harmful conduct the investigation. Anti-fouling Systems on Ships of 5 October 2001. ■ The International Convention on the Establishment of an If a criminal act is committed on board of a ship flying the Swiss International Fund for Compensation for Oil Pollution flag, the authorities of the canton of Basel-Stadt, i.e. the prosecutor’s Damage of 27 November 1992. office of Basel, shall be in charge of leading the criminal investigation (iii) Salvage / general average (Art. 15 of the Swiss Shipping Act). The prosecutor’s powers are laid out in the Swiss Criminal Procedure Code. Switzerland has ratified the following conventions: The STSB and the prosecutors coordinate their efforts and are under ■ The Convention for the Unification of Certain Rules of Law a duty to disclose their documents and findings respectively. respecting Assistance and Salvage at Sea of 23 September 1910.

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2 Cargo Claims 4 Arrest and Security

2.1 What are the international conventions and national 4.1 What are the options available to a party seeking to laws relevant to marine cargo claims? obtain security for a maritime claim against a vessel owner and the applicable procedure? Switzerland has ratified the Hague-Visby-Rules. In Art. 101, the Swiss Shipping Act explicitly refers to the Hague-Visby-Rules. Switzerland has ratified the 1952 Arrest Convention but is not a Switzerland has signed, but not ratified, the Rotterdam Rules. The signatory to the 1999 Arrest Convention. Hamburg Rules have not been signed. Switzerland is a landlocked country and therefore seagoing vessels will, apart perhaps from yachts and similar small vessels on the Switzerland Rhine, never be in the jurisdiction of Swiss courts/authorities. 2.2 What are the key principles applicable to cargo claims As a consequence, Swiss courts/authorities will never have the brought against the carrier? opportunity to arrest a seagoing vessel.

All the principles as established in the Hague-Visby-Rules apply, i.e. the presumed liability except for the excepted perils, the exclusion 4.2 Is it possible for a bunker supplier (whether physical of liability for nautical error and fire and the limitation of liability. and/or contractual) to arrest a vessel for a claim The limitations apply not only to contractual claims, but also if relating to bunkers supplied by them to that vessel? claims are based on tort (Art. 105 of the Swiss Shipping Act). The bill of lading determines the rights that any lawful holder of such Due to Switzerland being a landlocked country, this point is mute. bill of lading may assert against the carrier, whereas the charterparty remains decisive for the legal relation between the carrier and the 4.3 Where security is sought from a party other than the shipper (Art. 115 of the Swiss Shipping Act). vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what options are available? 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo? Due to Switzerland being a landlocked country, this point is mute as far as ship arrests are concerned. The Swiss Shipping Act, just like German law, distinguishes However, it is conceivable that cargo liens may be exercised based between the shipper and the so-called Ablader (Art. 106 of the on, and under the conditions set out in, the general provisions of Swiss Shipping Act). The Ablader is the party who, on behalf of Swiss national law on arrests. the shipper, actually delivers the goods to the ship. This can be the shipper himself or e.g. a forwarder or agent acting on behalf of the 4.4 In relation to maritime claims, what form of security is carrier. The Ablader is liable towards the carrier for any damages acceptable; for example, bank guarantee, P&I letter of caused by misdeclaration of cargo, regardless of fault. undertaking. The Ablader or the contractual shipper, if he is the one delivering the cargo, will also be liable to other shippers who have cargo aboard As mentioned above, ship arrests will never be carried out in and sustain damages. However, and contrary to the Ablader’s Switzerland. In the case of arrest on cargo (see above), courts would liability toward the carrier, the Ablader will only become liable accept the following securities: a bank guarantee; a cash deposit towards other shippers if they succeed in establishing the Ablader’s with the competent court; or any other asset replacing the arrested fault. goods, if such assets, in the view of the court, provide an adequate The carrier will not be liable for shippers’ damages in the event of security to the creditor. misrepresentation (Art. 106 of the Swiss Shipping Act). 5 Evidence 3 Passenger Claims 5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime 3.1 What are the key provisions applicable to the claims including any available procedures for the resolution of maritime passenger claims? preservation of physical evidence, examination of witnesses or pre-action disclosure? Switzerland has ratified the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea of 13 December Under Swiss civil procedural rules, the range of admissible 1974 including its 1976 Protocol. Art. 118 of the Swiss Shipping means of evidence is limited to witness testimonies, documents, Act explicitly refers to the Athens Convention. The provisions of visual inspections, expert opinions, written testimony and parties’ this convention, including the provisions on limitation of liability statements (Art. 168 of the Swiss Civil Procedure Code). All these therefore govern maritime passenger claims. means of evidence only qualify as evidence if they are given upon instruction by the court or at least in the course of a court proceeding. Pre-trial Affidavits, prepared witness statements or expert opinions prepared by a party are therefore not admissible as evidence in court.

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If a party is able to establish that evidence may be jeopardised, that A creditor seeking an arrest will have to apply to the party may apply to the competent court for provisional securing of competent judge to issue an arrest deed. The judge will do so, evidence. The court may then, even if no procedure on the merits if the creditor credibly establishes that he has a claim against is pending, hear witnesses, get a preliminary expert opinion or take the owner of the goods, that there is good cause for issuing an other appropriate measures to secure physical evidence (Art. 158 of arrest order and the goods to be arrested belong to the debtor. The judge will normally decide on the spot, without hearing the Swiss Civil Procedure Code). the other party. The arrest order will be issued with no delay The Civil Court of Basel-Stadt is the competent court for all tort (usually on the same day) and the Debt Enforcement Office claims based on incidents that take place on a ship flying the Swiss will be instructed to secure the assets. Once this is done, the flag. The same court is competent for any other civil claim which debtor will be informed about the arrest and the arrest deed has its legal basis in the Swiss Shipping Act, i.e., among others, all will be issued. claims relating to ownership, mortgages, liens, charterparties and Now the debtor has the possibility to object. If he does so, Switzerland crewing contracts (Art. 14 of the Swiss Shipping Act). the parties will be summoned to court where the court will decide, still based on prima facie evidence, whether the arrest will be upheld. 5.2 What are the general disclosure obligations in court If the arrest is confirmed or if the debtor does not even object proceedings? in the first place, the creditor is under an obligation to initiate the enforcement of his alleged claim within 10 days, either Under Swiss civil procedural law there is no pre-trial discovery. by commencing an enforcement procedure or by initiating a Hence, with no proceeding pending and in the absence of a court civil action against the debtor. order based on Art. 158 of the Swiss Civil Procedure Code (see ii) Courts of Arbitration: Courts of arbitration may, depending above) no party is obliged in any way to provide, disclose or secure on the applicable arbitration rules, grant interim reliefs. evidence. However, if the party concerned does not comply, the court Once a matter is pending, every party to the proceeding and also of arbitration has no power whatsoever to enforce the interim third parties who are not involved in the proceedings are under a relief. The Court of Arbitration would in this case have to apply to the competent judge to enforce the arbitral interim duty to cooperate which, inter alia, includes the duty to disclose relief. documents and to give accurate witness statements. iii) Mediation plays no significant role in the enforcement of A party to a proceeding is exempt from the described duty to claims. In any case, a mediator has no power whatsoever to cooperate, if this may give reason to a criminal investigation against grant interim reliefs or to arrest goods. that party (nemo tenetur rule) or reason to a civil liability against that party or if that party is subject to a professional secrecy as described in Art. 321 of the Swiss Criminal Code (e.g. attorneys, notaries, 6.2 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in patent attorneys, auditors subject to a duty of confidentiality under mind. the Code of Obligations, doctors, and others, including auxiliaries to any of the foregoing persons). Pro: Swiss courts are generally of rather high quality and the average Third parties are exempt from the described duty to cooperate amount of time necessary to obtain a judgment on the merits is, if there are certain family relationships to one of the parties as compared to an international standard, rather reasonable. As a very described in the Swiss Civil Procedure Code. general rule it may be expected that a first-instance proceeding on the merits of a case will take approx. one year. Of course, this is just 6 Procedure a very rough rule of thumb and the specifics of a case may shorten this period down or prolong it. Con: procedural costs in Switzerland are high, compared to other 6.1 Describe the typical procedure and timescale jurisdictions. applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist 7 Foreign Judgments and Awards arbitral bodies); and iii) mediation / alternative dispute resolution. 7.1 Summarise the key provisions and applicable ■ General Remarks: procedures affecting the recognition and enforcement ■ There are no courts in Switzerland who specialise in of foreign judgments. shipping or maritime issues. Any such issues will therefore be dealt with by the ordinary civil courts. Switzerland is party to various international treaties governing ■ The concept of an action in rem is not known to Swiss law. the recognition and enforcement of foreign judgments, the most An arrest under Swiss law is therefore rather a freezing important one being the so-called Lugano Convention (Convention injunction, i.e. merely a possibility to secure assets. The on jurisdiction and the recognition and enforcement of judgments claim itself (i.e. the proceeding on the merits) will, on the in civil and commercial matters of 30 October 2007), which is other hand, always have to be directed against the debtor. basically the equivalent of the Brussels I Regulation of 2001 i) National Courts: Due to Switzerland being a landlocked (Council Regulation (EC) No. 44/2001 of 22 December 2000 on country, there will never be a maritime lien enforced in jurisdiction and the recognition and enforcement of judgments Switzerland. The procedure described hereinafter does in civil and commercial matters). Furthermore, several bilateral therefore not refer to maritime liens, but instead refers to treaties are in place which deal with recognition and enforcement in the general arrest, which may, for example, be exercised on civil and commercial matters. maritime cargo if the conditions as set out in Swiss law are met.

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If no international or bilateral treaty applies, the provisions of the Swiss Federal Act on Private International Law (PILA) would apply. 8 Updates and Developments Therefore, and slightly simplified, it can be said, that European judgments will be recognised according to the Lugano Convention 8.1 Describe any other issues not considered above that whereas most other judgments have to meet the requirements as set may be worthy of note, together with any current trends out in the PILA. The main principles of these two systems are laid or likely future developments that may be of interest. out below: Lugano Convention: the Lugano Convention provides for a As described above, foreign judgments are in principle recognised system of automatic recognition of foreign judgments, i.e. there and enforceable in Switzerland. This does, however, not answer will be no review on the merits, no review of jurisdictional issues the question whether judicial sales of ships will also be recognised. and in general no decision by a Swiss judge is required to render Whilst this was a difficult issue in the past, the authorities have Switzerland the foreign judgment effective. However, if the enforceability is now signalled that a foreign judicial sale generally speaking will be disputed, then any party may apply for a court order confirming the recognised in Switzerland, and therefore constitutes a valid legal title enforceability in Switzerland. To this end a special form as defined to a ship and will enable the new owner to amend the ship registry. in Art. 54 of the Lugano Convention, has to be filed by which Switzerland was planning to introduce the possibility for cantons the foreign court confirms enforceability of the judgment. The to introduce tonnage tax systems. This tool was skipped from the recognition and enforceability in Switzerland will only be denied in current tax reform package, but the project is still being dealt with very exceptional circumstances as defined in Art. 34 and 35 LugC. in the federal administration and may be re-introduced in the near The circumstances referred to in these articles mostly represent the future. If such a regime would indeed be introduced, this would material or procedural public order. make the Swiss flag more attractive for shipping companies. PILA: contrary to the system of the Lugano Convention, the PILA does not automatically recognise foreign judgments. In order to have a judgment recognised in Switzerland, a respective application Stephan Erbe has to be submitted with the competent court. The court will then ThomannFischer examine whether the foreign court had sufficient jurisdiction to Elisabethenstrasse 30 render a judgment on the merits. If jurisdiction of the foreign court CH-4010 Basel is established, then the defendant may still argue that the judgment Switzerland

is incompatible with the Swiss public order or that he did not Tel: +41 61 226 24 24 receive proper notice on the foreign proceeding, that fundamental Email: [email protected] procedural rights had been violated or that the same dispute has URL: www.thomannfischer.ch already been decided upon. Apart from these points, the merits of the case will not be reviewed. Stephan Erbe, attorney at law, graduated in 1997 from the University of Fribourg in Switzerland. Before joining a Basel-based commercial 7.2 Summarise the key provisions and applicable law firm as a partner in 2004, he headed the legal department of procedures affecting the recognition and enforcement KPMG in Basel and worked for KPMG in Switzerland and in the UK. In of arbitration awards. 2011 he joined the law firm ThomannFischer. He regularly publishes on transport law matters and has acted as speaker at the Center for Logistics and Transport Law KOLT of the University of Lucerne and at Arbitration: Switzerland is signatory to the New York Convention the IBA Maritime and Transport Committee. He is a board member of on the Recognition and Enforcement of Foreign Arbitral Awards of the Swiss Maritime Law Association, a member of the legal committee 10 June 1958. The provisions of the Convention therefore apply. of the IVR – International Association for the representation of mutual interests in inland shipping and insurance and for keeping the register of inland vessels in Europe – and of the transport commission of the Chamber of Commerce of Basel.

ThomannFischer is a commercial law firm based in Basel, Switzerland and was established in 1998. Stephan Erbe and Dr. Christian Hochstrasser deal with transport, logistic and maritime law matters, making ThomannFischer one of the leading firms in this field in Switzerland. Besides dealing with transport matters, ThomannFischer also has a strong IP practice and generally advises clients in all fields of commercial law, such as real estate and construction, tax, labour law for employers and others. ThomannFischer also offers all notarial services.

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Taiwan Daniel T.H. Tsai

Lee and Li, Attorneys-at-Law James Chang

commercial port authority or other relevant authorities. If a ship 1 Marine Casualty strands, sinks or becomes malfunctioned and adrift outside the commercial port area due to beaching or other accidents, the 1.1 In the event of a collision, grounding or other major commercial port authority should order the master and the ship casualty, what are the key provisions that will impact owner to take necessary contingency measures, and to salvage and upon the liability and response of interested parties? remove the ships and cargo to the designated area within a limited In particular, the relevant law / conventions in force in time period. The ship owner should be responsible for the fees relation to: caused by the measures. If the sunk ships, objects, flotsam, pollutants and rafts within (i) Collision the fishing port area endanger or could endanger the voyage and If a collision is caused by the fault of one of the ships involved, the anchoring of vessels entering or departing the port, or contaminate ship at fault shall be liable for the damage. If the colliding ships are or could contaminate the fishing port area, the competent authority all at fault, each ship shall be liable in proportion to the extent of its may take the following measures: (1) to notify owners of the fault; if it is not possible to ascertain the degree of the respective ships, objects, flotsam, pollutants and rafts to remove them within fault, the liability is apportioned equally among the parties involved. a limited time period; these items will be deemed as waste and The ships at fault shall also be jointly and severally liable for the removed without further notification if they are not removed within loss of life or personal injury caused by the collision. If a collision the limited time period; and (2) in the event of emergency, these is caused by force majeure, the victim is not entitled to claim for items will be removed without a notification. The removal fees damage. The time limit of a claim arising out of a collision is two should be borne by the owners. years from the date of the collision. (v) Limitation of liability (ii) Pollution The liability of a ship owner is limited to an amount equivalent to A ship owner (including the owner, lessee, agent and operator of a the value of the ship, plus the freight and other accessories of the ship) shall be liable for the damage resulting from the pollution of particular voyage in respect of the following: (1) claims in respect the sea which is caused by a ship. The claimant for compensation of the loss of life, personal injury or loss of or damage to property, for pollution damage may seek compensation directly from the occurring on board or directly resulting from the operation of the liability insurer or seek to secure the guarantee as compensation. ship or salvage operations; (2) claims in respect of damage resulted In the event of damage arising out of a foreign ship’s violation of the from infringement of interests or rights caused by the operation of Marine Pollution Control Act (aka the Ocean Pollution Prevention the ship or salvage operations; provided, however, that the damage Act), the port management authority may restrict the foreign ship resulted from a contractual relationship should be excluded; (3) and related crew from leaving Taiwan if the foreign ship has not claims in respect of the removal of a sunk ship or property lost fulfilled its obligation of damage compensation or if there is further overboard; provided, however, that a reward or payment made investigation required. Nonetheless, if a security is provided, in under a contract should be excluded; and (4) claims in respect to the principle such a restriction may be lifted subject to the authority’s obligations incurred for taking measures to avert or minimise the discretion. liabilities set out in the preceding (2) or (3). (iii) Salvage / general average The term “ship owner” referred to in the preceding paragraph includes the owner, charterer, manager and operator of the ship. The A shipmaster should make an effort to render assistance to persons term “this particular voyage” referred to in the preceding paragraph in danger of being lost at sea or in distress, so far as he can do so means the voyage covered by the ship from one port to the next port; without serious danger to his ship, crew and passengers thereon. the term “freight” does not include such freight or ticket fares not Those who render salvage operations to a ship or the property collectible under the relevant laws, regulation or contract; the term thereon which have an effective result are entitled to proper reward “other accessories” refers to compensation for the damage to the for the result. The salvage reward is to be determined by the parties; ship, but not including payments on insurance policies. if the parties cannot reach an agreement on the reward, the parties may file for the arbitration award or a court judgment. If the sum of limitation of liability under the first paragraph is less than the following, the ship owner shall be liable for the deficit: (iv) Wreck removal (1) regarding property claims, an aggregate amount of 54 Special The retrieval or removal of wrecks, materials or floating articles Drawing Rights (“SDR”) as defined by the International Monetary within the commercial port area requires the consent of the Fund for each tonne of the ship’s gross registered tonnage (“GRT”);

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(2) regarding loss of life or personal injury claims, an aggregate ■ Where a contract of carriage, which is for the purpose of amount of 162 SDR for each GRT; (3) where the claims in the carrying individual cargo or a bill of lading, contains a clause, preceding (1) and (2) occur concurrently, an aggregate amount of covenant or an agreement diminishing or relieving the carrier 162 SDR for each GRT, of which a first portion amounting to 108 or the ship owner from liability for damage to, loss of or delay SDR for each GRT shall be exclusively appropriated to the payment to the cargo resulting from negligence or a failure to fulfil the obligations provided in this chapter, such clause, covenant or of personal claims in respect of loss of life or personal injury, and of agreement shall be null and void. (MA Article 61.) which a second portion amounting to 54 SDR for each GRT shall be appropriated to the payment of property claims; provided, however, ■ The carrier or ship owner shall be bound, before and at the time of the commencement of the voyage, to exercise due that in cases where the first portion is insufficient to pay the personal diligence to ensure that: (1) the ship is capable of navigating claims in full, the unpaid balance of such claims shall rank rateably

Taiwan safely; (2) the proper crew, equipment and supplies on the with the property claims for payment against the second portion of ship exist; and (3) the holds, refrigeration and cooling the fund; and (4) the GRT of a ship of less than 300 tonnes shall be chambers, and all other parts of the ship, are suitable for deemed to be 300 tonnes. carrying the cargo, and are fit and safe for reception, carriage The aforementioned limitation of liability does not apply to: (1) and preservation. The burden of proof shall be on the carrier obligations arising out of an intentional act or negligence of the ship or ship owner asserting the exemption. (MA Article 62.) owner; (2) obligations arising from the contract of employment with ■ The carrier shall properly and carefully load, discharge, the shipmaster, seafarers or any other personnel serving the ship; (3) handle, stow, care for, carry and keep the cargo. (MA Article reward for salvage or contribution in general average; (4) damage 63.) arising out of carrying toxic chemical substances or oil pollution; ■ Neither the carrier nor the ship owner shall be liable for loss or (5) damage arising out of nuclear incidents caused by nuclear damage arising from: (1) neglect of the shipmaster, mariner, substances or nuclear waste being carried on ships; or (6) claims for pilot or the employee of the carrier in navigation or in the nuclear damage caused by nuclear ships. management of the ship; (2) perils, dangers and accidents of the sea or of routing; (3) fire, unless caused by the carrier’s (vi) The limitation fund own intentional or negligent acts; (4) acts of God; (5) acts In Taiwan, it is unclear whether the limitation fund will work. of war; (6) riots; (7) acts by public enemies; (8) arrests, However, if it works, based on the practice of security form in the past, restraints of the authority, or seizures under legal process; (9) cash, a letter of undertaking or guarantee issued by an appropriate quarantine restrictions; (10) strikes or other labour incidents; bank or insurance company may be acceptable, but still subject to the (11) saving or attempting to save life or property at sea; (12) discretion of the applicable court or government authorities. insufficiency of packing; (13) insufficiency or inadequacy of marks; (14) wastage or any other damage or loss due to inherent defects, quality or vice of the cargo; (15) act or 1.2 What are the authorities’ powers of investigation / omission of the shipper or owner of the cargo, his agent or casualty response in the event of a collision, grounding representative; (16) latent defects of the ship not discoverable or other major casualty? by due diligence; and (17) any other cause arising without the carrier’s own intentional or negligent acts or without the fault A master shall prepare a sea protest and submit it to the competent or the neglect of the agent or employee of the carrier or the ship owner. (MA Article 69.) authority; this should contain details regarding the accident of sinking, stranding, collision, forced docking, or other accidents, ■ Where the nature or value of the cargo is fraudulently and extraordinary occurrences to cargo, seamen or passengers. The declared by the shipper at the time of shipment, neither the sea protest is effective only after having been authenticated by the carrier nor the ship owner shall be liable for any damage to or loss of the cargo. Unless the nature and value of the seamen or passengers, unless the sea protest is made in the event cargo have been declared by the shipper before shipment and that the master is the sole survivor of the accident. inserted in the bill of lading, neither the carrier nor the ship The Committee for Investigation of Marine Casualties under the port owner shall be liable for any damage to or loss of the cargo authority is, in principle, in charge of investigation and assessment in an amount exceeding 666.67 SDR per package or 2 SDR of maritime casualty liabilities. However, the authority sometimes per kilogram, whichever is the higher. Neither the carrier nor investigates by itself. the ship owner shall be entitled to the benefit of the limitation of liability if the damage or loss resulted from an intentional act or gross negligence of the carrier or the ship owner. (MA 2 Cargo Claims Article 70.) ■ Any deviation in saving or attempting to save life or property at sea or for other reasonable cause shall not be deemed to be 2.1 What are the international conventions and national breach of the contract of carriage, and neither the carrier nor laws relevant to marine cargo claims? the ship owner shall be liable for the damage or loss which resulted therefrom. (MA Article 71.) The Maritime Act is the main legislation regulating marine cargo ■ Where the cargo was loaded without the consent of the claims in Taiwan. Certain rules relevant to marine cargo claims were shipmaster or carrier, neither the carrier nor the ship owner substantially changed in the amendment to the Maritime Act in 1999. shall be liable for the damage to or loss of the cargo. (MA Many of the current provisions are essentially based on the Hague- Article 72.) Visby Rules, while some other provisions are based on the Hamburg ■ If the carrier or the shipmaster loads cargo on deck and the Rules. Please refer to questions 2.2 and 2.3 below for details. cargo consequently suffers loss or damage, the carrier shall be liable therefor, unless with the shipper’s consent and being stated in the contract of carriage, or allowed by the particular 2.2 What are the key principles applicable to cargo claims kind of ocean carriage or the trade practice. (MA Article 73.) brought against the carrier? ■ The issuer of a bill of lading shall be responsible for all acts which should be done as stated in the bill of lading. (MA The following are some of the key provisions of the Maritime Act Article 74.) (“MA”) relevant to marine cargo claims:

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■ The carrier and the ship owner shall be discharged from all increased necessary expenses paid by the passenger due to the liability in respect of the damage or loss, either totally or delay of the transportation. (CC Article 654.) partly, of the cargo unless a lawsuit is brought within one ■ A statement in a ticket, receipt or other document delivered by year of cargo delivery or of the date when cargo should have the carrier to the passenger, excluding or limiting the liability been delivered. (MA Article 56, Section 2.) of the carrier, is ineffective, unless it can be proved that the passenger expressly agreed to such exclusion or limitation of liability. (CC Article 659.) 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration ■ Claims for damages for injury or delay in the transportation of cargo? of passengers are extinguished by prescription if not exercised within two years from the date of the ending of

