Shipping case digest Consolidated edition January – June 2019 hilldickinson.com Contents January - 2019 May - 2019 The “FREE GODDESS”: time extensions The “ELENI P”: owners unable to claim 3 - 4 27 - 28 by consent must be notified to the court hire whilst vessel detained by pirates Volcafe: Supreme Court clarifies who Pan Ocean -v- China-Base: clear and has the legal burden of proof for 5 - 6 precise written confirmation required 29 - 30 damage to cargo under the Hague Rules for exclusive jurisdiction clause under Brussels Recast February - 2019 The Chartered Institute of Arbitrators The “FOUR ISLAND”: Court considers -v- B; C and D: instituting changes to the 31 - 32 whether arbitration clause in 7 duty of confidentiality in arbitrations charterparty applied to subsequent settlement agreement June - 2019 Nautical Challenge -v- Evergreen: The “RENOS”: Supreme Court decides Collision case returns to the High Court 8 - 9 what costs should be included in 33 - 34 for the assessment of damages owners’ CTL calculation Kaefer -v- AMS Drilling: Court of Appeal 10 - 11 The “ATLANTIC TONJER”: payment confirms test to establish jurisdiction 35 - 37 made or disputed within agreed period March - 2019 UTB LLC- v- Sheffield: application The M/V “ARCTIC”: is the obligation to of Disclosure Pilot and privileged 38 - 39 12 - 14 keep the vessel in class absolute? communications Globalink -v- DHL: right of set-off and 15 - 17 freight forwarding contracts A -v- B: When should experts’ reports be 18 - 19 excised for inadmissibility? April - 2019 The “LADY M”: can an owner be exempt under the Hague-Visby Rules for a fire 20 - 22 started by his own crew Michael Wilson & ‘Partners’ Ltd -v- John Forster Emmott: removing the Angel 23 - 24 Bell exception from a freezing injunction Lambert -v- VJ Glover Limited and Friday: 25 - 26 the extent of a skipper’s duty of care hilldickinson.com January 2019 Griffin Underwriting Limited -v- Ion G. In addition, the insurance company claimed that the shipowner received payment of US $1.6 million from the Varouxakis (The “FREE GODDESS”) cargo interests and the vessel’s P&I club, for which it was [2018] EWHC 3259 (Comm) obliged to account pursuant to the settlement agreement, but Mr. Varouxakis ensured that it failed to do so (the ‘Accounting Claim’). Introduction The claim form was served on Mr. Varouxakis on 8 March The Commercial Court in this case considered whether 2017 and on 29 March he filed an acknowledgment of an application challenging the court’s jurisdiction had service indicating an intention to contest jurisdiction. On 25 been made in time and, if not, should there be relief from April 2017, before any further steps were taken, the parties sanctions. agreed a moratorium in relation to all litigation, terminable on 48 hours’ notice. Despite the moratorium being lifted in November 2017, nothing happened in the action for Factual background some time, until May 2018 when Griffin applied to enter Griffin, a Guernsey insurance company, insured the judgment in default against Mr. Varouxakis. This lead to “FREE GODDESS”, under a policy of kidnap and ransom Mr. Varouxakis seeking an order that the court has no insurance for a 30-day round trip through the Gulf of jurisdiction to try the claim against him. Griffin contended Aden. In February 2012, while carrying a cargo of rolled that his application was out of time, consequently he must steel coil from Egypt to Thailand pursuant to bills of lading be treated as having accepted the court’s jurisdiction. Mr. issued on 20 and 26 January 2012, the vessel was seized Varouxakis disputed this, but if necessary, along with the by pirates in the Arabian Sea and taken to Somalia. As a present application challenging the court’s jurisdiction, he result Griffin paid out just under US $6.5 million under the sought relief from sanctions and an extension of time. policy, including sums by way of ransom payments, and the vessel was eventually released and arrived in Salalah, Oman in October 2012. General average was declared and Legal issues in February 2013, while the vessel was still in Salalah, a In his judgment, Mr. Justice Males addressed the following settlement agreement was reached between Griffin, the questions: shipowner and the vessel’s manager. 