______VOLUME 39 APRIL 2008 NUMBER 3

INDEX TO THIS ISSUE days of lively, interactive sessions were again superbly chaired by Professor Weiss PRESIDENT’S CORNER…………...….....……….Page 1 and the SMA’s Austin Dooley, PhD. THE HIDDEN TRUTH……………………...….….Page 2 Also in February, NYMAR put on a D.G.HARMONY DECISION……….……….……..Page 3 vivid afternoon lecture/discussion by simu- ANDREW J. BARBERI DECISION……………….Page 5 lating the COSCO BUSAN accident (alli- sion with a bridge in Bay and THE APPLICATION OF COGSA TIME BAR IN NEW YORK ARBITRATION………..….Page 7 subsequent oil spill) as having taken place in A COMMERCIAL MAN……...…………….……..Page 9 New York harbor: How prepared would New York be? The US Coast Guard CLEAN SHIPS…………………………...………..Page 12 (USCG) representatives from the New York HALL STREET V. MATTEL – EXPANDED JUDICIAL REVIEW…………………….…..Page 16 and New Jersey environmental agencies (EPA), spill responders, P&I Club, au- SMA LUNCHEON SPEECHES…………...... ……Page 16 thority, pilot association, Owner and Char- OIL SPILL RESPONSE UPDATE..…………..…..Page 17 terer’s representatives all made this frighten- SMA WORKSHOP REPORT……….…….………Page 19 ingly real, but demonstrating that New York PUBLISH WE DO!...... Page 20 would be prepared to deal with such a mess, (MORE ON) SMA AWARDS……..………………Page 21 literally speaking. Further details on both BOOK REVIEW………………………..………….Page 21 events are provided in this issue. PEOPLE AND PLACES……………….………….Page 21 Then in March the whole shipping SOME PERSONAL NOTES………………………Page 23 world, at least so it seemed, came together in Stamford for CMA’s Shipping 2008 Confer- IN MEMORIAM – Neil J. Carey..…………...……Page 23 ence. And let us not forget the many visiting firemen (an expression for lawyers, barris- THE PRESIDENT’S CORNER ters, arbitrators and/or other shipping digni- taries from abroad or far away) to keep our Easter has come and gone and so has lunch tabs running. Spring, even if only as a calendar date, it is What’s ahead: first of all, we are barely April and events have been and are planning a fancy birthday party for our- th keeping up a fast pace. selves. It is the SMA’s 45 anniversary and The fourth annual SMA seminar on we aim to celebrate in style. The date is “Maritime Arbitration in New York under September 24 and the venue is the Union SMA Rules” in February had a majority of League Club. More details will follow. foreign attendees, including London, Nige- Then there is Maritime Americas Week ria, Venezuela and Mexico (we had two last 2008 in Miami in May (an annual event, but minute cancellations – isn’t it ever so frus- apparently this being the first), at which trating when business gets in the way). Two SMA members will participate in a Mock 2 THE ARBITRATOR APRIL 2008

Arbitration in conjunction with Petro- the England manager took a lot of stick for spot/IBIA’s Bunker Arbitration Experience, that umbrella. He let the fuss die down for a dealing with bunker related dispute issues. couple of months before then ruining every- We also hear that the busy people thing by claiming that he had only used the running NYMAR are working on another umbrella to keep his notebook dry. Reckon. afternoon seminar sometime between now All sorts of people are susceptible to and June. Finally, keep planning on attend- this foot-in-mouth syndrome. A barrister ing ICMA XVII in Hamburg, October 2009. who should have known better once told an I encourage the membership to par- ICMA meeting that it was not a good idea ticipate in these interesting events. Watch for London maritime arbitrators to publish our website and stay tuned, but in the mean- their awards because this would lead to “a time enjoy the spring, if and when it actually proliferation of citations of authority.” You shows up. try proliferating nothing. Then he com- pounded it by saying that publication had to Klaus Mordhorst be in a user-friendly format. Fat chance. The only vaguely comparable gaffe is that committed by a soldier in the British THE HIDDEN TRUTH armed forces who, some years ago, was by Chris Hewer court-martialed for coming back to barracks after lights-out, climbing in through his hut Roughly 95 per cent of people in window, and falling into bed in a drunken the world claim that they have never told a stupor with a lit cigarette still in his mouth, lie. That figure is official: 95 per cent, mind. thereby setting fire to the bed and to the en- But it depends on your definition of a lie. Do tire hut. His subsequent plea in court was, you favour “gross falsification or misrepre- “Not guilty, m’lud. The bed was already on sentation of the facts, with constant repeti- fire when I got into it.” tion and embellishment to lend credibility?” Obfuscation (let us call it that, for Or do you prefer the old English maxim, want of a better word, although heaven “Liar, liar, pants on fire?” knows there must be thousands) has reached American author Steven Covey once new heights of sophistication in the elec- said, “When you make a mistake, admit it, tronic age. At this very moment there is correct it, and learn from it – immediately.” somebody trying to hawk an “enterprise- Easier said than done. wide application for metadata removal and There is a fine line between telling a metadata management in law firms which lie and just giving voice to what you hope is uses sophisticated technologies to remove the truth and then not knowing when to stop. visible metadata and clean the hidden or dif- Take the former manager of the England ficult-to-reach file elements.” football team (nobody else has snapped him Oh, that old metadata chestnut, you up yet), who last year stood on the touchline are probably thinking. And you’d be right. protecting his lovingly created hairstyle un- For those who did not know, metadata is der a huge umbrella while watching his side data about data. The word ‘meta’ comes being eliminated from the European Cham- from the Greek, where it means ‘after’ or pionships. ‘beyond’. In epistemology, the prefix ‘meta’ Real football managers don’t stand is used to mean ‘about’, which just happens under umbrellas. They wear cheesecutters, to be a word that causes more trouble in and stand out in the rain. Not surprisingly, 3 THE ARBITRATOR APRIL 2008