■ The shipper shall guarantee to the carrier the accuracy of the the transportation, or from the date when the ending of the Taiwan notifications of the name, quantity, the kind of packing, and transportation ought to have taken place. (CC Article 623.) the number of packages of the cargo to be delivered, and the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such 4 Arrest and Security particulars. The carrier is not entitled to such a defence against any holders of the bill of lading other than the shipper itself. (MA Article 55.) 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel ■ The carrier shall refuse to carry cargo of a contraband nature owner and the applicable procedure? or cargo being declared fraudulently with the knowledge of the carrier; the same rule applies where the nature of the cargo tends to cause damage to the ship or endanger the health of the A party seeking to obtain security for a maritime claim against a personnel on board the ship, provided that those allowable under vessel owner may file with an applicable court for provisional a custom of shipping or commercial trade are exempted. In attachment (arrest) on the vessel in accordance with the Code of the event that cargo of an inflammable, explosive or dangerous Civil Procedure. After obtaining the court’s approval, the party may nature, where the carrier has consented with knowledge of their further file for exercise of the provisional attachment in accordance nature, becomes a danger to the ship or cargo, the cargo may with the Compulsory Enforcement Act. A security (normally in at any time be landed at any place, or destroyed or rendered the form of cash or negotiable bank deposit certificates or other innocuous by the carrier without compensation except to securities acceptable to court) is usually required for exercise of the general average, if any. (MA Article 64.) provisional attachment (the amount of security shall be decided by ■ If the carrier or shipmaster finds any cargo without declaration, the court). However, provisional attachment may not be exercised he may unload it at the loading port, or charge the freight at the on a ship during the period from the time the ship has completed highest rate on the same kind of cargo under the same voyage, preparations for commencing a voyage until arrival at her next port and may also claim damages, if any. If the cargo is found of call; provided that this restriction shall not apply in respect of during the voyage and is contraband or of a dangerous nature, obligations incurred for the purpose of making preparations for the shipmaster may jettison the cargo. (MA Article 65.) commencing the voyage or damage arising from a collision of ships. Where a collision occurs within the territorial waters of Taiwan, its 3 Passenger Claims inland waters, port, harbour or river, the court may arrest the ship at fault. Where the collision does not occur within the territorial waters of Taiwan, its inland waters, port, harbour or river, but the 3.1 What are the key provisions applicable to the injured party or the ship is of Taiwanese nationality, the court may resolution of maritime passenger claims? arrest the ship at fault upon her entry to the territorial waters of Taiwan. The arrested ship may apply for release by furnishing the The Maritime Act (“MA”) and the Civil Code (“CC”) are the main court with a guarantee. The guarantee may be substituted with a pieces of legislation regulating marine passenger claims in Taiwan. letter of undertaking issued by an appropriate bank or protection and Here are some of the key provisions: indemnity insurer (“P&I”) acceptable to the court. ■ Where the ship is unable to continue the voyage due to force majeure, the carrier or shipmaster shall still endeavour to 4.2 Is it possible for a bunker supplier (whether physical carry passengers to the port of destination. (MA Article 88.) and/or contractual) to arrest a vessel for a claim ■ Where the ship is unable to enter the port of destination relating to bunkers supplied by them to that vessel? for disembarking passengers due to an act of God, war, or disturbances, epidemic or any extraordinary events at that Taiwan law itself is not very clear on this issue. Essentially, only port, the carrier or shipmaster shall be liable, at the option of creditors of the ship owner can arrest the ship. In the event that passenger, to send the passenger to the nearest port or back to bunkers are ordered by a charterer, and if the charterer is deemed an the original port of embarkation. (MA Article 89.) agent of the vessel owner in respect of the liabilities or the bunker ■ If the ship has to be repaired during the voyage, the carrier supplier’s claim against the charterer is secured by the maritime lien or shipmaster shall still complete the voyage with another on the vessel, it is possible for the bunker supplier to arrest the vessel. ship of the same class, and furnish adequate lodging and provisions for passengers during the period of waiting without extra payment. (MA Article 90.) 4.3 Where security is sought from a party other than the ■ The carrier of passengers shall be liable for any injury suffered vessel owner (or demise charterer) for a maritime by the passenger in consequence of the transportation, and for claim, including exercise of liens over cargo, what the delay in the transportation, except if the injury or the delay options are available? is due to the negligence of such passenger or the injury is due to force majeure. If the delay of the transportation is due to The carrier is entitled to retain such portion of the goods as may force majeure, unless otherwise provided by the trade custom, be necessary to secure payment of freight and other expenses. In the liability of the carrier of passengers shall be limited to the Taiwan, there is no “Action in Rem”; therefore the provisional

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attachment can only be imposed upon the debtor’s property. If the ■ In matters relating to a debt arising from or secured by a ship, cargo on the ship is under the name of the debtor, it is possible for a lawsuit may be initiated in the court for the location of the the creditor to apply for the provisional attachment on the cargo. ship. ■ Any disputes arising under a bill of lading with one of the ports of loading or ports of discharge in Taiwan may be 4.4 In relation to maritime claims, what form of security is adjudicated by the court of the said Taiwan port of loading or acceptable; for example, bank guarantee, P&I letter of port of discharge. undertaking. ■ Usually: the court of first instance takes less than one year to adjudicate a case; the court of second instance takes less than Normally cash, a letter of undertaking or guarantee issued by an two years; and the court of third instance takes less than one

Taiwan appropriate bank or P&I may be acceptable, but still subject to the year. However, for maritime claims, it could take more time discretion of the competent court or government authorities. than usual. ■ The court fee for the first instance is roughly 1.1% of the 5 Evidence value of the claim; the court fee for the second instance is roughly 1.65% of the value of the claim; and the court fee for the third instance is roughly 1.65% of the value of the claim. 5.1 What steps can be taken (and when) to preserve or Arbitration obtain access to evidence in relation to maritime ■ Where a bill of lading (with one of the ports of loading or claims including any available procedures for the ports of discharge being in Taiwan) contains an arbitration preservation of physical evidence, examination of clause, any disputes arising therefrom, if so agreed by the witnesses or pre-action disclosure? contracting parties, may be submitted to arbitration in Taiwan, regardless of the arbitration place or arbitration rules Where it is likely that evidence may be destroyed or its use in court stated in the said arbitration clause. This provision is deemed may be difficult, or with the consent of the opposing party, a party as a part of an arbitration agreement. However, nothing in may move the court for perpetuation of such evidence subject to the this provision will affect the validity of an agreement relating court’s discretion. Where necessary, the party who has legal interests to arbitration made by the parties after the dispute has arisen. in ascertaining the status quo of a matter or an object may move for ■ The arbitral tribunal shall render an arbitral award within expert testimony, inspection or perpetuation of documentary evidence. six months of commencement of the arbitration. However, A motion for perpetuation of evidence may be made before or after the arbitral tribunal may extend the decision period for an initiating a lawsuit but, in both cases, subject to the court’s discretion. additional three months if the circumstances so require. ■ Generally, the cost of arbitration is lower than the whole of the court fees. 5.2 What are the general disclosure obligations in court proceedings? Mediation/ADR ■ Maritime disputes may be resolved through mediation in In order to elucidate or ascertain relations involved in a lawsuit, the court, arbitral tribunal or certain institutions in Taiwan. Such a resolution mechanism will usually take several months and court may take the following measures: (1) order the parties or their the result thereof depends on the parties’ attitude, and thus it statutory agents to appear in person; (2) order the parties to produce is difficult to say what the timescale would be. drawings/illustrations, schedules/lists, translations of documents written in a foreign language, or other documents and objects; (3) temporarily retain in the court the documents and objects produced 6.2 Highlight any notable pros and cons related to your by a party or a third party; and (4) conduct inspections, order expert jurisdiction that any potential party should bear in mind. testimony, or request an agency or organisation to conduct an investigation. ■ The losing party of the lawsuit shall bear the court expenses. A party has the duty to produce the following documents: (1) However, the attorney fee, in principle, should be borne by documents to which such party has made reference in the course of the party itself no matter whether it wins or loses the lawsuit. the litigation proceeding; (2) documents whose delivery or inspection ■ Unless the parties have agreed otherwise, the interest payable the opposing party may require, pursuant to the applicable laws; (3) on claims is generally calculated at a rate of 5% per annum. documents which are created in the interests of the opposing party; ■ A foreign plaintiff who has no assets in Taiwan may be (4) commercial accounting books; and (5) documents which are required by the court to deposit the court fee bond if the created regarding matters relating to the action. defendant so requests.

6 Procedure 7 Foreign Judgments and Awards

6.1 Describe the typical procedure and timescale 7.1 Summarise the key provisions and applicable applicable to maritime claims conducted through: i) procedures affecting the recognition and enforcement national courts (including any specialised maritime or of foreign judgments. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution. A final and binding judgment rendered by a foreign court may be recognised in Taiwan, Republic of China (“R.O.C.”), except in case of any of the following circumstances: (1) where the foreign court National courts lacks jurisdiction pursuant to the R.O.C. laws; (2) where a default ■ In matters relating to a ship or its voyage, a lawsuit may be judgment is rendered against the losing defendant, except in the case initiated against the owner or user of the ship in the court with where the notice or summons of the initiation of a lawsuit had been the jurisdiction.

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legally served in a reasonable time in the foreign country or had accordance with applicable laws agreed upon by the parties or, in been served through judicial assistance provided under the R.O.C. the absence of agreed laws, in accordance with the laws of the place laws; (3) where the performance ordered by such judgment or its of arbitration; (5) one of the parties was not served with a notice of litigation procedure is contrary to R.O.C. public policy or morals; appointment of arbitrators or with the arbitration procedures, or other or (4) where there exists no mutual recognition between the foreign matters giving rise to a lack of due process; (6) the arbitration award country and the R.O.C. is irrelevant to the subject matter of the arbitration agreement, or Regarding the preceding (4), since Taiwan currently is not a member beyond the scope of the arbitration agreement, unless the offending of the New York Convention, a Taiwan court will tend to consider portion can be severed from the remainder of the arbitration award that obstacle (4) will not exist if there is no court case in that foreign without affecting the remainder; (7) the composition of the arbitral country in which the recognition of a Taiwan court judgment was tribunal or the arbitration procedures are contrary to the parties’ Taiwan rejected. agreement or, in the absence of an agreement, contrary to the law of the place of arbitration; and (8) the arbitration award has no binding A foreign judgment may be enforced in Taiwan if none of the force upon the parties or the award has been set aside or suspended foregoing circumstances exists and the enforcement of the foreign by a competent court. judgment is approved by an R.O.C. court.

7.2 Summarise the key provisions and applicable 8 Updates and Developments procedures affecting the recognition and enforcement of arbitration awards. 8.1 Describe any other issues not considered above that may be worthy of note, together with any current A foreign arbitration award is enforceable in Taiwan if recognised trends or likely future developments that may be of by an R.O.C. court ruling first. An R.O.C. court will refuse to interest. recognise the award on any of the following grounds: (1) recognition or enforcement of the arbitration award violates the public order The maritime legislation in Taiwan is deeply influenced by or good morals of R.O.C.; (2) under the R.O.C. laws, the subject international conventions (e.g., the Hague-Visby Rules). Where matter of the arbitration award lacks arbitrability; (3) the arbitration there is a lack of applicable provisions under Taiwan laws, courts agreement is invalid due to the parties’ incapacity in accordance might refer to the relevant international conventions. with applicable laws; (4) the arbitration agreement is invalid in

Daniel T.H. Tsai James Chang Lee and Li, Attorneys-at-Law Lee and Li, Attorneys-at-Law 9F-13, 12 Fu Hsing 4th Road 9F-13, 12 Fu Hsing 4th Road Chien Cheng District Chien Cheng District Kaohsiung, 80661 Kaohsiung, 80661 Taiwan Taiwan

Tel: +886 7 537 2188 Tel: +886 7 537 2188 Email: [email protected] Email: [email protected] URL: www.leeandli.com URL: www.leeandli.com

DANIEL T.H. TSAI is the partner leading the maritime law practice JAMES CHANG is a senior lawyer at Lee and Li. He joined the firm in group at Lee and Li, and was the chairman and an active member of the 2010 and focuses his practice on maritime, civil litigation and arbitration, Maritime Law Committee of the Inter-Pacific Bar Association from 2003 and international investment. He is experienced in handling cargo claims to 2004. He has successfully represented domestic and international and has successfully represented numerous clients in this field. clients in handling numerous maritime cases. He has co-authored numerous articles for many maritime law publications. He is also active in diversified practice areas, such as insurance, international trade, IP, corporate governance, M&A transactions, investor protection, etc.

As one of the leading maritime law practices in the world, Lee and Li has been recognised as the leading advisor of maritime law practice in Taiwan. Lee and Li has a practice that focuses on maritime law, with expertise and extensive experience in handling cargo claims, collision, ship financing, charter party, ship construction, etc. We provide effective representation and strategic advice and have successfully represented local and international clients in most of the landmark cases in Taiwan. Lee and Li has unmatched capabilities and experience in maritime practice in Taiwan and has handled many cases, worth a total of more than USD 100 million within a five-year period, for various multinational companies andTaiwanese companies on maritime and related deals and litigation.

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Turkey

Esenyel|Partners Lawyers & Consultants Selcuk S. Esenyel

1 Marine Casualty Occurrence Liability for Damages If the vessel is being navigated by the mandatory advisory pilot or optional 1.1 In the event of a collision, grounding or other major pilot, the vessel owner is liable for casualty, what are the key provisions that will impact Pilot’s fault as per Article the collision arising from his fault. upon the liability and response of interested parties? 1291 of the TCC. However, if the vessel is being navigated In particular, the relevant law / conventions in force in by the mandatory dispatch pilot, the relation to: vessel owner is not liable for the collision arising from his fault. (i) Collision In reference to the international conventions, Turkey is a signatory (ii) Pollution party to the two main conventions which govern collisions: the Turkey has announced new fines for vessels causing pollution to its Convention for the Unification of Certain Rules of Law with respect waters and environment, in accordance with Turkish Environmental to Collisions between Vessels, 1910; and the Convention on the Code No. 1983. A fine will be imposed on a vessel that causes International Regulations for Preventing Collisions at Sea, 1972. pollution to the Turkish waters through discharge of petroleum The relevant statute in Turkey is the new Turkish Commercial Code products, dirty ballast, garbage and sewage to the sea. The amount (“TCC”), which regulates collision at sea and takes into account the of the fine is usually determined by a tariff that is updated annually. provisions of these conventions as well. If the vessel discharges a hazardous substance into Turkish waters, the A collision may occur in the following circumstances in accordance fine will be 10 times the published rate for petroleum product fines. with the TCC: Repeated pollution to the environment will result in heavier fines being imposed. In the event of a first reoccurrence within three years Occurrence Liability for Damages of the first fine, the fine will be doubled; and on the second and third The person who suffers the damage reoccurrence, the fine will be increased by 200%. The fines are not the Force majeure or takes responsibility for the damage to only punishment, as the authorities will report the matter to the Public unexpected circumstance the vessel or the people or goods aboard Prosecutor immediately. The Public Prosecutor will commence a or the cause has not the vessel due to the collision, provided criminal investigation into the matter against the master of the vessel. been ascertained – as per that this occurred when all or one of the If the fines are not paid immediately, sufficient security must be put in Article 1287 of the TCC. vessels were at anchor at the time of accident. place for the total fine amount. Otherwise, the vessel may be arrested. If the fine is paid within 30 days of notification, a discount of ¼ will A fault of a party, i.e. a be applicable. Objections against the fine must be filed within 30 vessel owner or seaman The vessel owner will be liable to days of notification to the Administrative Court. The objection does of one of the vessels as compensate for the damage. per Article 1288 of the not stop the 30-day period running. Therefore, the most efficient way TCC. is to pay the fine within 30 days, to benefit from the ¼ discount, and then file an objection. The owner of that particular vessel is liable for the damage suffered by the Along with the above statute, Turkey is a party to the following vessels or the goods aboard the vessels international conventions (but not limited to these): or the death or injury or deterioration Fault of the parties ■ the International Convention on the Establishment of an of health of the persons in proportion to International Fund for Compensation for Oil Pollution jointly, i.e. if collision their faults. occurs due to the fault Damage, 1992; If this proportion cannot be determined of the vessel owner or ■ the Protocol concerning cooperation in preventing pollution seamen of the vessel that or both parties are established to have been equally at fault, as the case may be, from ships and, in cases of emergency, combating pollution collided with another of the Mediterranean Sea, 2002; vessel, the vessel owner the parties are held liable equally. If the will also be liable as per collision occurred as a result of an act ■ the International Convention on Oil Pollution Preparedness, Article 1289 of the TCC. of the seamen regarding the dispatch or Response and Co-Operation, 1990; other of the ship, the vessel owner would not be liable to ■ the Convention for the Protection of the Marine Environment those concerned for the goods carried and the Coastal Region of the Mediterranean, 1976; aboard his vessel. ■ the International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978; and

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■ the Protocol on Preparedness, Response and Co-operation to The relevant provisions from the domestic statute relating to cargo pollution incidents by Hazardous and Noxious Substances, claims in Turkey are governed under Articles 1178 to 1207 of the 2000. TCC. (iii) Salvage / general average

The relevant international conventions to which Turkey is a 2.2 What are the key principles applicable to cargo claims signatory party are the Brussels Convention for the Unification of brought against the carrier? Certain Rules with Respect to Assistance and Salvage at Sea, 1910 and the International Convention on Salvage, 1989. As per Articles 1178 to 1187 of the TCC, the carrier is liable for The TCC, continuing as the local relevant statute, was drafted in light losses that arise from the loss, damage or late delivery of goods, of the above regulations. In respect of general average contribution, provided that the loss, damage or late delivery occurs while the Turkey it is stated under Article 1273 of the TCC that the York-Antwerp goods are in the possession of the carrier. Rules shall be applied as well. If the loss is the result of an act related to managing the vessel or It is important to note that the Directorate General of Coastal Safety other technical management or fire, the carrier is liable for his own (“DGCS”) has the monopoly rights on the provision of salvage fault only. services in the Turkish Straits. This means that no other salvor will If the loss occurs due to: dangers and accidents in the sea that make be able to work in the Straits without the permission of the DGCS. it unsuitable to operate the vessel; acts of war; chaos and riots; They operate their own tugs and usually work independently. acts of public enemies; court decisions to seize; strikes; acts or (iv) Wreck removal negligence of the shipper, sender, and owner of the goods and their The statutes available under Turkish law – namely, the Harbour representatives and employees; spontaneous decrease in volume or Code and the Environmental Code – cover the situations involving weight or hidden defects of the goods or natural type or nature of the wreckage removal, dealing with measures to be taken for the removal goods of its own; inadequacy of the packaging; or inadequacy of the of wreckage that possesses a threat or danger to the environment. marking, the carrier and his agent are considered faultless. It must be noted that Turkey is not a signatory to the Nairobi The liability of the carrier defined under the TCC is in parallel with International Convention on the Removal of Wrecks, 2007. The Hague-Visby Rules and the Hamburg Rules, 1978. (v) Limitation of liability In compliance with Articles 1228, 1237/1 and 1238 of the TCC, the The Convention on Limitation of Liability for Maritime Claims Bill of Lading (“B/L”) serves as prima facie evidence demonstrating 1976 (“LLMC”) along with the 1996 Protocol has been ratified by the legal relationship between the carrier and holder of the B/L and it Turkey and is recognised under the TCC. It provides a mechanism constitutes evidence for the existence of a contract of affreightment, by which an owner may limit his liability for all claims arising out receipt of the cargo by the carrier and the obligation of the carrier to of a single maritime incident. deliver the goods. (vi) The limitation fund As provided under Article 1346 of the TCC, if a fund has been set up 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration pursuant to the LLMC or the 1996 Protocol, it can only be used by of cargo? those subject to the limitation fund. Any creditors of the person who have set up a limitation fund cannot have recourse to these funds. The charterer and the shipper, as per Article 1145 of the TCC, shall If the fund is used, no interest will be paid for the amount of the provide the carrier with a complete and accurate description of the receivables available in the funds that exceed the limits. cargo; each one is liable against the carrier for losses arising from their false declarations. They would be liable against third parties 1.2 What are the authorities’ powers of investigation / who suffer for that reason only if they are at fault. casualty response in the event of a collision, grounding or other major casualty? 3 Passenger Claims The Harbour Master’s Office has the authority to conduct an administrative investigation in case of a collision, grounding or 3.1 What are the key provisions applicable to the other major casualty. The vessel will not be permitted to sail during resolution of maritime passenger claims? the administrative investigation process. The Public Prosecution Office also has the authority to conduct a criminal investigation in The TCC regulates the provisions of maritime passenger claims case of a death, injury or pollution. in line with the provisions of the 2002 Protocol of the Athens Convention relating to the Carriage of Passengers and their Luggage 2 Cargo Claims by Sea, 1974. Turkey is not a party to this Convention. The carrier will be liable for the losses suffered as a result of the death/injury of the passenger caused by a shipping accident unless 2.1 What are the international conventions and national the carrier is able to prove that the incident resulted from an act laws relevant to marine cargo claims? of war, hostilities, civil war, riot or exceptional circumstances, unforeseeable natural disaster which could not be controlled, or an Turkey is a party to the International Convention for the Unification act or omission done by a third party with the intention of causing of Certain Rules of Law relating to Bills of Lading (Hague Rules) loss. which was signed in Brussels on 25 August 1924, but is not a signatory party to the Brussels Protocol, 1968 (Hague-Visby The liability of the carrier is limited to 250,000 Special Drawing Rules), the Hamburg Rules dated 1978 or the Rotterdam Rules. Rights (“SDR”) per deceased/injured passenger, per incident. However, the Hague-Visby Rules and parts of Rotterdam Rules are However, this limitation of liability will not apply if the incident incorporated into the TCC. which caused the loss was due to the fault or negligence of the carrier.

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The burden of proof lies with the carrier to disprove its liability. Furthermore, under Article 1202 of the TCC, if there is a dispute as to The liability of the carrier cannot exceed the amount of SDR the carrier’s receivables, once the disputed amount has been deposited 400,000 per passenger, per incident. to the court the carrier must deliver the goods. Once the goods have been delivered by the carrier and it has provided sufficient guarantee, If the vessel is licensed to carry more than 12 passengers, the carrier it can withdraw the disputed amount. must insure the passengers against liability arising from death or injury to passengers. The compulsory insurance must not be an amount lower than SDR 250,000 per passenger for each incident. 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of There is a 10-year limitation period for compensation claims for the undertaking. death/injury of a passenger. Turkey For maritime claims, as stated above, the security that can be 4 Arrest and Security deposited to the court can either be in the form of a letter of guarantee from the bank or as cash. A P&I Club letter of undertaking may also be used if mutually agreed between the debtor and owner of the 4.1 What are the options available to a party seeking to vessel. This was taken into consideration when the drafting of the obtain security for a maritime claim against a vessel TCC took place, and liberty has been given to the parties to choose owner and the applicable procedure? and agree on the Club letters of undertaking as security.

The TCC has adopted the provisions of the International Convention on the Arrest of Ships, 1999 by permitting the claimant to apply to the 5 Evidence court requesting an arrest order of the vessel for maritime claims only. The provisions of the TCC give the power to the Turkish courts to 5.1 What steps can be taken (and when) to preserve or order the arrest of vessels, including foreign-flagged vessels, which obtain access to evidence in relation to maritime are anchoring, berthing, drydocking or mooring in Turkish waters. claims including any available procedures for the A transit vessel cannot be arrested unless its transit journey is preservation of physical evidence, examination of interrupted. witnesses or pre-action disclosure? In order for a party to apply for the arrest of a vessel, it must deposit In compliance with the TCC, the master of the vessel has the right a counter-security in the amount of SDR 10,000, either as cash or in to make an application to the court to obtain a sea protest in case of the form of a letter of guarantee from the bank, as per Article 1363 an incident that results in damage to the vessel or the cargo carried of the TCC. The court has the power to increase or decrease the on board or other material losses. The Harbour Master’s Office amount of the counter-security. will also commence an administrative investigation and collect the Once an arrest order is granted by the competent Turkish court, the available documents and data. defendant is allowed to object to the arrest order by way of written The parties have a right to request for a survey to be done on the application to the relevant court. The court has the power to decide vessel. whether or not to lift the arrest order upon receiving the objections from the defendant. The court may also schedule a hearing to review the objections and render its decision. In practice, Turkish 5.2 What are the general disclosure obligations in court courts generally schedule a hearing within 10–20 days from the date proceedings? of the objection. It must be noted that the arrest order will remain in force until the objection is reviewed. A party shall disclose all the evidence that it intends to rely on as per Turkish procedural law. A party is not required to disclose all the relevant documents in its possession, but must only provide 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim documents that it deems appropriate. If it is not disclosed, it is relating to bunkers supplied by them to that vessel? at the discretion of the court to order the submission of a specific document from the parties. Under Article 1352 of the TCC, claims relating to unpaid bunker are listed as one of the types of maritime claim entitling the claimant to 6 Procedure seek the arrest of a vessel.

6.1 Describe the typical procedure and timescale 4.3 Where security is sought from a party other than the applicable to maritime claims conducted through: i) vessel owner (or demise charterer) for a maritime national courts (including any specialised maritime or claim, including exercise of liens over cargo, what commercial courts); ii) arbitration (including specialist options are available? arbitral bodies); and iii) mediation / alternative dispute resolution. If a carrier has receivables which are overdue, it can exercise a lien over the cargo for all of its dues pursuant to Articles 950 and 953 i. National courts in Turkey: maritime claims in Turkey are of the Turkish Civil Code. The carrier is able to retain the goods usually heard in Commercial Courts regardless of the claim as long as it has possession of them. If the goods are delivered, an amount, except for Istanbul City where a Specialised Maritime application can be made to the court within 30 days of delivering Court was founded to hear such claims or disputes. the goods, if they are in the possession of the recipient. The right The timescale applicable to maritime claims is usually 14–15 of lien is only exercisable for the amount of the security; whereas, months, excluding the appeal stage. The appeal stage usually in general average and salvage claims, the right of lien can be takes another 10–12 months. exercised over the whole of the goods.