1. Was the application submitted in time? At the time of conclusion of the settlement agreement, 2. Should there be relief from sanctions? all parties were operating on the basis that the bill of lading contracts were still in existence, capable of being 3. Does the court have jurisdiction? performed and would be performed. It was envisaged Taking each in turn, the judge found that upon filing an that the vessel would be repaired and would proceed to acknowledgement of service, Mr. Varouxakis had 28 days Thailand to discharge her cargo, in accordance with the to make his application challenging the jurisdiction of shipowner’s contractual obligations. However, that did the court. In the event that he failed to do so, he would not happen and the bill of lading holders commenced be treated as having accepted the court’s jurisdiction arbitration proceedings against the shipowner, seeking under Civil Procedure Rule 11(5). The judge proceeded to delivery of the cargo. The arbitral tribunal issued several consider the effect of the moratorium and noted that in awards, ordering the shipowner to deliver the cargo, but the Commercial Court, parties have to notify the court of it did not comply. The vessel remained in Salalah and any agreed extension. It was held that the parties’ failure was sold to another company, effectively destroying the to notify the court meant that the moratorium was not shipowner’s possessory lien over the cargo for general effective and did not extend the time Mr. Varouxakis had average. The cargo was eventually discharged and sold in to challenge jurisdiction. Mr. Varouxakis was therefore late 2017 and the vessel was sold for scrap. deemed to have accepted the jurisdiction of the court. In February 2017, Griffin commenced an action against Mr. Justice Males commented that even if the moratorium Mr. Varouxakis for inducing or procuring breaches by the had been effective, the same result would have followed shipowner and manager of the settlement agreement. as time would have been extended but only for 28 Griffin contended that it had lost the right to recover days. The judge stressed the importance of the court general average on a subrogated basis against the cargo retaining control of the proceedings and having at least interests by reason of the shipowner’s failure to complete ‘the opportunity to consider whether to override any the voyage to be performed under the bill of lading agreement reached between the parties’. contracts (the ‘Lost GA Claim’). hilldickinson.com The Commercial Court found that as the parties had Comment agreed a moratorium, even one which was ineffective, it was understandable why Mr. Varouxakis did not originally This Commercial Court case operates as a cautionary take any steps to challenge jurisdiction. However, after tale for all applicants wishing to challenge the court’s the termination of the moratorium in November 2017, jurisdiction but either need more time to make their there was no valid reason to refrain from making the application or want to pause proceedings to explore application to challenge jurisdiction if that was what he possible settlement. In his judgment Mr. Justice Males intended to do. Realistically, therefore, the application reminded applicants that it is not open to the parties to was six months late and this was deemed to be a serious agree an indefinite extension of time without notifying the failure. Mr. Justice Males noted that it would not be in court and noted that in this court ‘it takes three to make an the interests of justice to grant relief from sanctions and agreement’. doing so would not promote the efficient conduct of litigation as there had been a serious failure to comply with the rules for no good reason. The court held that the application to challenge jurisdiction came too late and Mr. Varouxakis must be treated as having accepted the court’s jurisdiction. Regardless, the court proceeded to consider the jurisdiction arguments. Article 7(2) of the Recast Brussels Regulation enables a claimant to sue in the courts for the place where it has suffered damage even if the event which gave rise to the damage occurred elsewhere. It is common ground that the burden falls on Griffin as the claimant to demonstrate that the court has jurisdiction and the standard to be applied is that of ‘good arguable case’. Mr. Justice Males thought it was necessary to consider separately the two claims brought by Griffin as he explained that the determination of the place where the damage occurred called for a finely balanced exercise of judgment, particularly in cases of financial loss. The judge found that the court did not have jurisdiction to try the Lost GA Claim as the place where the damage occurred was not England. The initial direct and immediate damage was suffered in Salalah where the shipowner was induced by Mr. Varouxakis to abandon the voyage and Griffin’s claim that it suffered an inability to enforce its subrogated right to general average contributions, the value of which would have been realised in London was rejected. The Accounting Claim was more straightforward as it concerned a claim that Mr. Varouxakis had procured the non-payment of money which ought to have been paid to the average adjusters in London, and it falls within Article 7(2). hilldickinson.com January 2019 Volcafe Ltd and others -v- Compania The carrier appealed.