shipping disputes than any other, and is by COGSA LIABILITY / no means exclusive to the Greeks. DG HARMONY But enough of that. The product on offer allows law firms the luxury of not hav- The following case summary ap- ing to “worry about file formats leaving peared in the Blank Rome March 2008 their electronic walls.” That’s a relief. And newsletter. it has an “email integration capability to prevent the inadvertent release of confiden- Second Circuit Decision Affects COGSA tial information.” The product can “require Liability for Shipment of Dangerous users to clean all documents sent outside the Cargo firm as part of a non-invasive automated On March 3, 2008, the United States workflow process.” Tidy. Court of Appeals for the Second Circuit, in If we are reading this right, lawyers In re M/V DG HARMONY, 2008 U.S. App. are being offered an electronic means of, at LEXIS 4483, No. 05-6116-cv (2d Cir. best, keeping secrets, and, at worst, covering March 3, 2008), issued an important deci- up their mistakes. The days of dumping a sion which clarifies the standard used to de- job lot of lever-arch files in the East River termine the liability of shippers and carriers are clearly long gone. The environment ex- transporting hazardous cargo under the Car- hales. But does it help us choose the right riage of Goods by Sea Act (“COGSA”), 46 lawyer? U.S.C. § 30701 note. Just the other day, an American law- Under the holding of this case, a yer sent out a press release telling the world shipper will not be held strictly liable for what to look for when hiring an attorney. damage caused by hazardous goods if both Among other things, this cautioned, “It is the shipper and the carrier had pre-shipment important to meet the lawyer, if possible, in knowledge of the dangerous nature of the the office. The client should see where the cargo, even if the carrier lacked information lawyer works. Observe the feel of the office about the precise characteristics of the cargo to see if it will be a good fit. There are no and its hazards. Instead, in such a case the secrets or surprises here.” And, oh yes, shipper’s liability will be determined on “Handshakes and a wink are not accept- negligence principles. In particular, where able.” the carrier alleges that the shipper failed This is all good advice, even though adequately to warn the carrier about the many of us grew up believing – and still be- characteristics of the particular shipment, the lieve – that handshakes, at least, are per- carrier must show (1) that the shipper had a fectly acceptable. A wink, meanwhile, is as duty to warn because the cargo presented good as a nod to a blind horse. But as for ‘no dangers of which the carrier could not rea- secrets and surprises’, what about those de- sonably have been expected to be aware, (2) leted files? What lies behind those electronic that the shipper failed to provide the ade- walls? What about the non-invasive auto- quate warning, and (3) that this failure mated workflow process? What about the caused the damage complained of. metadata? Overall, if you need to choose a law- Fact and Procedural History yer, you can do no better than choose a On November 9, 1998, the M/V DG lucky one. HARMONY caught fire off the coast of Brazil as a result of an explosion in its third hold. The fire burned for three weeks, ren- 4 THE ARBITRATOR APRIL 2008 dering the vessel and its cargo a constructive strict liability. After a bench trial, the dis- total loss. On board the vessel were ten con- trict court found PPG solely liable based tainers, each packed with 16,000 kilograms upon the theories of strict liability and neg- of calcium hypochlorite (hydrated) (“cal- ligent failure to warn. PPG appealed to the hypo”) which was manufactured and Second Circuit. shipped by PPG Industries, Inc. (“PPG”). The Second Circuit’s Decision on Calhypo is an industrial bactericide which is Appeal likely to combust when it reaches its critical The Second Circuit reversed the ambient temperature (“CAT”), a figure judgment of the district court that PPG was which is dependent on the manner in which strictly liable pursuant to COGSA § 4(6), the calhypo is stored and is inversely pro- which provides that the shipper of flamma- portional to the quantum of calhypo in a ble, explosive, or dangerous cargo “shall be given sample. Calhypo is listed in the Inter- liable for all damages and expenses directly national Maritime Dangerous Goods Code or indirectly arising out of or resulting from (“IMDG Code”), which recommends that such shipment.” The district court’s finding calhypo not be exposed to a heat source in of strict liability was based on the Second excess of 55° C for longer than a 24-hour Circuit’s holding in Senator Linie GMBH & period. PPG provided the carrier with Co. KG v. Sunway Line, Inc., 291 F.3d 145 documentation identifying the cargo by its (2d Cir. 2002), where a shipper was held IMDG Code, declaring the containers had strictly liable for damage caused by the been packed in accordance with the re- spontaneous combustion of hazardous goods quirements of the IMDG Code, cautioning being shipped from Korea to the United that the containers should be stored in a States. The DG Harmony Court emphasized cool, dry well-ventilated place away from that the application of the Senator Linie de- sources of radiant heat. PPG also warned cision was limited to the situation where the carrier that the cargo would become un- neither the shipper nor the carrier knew of stable above a certain temperature, but it the dangerous nature of the cargo. omitted specific information about what ef- Here, however, both the shipper and fect the packaging of the containers might carrier knew that calhypo was dangerous. have on the calhypo’s CAT. PPG’s contain- Relying on its prior decision in Contship ers were stowed in the vessel’s third hold. Containerlines, Ltd. V. PPG Indus., Inc., Three of the containers were placed adjacent 442 F.3d 74 (2d Cir. 2006), cert. denied, 127 to the heated port side bunker tank with two S.Ct. 565 (2006), the Second Circuit held of these containers also sitting directly atop that a shipper cannot be held strictly liable the bunker tank. The fire aboard the M/V for damage caused during the shipment of DG HARMONY was caused when PPG’s hazardous cargo in circumstances where the calhypo exploded. carrier was generally aware that the cargo’s Litigation ensued in the United dangerous nature requires careful handling States District Court for the Southern Dis- or stowage, as the carrier was in this case, trict of New York. All claims were resolved and it nevertheless exposes the cargo to except the claims of the ship-owning and conditions which could trigger a known cargo interests against PPG. The ship- danger, as the carrier did in this case. In owning and cargo interests alleged that PPG such a case, liability must be determined un- was liable for the constructive total loss of der negligence principles and not strict li- the vessel based upon theories of general ability principles. negligence, negligent failure to warn and 5 THE ARBITRATOR APRIL 2008