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ii. Arbitration is considered one of the most preferred ways by parties to resolve maritime disputes, as most of the maritime 7.2 Summarise the key provisions and applicable contracts or agreements usually include an arbitration clause procedures affecting the recognition and enforcement which empowers the parties to bring their claims before arbitral of arbitration awards. committees. Recently, the Istanbul Arbitration Centre has gained a good reputation with regard to commercial disputes. Turkey is party to the New York Convention on the Recognition and The usual timeframe to conclude a case is about 10 months. Enforcement of Foreign Arbitral Awards 1958. iii. Mediation is usually recommended by the judges at the In order for a foreign arbitral award to be recognised and enforced in beginning of the preliminary hearings as a form of alternative Turkey, the party applying must supply a duly authenticated original dispute resolution, from which the parties are free to benefit. If award or a duly certified copy and an original agreement or a duly

the parties cannot settle the dispute amicably, court proceedings Turkey shall start. certified copy. If the award or agreement is not in Turkish, the party applying for recognition or enforcement of the award needs to produce a Turkish 6.2 Highlight any notable pros and cons related to your translation of these documents and this must be certified by an jurisdiction that any potential party should bear in mind. official translator or a diplomatic or consular agent. The new Turkish Commercial Code came into force on 1 July In accordance with Article 62 of the PIL, enforcement of the 2012. The target was to harmonise the legislation with international arbitration award may be dismissed if: conventions and to modernise the previous Code. ■ there is no arbitration agreement between the parties, the arbitration clause violates public order, or the subject of the Turkey is a party to most of the international conventions and its dispute is not allowed to be referred to arbitration; legislation has been modernised to meet the needs of maritime claims. From that standpoint, we can say that there is no need for ■ the parties are not allowed to be represented before the arbitration panel or have not been properly served with urgent reform and will continue to monitor the sector for any changes notices and/or appointments; that may be required. ■ the arbitration award does not relate to matters included in the arbitration agreement or clause, or the content of the award 7 Foreign Judgments and Awards exceeds the limits of the agreement or the clause; ■ the appointment of the arbitrator or the application of the procedure by the arbitrator is in violation of the agreement 7.1 Summarise the key provisions and applicable between the parties or the law of the state where the award procedures affecting the recognition and enforcement was given; or of foreign judgments. ■ the arbitration award is not finalised pursuant to the provisions of the law of the state where the award is given or the award The Act on Private International Law and International Procedural is not enforceable/binding. Law No.5718 (“PIL”) dated 27 November 2007 is the main legislation that regulates the enforcement and recognition of foreign judgments. 8 Updates and Developments In order to enable a party to decide whether a foreign judgment can be recognised or enforced, the following preconditions must be met: ■ there must be a judgment given by the foreign courts; 8.1 Describe any other issues not considered above that ■ this must relate to civil claims. It can also be used in criminal may be worthy of note, together with any current matters involving personal rights; and trends or likely future developments that may be of interest. ■ the judgment must be final in accordance with the laws of the concerned foreign country. ■ The Amendment to the Turkish Straits Traffic Regulation The Turkish courts will look to Article 54 of PIL for foreign was published in the Official Gazette numbered 30137 on 28 judgments which satisfy the above requirements for them to be July 2017 for transit vessels passing through the Bosphorus. recognised or enforced in Turkey, which states the following: Under the new provisions, the anchoring permission allowed ■ there is an existing agreement between Turkey and the for vessels passing through Turkish Straits has been increased country concerned; to seven days, whereas previously it was two days. ■ there is a legal provision or a de facto application by the ■ Turkey has announced heavy fines for non-compliance foreign courts; or by vessels with environmental laws and anti-pollution regulations for the protection of its waters. These were ■ there is a provision under the laws of the foreign country brought into effect in April 2017 and will be issued by the concerned, or a bilateral treaty or agreement allowing for the authorities, including the Environmental Protection Agency, enforcement of the foreign judgment in Turkey. Harbour Master and Public Prosecutor. Furthermore, the enforcement of such decision must not be exclusive ■ The Turkish Parliament has ratified an amendment to the to the Turkish court and the foreign judgment must be compliant Turkish Ports Act, which entered into force on 5 December with Turkish public order. 2017. The amendment entrusts Harbour Masters with broad Lastly, the defendant should have been given the right to defend powers over inactive vessels and wrecks; a vessel which itself before the courts of the concerned foreign country. is posing a threat must be removed from its position and relocated by the vessel interests within a certain period (not The Court of First Instance is the authorised court to hear cases exceeding 45 days) to be determined by the Harbour Master. relating to the recognition and enforcement of a foreign judgment. This period is to be notified to the master, owner and the The enforcement procedure usually takes around 8–12 months consulate of the vessel’s flag state. The Harbour Master may excluding the appeal stage. The appeal stage is likely to take another extend the period for a maximum term of 45 days on the application/objection of the vessel interests. 6–8 months.

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Selcuk S. Esenyel Esenyel|Partners Lawyers & Consultants iTower, Merkez Mah. Akar Cad. No.3 K.19 D.135 Bomonti, Sisli Istanbul Turkey

Tel: +90 212 397 1991 Email: [email protected] URL: www.esenyelpartners.com Turkey Selcuk S. Esenyel is the founding partner of Esenyel|Partners Lawyers & Consultants and is a qualified lawyer admitted to the Istanbul Bar Association after completing his LL.B. in Turkey and studying for an LL.M. in the United Kingdom. He primarily focuses on maritime, admiralty, dispute resolution, banking and finance and asset finance and securitisation. He has acted for a wide range of clientele, from P&I Clubs to H&M insurers, to international banks, to ship charterers and owners. He is currently in charge of the Shipping, Finance and Litigation team in Esenyel|Partners Lawyers & Consultants.

Esenyel|Partners Lawyers & Consultants owes its ongoing growth to its reputation for providing swift, practical and high-quality service to its clients. The highly trained and capable lawyers of Esenyel|Partners Lawyers & Consultants take a hands-on approach to the practice of law and provide both legal and technical assistance by virtue of their dedication to understanding the clients they represent, and their expertise in the specific sectors in which they work. The firm observes the highest ethical and professional standards, combined with its rich depth of understanding of the law, to help it deliver better and more innovative solutions for clients. We consistently develop and expand our depth for the prosperity of our clients. Our solution-driven approach combines excellence of legal assistance with commercial awareness. Esenyel|Partners Lawyers & Consultants counsel the world’s leading companies in every area of the law, including international and domestic corporate and financial matters, corporate governance, international arbitration, technology, intellectual property, business litigation, appellate matters, white-collar criminal defence, federal and state legislative matters, energy and oil and gas matters, real estate, administrative, regulatory matters, shipping and transport, insurance, environmental and international trade. Lawyers at Esenyel|Partners Lawyers & Consultants are qualified and experienced, working in an internationally challenging environment. The firm owes its success to its devotion to handling matters by avoiding unnecessary litigation for its clients by adopting a customer-centric approach. The aim of the firm is to reach the most advantageous result for its clients through tailor-made solutions.

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Ukraine Evgeniy Sukachev

BLACK SEA LAW COMPANY Anastasiya Sukacheva

damages caused by oil pollution, approved on April 26, 2003, shall 1 Marine Casualty all be invalid from May 21, 2017. (iii) Salvage / general average 1.1 In the event of a collision, grounding or other major Ukraine acceded to the International Convention on Maritime Search casualty, what are the key provisions that will impact and Rescue on November 17, 1992. The York-Antwerp Rules (YAR) upon the liability and response of interested parties? have also been applicable in Ukraine since June 30, 1990, taking into In particular, the relevant law / conventions in force in relation to: consideration the new edition of the YAR 2016, adopted by the CMI Assembly at its conference in New York in May 2016. In addition, (i) Collision Chapter 1 of Section IX of the Code regulates general average that concerns Ukraine. Chapter 6 of Section IX of the Code regulates Ukraine is not a party to the International Convention on Certain salvage award issues. It is significant that Chapter 6 is not applicable Rules concerning Civil Jurisdiction in Matters of Collision, adopted to floating platforms and oil rigs according to Article 326 ofthe in Brussels on May 10, 1952. In addition, Ukraine has acceded Code. The law of the flag is applicable when the salvor and the neither to the International Convention for the Unification of Certain salved vessel are registered under the same flag. The award for the Rules of Law with Respect to Collisions between Vessels, adopted in salvage shall be determined by the contract, by the Ukrainian court Brussels on September 23, 1910, nor to the International Convention or by the Maritime Arbitration Commission, as provided by Article for Unification of Certain Rules Relating to Penal Jurisdiction in 332 of the Code. In addition, the salvage award shall be decreased Matters of Collisions or Other Incidents of Navigation, adopted in or abolished for the guilty salvor whose actions caused the danger. Brussels, 1952. All collisions that take place in Ukrainian inland The salvage reward amount is limited by Article 334 of the Code or territorial waters are regulated by the Merchant Shipping Code to the value of all salved ships, cargo, etc. The Code stipulates the of Ukraine (the Code) and in accordance with the Convention on security on the related claims for the salvors. Rescued property the International Regulations for Preventing Collisions at Sea 1972 stays at the port or place where such property has been delivered (COLREG), to which Ukraine acceded on November 17, 1992. The after the completion of the salvage operations, and the consent of the law of the flag will determine the reimbursement for damage or loss salvor is not required. Such prohibition lasts until sufficient security caused by a collision of vessels of the same flag in inland waters and for the claims of the salvor is granted. territorial waters, which does not concern third parties. When the collision results from force majeure or when the cause of a collision (iv) Wreck removal is unknown, parties cover loss or damage suffered at their own cost. Ukraine is not a party to the Nairobi International Convention If one party of the collision violates the COLREG, the guilty party on the Removal of Wrecks. Chapter 6 of Section IV of the Code will be liable for all damage suffered by the other parties. If more regulates wreck removal in Ukrainian inland or territorial waters. It than one or all of the parties of a collision violate such rules, each is significant that this chapter is not applicable to military property party is liable in equal part or to the extent of its guilt. All parties of or property of cultural, archeological and historical value. The Code a collision are subsequently liable for death or injury suffered by a determines destroyed ships and seagoing watercraft of any kind as a third party in a collision. wreck, as well as hydrofoil boats, air-cushion vehicles, their parts, (ii) Pollution any cargo, or other, in any way covered by water, sunken or left on the shore. The owner of the property that has sunk should inform Ukraine is a party to the International Convention for the Prevention the harbour master of the nearest Ukrainian seaport of its intention of Pollution from Ships. to retrieve this property within one year of its sinking. However, Maritime ecological inspections, such as the ecological inspection if the property that has sunk presents a direct threat to the safety of of the North-West Black Sea region of Ukraine and the Azov navigation, life or health, or the environment, the port administration Sea, provide state control of ecological security and follow the is entitled to take the necessary measures for its immediate retrieval provisions of the Maritime Ecological Inspections Statute. The or destruction. If the owner has not made a declaration of its Cabinet of Ministers of Ukraine’s Directive, enacted on March intention to retrieve the sunken property within a year of the date 10, 2017, and which came into force on May 21, 2017, has made on which it sank, or the owner has not retrieved the property within several significant instructions invalid. The instruction on nuclear a certain period determined by the port, the property becomes state transportation control at border crossings, the instructions on the property. If a wreck is removed accidentally, it shall be transferred to monitoring of waters, the approved unified forms of examination the nearest Ukrainian seaport administration. The transferring party acts for ecological control, and the approved method for calculating shall receive an award equal to a third of the value of the wreck.

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(v) Limitation of liability the preparation of proposals by the Ministry for the conclusion, Ukraine has not adopted the Convention on Limitation of Liability termination or suspension of actions, denunciations and accession for Maritime Claims (LLMC). However, Chapter 1 of Section X of to international treaties on maritime and river transport in Ukraine; the Code stipulates limitation of the owner’s liability. Remuneration conclude international treaties of an interdepartmental nature; to which a party may be entitled in relation to the death or injury of develop a strategy for ensuring the fulfilment of the obligations of a third party (including passengers and/or crew) or damage to the the flag state, the port state and the coastal state under international property shall be limited by Article 352 of the Code. agreements in the field of merchant shipping and to perform the functions arising from these obligations; prepare proposals for In relation to the claims arising from death or personal injury of ensuring the integration of the national sea and river transport third parties, the following remuneration is determined: system into the European and global transport systems and, in Ukraine ■ For ships with a tonnage below 500 tonnes – 333,000 Special accordance with the established procedure, ensure such integration; Drawing Rights (SDR). and control Ukraine’s implementation of international treaties ■ For ships with a tonnage of more than 500 tonnes, in addition on the safety of navigation and the prevention of environmental to the basic sum for each tonne: pollution. Additionally, the Administration will: monitor the safety ■ from 501 tonnes to 3,000 tonnes – 500 SDR; of the carriage of goods, passengers and baggage on ships and river ■ from 3,001 tonnes to 30,000 tonnes – 333 SDR; vessels; monitor the state of sea routes, the functioning of traffic ■ from 30,001 tonnes to 70,000 tonnes – 250 SDR; and control services and pilotage; carry out search and rescue operations ■ more than 70,000 tonnes – 167 SDR. on sea and river transport, in the water area of seaports; monitor the functioning of radionavigation and observation systems of the In relation to claims arising from other grounds, remuneration shall maritime mobile service; conduct checks as to the compliance of the be limited to the following: port facility security system; coordinate the activities of the captains ■ For ships with a tonnage below 500 tonnes – 167,000 SDR. of seaports within their authority; control the conclusion of contracts ■ For ships with a tonnage of more than 500 tonnes, in addition of compulsory insurance of the liability of subjects of transport of to the basic sum for each tonne: dangerous goods by sea and river; investigate and analyse the causes ■ from 501 tonnes to 30,000 tonnes – 167 SDR; of marine accidents and transport accidents on inland waterways ■ from 30,001 tonnes to 70,000 tonnes – 125 SDR; and of Ukraine; and carry out licensing of economic activities for the ■ more than 70,000 tonnes – 83 SDR. provision of services for the transport of passengers, dangerous goods, hazardous waste by sea and river transport, among others. (vi) The limitation fund Ukraine is a party neither to the Convention on Limitation of Liability for Maritime Claims, 1976, nor to the International Convention on 2 Cargo Claims the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971. The Merchant Shipping Code of Ukraine stipulates funds such as the emergency pilotage fund, the emergency 2.1 What are the international conventions and national laws relevant to marine cargo claims? maritime navigation department fund, and a fund for liability limitation provision. For claims arising from marine casualties caused by the pilot, the Code stipulates that such claims shall be covered by For the settlement of marine cargo claims in Ukraine, national acts an emergency pilotage fund. Such fund corresponds to 10% of all such as the Merchant Shipping Code of Ukraine, the Commercial pilot charges received in the preceding year. However, for claims Proceeding Code of Ukraine, the Civil Proceeding Code of Ukraine arising from the maritime navigation department’s pilot’s actions, and the Ukrainian Act on International Private Law shall be referred remuneration shall be limited to the emergency maritime navigation to. To provide an arbitration settlement in Ukraine, the Law of department fund, according to Article 114 of the Code. The amount Ukraine on International Commerce Arbitration and the Statute on in the emergency maritime navigation department fund corresponds the Maritime Arbitration Commission at the Ukrainian Chamber of to 10% of all charges received in the preceding year. In the case that Commerce and Industry shall be used. On May 6, 2012, Ukraine there is nuclear damage, the liability of the nuclear vessel operator joined the International Convention Relating to the Arrest of Sea- shall be limited by the fund for liability limitation provision: 99.75 Going Ships. The Convention initiated the concept of a maritime million SDR, including court charges. claim; however, such concept has not been totally implemented in Ukrainian law, even though some developments were adopted for the entry into force of the Commercial Proceeding Code of Ukraine 1.2 What are the authorities’ powers of investigation / and the Civil Proceeding Code of Ukraine at the end of 2017. The casualty response in the event of a collision, grounding Merchant Shipping Code of Ukraine stipulates the list of maritime or other major casualty? claims and privileged maritime claims that warrant a ground for arrest. The Code’s regulations correspond to the International The Ministry of Infrastructure of Ukraine, through the State Service Convention Relating to the Arrest of Sea-Going Ships, which of Ukraine of Transport Safety, provides supervision in relation to provides for effective ship arrest in Ukraine. the investigation of marine casualties and accidents in Ukrainian inland and territorial waters. The investigation of marine casualties in Ukraine is based on the Regulation on the Classification and 2.2 What are the key principles applicable to cargo claims Investigation of Marine Accidents approved by the Ministry of brought against the carrier? Transport on May 29, 2006. For investigation purposes, the State Service of Ukraine of Transport Safety can request the assistance of Ukrainian law is applicable to cargo claims when the defendant has other national authorities to receive any documents and information, a registered place of business in Ukraine or a property, which can and organise special groups and commissions. Moreover, the be charged under the court judgment. In addition, the agreement Ukrainian Maritime Administration will start its activity on August between the parties must contain an arbitration clause that provides 1, 2018. It will be a new department of the Ministry of Infrastructure, for settlement of claims in a Ukrainian court or arbitration institution. with huge opportunities and powers. The new body will: ensure The presumption of a carrier’s guilt is enforced in Ukrainian law.

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Article 176 of the Code stipulates the obstacles which may free a shipper of its liability, such as force majeure, acts of war, acts 4 Arrest and Security of authorities, latent defects of cargo, insufficiency of packing or labelling, strikes or lockouts. In Ukrainian court proceedings, the 4.1 What are the options available to a party seeking to shipper is entitled to prove the existence of such obstacles in order obtain security for a maritime claim against a vessel to be released from its responsibility. owner and the applicable procedure? Cargo claims in Ukraine are handled by domestic courts. It is significant that the claim shall be applied to the court whose On May 16, 2012, Ukraine adopted the International Convention jurisdiction expands to the territory where the defendant’s business Relating to the Arrest of Sea-Going Ships, Brussels, 1952. Any is registered or located or where the ship resides. Cargo claims must vessel sailing under the Ukrainian flag or located at a Ukrainian port Ukraine consist of a case description, the claimant’s position, related evidence can be arrested in respect of a maritime claim. The Commercial and the claimant’s demands. All documentary evidence related to Proceeding Code of Ukraine determines that security for a maritime the case shall be attached to the claim, translated into Ukrainian claim is obtained exceptionally at the local domestic court where and certified by a licensed translator or notary. The claimant shall the ship is berthed or registered. As a preliminary step, the claimant indicate the amount of the claim in the original currency and UAH can apply to the harbour master of the port where the ship is berthed equivalent. Furthermore, a receipt which shows the payment of the for the ship’s detention. A ship will be detained for three days upon court charges should be attached to the claim. the request of a person with a proven maritime claim against such ship. At the end of the three-day detention period, an arrest order from the court must be presented, otherwise the vessel will be 2.3 In what circumstances may the carrier establish immediately released. Ship detention provisions are determined in claims against the shipper relating to misdeclaration Article 80 of the Code. The applicant must apply to the domestic of cargo? court whose jurisdiction expands to the port where the vessel is berthed or registered, to get an arrest order. The application for an Chapter 2 of Section V of the Merchant Shipping Code of Ukraine arrest in respect of a maritime claim must contain (i) a description regulates carrier and shipper relations. Article 134 of the Code of a proven maritime claim, (ii) information that the claim is stipulates that the Charter and Bill of Lading are documents approving commensurate with the value of the vessel that will be arrested, the existence of the Cargo Transportation Agreement. The shipper is and (iii) the grounds showing the necessity of the ship’s arrest. All liable for all damages arising from incorrect or lacking information documentary evidence and other attachments must be translated declared in a Bill of Lading. When such incorrect information into the Ukrainian language and certified by a licensed translator or corresponds to dangerous cargo, such cargo can be discharged, notary. An application for arrest in respect of a maritime claim is destroyed or deactivated by the carrier. adjudged in three days.

3 Passenger Claims 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel? 3.1 What are the key provisions applicable to the resolution of maritime passenger claims? Bunker supplying is a maritime claim listed in the Merchant Shipping Code of Ukraine as a ground to arrest a vessel according For an effective regulation of carrier-passenger relations, Ukraine to the International Convention Relating to the Arrest of Sea-Going has acceded to the Athens Convention relating to the Carriage of Ships. Therefore, the bunker supplier can initiate an arrest in Passengers and their Luggage by Sea. Such regulations correspond Ukraine when (i) the existence of a maritime claim is proven, (ii) to Chapter 3 of Section V of the Merchant Shipping Code of the owner of the ship is liable for a maritime claim, and (iii) the Ukraine. Ukrainian law is applicable in such cases as: (i) the carrier debtor’s ship is berthed in Ukraine or sails under the Ukrainian flag. sailing under the Ukrainian flag; (ii) the Passenger Transportation It is important to note that for vessels under a Bareboat Charter, such Agreement being conducted in Ukraine; and (iii) the specified port vessels can be arrested when the charterer is liable for said claim of departure or port of destination being located in Ukraine. Any according to the Charter terms. Passenger Transportation Agreements limiting passenger rights are assumed invalid by Article 185 of the Code. The validity of Passenger Transportation Agreements is to be proven by the ticket and luggage 4.3 Where security is sought from a party other than the receipt. Article 191 of the Code stipulates that passengers are obliged vessel owner (or demise charterer) for a maritime to hold insurance for the duration of the Passenger Transportation claim, including exercise of liens over cargo, what options are available? Agreement. The insurance premium is included in the ticket value. In general, the carrier is liable for death or any injury of any passenger resulting from an action which happened during the carriage and was The ship arrest procedure in Ukraine is initiated exceptionally in caused by the fault or negligence of the carrier or its employees. In respect of a maritime claim to the owner of the ship, or the demise cases of damaged or missing luggage, the carrier is entitled to prove charterer in some cases. However, Ukrainian law provides other its innocence in order not to be charged a remuneration payment. methods for obtaining security for a claim. Article 67 of the In respect of a passenger’s death or an injury claim, remuneration Domestic Proceeding Code stipulates such methods as (i) arrest of payment shall be limited to 175,000 SDR. In respect of damaged or the defendant’s funds or property, (ii) prohibiting the defendant from missing cabin luggage, the carrier’s liability shall be limited to 1,800 conducting particular actions, and (iii) prohibiting third parties from SDR for one piece of passenger property. Article 194 of the Code conducting particular actions regarding the subject of dispute. Such also permits higher liability limitations to be determined in written list is exhaustive; other methods are not applicable. The method of form, signed by the carrier and the passenger. obtaining security for a claim may be cancelled if an applicant or defendant submits an application for its cancellation.

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claims arising from commerce are heard in domestic 4.4 In relation to maritime claims, what form of security is courts. Claims arising from the violation of regulations and acceptable; for example, bank guarantee, P&I letter of criminal law are heard in administrative and criminal courts. undertaking. Proceeding Codes in the Ukrainian law system do not state a special procedure for maritime claim proceedings. A defendant on the maritime claim can apply to the court for ii) The Maritime Arbitration Commission at the Ukrainian a change of a method to obtain security for such claim when the Chamber of Commerce and Industry (MAC) is a permanently defendant’s vessel is under arrest. As a rule, bank guarantee is used functioning arbitral institution that settles maritime claims. as a substitute for an arrest and, generally, Ukrainian courts recognise The MAC settles disputes arising from contractual and other a bank guarantee as an appropriate form of security for a maritime civil law relationships in the area of merchant shipping, irrespective of whether the parties to a relationship include Ukraine claim. However, courts will give priority to bank guarantees issued both Ukrainian and foreign entities, or whether the parties are by Ukrainian banks. The bank guarantee must cover all demands only Ukrainian entities or only foreign entities, in accordance of a claimant according to the maritime claim. As a rule, Ukrainian with Article 2 of the Statute on the Maritime Arbitration courts do not accept letters of undertaking issued by P&I Clubs. Commission at the Ukrainian Chamber of Commerce and Industry. The MAC accepts arbitration disputes subject to an agreement in writing between the parties to refer to the MAC. 5 Evidence As a rule, arbitration settlement does not last longer than six months; however, the MAC can state time limits for the case. The Arbitral Tribunal settles disputes in accordance with the 5.1 What steps can be taken (and when) to preserve or rules of law which the parties have chosen to apply to the obtain access to evidence in relation to maritime subject matter of the dispute. claims including any available procedures for the preservation of physical evidence, examination of iii) Mediation practice is developing in Ukraine. Although the witnesses or pre-action disclosure? Mediation Academy of Ukraine has provided mediation specialists, mediation remains unregulated by Ukrainian law. Verkhovna Rada of Ukraine (Parliament) approved the basic The party to a civil or commercial proceeding is entitled to preserve project of Ukrainian Law on Mediation on March 27, 2015, the evidence. The application for evidence preservation can be sent but this law has not yet been enacted. before or after the registration of the claim. The application must contain: (i) a description of the evidence provided; (ii) grounds for the necessity to obtain provision from the court; and (iii) the description 6.2 Highlight any notable pros and cons related to your of the facts proved by the evidence. The evidence preservation may jurisdiction that any potential party should bear in mind. be provided as: questioning of witnesses; examination provision; evidence reclamation; evidence investigation; and others, according Ukrainian jurisdiction entails long-lasting bureaucratic procedures. to the court’s decision. After the application’s acceptance, the Proceedings in a Ukrainian court could take more than six months. party will be obliged to establish the claim to the court in 10 days; But sometimes the case is closed in one or two months. In addition, otherwise, the provision of evidence for this claim will be cancelled. Ukrainian judges are not sufficiently qualified in maritime law. In a The party applying to preserve the evidence is obliged to pay the maritime claim settlement, it is important to present all documentary prescribed amount of court fees. evidence, which must be translated and certified. Usually, the court does not investigate emails or extracts from Internet resources. The preservation of evidence procedure is regulated by Articles Recently, the “electronic court” has been developed and given force 116–119 of the Civil Proceeding Code of Ukraine and Articles 110– of law and it is very useful to communicate with courts according 112 of the Commercial Proceeding Code. to the proceedings.

5.2 What are the general disclosure obligations in court proceedings? 7 Foreign Judgments and Awards

The general principle related to evidence in Ukrainian court 7.1 Summarise the key provisions and applicable proceedings is that everything that has been done or said and related procedures affecting the recognition and enforcement to the case should be proven, in a legal manner, and investigated of foreign judgments. as evidence. All documentary evidence must be submitted or translated in the Ukrainian language. The court may demand that Ukraine is a member of the New York Convention on the Recognition original copies of specified documents are presented. and Enforcement of Foreign Arbitral Awards. In addition, Section VIII of the Civil Proceeding Code of Ukraine regulates the recognition 6 Procedure and enforcement of foreign judgments in Ukraine. Application for the enforcement of foreign judgments shall be submitted within three years from the enactment day. The enforcement is initiated by the 6.1 Describe the typical procedure and timescale application presented to the general court in the area where the debtor applicable to maritime claims conducted through: i) or debtor’s property is located or registered. It is significant that the national courts (including any specialised maritime or applicant must prove that they notified the respondent in a foreign commercial courts); ii) arbitration (including specialist judgment. arbitral bodies); and iii) mediation / alternative dispute resolution. 7.2 Summarise the key provisions and applicable i) There are no specialised maritime courts in Ukraine. The procedures affecting the recognition and enforcement Ukrainian court system is divided into general, administrative, of arbitration awards. criminal and domestic branches. Maritime claims arising from labour relations are heard in general courts. Maritime There is no procedure for the recognition of arbitration awards.

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Arbitration institutions in Ukraine act in accordance with the On January 17, 2018, the Cabinet of Ministers of Ukraine decided Ukrainian Law on International Commerce Arbitration. An arbitration to establish the Maritime Administration of Ukraine, which will award can be enforced in a domestic court in accordance with the commence operation on August 1, 2018. This will be the central Commercial Proceeding Code of Ukraine, the Civil Proceeding authority responsible for the development of merchant shipping in Code of Ukraine and the Ukrainian Law on International Commerce the country, and will be supervised by the head of the Ministry of Arbitration. Attachments to the application must contain the award, Infrastructure. translated into Ukrainian and certified by a licensed translator or Recently, the Single Judicial Information and Telecommunication notary, and the original version of the arbitral award duly signed, System – which will ensure the exchange of documents electronically verified and stamped. The application for the enforcement ofan between courts, between the court and participants in the trial, and arbitration award can be refused for the following reasons: (i) the between the participants in the trial – has commenced operation in Ukraine arbitration award has already been cancelled; (ii) the case cannot be Ukraine. The lawyers, notaries, private executors, arbitrators, court settled by the arbitration institution; (iii) the deadline for submitting experts, state bodies, local governments and economic entities of the an application has been missed; (iv) an arbitration agreement is not state and municipal sectors of the economy may file procedural and applicable to the case; and (v) arbitration was provided illegally. other documents, and may conduct procedural actions in electronic form solely with the help of the Single Judicial Information and 8 Updates and Developments Telecommunication systems, using their own digital signature. Moreover, courts consider cases in electronic form. Procedural and other documents and proofs in paper form must be converted 8.1 Describe any other issues not considered above that into electronic form; materials of cases will be stored, as a rule, in may be worthy of note, together with any current electronic form. trends or likely future developments that may be of interest.

On December 15, 2017, the new Commercial Proceeding Code of Ukraine and Civil Code of Ukraine entered into force, containing new and very important chapters and clauses relating to ship arrest and release of vessels.

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Evgeniy Sukachev Anastasiya Sukacheva BLACK SEA LAW COMPANY BLACK SEA LAW COMPANY French Boulevard, 66/2 French Boulevard, 66/2 Odessa, 65009 Odessa, 65009 Ukraine Ukraine

Tel: +380 503 902 424 Tel: +380 503 905 654 Email: [email protected] Email: [email protected] URL: www.blacksealawcompany.com URL: www.blacksealawcompany.com Ukraine Evgeniy Sukachev is the Senior Partner at BLACK SEA LAW COMPANY, Anastasiya Sukacheva assists companies and individuals in maritime the head of the company’s shipping practice department, practising in insurance and also has significant experience in commercial litigation maritime law, particularly related to ship arrest and release, seafarers’ and in resolving infrastructure cases. She has been a Partner at BLACK rights, insurance, and assisting Ukrainian and international clients such SEA LAW COMPANY since 2015. as shipowners, ship repair factories and shipyards, seafarers, insurance Mrs. Sukacheva is a member of the Ukrainian Maritime Bar Association companies, banks and other parties of maritime business. He has and the Ukrainian Bar Association. extensive litigation experience before Ukrainian courts in ship arrest and release cases. Mr. Sukachev worked in the Commercial Court of Mrs. Sukacheva graduated from the faculty of law of the Odessa National Appeal of the Odessa region for about seven years, whilst also acting as Law Academy (LL.B.), and the faculty of economics of the Odessa the Head of the Trade Union of the Commercial Court of Appeal of the National Economic University (LL.B.). Anastasiya is fluent in Ukrainian, Odessa region. After initially working in the Court, in 2011 he became English and Russian. the head of G.A.S. Law Firm, and in 2013 he became a Senior Partner at BLACK SEA LAW COMPANY. Mr. Sukachev is an attorney-at-law and a Board Member of the Ukrainian Maritime Bar Association (UMBA) and represents Ukraine on the Comité Maritime International (CMI). He is a Board Member of the Odessa regional Branch of the Ukrainian Bar Association, and a Member of the International Bar Association and Odessa Bar Association. In 2016, Mr. Sukachev took part in the CMI Assembly in New York on the entry into force of the York-Antwerp Rules, as a delegate from the Ukrainian Maritime Bar Association. Mr. Sukachev graduated from the faculty of law of the Odessa National Maritime Academy (LL.B.), and the faculty of administrative law of the Odessa National Law Academy – High School of Judgement (LL.M.).

BLACK SEA LAW COMPANY was established in 2008 and, during 10 years of fruitful legal practice, has become one of the leading maritime law firms in Ukraine. BLACK SEA LAW COMPANY has a team of qualified lawyers with profound knowledge and unique regional experience in commercial litigation and arbitration in the fields of shipping and insurance law, as well as in transport, IT, corporate and infrastructure disputes. The team’s professional standards comply with the International Code of Ethics of the International Bar Association, and BLACK SEA LAW COMPANY provides legal services which everybody can rely on. The company has three offices in Ukraine: Odessa; Chernomorsk; and Kherson. As of 2016, BLACK SEA LAW COMPANY has an associated office in Russia in the city of St. Petersburg, with the law firm LEXNAVICUS CONCORDIA – also a major player on the Russian legal market in the sphere of maritime law. This allows BLACK SEA LAW COMPANY to deliver fast, effective, cross-jurisdictional legal solutions in the best interests of its clients.

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Ince & Co Middle East LLP Sheridan Steiger

The UAE’s position on general average is that adjustment will be 1 Marine Casualty made by one or more experts as agreed by the parties or, absent agreement, appointed by the court (as set out in articles 340–365 of 1.1 In the event of a collision, grounding or other major the Maritime Code). Where parties do not accept the adjustment, casualty, what are the key provisions that will impact they may refer the matter to court under article 358. Parties should upon the liability and response of interested parties? note that the law requires general average to be declared within 30 In particular, the relevant law / conventions in force in days from delivery of the goods (article 363 of the Maritime Code). relation to: (iv) Wreck removal

(i) Collision The UAE is not a signatory to the Wreck Removal Convention. Under the Maritime Code, however, the appropriate maritime The UAE has not formally ratified the 1910 Collision Convention; department (dependent upon the emirate in which the wreck is however, the provisions contained within the UAE Maritime Code located) has the power to confiscate the wreck to act as security for of 1981 (the Maritime Code) are based on this Convention (articles the cost of its removal (article 95). The law also provides the relevant 318–326 specifically). The UAE has, however, acceded to the maritime department with the right to conduct an administrative sale Collison Regulations 1972. by auction of the wreck should it deem it appropriate to recover any The Maritime Code will apply to all collisions that occur between sums expended in the removal. two vessels where the damage results from a vessel’s manoeuvring or negligence or failure to observe any provision stipulated under Where the wreck is located within port limits, the relevant port UAE law or an approved international maritime convention. UAE management authority will either remove the wreck or order its law also provides that compensation for damage to a vessel or removal. A number of local regulations have been enacted providing vessels involved in a collision will be commensurate with the actual various departments with express powers dependent upon which port damage caused. In the event that more than one party is found to be the wreck is located. liable for the collision, the Maritime Code allows for liability to be (v) Limitation of liability apportioned between the respective parties (article 321). In 1983, the UAE acceded to the International Convention on (ii) Pollution Tonnage Measurement of Ships 1969 and, in 1997, ratified the The UAE is a signatory to the International Convention for the Convention on Limitation of Liability for Maritime Claims 1976. Prevention of Pollution from Ships 1973 as amended by the 1978 It should be noted, however, that the UAE has not repealed the Protocol (MARPOL 73/78). It is also a signatory to the International sections of the UAE Maritime Code which set out local regulations Convention on Civil Liability for Oil Pollution Damage 1992 (CLC in relation to limitation of liability (articles 138–142) and which pre- 1992 and the Fund Convention 1992). The latter two were approved date accession and ratification of the relevant conventions. There in the UAE pursuant to UAE Federal Decree No. 82 of 1997. are discrepancies between the provisions of the conventions and the UAE Maritime Code (in terms of when the liability can be limited, The UAE has also enacted a federal law that seeks to protect the the size of the limits, etc.) which can give rise to a dispute. However, marine environment from pollution (Federal Law No. 24 of 1999 recently, there have been cases going through the UAE courts where Concerning the Protection and Development of the Environment the judges have allowed a party to rely on the limitation defence and Cabinet Resolution No. 37 of 2001 Concerning the Executive based on the 1976 Convention. Regulations of Federal Law No. 24). UAE law prohibits vessels from discharging oil or sewage water directly into UAE waters. (vi) The limitation fund In the event of a collision giving rise to a pollution claim, UAE The establishment of limitation funds in the UAE courts is not a law states that the polluting vessel’s owners will be liable for any common occurrence. However, the Dubai World Tribunal (a damages and costs incurred in the clean-up operations as a result. special tribunal established to consider claims in relation to Dubai The UAE is not a signatory to the International Convention on Civil World and its subsidiaries) has recently handed down a judgment Liability for Bunker Oil Pollution Damage. permitting establishment of a limitation fund under UAE law. It remains to be seen whether the UAE onshore courts will follow suit. (iii) Salvage / general average The International Convention on Salvage 1989 was ratified by the UAE in 1993. Non-contractual salvage scenarios are dealt with in articles 327–339 of the Maritime Code.

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as the blood money under Sharia law. A carrier will not be able to 1.2 What are the authorities’ powers of investigation / limit their liability for a passenger’s death or personal injury in the casualty response in the event of a collision, grounding event that it is established that the accident occurred as the result or other major casualty? of a fraud or unpardonable error committed by the carrier or any of their employees. An unpardonable error will be construed as any The authorities’ powers will vary from Emirate to Emirate, but they reckless act made with the knowledge that it would probably result are generally wide ranging and the relevant port authority will have in damage. the power to order a full investigation of any incident. It is typical for the relevant port authority to conduct a full investigation and for the relevant Harbour Master Office and the Environment, Health 4 Arrest and Security and Safety Department to also be involved in some capacity. On occasion, the local police force may also be involved. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel United Arab Emirates 2 Cargo Claims owner and the applicable procedure?

The UAE has not ratified any of the ship arrest conventions; 2.1 What are the international conventions and national however, the Maritime Code draws heavily on the 1952 Ship Arrest laws relevant to marine cargo claims? Convention (articles 115–134). Accordingly, the grounds available for arrest are largely based on article 1 of the 1952 Ship Arrest The UAE is not a signatory to any of the following: Hague Rules; Convention and require that there be a claim for a ‘maritime debt’, Hague-Visby Rules; Hamburg Rules; or Rotterdam Rules. which article 115 defines as: The Maritime Code deals with maritime claims and its provisions a) damage caused as a result of a collision; rely heavily on the Hague Rules (articles 256–287). b) death or personal injury; c) salvage; 2.2 What are the key principles applicable to cargo claims d) contractual claims for use of the vessel; brought against the carrier? e) contractual claims relating to the carriage of goods; f) loss or destruction of goods on board the vessel; The Maritime Code provides that the party named on the bill of g) general average; lading (or legally assigned or endorsed to them) or, alternatively, in possession of a copy of the same and having taken lawful delivery h) towing or piloting; of the goods, has rights of suit. i) supplies of products or equipment necessary for the maintenance of the vessel; The Maritime Code considers carriage of goods at sea as beginning when the carrier of goods (or their representative) takes delivery j) building, repairing or supplying the vessel and the costs of of the goods, and ending at the time the goods are delivered to the docking; consignee (article 256). k) disbursements spent on account of the vessel or shipowner; Further, the Maritime Code requires the carrier (or their l) crew wages; representative) to be notified in writing of any damaged or lost goods m) disputes over the vessel’s ownership; before or during the discharge of the cargo (article 282). In the event n) disputes concerning joint ownership; and that the loss or damage is not immediately apparent, written notice o) marine mortgages. will need to be given within three days of delivery of the goods. The Maritime Code also permits the arrest of a sister ship owned by the debtor at the time the debt arose where the ‘maritime debt’ 2.3 In what circumstances may the carrier establish claims may be defined as falling under types a–l above; however, only the against the shipper relating to misdeclaration of cargo? specific ship to which the debt relates may be arrested where the claim concerns disputes over ownership, joint ownership and mortgages. The shipper will be liable for any loss or damage that arises from The UAE courts will have jurisdiction to grant arrest orders on the misdeclaring the particulars of the cargo. basis of the vessel’s presence in territorial waters, even if the court does not have jurisdiction to decide upon the substantive case. 3 Passenger Claims It should be noted that, following the arrest of a vessel, the arresting party is required to commence the substantive claim in the UAE court within eight days, failing which the arrest will lapse. 3.1 What are the key provisions applicable to the Article 122 of the Maritime Code means that the UAE court will resolution of maritime passenger claims? have jurisdiction to decide upon the substantive case filed following an arrest, if it establishes jurisdiction by establishing that the: Contracts for the carriage of passengers is dealt with in articles 288– ■ claimant has its usual place of residence or head office in the 302 of the Maritime Code. UAE; A carrier will be liable if the death or personal injury arises as a ■ ‘maritime debt’ was incurred in the UAE; result of the sinking or collision of the ship, a stranding, explosion, ■ ‘maritime debt’ was incurred during the voyage when the fire or any other major accident unless the carrier is able to establish vessel was arrested; that the accident did not occur as a result of their breach or a breach ■ ‘maritime debt’ arose from a collision or salvage where the by any of their employees. relevant UAE court has jurisdiction to hear the substantive The carrier’s liability arising out of a passenger’s death or personal claim; or injury will be determined in relation to the compensation due as well ■ ‘maritime debt’ is secured by a UAE maritime mortgage.

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It is also possible for a party to arrest in order to obtain security a bank guarantee issued by a UAE bank or a cash payment. Getting for foreign/arbitral proceedings. In the substantive proceedings that the UAE courts to accept a P&I letter of undertaking as security is follow the arrest, the arresting party would typically apply to the problematic, but recently the Dubai World Tribunal has indicated court for a stay pending the handing down of a final substantive that it would be acceptable. judgment or the release of a final arbitral award. The time required to obtain an arrest order in the UAE is largely 5 Evidence determined by how quickly the ancillary documents required may be obtained. The UAE courts all require that the documents filed in support of the application are translated into Arabic by a translator 5.1 What steps can be taken (and when) to preserve or licensed by the UAE Ministry of Justice. Additionally, the arresting obtain access to evidence in relation to maritime party will need to provide local lawyers with a power of attorney claims including any available procedures for the (POA). The POA is typically drafted in both English and Arabic, preservation of physical evidence, examination of although only the Arabic is required for the court’s purposes, and witnesses or pre-action disclosure? signed by a duly authorised representative of the arresting party in United Arab Emirates the presence of a Notary Public. Where the POA is signed abroad, Pre-action steps available to one party to preserve evidence in the it will then need to be attested by that country’s Ministry of Foreign hands of another party in the UAE are very limited. A party can Affairs before being further attested by the UAE Embassy in that apply to court, before starting the proceedings, with a request to country. The original notarised and attested POA will then need to collect evidence and information, but the applicant must prove the be attested by the UAE Ministry of Foreign Affairs. urgency of the matter (e.g. where the vessel is due to depart from the port imminently) for the court to accept the request. The court may Assuming that a POA is in place and the documents have been appoint an expert to collect the evidence/information and, in marine translated, an arrest order may be obtained on the same day as matters, such an expert may board the vessel to collect evidence and the application is presented; however, the court only sits in office take statements from the crew. hours (Sunday to Thursday) and no judge will be able to hear an application over the weekend (Friday and Saturday). 5.2 What are the general disclosure obligations in court proceedings? 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim There is no equivalent of common law disclosure obligations in the relating to bunkers supplied by them to that vessel? UAE local courts. Once the claim has been filed, a party can request another party to provide documents in his possession, but the party Article 115(1) of the Maritime Code provides the bunker supplier making such a request must identify a specific document of which it with the right to seek an arrest in respect of unpaid bunkers seeks disclosure, and prove both that it exists and that it is in possession irrespective of whether the bunker supply contract has been entered of the opponent. The court can also appoint an expert ordering him/her into with the shipowner, the charterer or another contractual party. to examine commercial records of a party, which would require that Indeed, the UAE courts have previously granted such arrest orders, party to provide the expert with the relevant documents. but they remain open to challenge where the bunker supply contract Notably, common law disclosure principles apply in the Courts of is with a party rather than the owner of the vessel. the Dubai International Financial Centre (DIFC Courts) and the Courts of the Abu Dhabi Global Market (ADGM Courts). DIFC 4.3 Where security is sought from a party other than the and ADGM are two free zones in the UAE that have their own vessel owner (or demise charterer) for a maritime legal systems based on common law. It is beyond the scope of this claim, including exercise of liens over cargo, what chapter to discuss the legal and procedural principles that apply in options are available? the DIFC and ADGM but we will highlight the main differences with the onshore UAE legal system where appropriate. A party may seek an attachment order to be granted over assets other than vessels pursuant to article 252 of the UAE Civil Procedures Code of 1992. Whilst this article may be used to support an 6 Procedure application to arrest a vessel’s bunkers, in practice the UAE courts have been unwilling to grant such an order on the basis that the 6.1 Describe the typical procedure and timescale bunkers are not owned by the shipowner. applicable to maritime claims conducted through: i) As with an arrest, if granted, the substantive proceedings will need national courts (including any specialised maritime or to be commenced within eight days, failing which the attachment commercial courts); ii) arbitration (including specialist will automatically lapse. arbitral bodies); and iii) mediation / alternative dispute resolution. The shipowner has no right of lien on cargo loaded on the vessel in respect of freight and hire. The Master has a lien over cargo in i) National courts respect of the cargo owner’s liability to contribute under general Currently there is no specialist maritime court in the UAE and average (article 360 of the Maritime Code). therefore any maritime commercial claims are subject to the jurisdiction of the UAE civil courts. All claims must be filed in the 4.4 In relation to maritime claims, what form of security is court of first instance in the emirate concerned. Typically, the claims acceptable; for example, bank guarantee, P&I letter of must be filed in the emirate where defendant is located. Once filed, undertaking. the court is responsible for service of the claim on the defendant, but the claimant must provide all the details of the defendant to the Article 118 of the Maritime Code allows for an arrest order to be set court to enable the service to take place. In cases involving foreign aside in the event that the arrested party provides security. Typically, defendants, the court will effect service using diplomatic channels, the UAE courts will insist on security being provided in the form of which often leads to substantial delays in the proceedings.

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The procedure in the UAE courts take place by way of consecutive oral hearings which must be attended by both parties, but the 7 Foreign Judgments and Awards submissions are done in writing to the judge. In most maritime cases, the court will appoint an expert to assist the court in evaluating 7.1 Summarise the key provisions and applicable the factual circumstances of the case. The expert can request the procedures affecting the recognition and enforcement parties to provide further documents, and can conduct interviews of foreign judgments. and meetings with the parties. The expert submits the report to the court. The court is not bound by the report. A typical timeline for a The procedure for recognition and enforcement of foreign judgments maritime claim in the court of first instance would be approximately is set out in the UAE Civil Procedures Code. The requirements for one year from service to judgment, although this, of course, varies the recognition and enforcement of foreign judgments in the UAE are: on a case-by-case basis. The judgments of the UAE courts of first ■ that the UAE courts did not have jurisdiction in the dispute; instance are open to automatic appeals in the courts of appeal and ■ that the foreign court had the requisite jurisdiction under the the court of cassation, which prolongs the overall resolution of the applicable international rules to hear the dispute;

United Arab Emirates dispute by another six to twelve months. ■ that the defendant in question had been summoned to appear ii) Arbitration and had duly appeared before the foreign court; Since 2016, the UAE has a specialist maritime arbitration institution ■ that the judgment is final under the law of the court issuing – the Emirates Maritime Arbitration Centre (EMAC) based in Dubai, the same; and although to our knowledge it is yet to issue any awards. There are ■ that the judgment does not conflict with any judgment or also other arbitration bodies established in the UAE such as the order previously issued by a UAE court and is not contrary to Dubai International Arbitration Centre (DIAC), the DIFC-LCIA the public morals or order of the UAE. Arbitration Centre and the Abu Dhabi Commercial Conciliation and In practice, the first requirement (lack of jurisdiction of the UAE Arbitration Centre (ADCCAC). In May 2018, the UAE has adopted courts) is difficult to satisfy because the UAE courts will have a new Arbitration Law (Federal Law No. 6 of 2018), replacing jurisdiction over any cases involving defendants based in the UAE the outdated arbitration provisions of the UAE Civil Procedures and in many other instances. As a result, it is very problematic to Code. The DIFC and ADGM free zones have their own arbitration enforce a foreign judgment in the UAE unless the judgment originates laws, which are different from the laws applicable in the rest of the from one of the countries with which the UAE has an agreement for country and remain unaffected by the new UAE Arbitration Law. mutual recognition and enforcement of judgments. iii) Mediation In recent years, parties have resorted to the DIFC Courts as an Recently there has been an increased interest in using mediation alternative route to enforcement of foreign arbitral awards and for dispute resolution in the UAE. The business and cultural judgments in the UAE. The DIFC Courts apply common law environment in the UAE is conducive to resolution of disputes by principles to enforcement of foreign judgments and, once enforced in mediation. The recently established EMAC has its own mediation the DIFC, the judgment of the DIFC Courts recognising and enforcing rules (alongside its arbitration rules) which are available to parties a foreign judgment can, in turn, be easily enforced onshore in Dubai in maritime disputes. and potentially in the wider UAE. Initially, claimants have been successful in enforcing foreign awards and judgments in the DIFC, 6.2 Highlight any notable pros and cons related to your even in the absence of any jurisdictional link with the DIFC, purely jurisdiction that any potential party should bear in for the purpose of using it as a “conduit” jurisdiction. However, the mind. “conduit” jurisdiction of the DIFC Courts has recently been brought to a halt by establishment of the Dubai Judicial Tribunal (JT) set One of the procedural advantages in the UAE is the relative ease up by Decree No. 19 of 2016. In case of conflicting proceedings of obtaining ship arrest or an attachment order, provided that brought before the Dubai Courts and the DIFC Courts, the JT is the application meets the legal requirements and the necessary likely to find in favour of the Dubai Courts’ jurisdiction, which preparations (see question 4.1 above) are made in advance. The means that any “conduit” proceedings initiated in the DIFC Courts UAE courts are usually eager to assert their jurisdiction over the have been frustrated by defendants starting parallel proceedings in arrest and generally will not be deterred by foreign law factors and the Dubai Courts. proceedings (e.g. a foreign bankruptcy moratorium on enforcement). Another advantage over most other jurisdictions in the region is the 7.2 Summarise the key provisions and applicable availability of the DIFC jurisdiction (courts and arbitration) as a procedures affecting the recognition and enforcement common law environment that parties can choose as their dispute of arbitration awards. resolution forum. The presence of well-established arbitration centres alongside the newly formed specialist maritime centre The UAE has been a party to the 1958 New York Convention on (EMAC) is also an advantage. The geographical location and recognition and enforcement of arbitral awards (NY Convention) infrastructure in Dubai, in particular, make it an attractive forum for since 2006, but it is only in 2010 that courts have shown first signs international dispute resolution. of their willingness to enforce foreign arbitral awards in accordance with the NY Convention. Until then, enforcement proceedings One of the points to bear in mind as a potential disadvantage is that were often frustrated by respondents in local courts who relied on UAE law does not recognise the concept of “without prejudice” procedural defences or on arguments based on public order and negotiations. This means that any written offers of settlement and policy as a means to frustrate the enforcement. Ever since, the concessions made in the course of the negotiations can be brought local courts’ judgments have resulted in various degrees of highs before the attention of the courts even if they are marked to be and lows for claimants seeking to rely on the NY Convention. The without prejudice. In addition, there is a limited number of marine position has improved over the recent years, as demonstrated by experts listed in local courts, but we expect the numbers to increase a number of judgments where the courts have refused challenges in the future. to enforcement which are not based on the NY Convention.

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Nevertheless, the enforcement process can be protracted because Another development worthy of note is introduction of Value- the defendant has the advantage of a two-stage appeal process in Added Tax (VAT) in the UAE on 1 January 2018. VAT will be now the court of appeal and the court of cassation. It remains to be seen applicable in the country at the rate of 5% and, whilst international whether introduction of the new UAE Arbitration Law (see section transportation is a service subject to 0% VAT, the shipping industry 6.1(ii) above) will improve the position with the enforcement of in the country is still in the process of adapting to the new regime, foreign arbitral awards in the UAE. updating its compliance procedures and establishing which supplies Please also refer to question 7.1 above regarding establishment of are subject to VAT, exempt and zero-rated. the JT, which had a similar impact on the enforcement of foreign Finally, the parties should be aware of the continuing impact of the arbitral awards via the DIFC Courts as it did on foreign judgments. UAE’s embargo against Qatar. The measures affect the ability of Qatari vessels to call in UAE ports, as well as the transportation of cargo between the UAE and Qatar. 8 Updates and Developments

Acknowledgment United Arab Emirates 8.1 Describe any other issues not considered above that may be worthy of note, together with any current The authors would like to thank Anna Fomina for her contribution trends or likely future developments that may be of to the preparation of this chapter. Anna is a practice development interest. lawyer. She joined Ince & Co in London in 2006. Since moving to Dubai in 2010, she has guided clients based in the UAE and abroad The UAE is in the process updating a number of statutes which are in insurance and shipping disputes in the Middle East before the expected to improve the landscape for marine industry and dispute UAE courts, including the DIFC Courts. She has also represented resolution in the country. Work is in progress on drafting a new clients in cases before English courts, and handles international Maritime Code, which is expected to bring UAE maritime law in arbitrations in London and the UAE, conducted both ad hoc and line with the recent conventions to which the UAE is a party, and under the rules of LMAA, LCIA, DIFC-LCIA, DIAC and ADCCAC. to help the UAE to fulfil its ambition of being the world-leading She also advises on sanctions and compliance issues. In her role, maritime hub. At this stage, it is difficult to predict when the draft Anna monitors legal developments in all the firm’s core sectors, and will be ready. develops and delivers tailored in-house training programmes for As already mentioned, the UAE has adopted a new Arbitration Law clients’ legal and commercial teams. (Tel: +971 4 307 6000 / Email: in May 2018, which has been in the making for a number of years. [email protected].)