The Second Circuit then turned to by Mark Fass ([email protected]), covering the district court’s holding that PPG was li- the decision on a salvage claim by Henry able because it failed to adequately warn of Marine Service against the City of New the dangers posed in shipping the calhypo. York, as Owner and Operator of the The court affirmed the district court’s find- ANDREW J. BARBERI. ing that PPG had a duty to warn and that The owners and a crew member of PPG breached this duty by failing to ade- the Dorothy J, a that came to the aid quately warn the carrier of the potential of the Andrew J. Barberi ferry after it dangers posed by the specific manner in crashed into the Staten Island Ferry Termi- which PPG had packed the containers con- nal, are entitled under maritime law to a taining the calhypo, and it further affirmed “salvage award” for the crew’s efforts in the the finding that the calhypo caused the ex- immediate aftermath of the crash, a Brook- plosion resulting in the constructive total lyn federal judge has ruled. loss of the vessel. The court nevertheless However, the claimants are not enti- vacated the district court’s judgment based tled to an award for later keeping the Barberi upon its failure to address whether the car- stable within its ferry slip, the judge added, rier would have stowed the cargo differently as the company was required to do so under if PPG had provided an adequate warning the terms of a pre-existing contract with the and remanded the case to the district court city. with instructions to make findings on the Eastern District Judge Edward R. issue of whether an adequate warning would Korman found in In the Matter of the Com- have affected how the carrier stowed the plaint of the City of New York, 03-cv-6049, calhypo. that the tugboat’s actions in the half hour Conclusion following the crash satisfied the three ele- Where the carrier is generally aware ments of a “salvage service” under common of the hazardous nature of cargo, even if it is law: there was “marine peril,” the service not aware of the precise nature of the risk, was voluntary and the operation was a suc- and the carrier nevertheless exposes it to po- cess. The judge granted summary judgment tentially dangerous conditions, it will not be in favor of Henry Marine Service, which able to rely on the strict liability provisions owns the Dorothy J, and its mate, Robert of COGSA but will be required to show that Seckers. the shipper acted negligently with respect to The Barberi collided into a concrete the cargo and/or its obligation to warn the maintenance pier on the afternoon of Oct. carrier of the specific nature of the cargo’s 15, 2003, killing 11 people and injuring risks. more than 70. One person was decapitated, Reprinted with the permission of Blank another lost both of his legs. Rome LLP. For more details, contact: At the time of the crash, the Dorothy [email protected] or J was docked at a nearby pier, awaiting or- [email protected]. ders regarding an oil . ______Mr. Seckers quickly maneuvered his boat into action. Initially, he attempted to THE CITY OF NEW YORK, AS secure a line to the damaged end of the ferry OWNER AND OPERATOR OF THE in order to prevent it from drifting towards ANDREW J. BARBERI the Verrazano Bridge. When that plan failed, the tugboat’s engineer boarded the Barberi On February 15, 2008, the New York to fasten a line. The Dorothy J then pushed Law Journal published the following article 6 THE ARBITRATOR APRIL 2008 the ferry back to the passenger slip, where scene aboard the Barberi after the crash . . . emergency workers were waiting. Members There is also evidence that the City was of the tug boat crew also attempted to calm concerned that the Barberi was in danger of ferry passengers, coaxing them from jump- sinking even after the Dorothy J pushed it ing into the water, and provided the larger back into the ferry slip, and, for this reason, ship with its first aid kit. directed the Dorothy J. to continue pushing With the tugboat’s help, the ferry re- on the Barberi instead of attaching lines or turned to the landing within half an hour. cables to her,” he wrote. The city then ordered the Dorothy J, Judge Korman also found the ser- under the terms of its contract, to spend the vices to have been volunteered, as they did next few days “pushing” the Barberi to keep not fall within Henry Marine’s pre-existing it stable in its slip. contract with the city for tugboat services. The following March, Henry Marine The judge concluded, “Under these filed a salvage claim against the city, seek- circumstances, Henry Marine and Seckers ing $6 million for its work between the are entitled to a salvage award for the Wednesday of the accident and the follow- prompt and spontaneous efforts to aid the ing Saturday. Barberi in the immediate aftermath of the Mr. Seckers, the ship’s mate, submit- collision.” ted his own salvage claim, as well as a sepa- He also ruled that the two claimants, rate tort claim, seeking $2 million. Henry Marine and Mr. Seckers, were enti- Henry Marine and Mr. Seckers both tled to a single award. How such an award moved for summary judgment on the issue would be divided, the judge added, was not of whether their actions constituted a cogni- a subject of the present motion and cross- zable marine salvage claim. The city cross- motion. moved for summary judgment. The judge did not determine the size Yesterday afternoon, Judge Korman of the award. Although Henry Marine asked ruled largely in favor of the shipping com- for $6 million, Judge Korman said at a pany, finding that the aid offered in the March 2007 hearing that he believed that the “immediate aftermath of the collision” company perhaps deserved a “bonus” of though not after the city ordered the tugboat “not more than five figures” (NYLJ, March to keep the Barberi in its slip, entitled the 29, 2007). claimants to a salvage award. Even though the judge limited the The decision offered an extensive award to the Dorothy J’s first 30 minutes of history of salvage law - the “right to be re- work, the attorney for the tugboat’s owners, warded for saving a ship or its property from James E. Mercante of Rubin, Fiorella & peril” - which “pre-dates the Christian era Friedman, called the decision a “big win.” by 900 years.” “The time on the scene is not one of As both sides agree that the Dorothy the elements of the salvage award. The ele- J’s efforts were successful, the city only ments are the value of the vessel rescued, contested the first two elements of a marine the degree of peril it was in, the value of the salvage claim: that the ship was in peril and equipment that the salvor put at risk, the that the service was voluntarily rendered. lives saved and the skill employed by the The court found for the claimants on both salvors,” Mr. Mercante said. counts. “We made a motion for summary “Many of the passengers and crew judgment to get a ruling that Henry Marine’s have described the horrifying and chaotic service was salvage under admiralty law and 7 THE ARBITRATOR APRIL 2008

not towing, and Judge Korman agreed. [We within one year, it does not encompass “ar- got] exactly what we were asking for.” bitrations.” The court stated: The size of the award will be deter- mined at a later proceeding, which was not It is true that the [ar- specified in the judge’s decision. bitration] demand was not James E. Ryan of Dougherty, Ryan, made within the one year Giuffra, Zambito & Hession represented Mr. limitation upon suits, con- Seckers. tained in § 1303(6) of the Lawrence S. Kahn, chief litigating above Act [the COGSA time- assistant for the city’s Law Department, who bar provision], but there is, was involved in the case, said, “We’re re- nevertheless, no time bar be- viewing the decision.” cause arbitration is not within For anyone interested in accessing the term ‘suit’ as used in that the Court’s decision, please contact statute. [email protected].