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Mohamed El Hawawy Sheridan Steiger Ince & Co Middle East LLP Ince & Co Middle East LLP Maze Tower, Level 10 Maze Tower, Level 10 Sheikh Zayed Road Sheikh Zayed Road PO Box 123004 PO Box 123004 Dubai Dubai United Arab Emirates United Arab Emirates

Tel: +971 4 307 6000 Tel: +971 4 307 6000 Email: [email protected] Email: [email protected] URL: www.incelaw.com URL: www.incelaw.com

Mohamed is a bilingual Partner who specialises in litigation and dispute Sheridan specialises in dispute resolution, with a particular focus on all resolution. He has wide litigation experience before the courts in the aspects of shipping litigation, as well as international trade disputes. Middle East handling civil, commercial and criminal cases. Mohamed He advises a broad range of clients including shipowners, charterers, qualified as a lawyer in 2004 in Egypt, before moving to Dubai in 2011. cargo interests and P&I clubs in relation to disputes arising out of United Arab Emirates He has been involved in numerous matters across our areas of practice; charterparties, bills of lading, contracts of affreightment and other mainly shipping, insurance and aviation. contracts of carriage. He advises on both contentious and transactional shipping matters. On Sheridan has also been involved in a number of large disputes in the the contentious side, he advises clients on carriage of goods by sea, energy and offshore sector. His experience includes cases concerning ship arrests, bunkers, pollution, general average, salvage, personal drilling, surveying, UXO clearance and construction contracts. injuries, shipbuilding and repair claims. He has acted for clients in a range of high-value, complex and multi- Mohamed has been involved in a number of shipping disputes and jurisdictional disputes, and has experience of cases in both the English casualties in Egypt, UAE, Qatar, Bahrain and Kuwait. He advises and UAE courts and various international arbitration proceedings multinational and local companies on their shipping disputes in the (including LCIA, ICC, LMAA and DIAC references). region. His transactional shipping advice to clients covers charterparties, Sheridan has experience of working with lawyers in other jurisdictions bills of lading, ship finance, registration, mortgage and hire purchase. and in coordinating multi-jurisdictional proceedings.

Ince & Co has had a presence in the Middle East since 2006, when we opened our Dubai office to support the increasing number of clients in the region. The majority of our work is for organisations in four global sectors: transport; trade; energy & infrastructure; and insurance. During this time, the size of our legal team and the number of clients we advise have grown substantially. Our partners are supported by a team of dedicated lawyers who each advise clients over one or more of our core business strands. In addition to advising on English law matters, our lawyers are experienced in UAE laws, and we have several Arabic speakers. We handle both contentious and transactional matters on a local, regional and international scale. We advise clients throughout the Gulf States, Africa, the Middle East, India, Asia, Europe and the Americas in the firm’s core business. We configure teams that meet clients’ needs – offering focused legal services, a wide business perspective and advice that makes commercial sense.

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United Kingdom

Clyde & Co LLP Ed Mills-Webb

the Marine Insurance Act 1906 and common law. In practice, the 1 Marine Casualty York-Antwerp Rules will apply contractually in most cases. (iv) Wreck removal 1.1 In the event of a collision, grounding or other major The Merchant Shipping Act 1995 grants wide-ranging powers to casualty, what are the key provisions that will impact the relevant coastal authorities to intervene in relation to wrecks, upon the liability and response of interested parties? including the power to remove, destroy or take possession of wrecks In particular, the relevant law / conventions in force in relation to: as necessary. The owner of the vessel is subject to unlimited liability for the costs of wreck removal. (i) Collision The Wreck Removal Convention Act 2011 implements the Nairobi The UK is party to the 1910 Collision Convention and also International Convention on the Removal of Wrecks 2007 (WRC) applies the 1972 Collision Regulations to all foreign ships within which came into force in 2015. Vessels of 300gt and greater that are territorial waters and to all British ships around the world. Both are registered in a WRC State Party or call at a port or offshore facility implemented by the provisions of the Merchant Shipping Act 1995. in a WRC State Party must carry on board a certificate attesting that insurance or other financial security is in force in accordance with (ii) Pollution the Convention. The key provisions in force in the UK relating to pollution are as (v) Limitation of liability follows: The 1976 Convention on Limitation of Liability for Maritime Claims ■ The International Convention for the Prevention of Pollution (MARPOL) 1973 together with its 1978 and 1997 protocols. (LLMC) as amended by the 1996 Protocol is in force in the UK. The MARPOL is the leading international convention dealing convention sets limits of liability based upon the tonnage of the vessel with the prevention of pollution of the marine environment concerned. As well as applying to shipowners, charterers, operators, by ships. managers, and salvors, under English law the benefit of limitation is ■ The International Convention on Civil Liability for Oil also extended to slot charterers. Amendments to the 1996 protocol Pollution Damage (CLC) 1992 which establishes the principle (providing for significantly increased limits of liability) came into of strict liability for tanker owners for damage caused by force in June 2015. spills of persistent oil from laden tankers and creates a system (vi) The limitation fund of compulsory liability insurance. Article 11(2) of the LLMC provides that the “Fund may be constituted ■ The Fund Convention 1992 and the Supplementary Fund either by depositing a sum or producing a guarantee acceptable under Protocol 2003. This provides for payment of supplementary the legislation of the State Party where the Fund is constituted” and compensation where the funds available under CLC 1992 prove insufficient. Oil receivers in countries that are party to this was given force of law by s.185 of the Merchant Shipping Act the 1992 Fund Convention are liable for the payment of this 1995. supplementary compensation. Whilst the Civil Procedure Rules currently provide that “The ■ The International Convention on Civil Liability for Bunker Oil Claimant may constitute a Limitation Fund by making a payment Pollution Damage 2001. This convention is based on the CLC into court”, the Court of Appeal has considered whether the use of model (including compulsory insurance cover) and provides a P&I Club LOU was acceptable for this purpose under relevant compensation to parties who suffer damage caused by spills of United Kingdom legislation and held that a suitable guarantee from a bunker oil when carried as fuel in ships’ bunker tanks. creditworthy provider is effective security and sufficient to constitute (iii) Salvage / general average a Limitation Fund. The provisions of the International Convention on Salvage 1989 have been given the force of law in England by the Merchant 1.2 What are the authorities’ powers of investigation / Shipping Act 1995, though parties are permitted to expressly or casualty response in the event of a collision, grounding implicitly exclude the convention. Lloyd’s Open Form, probably or other major casualty? the most widely used international salvage agreement, is subject to English law and provides for arbitration administered by Lloyd’s The Secretary of State’s Representative for Maritime Salvage and Salvage Arbitration Branch in London. Intervention (SOSREP) has wide powers of intervention in relation At present there is no international convention relating to General to maritime incidents with objectives that include: Average and under English Law it is subject to certain provisions in

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■ acting at the earliest point during a shipping or offshore In addition, it should be noted that under the Hague-Visby Rules, incident to assess the risk to safety, to prompt the end of any the defences provided in the Convention “shall apply in any action such incident and to ensure that increasing risk is evaluated against the Carrier in respect of loss or damage to goods covered and appropriate measures taken to prevent or respond to by a contract of carriage, whether the action be founded in contract escalation; or tort”: non-contractual claims cannot therefore be used as an ■ monitoring all response measures to significant incidents alternative to contract in order to circumvent the Hague-Visby involving shipping and the offshore industry; and Rules, where they apply. ■ if necessary, exercising ultimate control by implementing the powers of intervention, acting in the overriding interests of the UK and its environment. 2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration The Marine Accident Investigation Branch (MAIB) carries out of cargo? investigations aimed at determining the causes and circumstances United Kingdom of marine accidents with a view to reducing the likelihood of The issue of misdeclaration of cargo, whether as to weight or such accidents recurring in the future. Accident investigations are contents, is a problem that has received increased attention in recent conducted solely in the interest of future safety and the MAIB does years, particularly in relation to containerised cargo. A number of not apportion blame, establish liability, enforce laws or carry out high-profile incidents have illustrated the dangers of misdeclared prosecutions. dangerous cargo being carried below deck and have brought the The Maritime & Coastguard Agency (MCA) conducts prosecutions potential liability of the shipper in such cases into sharp focus. and vessel detentions relating to breaches of maritime legislation. In England the shipper is under a common law duty not to ship The MCA inspects foreign and UK flag commercial and fishing “dangerous goods” without the permission of the carrier. Goods vessels to ensure compliance with international maritime conventions will be deemed dangerous in this context if they are likely to cause or domestic Merchant Shipping legislation. physical loss or harm to the ship or might lead to the detention of the ship. 2 Cargo Claims Under the Hague-Visby Rules the shipper has clearly established obligations to the carrier regarding declaration of cargo. Under Article III(5) the shipper is “deemed to have guaranteed to the 2.1 What are the international conventions and national carrier the accuracy at the time of shipment of the marks, number, laws relevant to marine cargo claims? quantity and weight, as furnished by him, and the shipper shall indemnify the carrier against all loss, damages and expenses arising The Hague-Visby Rules are incorporated into English law by the or resulting from inaccuracies in such particulars”. Carriage of Goods by Sea Act 1971. Article IV(6) of the Hague-Visby Rules provides further extensive The Carriage of Goods by Sea Act 1992 addresses the rights and rights to the carrier in relation to “goods of an inflammable, liabilities arising under bills of lading, including title to sue. explosive or dangerous nature” carried without the consent of the carrier. The carrier may, at any time before discharge, land, destroy 2.2 What are the key principles applicable to cargo claims or render innocuous the cargo without providing compensation to brought against the carrier? the shipper. Furthermore the shipper is held liable for all damages and expenses directly or indirectly arising out of or resulting from The Hague-Visby Rules as enacted by the Carriage of Goods by such shipment. Sea Act 1971 will apply in circumstances where the bill of lading Recently the International Maritime Organization (IMO) has is issued in a contracting State, or where the port of shipment is in amended the Safety of Life at Sea (SOLAS) Convention to the contracting State. When claims arising under the bill of lading require that a packed container’s gross weight be verified before are determined in England according to English law, then the English the container can be loaded on board a ship. The amendment to Courts will apply the Hague-Visby Rules, notwithstanding that the SOLAS Chapter VI requiring such verification came into force on terms of the bill of lading may provide for the application of the 1 July 2016. The MCA has published a Marine Guidance Note Hague Rules, since under English law the Hague-Visby Rules apply (MGN 534), clarifying that the UK is utilising existing auditable in specified circumstances as a matter of law. accreditation systems (such as Authorised Economic Operator, Issues relating to title to sue in contract are largely governed by the ISO 9000 and Enterprise Resource Planning systems) to manage Carriage of Goods by Sea Act 1992. Prior to this Act the general rule certification of weight assessment under the new scheme, as well as was that in order to claim in contract the claimant had to be a party to existing weights and measures regulations. the contract of carriage and the legal owner of the cargo. COGSA 92 improved the position for claimants and applies to all shipments under 3 Passenger Claims bills of lading so that a party can sue in its own name provided it is the ‘lawful holder’ of the bill as defined in the Act, regardless of whether or not it is the cargo owner. 3.1 What are the key provisions applicable to the In some cases, the cargo claimant may find that he has no claim resolution of maritime passenger claims? in contract against the shipowner (or other person) who was in possession of the goods at the time of the loss or damage. This The Athens Convention 1974 was incorporated into English law by may occur because the buyer of the goods has, for some reason, not section 183 of the Merchant Shipping Act 1995 and subsequently acquired the benefit of the bill of lading contract under COGSA 92 or the 2002 Protocol to the Athens Convention entered into force in perhaps because charterers’ bills have been issued. In such cases it England on 23 April 2014. The convention provides that a carrier may still be possible to establish a claim under the principles of tort or under an international contract of carriage is liable for damages bailment for damage to the cargo, but such claims can raise complex suffered as a result of the death or personal injury of a passenger, issues regarding the ownership of the cargo at the time of damage. if the incident which caused the damage occurred in the course of

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the carriage and was due to the fault of neglect of the carrier or his servants or agents. Fault on the part of the carrier is presumed, 4.3 Where security is sought from a party other than the unless proved to the contrary, in cases involving shipwreck, vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what collision, stranding, explosion or fire or defect in the ship. options are available? The 2002 Protocol increased the limit for carrier liability contained in the Athens Convention to 250,000 SDRs for each passenger’s Under common law a shipowner may be able to rely upon a lien on injury or death. The 2002 Protocol also introduces limits of 2,500 cargo in respect of freight due. Such a lien is usually exercised by SDRs per passenger per carriage for the loss of, or damage to, cabin refusing to discharge or release the cargo until payment is made and luggage together with requirements for compulsory insurance of is therefore dependant on the shipowner having retained possession 250,000 SDRs per passenger. of the cargo. This is commonly referred to as a ‘possessory’ lien. Other liens can have their basis in contract, usually where a lien

4 Arrest and Security clause has been included in a charterparty that has been validly United Kingdom incorporated into the contract of carriage. Such clauses can entitle the shipowner to exercise liens on sub-freight or sub-hire. However, 4.1 What are the options available to a party seeking to such clauses tend to be subject to strict interpretation by the courts so obtain security for a maritime claim against a vessel that, for example, any notice provisions must be strictly adhered to owner and the applicable procedure? and any reference to ‘sub-freight’ will not necessarily be sufficient, without more, to also encompass sub-hire. The UK is party to the 1952 Arrest Convention and in general terms it It should be noted that in some limited cases English law recognises is applicable in the UK. English law provides that arrest proceedings categories of lien, known as ‘maritime liens’, which can be enforced may be commenced following the issuing of an in rem claim (a claim against a vessel by means of an arrest even where there has been a against a ship). The right to bring proceedings in rem is governed by change of ownership. Claims of this type include those for damage the Senior Courts Act 1981. Section 20 of this Act lists a number of done by a ship, salvage and the wages of Master and crew. claims that may be brought in rem, and a ship arrested in respect of them. The most notable include claims for loss of damage to goods 4.4 In relation to maritime claims, what form of security is carried on a ship, claims for damage done by or to a ship, claims acceptable; for example, bank guarantee, P&I letter of relating to use or hire of a ship, claims for loss of life or personal undertaking. injury and claims for salvage or arising from a collision. The procedure for ship arrest in England is relatively straightforward The practice of providing cash deposits as security for maritime and can be undertaken at short notice. It is not necessary to provide claims in general has largely been superseded by P&I Club LOUs. counter security for the arrest though an undertaking to meet the Under the Civil Procedure Rules (CPR) Part 61, where an in rem expenses of the arrest incurred by the Admiralty Marshall must be claim form has been issued and security sought, any person who has provided. It is possible to arrest sister ships in England where those filed an acknowledgment of service may apply for an order specifying vessels are owned, at the time the action is brought, by the same the amount and form of security to be provided. The courts have person who owned or demise chartered the vessel in connection with approved the use of P&I Club LOUs in this context and also, more which (and at the time when) the cause of action arose. Associated recently, in the context of establishing a limitation fund under the ship arrests are not allowed in England, however. Damages for 1976 Convention on Limitation of Liability for Maritime Claims. wrongful arrest will only be awarded where it is proved by the owners of the arrested ship that the action was brought either with malice or gross negligence. 5 Evidence In cases where arrest is not available, it may be possible to seek a freezing injunction over assets in order to secure a claim. A freezing 5.1 What steps can be taken (and when) to preserve or injunction is an interim remedy which prevents a defendant from obtain access to evidence in relation to maritime disposing of, or dealing freely with, assets (located in the jurisdiction claims including any available procedures for the of the High Court or, exceptionally, elsewhere) to avoid paying any preservation of physical evidence, examination of future/current judgment. witnesses or pre-action disclosure?

Under the CPR it is possible to seek an order for pre-action 4.2 Is it possible for a bunker supplier (whether physical disclosure, subject to certain conditions, where it is considered by and/or contractual) to arrest a vessel for a claim the court to be desirable in order to: dispose fairly of the anticipated relating to bunkers supplied by them to that vessel? proceedings; assist the dispute to be resolved without proceedings; or to save costs. Under English law, an arrest may not be made in relation to the It is also possible to seek an order for specific disclosure seeking supply of bunkers without a contractual link between the vessel’s to direct a party to carry out a thorough search for any documents owner and supplier. In relation to the problems that arose in the which it is reasonable to suppose may adversely affect his own case OW Bunker case, the contractual supplier (usually OW Bunker) had or support the case of the party applying for disclosure or which may often sub-contracted the physical supply of bunkers to be carried lead to a train of enquiry which has either of these consequences and out by a third party. In such a case, the shipowner will usually to disclose any documents located as a result of that search. have no contractual link to the physical supplier and therefore no in personam liability on which an arrest could be based. On that basis In relation to arbitration proceedings, S 44 of the Arbitration Act 1996 provides the court (subject to contrary agreement by the there would be no right of arrest on behalf of a third-party physical parties) with the same powers of making orders as it has in relation supplier in England unless there were some additional evidence, to court proceedings for the following: such as that showing a previous course of dealing, sufficient to establish an intended contractual relationship. ■ the preservation of evidence;

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■ making orders relating to property which is the subject of claims, limitation claims and, perhaps most importantly, the proceedings or as to which any question arises in the proceedings for the arrest of a vessel. Cases that fall within proceedings: the specialist jurisdiction of the Commercial Court include ■ for the inspection, photographing, preservation, custody those involving: or detention of the property; or ■ the export or import of goods; ■ ordering that samples be taken from, or any observation ■ the carriage of goods by land, sea, air or pipeline; be made of or experiment conducted upon, the property; ■ insurance and re-insurance; and ■ the construction of ships; and ■ for that purpose authorising any person to enter any premises ■ arbitration. in the possession or control of a party to the arbitration. Although cases heard in the Admiralty and Commercial Court are subject to the general procedural provisions set 5.2 What are the general disclosure obligations in court out in the CPR, these rules are explained and supplemented United Kingdom proceedings? by the Admiralty and Commercial Court Guide to reflect procedures that are specifically tailored to the types of Under English law, disclosure is an important exercise which can often dispute dealt with in those courts. Judges play an active role “make or break” a case, as the strength of each side’s case can only in case management. After commencement of proceedings be fully tested once the complete factual background to the dispute and service of statements of case the court will hold a Case Management Conference (CMC) to discuss the issues in has been revealed. Judges usually find that the contemporaneous the case and its requirements, including disclosure, expert documentation is the most reliable guide to what actually happened. evidence and the potential for mediation. If the matter Disclosure also prevents any last minute surprises just before or proceeds towards trial then further supervision by the judge in during the trial. In certain circumstances, the court may also impose the form of additional CMCs and a pre-trial review will take penalties, which can range from costs consequences to contempt of place. It will typically take between 12 and 24 months for a court, if a party fails in its disclosure obligations. matter to proceed to trial although this will vary according to Each party will be required to disclose to the other side documents the complexity and requirements of the case. It is important to note that settlement is encouraged at every stage of the upon which it will rely at trial, documents which adversely affect proceedings and in approximately 95% of cases a settlement its case or support the other side’s case and any specific documents is reached by the parties without need for a trial. which are required to be disclosed by the court. Accordingly, ii) Arbitration is a common method of dispute resolution in documents will have to be disclosed even if they are harmful to either shipping cases and many contracts provide for arbitration party’s case or are confidential, if they are relevant to the issues. to take place in London subject to English law. Specialist A party must disclose all documents (whether originals or copies, or arbitrators in London provide a wealth of experience in copies of copies): resolving shipping disputes and many are members of the a) which are or have been in its control, including its physical London Maritime Arbitrators Association (LMAA), which possession; issues its own rules that are tailored to deal with small claims, fast and low-cost arbitration, intermediate claims and b) over which it has a right to possession; and larger cases. The LMAA has recently published new Terms c) which it has a right to inspect or take copies of. and Procedures that will apply to arbitration proceedings Parties will also be required to list documents which fall within commenced on or after 1 May 2017. categories (a)–(c) even if they had but no longer have them. So if iii) Mediation and alternative dispute resolution are actively documents have been lost or disposed of prior to litigation, it will be encouraged by the Admiralty and Commercial Court and necessary to explain the circumstances in which they were lost or there is a large pool of qualified mediators with experience of disposed of. shipping disputes that parties may utilise in England. A “document” is anything which records information of any description. It includes, for example, not only letters, faxes, file 6.2 Highlight any notable pros and cons related to your notes, memos and reports, but also hand-written notes, diary entries, jurisdiction that any potential party should bear in mind. log books, maintenance records and electronic documents, including e-mail and other electronic communications. There is a great history and tradition of shipping dispute resolution in England. This has resulted in the development of a body of law and expertise that provides unequalled guidance to parties seeking 6 Procedure to assess the strengths and weaknesses of their case and to have their disputes resolved in a fair and transparent way. Improvements in court procedure, including those relating to costs, are designed to 6.1 Describe the typical procedure and timescale ensure that all cases are dealt with efficiently and at a cost that is applicable to maritime claims conducted through: i) national courts (including any specialised maritime or proportionate to the amount in dispute. commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution. 7 Foreign Judgments and Awards

i) Claims where the amount in dispute is more than £100,000 7.1 Summarise the key provisions and applicable (or £50,000 if the claim is for personal injuries) are heard procedures affecting the recognition and enforcement in the High Court and in the case of maritime claims this of foreign judgments. generally means the Commercial Court or the Admiralty Court. In these specialist courts cases are heard by judges that have many years of experience in dealing with maritime and There are a number of reciprocal regimes that allow the enforcement commercial law. Certain proceedings must be commenced in of foreign judgments in English courts. The most important of these the Admiralty Court and these include salvage and collision are those governing European and Commonwealth countries.

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European judgments are currently enforced under Regulation (EU) No 1215/2012 (the Recast Brussels Regulation). The 8 Updates and Developments Recast Brussels Regulation has applied from 10 January 2015 to proceedings instituted on or after that date. The 2001 Brussels 8.1 Describe any other issues not considered above that Regulation (44/2001) will continue to determine the enforcement of may be worthy of note, together with any current judgments across EU Member States given in proceedings instituted trends or likely future developments that may be of before 10 January 2015. interest. The EU Regulations and the Lugano Convention as implemented into English law govern the recognition of judgments from Whereas last year saw a number of significant decisions of the European Community Member States as well as Norway, Iceland Supreme Court, including in The ‘Ocean Victory’ (safe ports) and and Switzerland. The procedure for enforcement of judgments from The ‘New Flamenco’ (assessment of damages following repudiation these countries is relatively straightforward unless (most commonly) of a time charterparty), 2018 also seems likely to be a significant they are shown to be contrary to public policy or irreconcilable with a year for maritime rulings in the UK. We have already seen key United Kingdom judgment in dispute between the same parties in England and Wales. decisions of the Court of Appeal handed down in The ‘Aqasia’ and The ‘Maersk Tangier’ regarding limitation issues relating to cargo Under the Administration of Justice Act 1920 and the Foreign claims (see the opening chapter to this Guide for full details) and Judgments (Reciprocal Enforcement) Act 1933, judgments from can look forward to further significant cases, including likely rulings Commonwealth and other reciprocating countries can be enforced from the Supreme Court in Volcafe Ltd v CSAV (inherent vice and by a process of registration of the judgment. the burden of proof under the Hague and Hague-Visby Rules) and The Hague Convention on Choice of Court Agreements (Hague of the Court of Appeal in The ‘Pacific Voyager’ (the nature of a Convention) came into force in all EU Member States (except shipowner’s obligation to proceed to the loadport with utmost Denmark where entry into force is expected in September 2018) and despatch). For further information about these and other cases or Mexico on 1 October 2015. Subsequently it was ratified by Singapore issues arising in the English courts, please contact the author. on 2 June 2016 and entered into force as between Singapore, the EU (except Denmark) and Mexico on 1 October 2016. The Hague Convention will generally apply to the enforcement of judgments from Mexico and Singapore in the UK (or in any other Member Ed Mills-Webb State) where Mexico or Singapore (as appropriate) was designated Clyde & Co LLP St Botolph Building in an exclusive choice of court agreement. 138 Houndsditch Enforcement of judgments from countries outside the scope of these London, EC3A 7AR United Kingdom arrangements may still be possible but will be subject to common law rules and is usually a more complex procedure. Tel: +44 20 7876 5000 Fax: +44 20 7876 5111 Email: [email protected] 7.2 Summarise the key provisions and applicable URL: www.clydeco.com procedures affecting the recognition and enforcement Ed advises clients on all issues relating to the international sale and of arbitration awards. movement of goods, finance, insurance and regulatory issues, with particular knowledge of commodity, charterparty and bill of lading The United Kingdom is party to the 1958 New York Convention on disputes. the Recognition and Enforcement of Arbitration Awards. As such, He has significant experience, both in the UK and abroad, of High enforcement of awards from other contracting states is relatively Court proceedings and arbitration work within the London Maritime straightforward. Arbitrators Association, London Court of International Arbitration and International Chamber of Commerce. Enforcement of awards from non-contracting states may still be Ed also acts for a number of clients in the offshore sector and has possible, though less straightforward, under the Arbitration Act advised on several significant energy projects in West Africa, including 1996 and under common law. production sharing and farmout agreements. He also deals with vessel construction issues, including specialist offshore vessels and superyachts.

Now the largest shipping practice in the world, Clyde & Co has over 300 specialist marine lawyers based in trading hubs around the globe, on call and serving clients’ requirements in all time-zones at any time of day. We act for the heart of the maritime industry – shipbuilders, owners, charterers, salvors, financiers, port authorities and government, P&I Clubs and insurers – and clients across the broader trade commodities and energy sector. No other law firm can match Clyde & Co’s combined size of practice, in-depth industry knowledge, specialist shipping expertise and global reach – adding up to an unrivalled collective offering in the maritime industry. Wet or dry, contentious or non-contentious – our cradle-to-grave industry approach means that we stand alongside clients through the full corporate lifecycle; from establishment and commercial operations through to dispute resolution and corporate exit options.

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USA Peter A. McLauchlan

Foley Gardere, Foley & Lardner LLP Anacarolina Estaba

marine casualties, where there is a loss of six or more lives, a loss 1 Marine Casualty of a vessel of at least 100 gross tons, property damage amounting to at least $500,000, or there is a serious threat of damage caused 1.1 In the event of a collision, grounding or other major by hazardous materials, the National Transportation Safety Board casualty, what are the key provisions that will impact (NTSB) conducts a formal investigation of the casualty. The upon the liability and response of interested parties? NTSB then provides a comprehensive report and can make In particular, the relevant law / conventions in force in recommendations to the Coast Guard and other governmental relation to: agencies regarding changes to regulations. (ii) Pollution (i) Collision Several statutes and regulations have been enacted since 1970 to The conventions pertinent to collisions that the U.S. is a signatory address the pollution caused by vessels. The most recent of these to are the International Convention for the Safety of Life at Sea, is the Oil Pollution Act of 1990 (OPA 90), which was enacted in also known as SOLAS, and the International Regulations for response to the Exxon Valdez spill in Alaska in 1989. OPA 90 sets Preventing Collisions at Sea, also known as COLREGS. In forth liability of an owner or operator of a vessel, on- and off-shore addition, the navigation of vessels is governed by many regulations facilities, and pipeline owners when oil is discharged from the and statutes addressing a wide range of topics, including the Inland vessel or facility. Liability is strict and can result in removal costs Navigation Rules which govern all inland waters including the and six different categories of damages. Criminal penalties can also Great Lakes, aids to navigation, anchorages, ports, bridges, cargo, be imposed. Only three defences exist under OPA 90: (1) act of and vessel requirements. Liability for a collision is established by God; (2) act of war; or (3) act or omission of a third party. For the proof of fault that caused the collision in whole or in part. The purposes of OPA 90, a third party does not include an employee, an standards of care that mariners are held to are: (1) general concepts agent, or an independent contractor of the vessel owner or operator. of prudent seamanship and reasonable care; (2) statutes and OPA 90 contains provisions, which limit liability to certain amounts regulations germane to navigation and management of vessels; and depending on the size of the vessel or type of facility. This limitation, (3) governing customs and usages. The most common cause of however, in some instances, only applies to damages and does not collisions is the failure to adhere to a statute or regulation, and fault apply to removal costs. These limits on liability do not apply to is most often established through proof of violation of one or more a case of gross negligence, wilful misconduct or a violation of an of the COLREGS. The Pennsylvania Rule, which is a presumption applicable regulation. Limitation is also not available if the owner of causation, is closely tied to fault. This rule provides that when or operator does not report the spill. Finally, limitation under OPA a vessel involved in a collision, allision or grounding is shown to 90 excludes any liability exposure under state law. have violated a statute or regulation aimed at preventing the harm that occurred, that vessel is presumed to have caused the harm, at Other statutes have been enacted, which also address pollution and least in part, unless it can prove that the violation could not have pollution control. Many of these statutes work in conjunction with been the cause of the accident. While this bar is high, it is not OPA 90. The Federal Water Pollution Control Act (FWPCA), also insurmountable. known as the Clean Water Act, was enacted prior to OPA 90 and was the primary legislation addressing spills of both oil and other U.S. collision law also includes several other presumptions of fault. hazardous material. The Comprehensive Environmental Response, The Oregon Rule provides that when a vessel under its own power Compensation, and Liability Act (CERCLA), which also predates collides with an anchored vessel or navigational structure, the OPA 90, addresses the discharge of substances other than oil. Both burden of proving no fault is on the moving vessel. Similarly, the FWPCA and CERCLA establish liability parameters and set forth Louisiana Rule provides that when an unmoored and drifting vessel damage schedules. Both of these statutes are used as supplemental strikes a moored or anchored vessel or a structure, it is presumed to regulations to OPA 90, based on their similarities to the statute. be at fault. Lastly, the presumption of negligence embodied by the In the event of oil spills, the Bureau of Safety and Environmental doctrine of res ipsa loquitor also applies to collision cases. Enforcement (BSEE) is involved in the overseeing of oil spill The U.S. Coast Guard has statutory authority to investigate marine response operations. casualties. Those casualties involving death, personal injury, or In addition, there are some federal agencies that regulate operations substantial damage to a vessel must be reported to the Coast Guard of offshore facilities, such as the Department of Energy (DOE), within five days. The Coast Guard also has the authority to bring The United States Coast Guard, The Maritime Administration, criminal charges as part of its investigations. In the case of major The Bureau of Ocean Energy Management (BOEM) and The

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Bureau of Safety and Environmental Enforcement (BSEE), The Act (the “Limitation Act”). The Limitation Act provides that, in Chemical Safety Board (CSB), The Occupational Safety and Health the event of a collision or other marine casualty, the ship owner Administration (OSHA) and The Environmental Protection Agency (whether American or foreign) may be able to limit the liability to (EPA). the post-casualty value of the vessel and its pending freight and have (iii) Salvage / general average the benefit of concursus – all claims being heard in one court. Salvage in the U.S. is governed by the General Maritime Law of (vi) The limitation fund the United States. Salvage can be either pure salvage or contract The Limitation Act allows a federal court to enjoin all pending suits salvage. Pure salvage occurs when the salvor is a volunteer, while and to compel all claimants to appear in the limitation action. The contract salvage occurs when parties enter into an agreement for ship owner must file a complaint for limitation within six months of USA salvage. The elements of a pure salvage claim are: (1) there must the casualty and must post security in the value of the ship and the be a marine peril; (2) salvage efforts must be voluntary; and (3) the pending freight. This creates the limitation fund. If there are claims salvage effort must be successful in whole or in part. The amount for personal injury, the ship owner must increase the limitation of a salvage award is at the discretion of the court, which is weighed fund by $420 per gross ton of the vessel. The limitation court will against the benefit enjoyed by the property owner, as well as the then determine whether the ship owner is entitled to exoneration or risk of the salvage effort. Courts will consider the following factors limitation of liability. If liable, the ship owner will be entitled to when setting a salvage award: (1) the time and labour expended limitation only if he can prove that he had no privity or knowledge by the salvor; (2) the promptitude, skill, and effort of the salvor; of the negligence or unseaworthiness that caused the loss. If the ship (3) the value of the property risked by the salvor and the danger owner is liable, but entitled to limitation, the limitation court will to which such property was exposed; (4) the value of the property then distribute the limitation fund to the claimants. The limitation saved; and (5) the degree of danger from which lives and property fund will be distributed on a pro rata basis if the claims exceed the are rescued. While the calculation of the award is never an exact fund, and some courts may take into consideration any priorities of science, the award cannot exceed the total value of the property any of the claims based upon the statute. that was salvaged. The U.S. is a signatory to the International Convention on Salvage of 1989, which has criteria very similar 1.2 What are the authorities’ powers of investigation / to those of the courts above. Contracts for salvage are maritime casualty response in the event of a collision, grounding, contracts and are generally upheld, unless the amount contracted for or other major casualty? is exorbitant, or if the salvor clearly took advantage of the property owner. Frequently, salvage operations in the U.S., as in the rest The U.S. Coast Guard has statutory authority to investigate marine of the world, are performed under Lloyd’s Open Form Salvage casualties. Those casualties involving death, personal injury, or agreements based upon the “No Cure, No Pay” rule. substantial damage to a vessel must be reported to the Coast Guard With regard to general average, the principles of general maritime within five days. The Coast Guard also has the authority to bring law still apply; however, general average is governed by the criminal charges as part of its investigations. In the case of major York-Antwerp Rules (the “Rules”). Rule A of the Rules provides marine casualties, where there is a loss of six or more lives, a loss that general average applies when an extraordinary sacrifice or of a vessel of at least 100 gross tons, property damage amounting expenditure is intentionally and reasonably made to preserve to at least $500,000, or there is a serious threat of damage caused property in a common maritime adventure from peril. If nothing by hazardous materials, the National Transportation Safety Board is saved, there is no interest liable to contribute to the sacrifice. conducts a formal investigation of the casualty. The NTSB then Owners of cargo are frequently surprised when a ship carrying their provides a comprehensive report and can make recommendations goods has a grounding or mechanical breakdown at sea and the ship to the Coast Guard and other governmental agencies regarding owner declares general average. This triggers the cargo owner’s changes to regulations. duty to post security toward its potential general average obligation, In addition, in the event of oil spills, the Bureau of Safety and as vessel, cargo and freight all contribute toward the general average Environmental Enforcement (BSEE) is involved in the overseeing expense. The main defence to a general average claim is that the of oil spill response operations. vessel owner failed to exercise due diligence to make the vessel seaworthy at the inception of the voyage. (iv) Wreck removal 2 Cargo Claims The owner, operator or demise charterer of a vessel which has sunk in navigable waters and which constitutes a hazard to navigation, is 2.1 What are the international conventions and national required to mark and remove it, is liable to the government for any laws relevant to marine cargo claims? costs incurred by the government in marking it and removing it, and may be liable to third parties whose property may be physically In 1936, the Carriage of Goods by Sea Act (COGSA) was enacted damaged as a result of its failure to promptly remove the wreck in the U.S. and incorporated the Hague Rules into domestic law. or its failure to properly mark it. Wreck removal is governed by The Hague-Visby amendments and the Hamburg Rules are always the Wreck Act. The Wreck Act imposes a non-delegable duty on a a topic of discussion at major U.S. maritime industry events. vessel owner to mark the wreck with day and night markings as soon However, they have not been incorporated into U.S. law. as possible. The duty to mark continues until the wreck is removed COGSA governs “all contracts for carriage of goods by sea or from or abandoned. If the wreck is in navigable waters, or if it creates a ports of the United States in foreign trade”. A contract of carriage hazard for navigation, the Wreck Act also requires that the wreck be is a prerequisite for the application of COGSA between the parties. removed immediately. Accordingly, COGSA only applies between U.S. and foreign ports. (v) Limitation of liability It does not apply to domestic carriage, unless it is incorporated into The U.S. is not a signatory to the Convention on Limitation of the bill of lading. COGSA does not apply to bills of lading issued Liability for Maritime Claims of 1976. Instead, limitation in the under a charter party or other private contracts of carriage unless it U.S. is governed by the Limitation of Ship Owner’s Liability is expressly incorporated as a contractual term.

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The Harter Act, enacted in 1893, governs the carriage of cargo destroy inherently dangerous goods without liability if the carrier between domestic ports where a bill of lading is issued as a contract discovers the dangerous nature of the goods during the voyage. The of carriage. The Harter Act imposes liability upon the carrier from carrier can also destroy or off-load dangerous goods that they are receipt of goods until delivery, but does not permit the carrier to aware of if the goods become actively dangerous. limit liability. COGSA can apply to purely domestic U.S. carriage An interesting set of cases dealing with misdeclaration of cargo where the bill of lading expressly states that COGSA shall govern has been occurring in the last couple of years involving car the contract, and in such instances, the Harter Act will apply to the smuggling rings. All of these cases have the same general fact periods before loading and after discharge. pattern. Smugglers will steal luxury automobiles, such as Ferraris or Aston Martins. The stolen vehicles are then loaded into shipping USA 2.2 What are the key principles applicable to cargo claims containers and subsequently sent off overseas to places such as brought against the carrier? Vietnam or West Africa. The carriers were unaware that they were transporting stolen cars because the declarations in the bills of Under COGSA, the shipper is the party who supplies the goods to lading stated that the containers had “used automotive parts”. Due be transported, and the transporter is the carrier of the goods. The to the volume of shipping containers in transit (an average modern carrier is usually the ship owner or a person, such as a charterer, carrier holds 10,000 shipping containers) it is impossible to check who has the right to operate the ship. It should be noted that while every one. Even the port authorities may be fooled by smugglers. a contract of carriage is between the shipper and carrier, a consignee For instance, in one case the vehicles were detected because a GPS or transferee (or subrogated insurer) of a bill of lading can also be of a rental company showed that the vehicles at a harbour were a proper party to sue the carrier for loss or damage to the goods in not moving. This results in high risk for ships, because they can transit. The same rule applies for some other breach of contract of possibly be detained by law enforcement agencies. It remains an carriage actions. open legal question of whether a carrier can establish any claims against a shipper for unwittingly transporting stolen cars in these COGSA imposes a duty on the carrier to “properly and carefully load, circumstances under COGSA. handle, stow, carry, keep, care for, and discharge the goods carried”. A carrier also has a duty to issue a bill of lading that contains a description of the goods. In order to establish the carrier’s liability 3 Passenger Claims for loss or damage to cargo, the shipper must establish a prima facie case that the goods were damaged in the carrier’s custody. A shipper can do this by proving that (1) the cargo was delivered in 3.1 What are the key provisions applicable to the good condition, and (2) it was discharged in a damaged condition. resolution of maritime passenger claims? The shipper is not required to prove that the carrier was at fault or explain how the damage was inflicted. Both COGSA and the Harter Passenger claims generally involve personal injury or death, but may Act provide that the bill of lading constitutes “prima facie evidence” also involve claims for lost or damaged luggage. Internationally, of the receipt by the carrier of the goods “therein described”. A these claims are regulated by the Athens Convention. However, bill of lading that fulfils these requirements and has no notations of because the U.S. is not party to the Athens Convention, passenger damage is called a “clean” bill of lading and may be relied upon to claims are governed by the general maritime law of the U.S. show that the goods were given to the shipper in good condition. A ship owner owes passengers a duty to exercise reasonable care The carrier’s liability for lost or damaged cargo is limited to $500 under the circumstances. In order for a passenger to succeed on per package. If the goods were not shipped as a “package”, then a negligence action, the passenger must prove that the ship owner liability is limited to $500 per customary freight unit. The carrier breached a duty owed to the passenger, the actions of the ship owner cannot invoke a COGSA limitation unless it gave the shipper a or one of his/her employees was the proximate cause of the injury, fair opportunity to declare the actual value of the goods or at least and that the passenger experienced actual harm and damages. declare a value in excess of $500 per package. While ship owners may limit their liability concerning damage to a Arbitration clauses in a bill of lading are valid. Forum selection passenger’s luggage and other various related claims not involving clauses and choice of law clauses have been consistently upheld as physical injury, ship owners may not limit their liability concerning well. However, enforcement of a clause mandating a foreign forum a passenger’s claim of negligence. Under 46 U.S.C. § 30509, may be denied if there is no opportunity for a U.S. court to review the owner or agent of a vessel transporting passengers to or from a foreign decision. a U.S. port, may not include in a contract, a clause limiting “the liability of the owner or agent for personal injury or death caused by the negligence or fault of the owner or the owner’s employees or 2.3 In what circumstances may the carrier establish agents” or “the right of a claimant for personal injury or death to a claims against the shipper relating to misdeclaration of cargo? trial by a court of competent jurisdiction”. Pursuant to 46 U.S.C. § 30106, maritime claims in the U.S. are Under COGSA, the carrier can establish a claim for damages caused typically required to be brought within three years of when the cause by “goods of an inflammable, explosive, or dangerous nature” where of action arose. However, pursuant to 46 U.S.C. § 30508(b), the the carrier did not have actual or constructive knowledge of the owner can limit the time to bring a claim for personal injury or death goods. This includes goods that are not only named as hazardous to one year. or dangerous cargos under applicable international instruments Finally, passenger claims are maritime contracts, which sometimes and national regulatory regimes, but also goods whose danger is include forum selection clauses and/or mandatory arbitration clauses. discovered during or after shipment. The shipper is strictly liable These are generally enforceable as long as they are fundamentally for these damages, unless the carrier had actual or constructive fair, communicated to the passenger, and not utilised as a means of knowledge that the cargo was dangerous. A carrier can off-load or discouraging passengers from pursuing legitimate claims.

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liens for necessaries. Therefore, if a bunker supplier contract 4 Arrest and Security contains a choice of law clause under English law, but calls for the application of substantive and procedural law of the United States, 4.1 What are the options available to a party seeking to then in the event of a breach of contract by the buyer the bunker obtain security for a maritime claim against a vessel supplier may exercise any action to secure its rights under the owner and the applicable procedure? contract in any court in the United States. Liverpool & London S.S. Prot & Indem. Ass’n. Ltd. v. Queen of Leman MV, 296 F.3d 350 (5th U.S. law differs from that of other countries because it makes no Cir. 2002). The lack of the substantive and procedural language distinction between the process of obtaining security for a claim may present enforceability issues under United States law to the against a vessel owner and the process of obtaining security for a bunker supplier. USA claim against a non-vessel owner. Instead, U.S. law provides for It is also important to note a development in this area involving procedures to either obtain security from an in personam defendant cases dealing with the 2014 collapse of O.W. Bunker & Trading A/S (individual, corporation, etc.) or, in instances where a lien has (O.W. Bunker), a marine fuel trading company, and its affiliates. In arisen, directly against the property through an in rem proceeding. light of the O.W. Bunker bankruptcy, vessel owners did not know whom to pay. If they paid O.W. Bunker, which had arranged to 4.2 Is it possible for a bunker supplier (whether physical supply the fuel, suppliers might arrest their vessels by asserting and/or contractual) to arrest a vessel for a claim maritime liens for the value of the goods. One judge in the Southern relating to bunkers supplied by them to that vessel? District of New York opined that the vessel owners could have faced triple liability. In most foreign jurisdictions, a contractual bunker supplier would Predictably, vessel owners instituted 30 interpleader actions in the not be able to arrest a vessel for a claim relating to bunkers that they U.S., where they put the price of the bunkers in the registry of the supplied to that vessel due to a lack of privity between the supplier courts and asked the courts to sort out the mess by deciding who was and the vessel owner. The U.S., however, is an exception to this entitled to payment. Two dozen of the interpleader actions ended up general rule, due to the fact that bunkers fall under the definition in Judge Caproni’s court, with three test cases underlying her Jan. 9 of “necessaries” found in the U.S. Maritime Lien Act. 46 U.S.C. § opinion in Clearlake Shipping PTE Ltd. v. O.W. Bunker (Switzerland) 31341. Necessaries generally mean any item which is reasonably SA, 2017 U.S. Dist. LEXIS 2888, 2017 WL 78514 (S.D.N.Y. Mar. needed for the operation of the vessel, such as bunkers. This act 3, 2017). The facts in the test cases were similar. Vessel owners provides that a person providing necessaries to a vessel on the order contracted for O.W. Bunker to supply fuel. In turn, O.W. Bunker of the owner, or a person authorised by the owner, has a maritime selected the physical suppliers who ultimately delivered fuel to the lien on the vessel and may bring a civil action in rem to enforce the vessels. When O.W. Bunker’s financial problems became public lien. 46 U.S.C. § 31342. The act further provides that certain parties knowledge, vessel owners refused to pay anyone. In the test cases, are presumed to have the authority of the vessel owner to procure the suppliers contended they had maritime liens entitling them to necessaries. These parties include: the owner; the master; a person payment. Pointing out conflicting decisions by several courts around entrusted with the management of the vessel at the port of supply; the U.S. in the course of her opinion, Judge Caproni decided that the or an officer or agent appointed by the owner or the charterer. 46 suppliers had no maritime liens, even though it was undisputed that U.S.C. § 31341. A lien for providing necessary services or supplies they had supplied “necessaries” to the vessels. to a vessel attaches only to the particular vessel which received the The outcome is governed by the federal Commercial Instruments benefit of the service. & Maritime Lien Act, or CIMLA, which codifies common law The U.S. Maritime Lien Act is an exception to the general rule maritime liens for “necessaries”, or supplies and services provided to because it circumvents the issue of contractual privity, by establishing vessels. As Judge Caproni explained, a valid lien for “necessaries” liability on the maritime lien based on a principal/agent relationship. has three requisites: (1) the goods must be “necessaries”; (2) the This relationship creates a rebuttable presumption that any of the goods must be “provided” to the vessels; and (3) the goods must above-listed parties had the authority to procure necessaries for have been delivered “upon the order of” the owner or someone the vessel. Based on this presumed authority, the vessel owner authorised by the owner. With the first two issues uncontested, the becomes a party to the contract and is therefore liable under that only question was whether fuel was supplied “on the order of” O.W. contract. This presumption can be rebutted if there is proof that the Bunker or the vessel owners. Judge Caproni said the result was bunker supplier knew that the charterer had no authority to bind the based on “the Second Circuit’s commitment to a strict approach to vessel and the vessel owner expressly precluded the charterer from maritime liens” and the “long-standing Federal policy disfavoring creating any liens against the vessel. The language of the statute is maritime liens”. Clearlake Shipping, 2017 U.S. Dist. LEXIS 2888, clear in saying that unless this presumption is rebutted, the maritime 2017 WL 78514 at *21, *43. To avoid the assertion of a plethora of lien is successfully established, which gives the bunker supplier, unrecorded maritime liens, she said there should be no “uncertainty whether physical or contractual, the right to bring a civil action in in an area of the law that demands definite answers”. Id. at 28. For rem to arrest the vessel. It is important to note that Maritime liens example, there should be no liens on vessels resulting from disputes for services or supplies provided by a foreign plaintiff to a foreign between contractors and subcontractors. vessel in a foreign port do not give rise to a U.S. maritime lien. Mainly, her opinion turned on facts showing that the vessel owners Under the U.S. Maritime Lien Act, a bunker supplier may have a contracted with O.W. Bunker, not with the suppliers. In addition, maritime lien. However, an issue may arise if the bunker supplier the suppliers were giving credit to O.W. Bunker and were basing contract contains a choice of law clause that provides for the their decisions on O.W. Bunker’s finances, not the credit of the ship application of English law, regardless of the contract providing owners. Even the bunker signed by the vessels’ masters did the bunker supplier with the right to assert a lien under a lien not give rise to a contract between the suppliers and the ship owners. provision clause in any jurisdiction where the vessel may be found. Subcontractors, such as the suppliers, “lack a direct connection to Under English law, a vessel may be arrested under very restricted the vessel” and thus are not entitled to maritime liens, Judge Caproni circumstances such as for claims for salvage, crew wages and held. Clearlake Shipping, 2017 U.S. Dist. LEXIS 2888, 2017 WL damage by another ship. English law does not recognise maritime 78514 at *22. In that regard, Judge Caproni declined to follow more

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lenient rules from the Ninth and Eleventh Circuits that might have given to an unsecured creditor in a bankruptcy. A low priority in justified a lien based on the attenuated relationship between the bankruptcy almost always causes hardship, but that is not something suppliers and the ship owners. Invoking the more stringent Second that this court, even sitting in equity, can alleviate.” Judge Caproni Circuit standard, Judge Caproni said that the bunkers were not did not decide whether ING Bank, as the security agent for a supplied “on the order of” the vessel owners because the suppliers $700 million syndicated credit facility, received an assignment of were not “directly engaged” by the owners. Clearlake Shipping, O.W. Bunker’s liens. Clearlake Shipping Pte. Ltd. v. O.W. Bunker 2017 U.S. Dist. LEXIS 2888, 2017 WL 78514 at *20,*29. Moreover, (Switzerland) SA, 239 F.Supp.3d 674 (2017). she said the suppliers were not entitled to liens because the owners Interestingly, a Florida judge took the opposite view in Martin “were indifferent to the identity of the suppliers”. Id. at 29. Energy Servs., LLC v. M/V Bravante IX, 2017 U.S. Dist. LEXIS USA Having decided that the suppliers had no liens, Judge Caproni 11833, 2017 WL 373449 (N.D. Fla. Jan. 26, 2017). It looks like next analysed whether O.W. Bunker had liens. “Until recently”, the Supreme Court will eventually have to clean up multiple she said, courts uniformly held that “a contractor like O.W. could opinions around the country on the existence of a maritime lien as ‘provide’ necessaries to a vessel indirectly through performance traditionally known. Judge Hinkle recognised the existence of a by a subcontractor”. Clearlake Shipping, 2017 U.S. Dist. LEXIS bunkering certificate that gave rise to a maritime lien to thefuel 2888, 2017 WL 78514 at *34. Deciding that O.W. Bunker had a supplier. External signals were set out in the bunkering certificate lien, Judge Caproni declined to follow District Judge Katherine in terms that could bear only one meaning: the ship bore ultimate B. Forrest also in New York, who held in October 2016 that O.W. liability for the debt arising from the suppliers’ delivery of fuel. The Bunker “was not a statutory ‘provider’”. See ING Bank, N.V. v. only remaining question was who possessed the lien. M/V TEMARA (Temara II), No. 16-cv-95, 2016 U.S. Dist. LEXIS To answer that question, the Florida court reached the substantive 146251, 2016 WL 6156320, at *9 (S.D.N.Y Oct. 21, 2016). Judge result that all parties expected had there not been a bankruptcy Forrest’s decision is on appeal, giving the Second Circuit a chance proceeding. Applying equity to this transaction, the intended result to decide whether Judge Forrest or Judge Caproni has the correct was that the owner would pay $290,100 and receive 300 metric tons approach to maritime liens. of fuel. The supplier would receive $286,200 and O.W. Bunkers Nonetheless, Judge Caproni said she adopted the analysis utilised by would pocket the difference, $3,900. As a matter of common sense, Judge Forrest, but said that Judge Forrest reached a different result Judge Hinkle put it in simple terms, and stated: “anyone seeking because the facts laid out on summary judgment were different. to do justice in this situation would distribute the fund in precisely The Second Circuit may eventually tell us whether the factual this way, achieving the parties’ intended result. Giving the entire distinctions are pivotal. Judge Forrest rested her conclusion on $290,100 to ING (O.W. Bunkers’ creditor) would provide it a the more equitably based fact that O.W. Bunker was in pursuit of a windfall – a payment far beyond anything it could have achieved windfall because it had not paid the suppliers. from the underlying transaction. The bankruptcy proceedings Looking at the equities, Judge Caproni said she sympathised with should not impair ING’s security, but neither should ING reap a the suppliers, “which apparently believed that they held maritime windfall from those proceedings”. Martin Energy, 2017 U.S. Dist. liens and may be financially harmed by this court’s holding that they LEXIS 11833, 2017 WL 373449 at *8. do not”. Clearlake Shipping, 2017 U.S. Dist. LEXIS 2888, 2017 Judge Hinkle rested his decision on Galehead, Inc., v. M/V Anglia, WL 78514 at *32–33. The suppliers argued it would be inequitable 183 F.3d 1242 (11th Cir. 1999), which Judge Caproni in New York to award O.W. Bunker with a lien without paying the suppliers who has refused to follow saying that the Eleventh Circuit “is navigating actually delivered the fuel. Although she admitted there was “some outside the mainstream of American maritime law”, because it has force” to the suppliers’ reliance on equity, she said the suppliers historically recognised maritime liens for physical suppliers of “have not seriously argued that any equitable doctrine bars O.W.’s necessaries, as has the Fifth Circuit. Clearlake Shipping, 2017 U.S. recovery”. Clearlake Shipping, 2017 U.S. Dist. LEXIS 2888, 2017 Dist. LEXIS 2888, 2017 WL 78514 at *28–29. WL 78514 at *39–40.