Despite the Son Shipping holding and the few awards which rely upon it, how- THE APPLICATION OF THE COGSA ever, the great weight of arbitration prece- TIME BAR IN dent (persuasive albeit non-binding) indi- NEW YORK ARBITRATION cates that the COGSA time bar routinely has by Manuel R. Llorca been applied in charter party arbitrations in- Partner, Llorca & Hahn volving cargo loss or damage, where COGSA is properly incorporated in the There have been a handful of arbitra- charter party or bill of lading governing the tion decisions or dissents over the years contract of carriage. See The S.S. Borgfjell which have held (or implied) that the Car- (SMA #1144, 1977); The S.S. Prairie Grove riage of Goods by Sea Act (“COGSA”) one- (SMA #1020, 1976); The M/V Wind En- year time bar provision is not, or should not deavor (SMA #1533, 1981); The M/T King be, applicable in an arbitration scenario, Cadmus (SMA #1881, 1983); and The even where COGSA was incorporated by Ocean (SMA #2576, 1989). Case law since the parties into the contract of carriage. See, Son Shipping, as discussed below, supports for example, In the Matter of the Arbitration these awards. between Elektra Shipping Co. Ltd. and Un- In this writer’s opinion, the status of ion Oil Trading (SMA #941, 1974), and In this issue is well illuminated by the decision the Matter of the Arbitration between Vin- of the Second Circuit Court of Appeals in cent J. Shannon and Rice Growers Assoc. of Office of Supply, Government of the Repub- Calif. (SMA #1830, 1983). The awards or lic of South Korea v New York Navigation dissents in question generally rely upon the Co., Inc., 469 F.2d 377 (2d Cir. 1972). The holding of the Second Circuit Court of Ap- court there stated: peals in the case of Son Shipping Co. v De Fosse & Tanghe, 199 F.2d 687 (2d Cir. …we fail to find … 1952). Son Shipping contained language to manifest disregard of the law the effect that since the COGSA time bar on the arbitrators’ part in provision referred to the bringing of “suit” concluding that OSROK’s claim was time-barred by the 8 THE ARBITRATOR APRIL 2008

one-year provision of may find upon the record be- COGSA, which was incorpo- fore them in an appropriate rated by reference in the case that the one-year time- agreement of the parties and bar does not govern the par- quoted in full on the reverse ticular dispute, either because side of the bill of lading. It it was not incorporated in the was not unreasonable for the bill of lading through the arbitrators to conclude that its charter party or contract of effect in the present case was affreightment, or because the to extinguish OSROK’s provision was later waived or claim. See, e.g., VM Inc. v modified by the parties, or for St. Paul Fire & Marine Ins. some other reason. In short, Co., 156 F. Supp. 879 where parties have agreed to (S.D.N.Y. 1957), rev’d on settle differences by arbitra- other grounds, St. Paul Fire tion, they should not be de- & Marine Ins. Co. v United nied access to that forum, re- States Lines Co., 258 F.2d gardless of COGSA’s one- 374 (2d Cir. 1958), cert. de- year time-bar, provided they nied, 359 U.S. 910, 79 S. Ct. invoke arbitration within a 587, 3L.Ed. 2d 574 (1959). reasonable time after their Such an expressed contrac- differences have arisen. Son tual time-bar must be distin- Shipping Co., supra at 689. guished from laches, which is Thereafter it is for the arbitra- essentially a principle of eq- tors, not the court, to decide uity. Czaplicki v Hoegh whether a claim is time- Silvercloud, 351 U.S. 525, barred by their agreement. 533, 76 S.Ct. 946, 100 L.Ed. 1387 (1956). This decision clearly moves away from the problematic language in Son Ship- Our decision is not ping which holds that COGSA, referring to inconsistent with Son Ship- “suits” in its time-bar provision, does not ping Co. v DeFosse & thereby encompass “arbitrations.” While Tanghe, 199 F.2d 687 (2d choosing not to explicitly overturn Son Cir. 1952), so heavily relied Shipping, the Second Circuit chose not to upon by appellant, which cleave tightly to that precedent on this issue, held that COGSA’s one-year since it held that arbitrators could indeed time-bar did not preclude the apply the COGSA time bar in the case be- carrier from invoking arbitra- fore it, even though that time-bar provision tion. Having agreed upon ar- of COGSA still referred to “suits.” The bitration as the procedure for court chose to read Son Shipping narrowly, resolution of their differences deciding that the important lesson Son Ship- the parties should not be en- ping teaches is that arbitration may be in- joined from utilizing that voked despite the passage of the COGSA procedure, even though the one-year time-bar period, but that once in- demand for arbitration may voked the arbitrators are free to apply the be late, since the arbitrators COGSA limitation unless they find that 9 THE ARBITRATOR APRIL 2008

there is an independent reason why it should OINOUSSIAN, 1994 U.S. Dist. LEXIS 2625 not apply (waiver; modification of the (S.D.N.Y. 1994); B.S. Sun Shipping Mon- COGSA provisions incorporated by refer- rovia v. Citgo et al., 509 F. Supp. 2d 334 ence; estoppel; etc.). (S.D.N.Y. 2007). Thereafter, a number of arbitration It is hoped that this brief exposition panels explicitly chose to reject the notion will assist in filtering the slightly muddied that COGSA’s “suit” language did not en- waters surrounding the COGSA time bar compass arbitrations as included fora, and and its application within the context of ar- implicitly or explicitly followed the reason- bitration proceedings. ing of the Second Circuit’s Office of Supply case instead. See, e.g., SS ELEKTRA, SMA #941 (1974) (quoting from Office of Sup- ply); SS PRAIRIE GROVE, SMA #1020 (1976); SS BJORGFJELL, SMA #1144 A COMMERCIAL MAN (1977) (criticizing Son Shipping); MV WIND by Mary Thomson ENDEAVOR, SMA #1533 (1981) (We are Kennedys, Hong Kong of the opinion that the time-bar provisions of COGSA must find application to this par- This article discusses Hong Kong, ticular cargo case. We cannot deny Uni- English and US case law on the satisfaction marine its right and immunities under of contractual requirements that an arbitrator COGSA through the U.S. Clause Paramount should be a “commercial man.” without trespassing on established law and Introduction custom of the industry, both in the U.S.A. Who qualifies as a “commercial and also under English law.); MT KING man” when appointing an arbitrator? CADMUS, SMA #1881 (1983) (citing Son It is not uncommon, particularly in Shipping and Office of Supply); and the standard form contracts in certain trades, to OCEAN, SMA #2576 (1989) (“In general, provide that an arbitrator must be a “com- when COGSA is incorporated into a con- mercial man” - an expression that covers tract, courts and arbitrators bind the cargo both men and women. What does it take to claimants to bringing action within 12 be a “commercial man?” Can a lawyer qual- months of delivery (or 12 months of sched- ify as one, for instance? uled delivery in case the cargo was never The narrow view would suggest that delivered).”). lawyers cannot qualify. The original inten- The Federal courts in New York, af- tion behind the qualification was to exclude ter Office of Supply, have routinely “punted” them from arbitral panels because they were time-bar issues to the arbitrators, and it is thought to be less practical, more pedantic clear that a panel’s decision to recognize the and more concerned with legal principles parties’ intent to agree to the COGSA one- than with helping parties to resolve their year time bar, manifested by incorporating disputes in a timely and efficient manner. COGSA into a charter party and/or bill of Consequently, the preference has been to lading, will not be disturbed or treated as a empanel experienced business people in- “manifest disregard of the law.” See In the stead, as they are likely to be more familiar Matter of the Arbitration between World with the trade than the average lawyer and to Carrier Corp. and Metal Transport Corp., have a greater knowledge of the background 1979 U.S. Dist LEXIS 7846 (S.D.N.Y. to (and the customs adopted in) the particu- 1979); Mitsubishi Corp. v. MV lar industry. Such a narrow approach is, however, 10 THE ARBITRATOR APRIL 2008 now unwarranted. Should otherwise knowl- lenged arbitrator previously practised as a edgeable commercial men be excluded from lawyer cannot in itself disqualify him as a arbitral panels merely because they once commercial man, so long as he has subse- practised as lawyers or are still currently in quently qualified as a commercial man. practice? In view of these two English authori- Hong Kong and English case law ties, the Hong Kong court in Vincor Ship- Courts are rarely asked to resolve the ping found that a retired solicitor who had issue of whether an arbitrator qualifies as a been a full-time employee of a correspon- commercial man. The reality is that such dent of a mutual insurance association did challenges are commonly made at the com- possess practical commercial experience in mencement of the arbitration proceeding and the commercial shipping industry and there- the challenged arbitrator then usually resigns fore qualified as a commercial man. the appointment. Typically, the cases that do United States case law proceed to litigation are those where parties Can a lawyer who is still in practice challenge the arbitral award at the enforce- qualify as a commercial man? The issue has ment stage. not been reviewed by any English or Hong The only Hong Kong case to have Kong courts, but has been considered in the considered the issue is Vincor Shipping Co United States. Ltd V Transatlantic Schiffahrtskontor The first important case was a deci- GmbH.1 In this case, the court relied on two sion of the Court of Appeals for the Second English cases. The first was Rahcassi Ship- Circuit, WK Webster & Co v American ping Co SA v Blue Star Line Ltd [1967] 2 President Lines Ltd.3 In this case, the arbi- Lloyd's Rep 261. The court in that case de- trator had practised as an admiralty lawyer clined to lay down any general principles early in his career. He then worked as a about who qualifies as a commercial man, manager for several companies involved in but stressed that the term should be given a maritime cargo claims and insurance. He sensible and practical construction. The was a consultant with a law firm at the time court made it clear that the phrase “commer- that he was appointed as an arbitrator, and, cial man” is not so vague as to render the prior to the making of the arbitral award, he arbitration provision invalid. The term is had become a partner of that firm. Ameri- specifically designed to be general, so that a can President Lines sought to vacate the wide field of people with commercial ex- award, alleging that the arbitrator was not a perience can be included. commercial man. In the second English case, Pando The Court of Appeals rejected this Compania Naviera SA v Filmo SAS, 2 the argument, holding that the arbitrator in ques- court held that a retired practising solicitor tion possessed substantial practical experi- who later became a full-time arbitrator – and ence of the commercial workings of the who acted as director of several shipping maritime industry. Adopting the English companies – was a commercial man as en- decision in Pando, the court ruled that the visaged by the court in Rahcassi. In con- arbitrator’s experience must be taken as a firming the Rahcassi construction of the whole – that is to say, both experience ac- term “commercial man,” the court in Pando quired as a maritime lawyer and experience said that “like an elephant, they are more gained during his non-legal career should be easily recognised than defined.” What is taken into account. The fact that the arbitra- important is the commercial experience of tor was a practising lawyer at the time of the such individuals. The mere fact that a chal- arbitration could not disqualify him from 11 THE ARBITRATOR APRIL 2008 being a commercial man. authority in reaching their findings, there is A more recent authority, which relies no certainty that Hong Kong or English on both the Webster and Pando decisions, is counts will, in turn, rely on them. Whilst US Ship Management Inc v Maersk Line US precedents have no binding effect in Ltd.4 This case centred on several arbitra- those jurisdictions, they are persuasive and tions between Maersk Line Ltd (Maersk) there is a reasonable chance that the Webster and US Shipping Management Inc (USSM), and US Ship Management decisions will be in which Maersk had appointed one Emery followed in similar cases. There are no ob- W Harper as arbitrator. The arbitration vious policy reasons why courts in either panel made an award in favour of Maersk. jurisdiction should take a different approach USSM challenged the decision, arguing that and, as mentioned previously, both US deci- Mr Harper was not qualified to serve as an sions are in line with prior English authori- arbitrator because he failed to meet the con- ties. tractual requirement that each arbitrator be a Relevant time for qualification “commercial person knowledgeable in the On a final note, the relevant time for operation and chartering of container vessels assessing whether someone qualifies as a and the operation of scheduled container commercial man is the date of their ap- services.” pointment. This is made clear by the Eng- Mr Harper had been a maritime law- lish decision in Pan Atlantic Group Inc v yer for more than 30 years. During that Hassneh Insurance Co of Israel Ltd.5 Tech- time, he not only acquired a formidable nically speaking, the case was concerned amount of knowledge about the container with a different qualification requirement - vessel industry, but also had spent many af- namely, that the arbitrator must be a “disin- ter-work hours participating in discussions terested executive official of insurance or with container service companies and execu- reinsurance companies.” However, as a tives of his clients. After he ceased practice matter of construction, the decision equally as a lawyer, Mr Harper established his own applies to arbitration clauses requiring arbi- consultancy firm, which managed maritime trators to be commercial men. The practical commercial ventures. His work consisted of effect of the Pan Atlantic decision is that an legal and non-legal matters, including