To prevent a similar loss in the future, Judge Caproni explained to 4.3 Where security is sought from a party other than the suppliers how they could demand an assignment of O.W. Bunker’s vessel owner (or demise charterer) for a maritime claims against the vessels or could have made the vessel owners claim, including exercise of liens over cargo, what parties to the supply contracts. Either alternative, though, might options are available? not have been feasible under O.W. Bunker’s own secured lending arrangements. Rule B of the Supplemental Rules for Certain Admiralty and O.W. Bunker’s secured lender, ING Bank, was also a party in the test Maritime Claims, which are part of the Federal Rules of Civil cases and asserted a right to the interpleaded funds. At a later time, Procedure, allows a party to obtain a security for a claim against Judge Caproni will decide whether O.W. Bunker validly assigned its anyone whom he or she has a maritime claim against, including both maritime liens to the bank. vessel owners and non-vessel owners. Rule B provides for maritime garnishment and attachment when a plaintiff has an in personam In January of 2017, Judge Caproni issued an order in four test cases maritime claim against a defendant. It is used when the defendant concerning delivery of fuel on behalf of O.W. Bunker. To give cannot be found in a judicial district in which the claim is to be every party an opportunity to be heard, in three cases that are part of brought, but property owned by that defendant, such as a vessel, nearly 30 interpleader lawsuits, Judge Caproni concluded that O.W. can be found. Rule B attachment is generally used to: (1) acquire Bunker provided necessaries to the vessels and hold maritime liens. jurisdiction over a defendant; (2) obtain security for a claim; or (3) “The court’s sympathetic view of the physical suppliers’ situation to seize property in connection with the enforcement of a judgment. is not, however, boundless, and it does not extend to rewriting the The property attached can be any property owned by the defendant, consistent, and nearly uniform, case law denying subcontractors a and does not have to be in any way associated with the underlying maritime lien.” “This rule is rooted in the long-standing federal claim. Rule B attachment is frequently used in the U.S. to obtain policy disfavoring maritime liens. Because the physical suppliers do a security for a claim that has been, or will be, brought in a foreign not hold maritime liens, they do not have in rem claims against the arbitral tribunal. interpleader stake. Ultimately, their real problem is the low priority

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A plaintiff wishing to attach their interest to the property of the defendant must obtain an order of attachment from the court, which 5 Evidence is done on an ex parte basis. The court’s order will direct the U.S. Marshal to effect the attachment. The plaintiff must deposit with 5.1 What steps can be taken (and when) to preserve or the Marshal a fee (typically $5,000–$10,000) to cover the costs of obtain access to evidence in relation to maritime the attachment. This fee, along with the plaintiff’s attorney’s fees claims including any available procedures for the and other costs, can be recovered from the defendant if provided preservation of physical evidence, examination of by contract or if bad faith is found. Once the property is attached, witnesses or pre-action disclosure? the defendant must then post security in the form of a bond or other acceptable security for the underlying claim (not to exceed the Evidence can be obtained through discovery. Discovery includes USA value of the seized property) in order to get the property released. Initial Disclosures, which the parties are required to make soon The property owner can also move for a post-seizure hearing and after the suit is filed and served. The parties must produce all argue that the seizure was improper, and that the property should non-privileged information in its possession as part of its Initial therefore be released. If the property is not released, and security is Disclosures. The parties can then propound Interrogatories, not posted, the property can be sold by the U.S. Marshal at public Requests for Production of Documents and Things, and Requests auction to satisfy the underlying claim. for Admission. The Requests for Production provision specifically provides for inspection of land or other property. Witnesses can be U.S. law also contains a unique procedure that allows a party to examined through depositions taken under oath. enforce a maritime lien directly against the property that the lien has attached to. Rule C of the Supplemental Rules for Certain Admiralty In the event that a party believes that evidence is being destroyed, and Maritime Claims provides an in rem action of arrest against a that party should immediately file a motion for a protective order defendant’s property that is the subject of the underlying lien claim. to preserve evidence. The party can also move the court for a A Rule C action usually involves a vessel, but can also be asserted temporary restraining order to prevent the spoliation of evidence. If against other property such as cargo or freight. In a Rule C action, a party refuses to produce a witness or requested evidence, the other the vessel or property itself is named as the defendant, but the vessel party can file a motion to compel asking the court to compel the or property owner can be named in personam as well. A Rule C production of evidence or witness. Some courts consider spoliation arrest can only be brought by a plaintiff to enforce a lien it possesses of evidence to be an abuse of discovery which can lead to sanctions. on the vessel or property being arrested. Such a lien may arise for a Preservation of evidence is crucial due to potential criminal liability multitude of things including collisions or allisions, other damages if evidence is destroyed. In the event of an oil spill, or a catastrophic caused by the vessel’s master or crew, necessaries supplied to a event, the maintenance and preservation of evidence is essential. vessel, a mortgage on the vessel, crew wages, personal injury, etc. When a party reasonably anticipates litigation, it must apply a policy The process for obtaining a Rule C arrest is largely identical to to preserve and avoid destruction of evidence. Zubulake v. UBS the procedure under Rule B above. The plaintiff must obtain an Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003). For instance, order and warrant for the arrest of the vessel or property. The U.S. in the BP Macondo case, a former BP engineer was arrested by the Marshal will then go make the arrest. The owner of the vessel or U.S. Department of Justice (DOJ) for two counts of obstruction of property must then post bond to secure the release of the property. justice on intentionally destroying evidence requested by federal If the ship owner fails to post bond, or does not appear to contest the authorities (FBI) investigating the disaster. BP sent out legal holds arrest, judgment can be entered against the vessel or property itself, to its employees in connection with the spill notifying them of their which can be sold by the U.S. Marshal at auction to satisfy the lien. duty to preserve all records, including text messages related to the Deepwater Horizon incident. Text messages are a form of evidence admissible in court. The litigation hold stated that “withholding, 4.4 In relation to maritime claims, what form of security is concealing, altering, falsifying, or destroying anything subject to acceptable; for example, bank guarantee, P&I letter of this legal hold order may subject individuals or BP to prosecution undertaking. or other severe consequences”. Despite BP’s compliance with its duty to alert its employees to preserve evidence, the engineer Several forms of security are allowed to be submitted in maritime deleted his entire string of hundreds of text messages exchanged arrests brought in U.S. courts. Rule E of the Supplemental Rules with his supervisor two days before they were going to be collected for Admiralty or Maritime Claims contained in the Federal Rules for production. As a result, the engineer was acquitted of the second of Civil Procedure, provides that a bond can be submitted, which charge of obstruction of justice, but faces 20 years in prison and a then must be approved by the court. The amount of the bond can $250,000.00 fine. be stipulated by the parties, and if the parties cannot agree, the court will fix the sum at an amount that will cover the amount ofthe plaintiff’s claim together with interests and costs. While the court 5.2 What are the general disclosure obligations in court has broad discretion in the setting of security, Rule E specifically proceedings? provides that the bond cannot be set higher than twice the amount of the plaintiff’s claim or the appraised value of the property seized, At the beginning of litigation in a federal court, parties are obligated whichever is smaller. While Rule E provides for a bond, courts will to exchange Initial Disclosures, in which they list their witnesses, generally accept two other forms of security. These are a Letter documents, any potentially responsive insurance, and an explanation of Undertaking from a P&I Club and a letter of credit from the of how the damages claimed (if any) are calculated. defendant’s bank. The same Rule E guidelines regarding amount The parties will then engage in written discovery with the parties, of the bond will generally be applied in setting the amount of either issuing requests for admissions, interrogatories, and requests the Letter of Undertaking or a bank letter. However, some courts for production of documents. Discovery in U.S. proceedings will not allow a Letter of Undertaking as security when such a letter is extremely broad, and the parties are obligated to produce all does not comport with the court’s local admiralty rules. In that case, potentially relevant documentation and even documents that could a Letter of Undertaking will only be approved upon agreement by lead to the discovery of relevant evidence. the parties.

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The parties will then usually seek to depose witnesses (i.e. examine them under oath) to determine or memorialise their testimony. 6.2 Highlight any notable pros and cons related to your Parties will also usually produce expert reports on liability and jurisdiction that any potential party should bear in mind. damages, and the authors of those reports may also be deposed.

As noted, discovery in litigation in the U.S. can be extremely broad. 6 Procedure This can be both an advantage and a disadvantage in that it can result in extensive documentation. This overproduction can be extremely burdensome and expensive. 6.1 Describe the typical procedure and timescale USA applicable to maritime claims conducted through: i) With regard to attorneys’ fees and costs, it is important to note that national courts (including any specialised maritime or federal courts will usually not award these to the prevailing party commercial courts); ii) arbitration (including specialist unless the contract or a statute so provides. arbitral bodies); and iii) mediation / alternative dispute Finally, since admiralty cases are traditionally heard without a resolution. jury, the risks inherent to a jury trial are avoided, except in certain circumstances, notably maritime personal injury and death litigation. (i) Federal courts The U.S. federal courts have original jurisdiction over maritime claims, but in some circumstances, admiralty claims can be filed in 7 Foreign Judgments and Awards the courts of individual states. In federal court, suits are randomly assigned to the district judges, and there are no specialist admiralty courts or judges. 7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement A typical proceeding in federal court commences with the filing of a of foreign judgments. complaint by the plaintiff. The complaint is a notice pleading, which means that the defendant must be given sufficient details of the facts Individual state law most often governs the recognition of foreign alleged. The complaint must be served on the defendant within 120 judgments in U.S. courts. Most states have adopted either the days. An answer or responsive pleadings must be served within 20 Uniform Foreign Money-Judgments Recognition Act of 1962 or days of service. The court will set the time and place for a scheduling the Uniform Foreign-Country Money Judgments Recognition Act conference and the parties must produce initial disclosures. Further of 2005, which gives holders of foreign judgments the same rights discovery (disclosure of evidence) then follows, as discussed in and remedies as the holders of a domestic judgment. The remaining Section 5 supra. states apply the common law principles of comity to enforce foreign Once a sufficient amount of discovery has been completed, a party judgments. may move for summary judgment. This motion essentially asks the Enforcement of a debt arising out of a foreign judgment must be court to rule on the case on the basis of what the party argues are the initiated by civil action in a state or federal court, and the judgment undisputed facts. creditor must establish a basis for the exercise of jurisdiction by Settlement conferences (which are very similar to mediations) the court attempting to enforce the judgment against the debtor’s are usually mandatory in federal courts, and take place before the property. A successful action then becomes a local judgment that is magistrate judge. both enforceable under local law and entitled to full faith and credit If no settlement is reached, the case will proceed to trial. Admiralty in other courts within the U.S. suits (with the exception of claims of Jones Act Seaman) do not U.S. courts have been quite liberal in their recognition and usually give rise to the right to a jury trial. The district judge will enforcement of foreign judgments. As a result, once the party try the case and issue an order and reasons, followed by a judgment. seeking the recognition of a foreign judgment has established the Parties have the right to appeal the district court’s judgment to the judgment’s existence, the burden is on the party resisting recognition federal circuit court of appeals for the circuit in which the district to prove grounds for non-recognition. court that tried the case is located. A party can further petition the The U.S. signed the Hague Convention on the Recognition and U.S. Supreme Court for review, but such petitions are rarely granted. Enforcement of Foreign Judgments in 2009. It will apply where Additionally, the process of obtaining security for a claim against a there is national diversity between the parties and/or where foreign vessel referenced in Section 4 supra is filed in federal court. enforcement of a judgment is desired. The general rule is that the (ii) Arbitration enforcing country will recognise and enforce a final judgment of the Arbitration clauses are routinely enforced within the maritime original foreign court if jurisdiction is properly established under context. Vimar Seguros Y Reaseguros v. M/V Sky Reefer, 515 U.S. the treaty. 528 (1995). A party seeking to enforce an arbitration clause when a lawsuit has already been filed will usually ask the court to stay or 7.2 Summarise the key provisions and applicable dismiss the lawsuit pending the conclusion of that arbitration. procedures affecting the recognition and enforcement There are a number of specialist arbitration bodies within the U.S., of arbitration awards. including the American Arbitration Association, as well as various state-based maritime arbitration associations. The enforcement of foreign arbitration awards is governed by the (iii) Mediation Federal Arbitration Act (FAA), which implemented the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of Mediation is strongly encouraged by the federal courts. As noted, 1958 into domestic law in 1970. It requires contracting states, such parties are usually required to attend a settlement conference before as the U.S., to recognise written arbitration agreements that concern a magistrate judge. Parties can also agree to a private mediation subject matter that is capable of settlement by arbitration. To with one of the many qualified and experienced mediators within the implement a convention in a U.S. court, a party seeking to enforce maritime jurisdictions in the U.S. arbitration agreements has two options: (1) file an action to compel

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arbitration in accordance with the terms of the agreement; or (2) at a seaman’s mother. The Court held that recovery for non-pecuniary later stage, file an action to confirm an arbitral award made pursuant losses, such as loss of society, was not permissible when liability to the arbitration agreement. U.S. courts are to refer the parties to was predicated on either the Jones Act or unseaworthiness. The en arbitration, unless the court finds that the agreement to arbitrate is banc McBride panel held that Miles controlled, and because punitive null and void, inoperative, or incapable of being performed. An damages are non-pecuniary, they were also not recoverable. The award under the convention will be confirmed except where the U.S. Supreme Court recently declined to review the Fifth Circuit’s court in the enforcing state finds: en banc decision. (1) either of the parties were under some incapacity, or the (2) Cabotage agreement is not valid under the law prescribed by the parties Other provisions of the Jones Act also require that all goods or under the law where the award was made; USA transported by water between U.S. ports be carried in U.S. flag (2) proper notice was not received by the party against whom the ships, built in the U.S., owned by U.S. citizens and (at least three- award has been invoked; quarters) crewed by U.S. citizens or legal permanent residents. (3) the award is outside the agreement; However, the U.S. Coast Guard can be petitioned to grant exemption (4) the arbitrating board or procedure was not in line with the letters for foreign individuals that are not part of the regular crew, agreement made by the parties; but are instead specialists, professionals, or other technically trained (5) the award is not yet binding on the parties; personnel called in to handle emergencies or other temporary (6) the subject matter of the dispute is not capable of settlement operations. by arbitration under the law of the enforcing country; and (3) Vessel status (7) the recognition or enforcement would be contrary to the In recent years, there has been significant litigation on whether public policy of the enforcing country. or not floating structures qualify as “vessels”, with two opinions These exceptions are construed narrowly. from the U.S. Supreme Court in the last eight years. In Stewart v. Dutra Constr. Co., 543 U.S. 481 (2005), the Supreme Court defined a “vessel” as any watercraft “used, or capable of being 8 Updates and Developments used, as a means of transportation on water”. Recently, in Lozman v. City of Riviera Beach, 133 S. Ct. 735 (2013), the Court revised this definition and held that a structure was not a vessel “unless a 8.1 Describe any other issues not considered above that may be worthy of note, together with any current reasonable observer, looking at the [structure’s] characteristics trends or likely future developments that may be of and activities, would consider it designed to a practical degree for interest. carrying people or things over water”. Post-Lozman, the courts have taken a narrower stance on what constitutes a vessel. For example, While there are many similarities between the General Maritime in the case of floating production facilities and similar structures, the Law of the U.S. and other jurisdictions, particularly English law, courts evaluate the time and cost to dislodge them from the seabed. there are some important unique aspects that are unique to the U.S. In recent years, courts in the Fifth Circuit have addressed the issue and commonly give rise to disputes. of whether vessels under construction undergoing sea trials are (1) The rights of seamen vessels “in navigation”. The term “in navigation” means “engaged Whether an injured person is or is not a seaman is an issue that is in commerce and transportation on navigable waters”. In 2012, the often disputed in the U.S. The issue is important because seamen are Western District of Louisiana ruled that a ship undergoing sea trials treated as wards of the courts and are afforded certain common law is not a vessel “in navigation”. Duplantis v. Northrop Grumman, and statutory rights. First, if a seaman is injured in the course and C.A. NO. 10-1575 (W.D. La. June 20, 2012). scope of his employment, he is entitled to payment of maintenance The issue of vessel status is important in that it can have and cure until such time as he reaches maximum medical cure, ramifications, for example, as to whether the court has admiralty regardless of fault. Arbitrary and capricious failure to pay such jurisdiction, whether a contract involving the structure is a maritime maintenance and cure can result in punitive damages being awarded contract, whether someone injured abroad is a Jones Act seaman, against the employer. Atl. Sounding Co. v. Townsend, 557 U.S. 404 whether the owner of the structure is entitled to seek to limit its (2009). Second, a seaman is entitled to the benefits and protections liability and many other situations. of the Merchant Marine Act of 1920, more commonly known as the (4) Injuries not compensable under the Jones Act Jones Act, 46 U.S.C. § 30104, which allows him to recover damages Under the Jones Act, a seaman can sue his employer for injuries from the employer and assert a claim of unseaworthiness. caused by the employer’s negligence. However, this right only Recently, the U.S. Court of Appeals for the Fifth Circuit (the extends to injuries caused by physical perils. In Skye v. Maersk Fifth Circuit has jurisdiction over District Courts in Louisiana, Line, Ltd. Corp., 751 F.3d 1262 (2014), the plaintiff suffered from Mississippi, and Texas) held that seamen may recover punitive left ventricular hypertrophy, which he alleged was caused by damages for their employer’s willful and wanton breach of the excessive duties and an erratic sleep schedule. The trial court found general maritime law duty to provide a seaworthy vessel. McBride for the plaintiff, however, the appellate court reversed, holding that v. Etsis Well Serv., LLC, 731 F.3d 505 (5th Cir. 2013), reh’g en banc injury caused by work-related stress, as opposed to physical injury, granted, 743 F.3d 458 (5th Cir. 2014). The Fifth Circuit reasoned is not cognisable under the Jones Act. that unseaworthiness was established as a general maritime claim (5) Time for filing suit before the passage of the Jones Act, and that the Jones Act does not In cases involving personal injury or death, there is a three year address unseaworthiness or limit its remedies. However, following statute of limitations. However, for all other claims, there is no a rehearing en banc, the Court reversed its previous ruling and statute of limitations. Instead, the doctrine of laches applies. Under affirmed the District Court’s ruling that punitive damages were not this doctrine, which is an affirmative defence, a claim will be barred recoverable. The panel relied on the U.S. Supreme Court’s decision if there is an unreasonable delay in bringing the claim. Additionally, in Miles v. Apex Marine Corp., 498 U.S. 19 (1990). That case in order for the claim to be barred, the unreasonable delay must turned on whether loss of society was recoverable by the deceased

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prejudice the defendant. Sometimes courts will look to analogous Fifth Circuit reasoned that use of the vessel to lift the equipment was state law statutes of limitations for guidance in determining whether an insubstantial part of the job and not work that the parties expected the doctrine of laches should bar the claim. to be performed. So, the Fifth Circuit held that the master services (6) Maritime contracts in the oilfield contract was non-maritime. Therefore, LOIA barred Dorion’s indemnity claim against Specialty. In a recent 2018 decision, In re Larry Doiron, Inc. 2018 WL 316862, at *7 (5th Cir. Jan 8, 2018), the Fifth Circuit set a new precedent on the (7) Bankruptcy automatic stay and maritime liens test for determining whether oilfield contracts are maritime contracts. A bankruptcy filing may not divest a district court of maritime Apache Corporation issued a service order to Rental Tools & Supply, jurisdiction over a vessel. According to Judge Nguyen in the Ninth L.L.P. – a contractor to perform services in navigable waters in Circuit, a bankruptcy stay does not apply to maritime liens, and the USA Louisiana. To perform the contract, the contractor hired Larry Doiron, bankruptcy court does not have jurisdiction to adjudicate maritime Inc. to provide a barge. During operations, one of the Doiron crane liens, Barnes v. Sea Hawaii Rafting LLC, 16-15023 (9th Cir. March 28, operators accidently struck and injured a Specialty crewmember. The 2018). The Ninth Circuit reversed the dismissal of a seaman claim for crewmember sued Doiron, Doiron sought indemnity under the master maintenance and cure (injured seaman’s food, lodging, and medical service agreement, and Specialty sought a declaration that Doiron care while unable to work). Fifteen months into the maritime suit, was not entitled to immunity. The issue rested on whether the master the defendant filed for chapter 13 and 7. The district court stayed service was a maritime contract. If so, general maritime law applies, the maritime suit under the bankruptcy automatic stay. The district otherwise Louisiana law and the Louisiana Oilfield Indemnity Act court later dismissed the maritime suit, because the seaman failed (LOIA) apply. to file a verified complaint. Then the bankruptcy court approved The Fifth Circuit issued an en banc unanimous opinion authored the sale of the vessel free and clear of liens. The seaman filed an by Judge Davis that abandoned the prior test in favour of a more appeal. Judge Nguyen reversed the district court decision and held straightforward two-pronged contract-based test following the U.S. that the failure to file a verified complaint did not divest the district Supreme Court’s decision in Norfolk Southern Railway Co. v. Kirby, court of maritime jurisdiction, because the defendant did not object 543 U.S. 14, 14, 125 S. Ct. 385, 387, 160 L. Ed. 2d 283 (2004): to maritime jurisdiction, The defendants argued the appeal was moot because the vessel was sold free of liens. Judge Nguyen held that the 1. Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters? bankruptcy court did not have jurisdiction to dispose of the seaman’s maritime lien. 2. If the answer to the first inquiry is “yes”, does the contract provide or do the parties expect that a vessel will play a Judge Nguyen commented that “a maritime lien cannot be substantial role in the completion of the contract? If so, then extinguished except through application of maritime law”. Even if a the contract is maritime in nature. bankruptcy court has jurisdiction to release a maritime lien, it “should In applying this new test, the Fifth Circuit noted that the work order be required to do so pursuant to maritime law” because priorities are required Supply to perform work that could only be accessed by a different under the Bankruptcy Code and maritime law. platform. During the work, the crew required the use of a vessel. The

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Peter A. McLauchlan Anacarolina Estaba Foley Gardere, Foley & Lardner LLP Foley Gardere, Foley & Lardner LLP 1000 Louisiana Street, Suite 2000 1000 Louisiana Street, Suite 2000 Houston Houston Texas 77002-2099 Texas 77002-2099 USA USA

Tel: +1 713 276 5730 Tel: +1 713 276 5398 Email: [email protected] Email: [email protected] URL: www.foley.com URL: www.foley.com USA

Peter has represented clients in marine, energy, transportation, and Anacarolina Estaba is a Special Counsel assisting clients with complex commercial matters worldwide for 30 years. Peter has extensive maritime, marine, energy, transportation, commercial, and oil and gas experience in admiralty and maritime matters, including allisions, disputes and transactions. Anacarolina focuses on litigation in the areas collisions, maritime bankruptcy, vessel arrests, attachments, cargo of vessel collisions, allisions, carriage of goods, charter disputes, freight, claims, general average casualty investigations, environmental onshore and offshore personal injury, Jones Act cases, maritime liens, incidents, freight, vessel arrests, onshore and offshore personal injury, and general average claims. Anacarolina has also represented clients Jones Act cases, Longshore and Harbor Workers’ Compensation Act, in maritime corporate deals involving acquisition of U.S. flag vessels, protection and indemnity, hull, cargo, insurance and coverage defence. reflagging of U.S. flag vessels for foreign owners, risk management In particular, a complex maritime bankruptcy case stands out. In TMT advice to ship owners, drafting of charter agreements, purchase and Procurement et al., Peter led the firm’s team representation of several sale of LNG and LPG, crewing agreements and incorporating special Asian and international lenders in a multi-billion-dollar bankruptcy purpose vehicles for ownership of vessels. matter involving ships in several countries. The team succeeded in She also represents leading domestic and foreign entities worldwide, auctioning the ships and repaying the loans. particularly in Latin America, and has participated in a wide variety of Peter has also handled several matters the purchase, sale, and litigation, arbitration and mediation matters. Anacarolina focuses on financing of offshore rigs, LNG and LPG, vessels, and aircraft. In clients with cross-border litigation and international discovery needs. addition, he has experience in negotiating and drafting contracts, Anacarolina is licensed to practise law in New York, Texas, and charters, and financing documents. Prior to practising law, Peter Venezuela. She is fluent in English and Spanish. worked as captain and chief engineer with a California-based shipping company and as a representative for a major shipping company in the Gulf South. Peter is licensed to practise law in New York and Texas. He is fluent in Spanish.

Foley & Lardner LLP looks beyond the law to focus on the constantly evolving demands facing our clients and their industries. With over 1,100 lawyers in 24 offices across the United States, Mexico, Europe, and Asia, Foley approaches client service by first understanding our clients’ priorities, objectives, and challenges. We work hard to understand our clients’ issues and forge long-term relationships with them to help achieve successful outcomes and solve their legal issues through practical business advice and cutting-edge legal insight. Our clients view us as trusted business advisors because we understand that great legal service is only valuable if it is relevant, practical and beneficial to their businesses. On April 1, 2018, Foley combined with Gardere, Wynne & Sewell LLP. Foley & Lardner LLP operates as “Foley Gardere” in Austin, Dallas, Denver, and Houston, and as “Foley Gardere Arena” in Mexico City through its subsidiary, Gardere, Arena y Asociados, S.C.