the appointed arbitrator will qualify as a com- development of business opportunities. mercial man if, at the date of appointment, The US District Court for the South- he possesses the necessary substantial com- ern District of New York ruled that Mr mercial and practical experience. Harper did indeed qualify as a commercial Summary man. The Court of Appeals for the Second In view of the English and US authori- Circuit agreed. ties, it is submitted that the position may be In the light of the Webster and US summarised as follows. Ship Management decisions, therefore, it is • A lawyer will not qualify as a com- clear that practising lawyers can qualify as mercial man if he has only a general commercial men, provided that they possess familiarity with the industry, ac- substantial (and relevant) practical commer- quired solely through practising law, cial knowledge and experience. but no practical commercial experi- Will the Hong Kong courts follow ence gained from working in the suit? sector itself. While the US decisions discussed • A lawyer who has substantial com- above have undoubtedly relied upon English mercial experience, which has been 12 THE ARBITRATOR APRIL 2008

acquired after retiring from legal volvement at multiple levels that many peo- practice, will qualify as a commer- ple believe ocean carriers can stride the cial man. earth like 19th century robber barons abusing • A lawyer will also qualify as a employees, customers and the environment. commercial man if he has acquired Well, we can’t and we don’t. substantial commercial experience Environmentally cleaner ocean- before becoming a full-time practis- going cargo vessels are a critically important ing lawyer. topic for the people of the United States and The focus is not, therefore, on whether the world. an individual is (or was) a practising lawyer A word of warning….while I have but, rather, is on: many years of experience in the ocean • whether the individual is (at the time transportation business, I am neither an en- of his appointment) in fact familiar vironmental scientist nor an expert. I am a with the customs and practices of simple transportation executive charged with the trade; and moving goods from point A to point B. But I • whether that familiarity derives from am also someone who cares deeply about substantial, practical and non-legal the future of my company, the industry and experience gained through the con- the environment. I have two children, and duct of commerce rather than the like all parents, I would like to do my part to practice of law alone. ensure that my children and grandchildren Moreover, a person retains the status of a have clean air and water in the future in ad- commercial man, whether or not they have dition to a productive and sustainable econ- retired from commerce or are still engaged omy. in it. Also, as we discuss this critical issue ______1 HCCL 99/1986, 9 January 1987, unreported. I believe it is important to keep in mind a 2 [1975] QB 742. sticky, inconvenient topic that seldom gets 3 1994 US App LEXIS 20244. any air time in the debate. In his second best 4 2002 US App LEXIS 24053. 5 seller entitled “Collapse,” Jared Diamond [1992] 2 Lloyd’s Rep 120 raises the issue of choices societies have to

make and how these choices can lead to sus- Note: This article appeared in the Asian Dispute Review, October 2007 at pp.123-124. tainable prosperity or to societal collapse. The author also practices as an arbitrator and is Without getting too dramatic, these are the an accredited mediator. She can be real choices we face. Can we find a way to reached at [email protected]. support sustainable economic growth or not? Can we find a way to continue growth and improvement in economic activity and qual- ity of life while protecting the environment CLEAN SHIPS or are we at the point of a Hobson’s choice that no one wants to make between eco- by Bill Rooney nomic growth and a clean environment? I Managing Director think we still have real choices. Hanjin Shipping I’d like to focus on four questions. The answers to these questions are fundamental It’s almost as if in today’s world of to reaching a successful conclusion to the intense competition, microscopic public scrutiny and pervasive government in- 13 THE ARBITRATOR APRIL 2008 debate and a cleaner environment. The 4 Question 2: Do ocean carriers support en- questions are: vironmental regulation? 1. Do ocean carriers want a clean and In five words….yes, of course we healthy environment and are they do. willing to play a productive role in We understand the need for envi- achieving these goals? ronmental regulations and support regula- 2. Do ocean carriers support environ- tion. However, we do have a problem when mental regulation? regulations are set by multiple, overlapping 3. What data supports the discussion jurisdictions making compliance much more and debate surrounding the environ- onerous and problematic without achieving mental impact of transportation ac- the best or desired result. Some current pro- tivity and, more importantly, what posals in southern California are like each high-potential remedies does the data county in California requiring a different point to? type of automobile fuel and all cars having 4. Have ocean carriers taken any steps to be equipped with multiple technologies to help protect the environment? including several fuel tanks and computer technology to manage the combustion of Question 1: Do ocean carriers want a clean various fuels. In addition, the car and driver and healthy environment and are they will- would have to be alert enough to know when ing to play a productive role in achieving they crossed a city boundary and what regu- these goals? lations applied in the jurisdiction they just What is the ocean carrier position on entered. the environment? Do carriers have horns and Most large containerized ocean car- hooves? riers call in many different countries, The last time I checked I didn’t have and facilities around the globe. And these horns and hooves. carriers’ fleets of vessels will be shifted Ocean carriers want and need to be around the globe in different rotations to good global corporate citizens. Part of being meet changing market requirements. Having good corporate citizens is being aware of the each of these countries, let alone multiple environmental issues we face, establishing jurisdictions within each country, set indi- corporate standards and policies that are en- vidual and inconsistent environmental regu- forced and abiding by established environ- lations would amount to a bewildering mental regulations. patchwork quilt of regulations that would Most, if not all, leading container- not only be economically and probably ized ocean carriers hold these views. We technically disastrous, but also would not understand that we are part of the problem. meet stated environmental objectives. However, we are also part of the solution. The tried and true approaches of set- We are an active part of the solution now ting emission standards and then allowing and we intend to continue to be part of the the manufacturers adequate time to develop solution. We strongly believe that industry, the most cost-effective technologies need to