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Venezuela José Alfredo Sabatino Pizzolante

Sabatino Pizzolante Abogados Marítimos & Comerciales Iván Darío Sabatino Pizzolante

assist a vessel or any other property in danger in navigable waters 1 Marine Casualty or in any other waters whatsoever (Art. 336). Salvage operations which have had a useful result shall give rise to the right to a reward. 1.1 In the event of a collision, grounding or other major Unless otherwise agreed, if the salvage operations have had no casualty, what are the key provisions that will impact useful result, no payment is due. Insofar as the criteria for fixing upon the liability and response of interested parties? the reward, domestic provisions follow Art. 13 of the Convention. In particular, the relevant law / conventions in force in Any action relating to payment under domestic provisions shall be relation to: time-barred within a period of two years, to be counted as from the day on which the salvage operations are terminated. The person i) Collision against whom a claim is made may, at any time during the running Rules related to collision can be found in Title VI of the Law on of the limitation period, interrupt it by means of a declaration to the Maritime Commerce (LMC) published in the Official Gazette No. claimant, although interruption is allowed only once. 38,351 dated 6th January 2006, and based on the 1910 Convention On the other hand, general average is also governed by the provisions for the Unification of Certain Rules of Law with respect to Collisions of the LMC according to which the acts and contributions will be between Vessels. subject to the agreements between the parties, or in any case to the Collision is defined by domestic legislation as the violent material rules and international practices if they are more recent; however, for contact between two or more vessels, navigating or capable of the purposes of qualification, liquidation and distribution, the parties navigation in aquatic spaces. As prescribed by the Convention, Art. may freely agree on the application of national or international 328 of the LMC states that the collision rules extend to reparation rules, uses or practices. It follows that the York-Antwerp Rules are of damages caused by a vessel to another vessel or vessels; or to the admitted (Art. 368). property or persons that might be on board these vessels, even if a In the case of declaration of general average, the consignee that collision has not actually taken place and these damages are caused must contribute to its payment shall sign, before receiving the cargo, by the execution or non-execution of a manoeuvre, or by the non- a compromise of average making a deposit in cash or submitting observance of the law. a guarantee to the satisfaction of the carrier, actual carrier or their Legal actions for the recovery of damages arising from a collision representative to guarantee the payment of the respective contribution, must be brought within two years of the date of the casualty. In or to guarantee the consignee the reserves he may consider appropriate. the case of joint liability among the vessels, or among the parties In the absence of a deposit or guarantee, the carrier, actual carrier or in a convoy, the time-bar for legal actions to exercise the right of their representative may request the embargo of the cargo pursuant to recourse by reason of sums paid in excess of those that are payable a sea protest filed with the authority (Art. 371). is one year, to be counted from the date of payment. With regard to a time limit, as prescribed by Art. 369, in those cases ii) Pollution where a general average compromise is not signed, any party alleging Venezuela is a signatory to the 1969 International Convention on a legitimate interest in the voyage may exercise an action in order to Civil Liability for Oil Pollution Damage, as amended in 1976 and obtain payment of respective contributions within a period of one 1984, published in the Official Extraordinary Gazette No. 4,340 year, counted from the time of the occurrence of the event. Besides, dated 28th November 1991, as well as the 1992 Protocol published in in those cases where a general average compromise has been signed, the Official Gazette No. 36,457 dated 20th May 1998, and so liability the liquidation will be practised. In case of disagreement or non- of ship owners for oil pollution is governed by said provisions. compliance with what has been decided in the liquidation, the parties Consequently, ship owners are strictly liable for damages resulting may refer to the judiciary, in which case the matter will be decided from an oil spill, unless such damage has been caused by the events according to the Brief Procedure as stated in the Code for Civil referred to in the Convention. Ship owners, however, are entitled Procedure. This action will be decided on within two years, to be to limit liability in accordance with the Convention, following the counted from the manifestation of disagreement, or the verification procedural rules prescribed by the LMC (Art. 74). of the non-compliance, whichever occurs first (Art. 370). iii) Salvage / general average iv) Wreck removal The main provisions of the 1989 International Convention on This matter is covered by Art. 92 of the Law on Merchant Marine and Salvage are incorporated within domestic legislation, enacted in the Related Activities (LMMRA), last amendment published in Official LMC. A salvage operation means any act or activity undertaken to Extraordinary Gazette No. 6,153 of 18th November 2014. Thus, the

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obstruction of a navigation channel due to grounding of a vessel, meantime, the liquidator will submit the list of creditors with the collision of two or more ships, collision between a ship and a fixed right to participate in the distribution of the fund, to be effected object, sinking of a vessel as a result of the former, among other within 30 days after publication of the list, based on the rules on the causes, will impose upon the ship owner the following obligations: privileges prescribed by the law. Those credits whose opposition notification of the incident to the Port Captaincy; marking the place has not been resolved will be subject to the reserves made by the where the danger to navigation is (such mark should be appropriate liquidator, who will proceed to distributing the rest of the fund. and maintained); surveillance of the area and ensuring that the other ships are warned of the danger in the area in case the wreck has not 1.2 What are the authorities’ powers of investigation / been located; removal of the vessel with its remains expeditiously casualty response in the event of a collision, grounding and diligently, in the period agreed by the aquatic authority and or other major casualty? the ship owner or his representative (in the event no agreement is Venezuela reached, the aquatic authority will set such time period); and to The authority vested with broader powers for the investigation of reimburse expenses incurred by a third party for the marking of casualties is the National Institute of Aquatic Spaces (INEA) and danger, surveillance of the area and removal of the wreck. the Port Captaincies as its local branches. In case of casualties the (v) Limitation of liability Master, through his agent, is obliged to make formal notification The LMC has incorporated the provisions of the 1976 Convention of the incident to the Port Captaincy within 24 hours of arrival, on Limitation of Liability for Maritime Claims. Consequently, in as prescribed by Art. 87 of the LMMRA. Although the aquatic Art. 41, the right for ship owners to contractually limit liability is authority has the obligation to notify the casualty to other competent recognised. Unless prohibited by the law, ship owners may limit authorities that may have an interest in the incident, the investigation liability in the same manner as listed in Art. 2 of the Convention. in the maritime field will be carried out by the Port Captaincy, which Limitation figures strictly follow the general limits prescribed by in case of a casualty will appoint an Investigation Committee in Art. 6 of the Convention, including those for loss of life or personal charge of preparing a formal report. injury to passengers of a ship. Insurers of claims subject to limitation shall be entitled to limit liability pursuant to these legal provisions, 2 Cargo Claims in the same way as is assured under Art. 49. (vi) The limitation fund According to Art. 52 of the LMC, ship owners, charterers, insurers, 2.1 What are the international conventions and national laws relevant to marine cargo claims? salvers and in general any person who considers that they have a right to limit their responsibility may appear before the maritime court and request to start a proceeding to constitute the limitation When dealing with the provisions for the carriage of goods by water, fund, verify and liquidate the credits and distribute them in the contained in Chapter III, Title V, the LMC adopts a mixed regime form and terms prescribed by law. Said request for limitation and (i.e. Hague-Visby/Hamburg rules) for its regulation. Art. 199 makes constitution of the fund may be asked for at any stage of the court it clear that these provisions shall apply whatever the nationality proceedings. of the ship, carrier, actual carrier, shipper, consignee or any other interested person might be. Nevertheless, according to Art. 201, The petition for opening the limitation procedure must indicate the these provisions do not apply to charterparties, unless a bill of lading fact giving rise to the damages for which the request is made, the is issued pursuant to a charterparty and it governs the relationship maximum amount of the limitation fund calculated according to the between the carrier and the holder of the bill of lading (which is not law, the list of the creditors known by the petitioner with indication the charterer). It follows that any shipment to or from Venezuela of their domiciles, definite or provisional amount of their credit and its nature and all the documents that justify the calculation of the under liner traffic will be subject to the provisions of Chapter III in amount of the fund. terms of the liability regime, exoneration and limitation of liability, time-bar, etc., irrespective of the nationality of the ship. Pursuant to Art. 56, after examining whether the amount of the limitation fund calculated by the petitioner is correct, the court Insofar as the period of responsibility is concerned, Art. 202 will declare the limitation procedure initiated and also appoint a states that it covers the period during which the goods are under liquidator. The court will pronounce upon the modes offered for the custody of the carrier at the port of loading, during the actual the fund ordering its constitution; it will also set up the amount that carriage, and at the port of discharge. Goods are deemed to be under the petitioner shall submit to the court to guarantee the costs of the the custody of the carrier from the moment he receives the goods procedure, calculated in a provisional way, so that it includes the from the shipper or the person acting on his behalf, or from any value of the necessary studies and the payment of the liquidator, other competent authority through a document issued to such effect, fixed by the court’s previous agreement with the petitioner, which until that time when he has delivered the goods: 1) to the consignee shall not be higher than 10% of the value of the fund. The fund will – in cases when the consignee does not receive the goods from only be constituted in cash money, in financial instruments or in the carrier, the carrier shall make them available to the consignee securities issued or guaranteed by the Republic. Once the limitation pursuant to contract, law or common commercial practice at the port fund is constituted, any ship or other property of the petitioner in of discharge; or 2) to an authority or a third party to whom goods connection to credits to which the limitation of liability is invoked must be delivered, pursuant to contract, law or common commercial will be suspended. practice at the port of discharge (Art. 203). As required by Art. 61, all existing claims, actions or procedures or those that may be eventually instituted against the petitioner, in 2.2 What are the key principles applicable to cargo claims respect of which he may limit his responsibility, will be accumulated brought against the carrier? to the procedure for limitation. Following the order of the court for the constitution of the limitation The carrier will be able to exonerate and limit liability in certain fund, the creditors will be notified within the following 30 days, cases. The events giving rise to exoneration from liability are found being able to make opposition to the limitation of liability. In the in Art. 206, matching the content of Art. 4 of the Hague-Visby Rules.

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Limitation of liability is found in Art. 211 of the LMC, according to loss or damage to luggage or to cabin luggage shall expire after two which the liability of the carrier or the ship in respect of losses or years have elapsed: 1) in case of personal injury, from the date when damage to goods shall in no case exceed the limit of 666.67 units passengers disembarked; 2) in case of death or disappearance of of account per package or per any other unit of cargo transported, the passenger occurring during the carriage, from the date that the or 2.50 units of account per kilogram of gross weight of goods passenger should have disembarked; 3) in case of personal injury lost or damaged, whichever is the higher, unless the shipper has occurring during the carriage which becomes the cause of death after declared before shipment the nature and value of merchandise and the passenger disembarks, from the date of death, as long as this such declaration has been incorporated to the bill of lading and such lapse does not exceed three years counted from the date passengers declaration has not been an administrative imposition on the country disembarked; and 4) in case loss or damage occurred to the luggage of loading or discharge. Liability of the carrier for delay in delivery or cabin luggage, from the date of disembarking or from the date shall be limited in similar terms to those set out in the Hamburg when disembarkation should have occurred, if this is a later date. Venezuela Rules. The loss of the right to limit liability is regulated by Art. 218 stating that the carrier, his employees, agents and port operators nominated by the carrier may not invoke the limitation of liability, 4 Arrest and Security as provided in Chapter III, if it is proved that the loss, damage or delay in delivery resulted from an act or omission with the intent to cause such loss, damage or delay or gross negligence. 4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel As per Art. 253 of the LMC, all actions derived from the contract of owner and the applicable procedure? carriage of goods by water lapse after one year, counted from date of delivery of the merchandise by carrier to the consignee, or the date Provisions related to the arrest of ships in Venezuela have when the merchandise should have been delivered. significantly improved with the enactment of the LMC, to a great extent incorporating the 1999 International Convention of Arrest of 2.3 In what circumstances may the carrier establish claims Ships. Art. 93 contains the list of maritime claims giving rise to the against the shipper relating to misdeclaration of cargo? arrest of a ship, similar to the one prescribed by the Convention. The governing provisions allow the arrest of the ship in respect In light of the LMC, the shipper, its servant or agent are not liable of which the maritime claim arose, as well as the arrest of a sister for losses sustained by the carrier or the actual carrier, or for damage ship. As per Art. 97 of the LMC, the court shall grant the arrest sustained by the ship, unless such loss or damage was caused by for a maritime claim when this is founded in a public document their fault (Art. 229). or a private one recognised by the other party, accepted invoices, As required by Art. 230, if the goods are dangerous the shipper charterparties, bills of lading or any other document proving the must mark or label the goods as such in a suitable manner. Where existence of said maritime claim, otherwise, the court as a condition the shipper hands over dangerous goods to the carrier or an actual to granting the arrest of the ship may request from the claimant carrier, as the case may be, he must inform him of the dangerous the submission of a guarantee in the amount and subject to the nature of the goods and, if necessary, of the precautions to be taken. conditions determined by the court. The defendant, however, may If the shipper fails to do so and such carrier or actual carrier does oppose the arrest or request the lifting of it, if in the opinion of the not otherwise have knowledge of their dangerous nature then the court sufficient security has been provided, save in cases in which shipper is liable to the carrier and any actual carrier for the loss the ship has been arrested for any dispute as to the possession of the resulting from the shipment of such goods, and the goods may at ship or any dispute resulting from a contract of sale. any time be unloaded, destroyed or rendered innocuous, as the circumstances may require, without payment of compensation. 4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim 3 Passenger Claims relating to bunkers supplied by them to that vessel?

Bunker supply is within the list of maritime claims as prescribed by 3.1 What are the key provisions applicable to the Art. 93 of the LMC, and so gives rise to an arrest. It follows that resolution of maritime passenger claims? the claimant may request from the maritime court a precautionary measure of prohibition from sailing. The court should agree on The LMC has incorporated the provisions of the Athens Convention the petition without major formalities, provided antecedents are in its Chapter V, governing the contract for carriage of passengers. submitted from which a presumption of the right that is claimed can Indemnity paid by the carrier in cases of death or personal injury to be inferred. If these antecedents are not sufficient, the court may a passenger shall not exceed the amount of 46,666 special drawing request a guarantee to decree this precautionary measure. rights (Art. 298). The limits of liability both for contractual and non- contractual liability of the carrier in respect of loss of or damage to luggage shall not exceed the following limits: 1) per item of cabin 4.3 Where security is sought from a party other than the luggage, 833 special drawing rights per passenger, per voyage; 2) vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what per vehicle, including luggage being carried inside the vehicle or on options are available? top of it, 3,333 special drawing rights per vehicle, per voyage; and 3) per item of luggage, different from that mentioned above, 1,200 Following a ruling by the Supreme Court of Justice in 2004, it special drawing rights per passenger, per voyage. Contractual and non-contractual liability of the carriers in those cases covered by has been held that the arrest or preventive embargo should only Arts 286 and 288 of the law shall not exceed 3,000 special drawing proceed in the event of maritime claims as listed by the law. In rights per passenger. case of credits different from those regarded as maritime claims, a “prohibition from sailing” is available pursuant the rules of the Code A time-bar is set up by Art. 308, under which the right to exercise for Civil Procedure. any action for damages due to death or personal injury or for the

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Based on Art. 259 of the LMC, in order to guarantee the payment area, requiring compliance with court orders within a period of 20 of freight, use of containers, demurrage, contribution to general court days following the issuance date of the order. This period may average and signature of the bond, the carrier, through an order of be extended pursuant to an agreement by the parties or because of a the maritime court, may place the goods in the hands of a third party justified cause, as decided by the court. Within the first five days of (warehouse), provided the carrier guarantees the corresponding said period, the requested party may oppose the totality or part of the fiscal credit and in the absence of anyone claiming the goods, they contents of the order, alleging illegality, impertinence or reasons of will be taken to court auction. public order. The judge shall resolve in respect of allegations within a period of no more than three court days. Opposition shall suspend the term of compliance. When opposition is decided upon, the 4.4 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of period shall continue in respect of those initial elements requested and admitted. undertaking. Venezuela

As previously mentioned, Art. 97 of the LMC states that the court, 6 Procedure as a condition to grant the arrest of the ship, may request from the claimant the submission of a guarantee in the amount and subject to the conditions determined by the former, for the claimant to answer 6.1 Describe the typical procedure and timescale for the damages that may be caused as a consequence of the arrest. applicable to maritime claims conducted through: i) Usually, this guarantee may take the shape of a bank guarantee national courts (including any specialised maritime or or bond equivalent to 30% of the claim amount as the maximum commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute legal costs, plus double the said claim amount. The lifting of the resolution. arrest as well as any other embargo measure granted by the court will be subject to the submission of a bank guarantee. A letter of Claims are litigated in the courts with maritime jurisdiction and undertaking issued by a reputable Protection and Indemnity (P&I) governed by the procedural rules introduced with the enactment Club can be only used if acceptable by claimants. of the LMP, the main features of which are now oral proceedings and abbreviation. Ordinary procedure before the First Instance 5 Evidence Maritime Court, in general terms, is as follows: the claim will be brought in a written manner, also attaching any proof documentation and the name of the witnesses to participate in the oral hearing; and 5.1 What steps can be taken (and when) to preserve or the answer to the claim or submission of precedent matters will take obtain access to evidence in relation to maritime place within the following 20 court days as from the date the writ claims including any available procedures for the has been served. The plaintiff is allowed to amend the claim and preservation of physical evidence, examination of witnesses or pre-action disclosure? the defendant may amend the answer to the claim; in any case, after the claim is amended or once the answer to the claim is put into effect, the court will schedule any of the following five court days As allowed by Art. 16 of the Law on Maritime Procedure (LMP) for the preliminary oral hearing. At any opportunity prior to the oral published in the Official Extraordinary Gazette No. 5,554, dated 13th hearing, the parties may promote any witness, judicial inspection, November 2001, even before the claim is brought, any interested expertise or recognition, as long as they justify the urgency for such party may request a judicial inspection from the court in order to procedure by virtue of the imminent danger or disappearance of certify the state of persons, things, sites or documents. This is also evidence. Under this supposition, the judge shall schedule a time established by the provisions of the Code for Civil Procedure. To which may not be in less than two court days, and the other party achieve this, those persons to whom such proof will be opposed must be notified in advance. After initial steps have been complied shall be summoned in advance, except in cases where, by reason of with, the court will schedule any of the following 30 calendar days urgency, this is not possible, and in such cases those persons will be for the oral hearing to take place, and the hearing may be extended assigned a court-appointed defence counsel who will attend to the by another day or couple of days to complete the matter, in which inspection. case the judge will proceed to give judgment. Appeal is heard by the Superior Maritime Court and eventually cassation (if any) will 5.2 What are the general disclosure obligations in court be heard by the Supreme Court of Justice. proceedings?

6.2 Highlight any notable pros and cons related to your Maritime procedural rules incorporate so-called “discovery”. As jurisdiction that any potential party should bear in per Art. 9 of the LMP, after answering the claim, and once precedent mind. matters presented by the defendant have been amended or decided, any of the parties may request, within a period of five days, that Generally speaking, maritime proceedings develop smoothly. The the court orders the other party: 1) to exhibit documents, records LMP allows the use of the electronic Power of Attorney. For the or registers under the other party’s control or custody, related to the purposes of submittal and admission of a lawsuit or any other subject claim, or to allow for these documents, records or registers petition, representation of the plaintiff may be proved by written to be reproduced by any means; and 2) to allow access to a ship, or electronic means, provided it is accompanied by a guarantee; pier, dry dock, warehouse, facility or port area, in order to perform however, this must be later replaced by the formally granted POA. an inspection of ships, merchandise or any other object or document; All supporting documentation must be submitted in original, duly or in order to measure, photograph or reproduce them. As per Art. notarised form with the Apostille formalities as per the 1961 Hague 10, the judge shall request the required parties to exhibit documents, Convention and translated into Spanish by a public interpreter. recordings or registers, and allow access to the ship, pier or other

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resulting in the conviction of seafarers and the retention of ships, it 7 Foreign Judgments and Awards is fair to say that there has been a significant reduction in such cases. It is worth pointing out that these are outside the scope of maritime 7.1 Summarise the key provisions and applicable jurisdiction, as they are exclusively dealt with by the criminal courts procedures affecting the recognition and enforcement and their investigation is vested with the Prosecutor’s office, for of foreign judgments. which reason it is advisable to use a team comprising both shipping and criminal lawyers to discuss strategies and an effective approach. The Code for Civil Procedure contains the provisions for the The current exchange control regime continues to be a significant execution of foreign judgments and provides that, in any case, obstacle to the country’s international trade, affecting the regular flow the exequatur of the Supreme Court of Justice for its enforcement of goods through the ports. Presently, the ports have experienced a

Venezuela is required; however, such exequatur may be denied in the cases significant reduction in cargo volumes, backed by a punitive, newly specified in the procedural rules. enacted customs law imposing huge fines on importers and shipping lines. The decline in oil prices has meant that the state has been 7.2 Summarise the key provisions and applicable obliged to look for other sources of foreign currency, for which reason procedures affecting the recognition and enforcement port tariffs in commercial ports, as well as pilotage and towage, of arbitration awards. are nowadays payable in US dollars, with the resulting increase in costs. The former obliges carriers to review their tariffs and services, Venezuela is a signatory to the Convention for the Recognition and in order to cope with such an adverse economic environment. Execution of Foreign Arbitration Awards (New York Convention), Despite the difficult times the country is going through, the main published in the Official Extraordinary Gazette No. 4,284 dated 29th container shipping lines are committed to staying and servicing the December 1994. Therefore, foreign arbitration awards are enforceable main routes to and from the country. On the other hand, Executive provided requisites of Art. IV of the Convention are met, in which case Decree No. 769, assigning to the national shipping line Venavega the the execution will follow the rules prescribed by the Code for Civil performance of cargo transportation for the various public agencies, Procedure for the compulsory execution of sentences. In addition with the support of the cargo reservation provisions prescribed by to the domestic application of the New York Convention, Venezuela the 2014 amendments to the General Law on Merchant Marine and has also enacted the Law for Commercial Arbitration published in Related Activities, has had very little impact on the sector. the Official Extraordinary Gazette No. 36,430 dated th7 April 1998, The Puerto Cabello container terminal, under construction by China based on the UNCITRAL Model Law on International Commercial Harbour Engineering Company, has been definitively suspended due Arbitration, whose Art. 48 prescribes that the final arbitration award, to differences between the government and the contractors, as well wherever it is issued, shall be recognised by ordinary justice as binding as lack of funding. Commercial ports in general are now suffering a and non-appealable, and on presentation of a written petition to the reduction in cargo volumes and investment. competent Court of First Instance, shall be executed obligatorily by An important step back for the maritime community has been the such court with no requirement of an exequatur. elimination of the exclusive maritime courts in Caracas with national jurisdiction, which were opened in 2004, since through Resolution rd 8 Updates and Developments No. 2017-0011 dated 3 May 2017, the Supreme Court of Justice decided to attribute jurisdiction in matters of maritime law to the civil Courts of First Instance in different states of the country, and 8.1 Describe any other issues not considered above that appeals will also be heard by civil Superior Courts. Said move was may be worthy of note, together with any current justified, among other reasons, by the need to guarantee to all citizens trends or likely future developments that may be of an expeditious access to justice without delay and at a reduced cost. interest. The fact that maritime matters need to have judges with knowledge and experience, as was the case with the exclusive maritime courts, Although in recent years the shipping industry in Venezuela has seen means future problems are anticipated in the litigation field. a trend towards the criminalisation of seafarers in drug-related cases,

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José Alfredo Sabatino Pizzolante Iván Darío Sabatino Pizzolante Sabatino Pizzolante Abogados Sabatino Pizzolante Abogados Marítimos & Comerciales Marítimos & Comerciales Centro Comercial “Las Valentinas” Centro Comercial “Las Valentinas” Nivel 2, Oficinas 12/13, Calle Puerto Cabello Nivel 2, Oficinas 12/13, Calle Puerto Cabello Puerto Cabello 2050 Puerto Cabello 2050 Venezuela Venezuela Tel: +58 242 361 8159 / 4453 Tel: +58 242 361 8159 / 4453 Fax: +58 412 421 0545 Fax: +58 412 421 0545 Email: [email protected] Email: [email protected] URL: www.sabatinop.com URL: www.sabatinop.com

José Alfredo Sabatino Pizzolante holds a Law Degree from the University Iván Darío Sabatino Pizzolante is a lawyer who graduated from Venezuela of Carabobo (Venezuela). He studied at the University of Wales, the Universidad de Carabobo (Venezuela), with a specialisation College of Cardiff, where he obtained an M.Sc. in Port and Shipping in Maritime Law from the School for Superior Studies of Merchant Administration, as well as an LL.M. in Maritime Law. He is currently a Shipping, Caracas, Venezuela. He followed a course specialising Partner with Sabatino Pizzolante Abogados Maritimos & Comerciales, in International Maritime Law at the Spanish Maritime Institute (IME) Managing Director of Globalpandi, S.A. (P&I Correspondents) and and the Universidad Pontificia de Comillas, Spain, and later gained a Professor at the Universidad Experimental Marítima del Caribe a specialisation in Commercial Arbitration from the Universidad (Caracas). He is also a Legal Advisor to the Venezuelan Shipping Católica Andrés Bello (UCAB), Caracas. He is a Partner at Sabatino Association, Vice-President of the Venezuelan Association of Maritime Pizzolante Abogados Marítimos & Comerciales and General Director Law, Executive Vice-President of the Venezuelan Association of Port of the firm Globalpandi, S.A. (P&I Correspondents). He is a member Law, and a Titular Member of the Comite Maritime International (CMI) of the Venezuelan Association of Maritime Law and the Iberoamerican and the Iberoamerican Institute of Maritime Law. He has written Institute of Maritime Law. He is a former consultant to the National extensively on the subject of Venezuelan maritime law, attending many Institute of Aquatic and Insular Spaces (INEA). He is currently a international seminars and conferences as a speaker. Director of the Chamber of Commerce of Puerto Cabello and Alternate Director of the Venezuelan Association of Maritime Law.

Established four decades ago, Sabatino Pizzolante Abogados Marítimos & Comerciales is one of the leading law firms in maritime and port affairs throughout the country. Although situated in Puerto Cabello, the second-largest city within the state of Carabobo, the firm has correspondents in all other major Venezuelan ports, among them La Guaira, Maracaibo, Guanta, Puerto Ordaz and Caracas, offering assistance in the field of commercial and business, labour, tax, administrative and customs law, as well as litigation in the context of international trade. In the maritime field, services are not restricted to maritime and port law, but through Associated Maritime Consultants, C.A., its sister company, they extend to the areas of managing and technical consultancy comprising, among others, construction, sale and purchase agreements, vessel registration and documentation, naval mortgages, charterparty and bill of lading disputes, marine pollution, salvage, towage and collisions, port and terminal management consultancy, port operators’ liabilities, pre-loading surveys, vessel and cargo inspections, reefer and dry container inspections, investigations (theft, fraud, etc.) and legal remedies in customs affairs. Globalpandi, S.A. is another sister company, acting purely as Commercial P&I Correspondents. In addition, the office has close relationships with legal firms and specialised international agencies worldwide, providing periodic updates to its domestic and international clients – ship owners, protection and indemnity clubs, port operators, ship agents, etc. – through the publication of the Sabatino Pizzolante Newsletter, fully searchable alongside a significant number of articles and papers on the firm’s website.

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