government and communities can work to- be applied to the international movement of gether and contribute to a cleaner environ- cargo. ment while continuing to meet our custom- The more recent approach to envi- ers’ and the nation’s transportation needs. ronmental regulation of transportation activ- ity of selecting specific technologies and 14 THE ARBITRATOR APRIL 2008 imposing these requirements on the end-user and more importantly what high-potential of the technology is unlikely to be success- remedies does the data point to? ful in meeting the stated goals of regulators Protecting the environment is a criti- or the population in general. cally important issue for all of us not just as We need to re-think ocean transporta- private citizens but also as employees of tion environmental regulation and establish private companies and of governments. It is regulations on the following basis: not only important to Americans, but to all • We need globally accepted stan- the inhabitants of this finite third rock from dards established via the US EPA the sun. consistent with the Clean Air Act Simply put, fact- and data-based de- and through the International liberation is an absolute requirement for Maritime Organization. cleaning up the environment and protecting • We need to focus on standards public health at the same time we keep our and results and not on specific country, society and economy functioning technologies that may not be suit- the way we want them to. able for the various types of ves- Unfortunately, given the nature of sels and operations that exist politics, sometimes facts and data are in very worldwide. short supply in the environmental debate. Before I go any further and before I • The timing of implementation of hear the inevitable shouts that carriers are regulations for a global industry using the age-old technique of attacking the where assets are shifted frequently data when you have no sound arguments of needs adequate advance notice to your own, I want to add that every carrier I ensure compliance. know accepts that transportation activity, • We need to base regulations and like most other economic activity, has an standards on facts and data and impact on the environment. We also accept not on political expediency. that the impact needs to be addressed. • We need regulations and stan- The problem we have is that the is- dards that are developed via an sue cannot be successfully addressed with- open and frank dialog among in- out sound data. Data matters primarily be- dustry participants, governmental cause it will more fully spell out the prob- agencies and recognized interest lems we have and define the types of regula- groups. We need to talk to each tions and solutions that will really address other rather than to shout past one the issue. Deliberations driven by headline another. grabbing sound bites, politically correct • Finally, we need an atmosphere bromides or statements calculated to shame- where new technologies and best lessly secure a win in the next step up the practices to reduce emissions are political food chain will not solve the prob- encouraged – unlike some of the lem. current proposals that are driven Trying to address this issue without by specific or even pet technolo- solid data is a little like trying to find out gies. what is going on in the world by reading tabloid headlines. If you want to know Question 3: What data supports the discus- where Elvis was last sighted, how Britney is sion and debate surrounding the environ- doing or how the latest miracle diet works, mental impact of transportation activity you should read the National Enquirer or 15 THE ARBITRATOR APRIL 2008

the Star. But if you really want to know Question 4: Have ocean carriers taken any about things that materially affect your life, steps to help protect the environment? you need to search out other sources. Contrary to popular belief and as The same thing holds true when it shocking as it may seem to some, carriers do comes to the port environmental debate. If not have their heads in the sand and have you want to be entertained or shocked, read actually done quite a bit already voluntarily the industry equivalent to the super market to address environmental issues. For exam- tabloids. If we want to solve the problem, ple, numerous carriers have done things like then it’s time for us to obtain and use real the following: data. • Carriers generally have a clearly Sound data and thoughtful considera- stated environmental policy which tion and deliberation of various interests and supports a cleaner environment and points of view will bring us to effective directs management to take action regulations and solutions. in this regard. On the U.S. west coast, ocean carri- • Most vessel new builds have AMP ers are working to develop actual emissions (Alternative Marine Power) capa- data for both auxiliary and main engines bility. through a cooperative monitoring program • Most carriers have converted to working with various governmental agen- slide valve engine technology. cies. The intent of this program is to develop • Many carriers now use RT-Flex en- hard data to be made available to the general gines in all new builds. public, allowing people and organizations to • Almost all carriers comply with the make better decisions on how to reduce Port of Long Beach’s voluntary emissions. Our industry has supported other speed reduction program. programs such as comparative emissions testing of diesel and LNG cargo handling • Most carriers have implemented equipment – again, to provide organizations electronic injection technology to and policy makers with more data with limit PM emissions. which to make informed, not political, deci- Also many carriers have: sions. • Moved to larger ships which pol- We also support additional monitor- lute less per unit of cargo moved, ing and development of accurate emissions • Minimized the time that vessels inventories. As an industry, we have sup- spend at berth, ported the development of emissions inven- • Sponsored legislation for the rati- tories in the Pacific Northwest and in Cali- fication of IMO MARPOL Annex fornia. For example, the updated 2005 emis- VI and the creation of a North sions inventory in the ports of Los Angeles American Sulfur Emission Con- and Long Beach showed approximately a 50 trol Area (SECA), percent decrease in cargo handling emis- • Moved to new, less polluting in- sions from 2001/2002 levels – all achieved jection technology, through cooperation and incentives between • Moved to shaft generators, the ports and their tenants. • Moved to new technology, less This kind of success story, when polluting engines and cleaner fu- coupled with solid data, can help set the els. right priorities to achieve the greatest posi- The carrier industry is in the thick of tive environmental impact. things moving toward a more environmen- 16 THE ARBITRATOR APRIL 2008

tally friendly way of doing business….but issues. Because the arbitration agreement more needs to be done. was entered into during litigation, was sub- mitted to the district court as a request to Closing deviate from the standard sequence of litiga- In conclusion, I would like to ad- tion procedure and was adopted by the court dress a comment directly to any regulators as an order, there is some question whether that happen to be reading this article. As a it should be treated as an exercise of the dis- company that operates vessels all over the trict court’s authority to manage its cases world, I would urge you, when you are under Federal Rule of Civil Procedure 16. working in pursuit of laws and regulations This court ordered supplemental briefing on that will lead to reduced emissions from the issue, but the parties’ supplemental ar- vessels and a clearer environment, to be guments implicate issues that have not been guided by the following: consistency, uni- considered previously in this litigation and formity and effectiveness based on sound could not be well addressed for the first time science. here. Thus, the court expresses no opinion on these matters beyond leaving them open for Hall Street to press on demand. (196 HALL STREET ASSOCIATES Fed. Appx 476, vacated and remanded} v MATTEL NOTE: The foregoing is based on the (Expanded Scope of Judicial Review) syllabus prepared for decision of March 25, 2008 [No. 06-989]. I expect to produce a more scholarly Several issues back, Keith Heard re- treatise of this important decision in the summer ported on the district court decision in Hall issue of THE ARBITRATOR. v. Mattel. The issue addressed was whether private parties may expand, through contrac- tual language, the scope of judicial review of SMA LUNCHEON SPEECHES the arbitration award. In the January 2008 issue, Keith reported on the arguments pre- Luncheon Committee Chairman Tom sented to the Supreme Court at the Novem- Fox continues to produce an entertaining ber 7, 2007 proceeding. mix of luncheon speakers for the current On March 25, 2008, the Supreme season. To recap: Court, in a 6-3 decision, held that an arbitra- • In October 2007, we heard from tion agreement cannot expand the scope of Tom Belknap, Partner, Blank Rome, federal district review beyond that allowed on “Treasure Salvage – Finders in the Federal Arbitration Act (FAA). Un- Keepers?” (as reported in our Janu- der Sections 10 and 11 of the FAA, the dis- ary 2008 issue at p. 11). trict court’s review of an arbitration award is • In November, SMA member Captain very limited; here, in a rental contract, the Victor Goldberg spoke on “Articu- parties had agreed to a much broader scope lated Tug and Their Role in of review (“erroneous” ruling). The Su- U.S. Coastwise Petroleum Transpor- preme Court said that was an impermissible tation.” end-run around the FAA. With this holding, • The December speaker was Tom the Court decides nothing about other possi- Russo, Partner, Freehill Hogan & ble avenues for judicial enforcement of Mahar, whose topic was “Crime and awards. Accordingly, this case must be re- the Sea.” manded for consideration of independent 17 THE ARBITRATOR APRIL 2008

• Our January 2008 speaker was Matt But I can’t help but needle my long-time McCleery, President of Marine friend Clay Maitland that I am still hopeful Money International, with a presen- of publishing his luncheon speech on “Ship tation on “Recent Developments in Registries and What They Do.” Ship Finance.” • Steven Candito, president of Na- tional Response Corporation, spoke OIL SPILL RESPONSE UPDATE: to us at the February luncheon about THE RAMIFICATIONS OF RECENT “Oil Spill Response Update: The SPILLS AND Ramification of Recent Spills and RELATED REGULATORY CHANGES Related Regulator Changes.” A by Steven Candito, President summary of his presentation appears National Response Corporation below. • In March, Steven R. Blust, president A number of recent oil spills, par- of the Institute of International Con- ticularly in the US, have led to reactionary tainer Lessors, gave us “An Over- legislative changes. This presentation re- view of the Institute of International viewed four notable recent events and ana- Container Lessors.” lyzed the subsequent legislative changes. A • The last of the open luncheons will lively discussion ensued with participation be held on April 16, 2008 at 12.15 by numerous attendees. hours at The Ketch Restaurant; the First Event: 2003 barge grounding speaker will be Peter Skoufalos, in Buzzards Bay, MA, 98,000 gallons of #6 Partner, Brown Gavalos & Fromm, Fuel Oil spilled. Oil Spill Response: Costs with the topic “Re-visiting the New totaled $36 Million, approximately $367 per York-London Arbitration Divide: A gallon; at its peak, 700 personnel were in- few thoughts on narrowing the gap.” volved in the clean up. Legislative Re- The SMA is most thankful and indebted sponse: The State of Massachusetts enacted to those who volunteer to speak and those the Massachusetts Oil Spill Act, which be- who are gently persuaded by Tom Fox to do came law on August 4, 2004. Among other so. Taking time out to prepare and present a provisions it required up to a $1 billion Mas- paper is a commitment and an obvious ex- sachusetts State Certificate of Financial Re- pression of support of the SMA. sponsibility (“COFR”), double hulls on cer- Considering the efforts by the presenters, tain vessel classes, mandatory state pilots, I felt that full publication of their papers in tug escorts, vessel routing requirements and THE ARBITRATOR would give them oil spill response and prevention fees. These greater and deserved exposure and recogni- state regulations were viewed to be in con- tion beyond the applause and the SMA flict with similar United States federal regu- watch at the luncheons themselves. Some of lations and thus were challenged by the US the speakers have prepared summaries for Coast Guard (USCG) and the Department of this newsletter, others have provided a text Justice as unconstitutional. In a related which could readily be adapted for publica- move, the USCG passed its own navigation tion, and others, unfortunately, have re- regulations for the region which became ef- mained silent. In the end, the SMA, THE fective on November 28, 2007. The legal ARBITRATOR and the attendees of the challenges between the state and federal SMA luncheons are appreciative and thank- government continue with the federal gov- ful to everyone who has appeared before us. 18 THE ARBITRATOR APRIL 2008

ernment due to file responding legal papers 110,000’ of boom. Legislative Response: in mid February, 2008. The federal government enacted the Dela- Second Event: 2004 Seattle barge ware River Protection Act by July 2006. The spill. A tank overflow during loading opera- provisions of the Act included: raising the tions spilled 4,800 gallons of heavy fuel oil. federal COFR limits for single hull tank ves- Oil Spill Response: Cost was $4.5 million, sels from $1,200 to $3,000 per gross regis- approximately $938 per gallon ($571 higher tered ton (GRT) and nontank vessels from than the Buzzard Bay spill); resources used $600 to $950 per GRT, while providing a included 250 personnel, 17,000’ of boom, financial incentive to use double hulls by 14 skimmers and 24 boats. Legislative Re- only raising their COFR limits from $1,200 sponse: Washington State passed a number to $1,900 per GRT; the creation of a Dela- of new regulations focused on pre-booming ware River and Bay advisory committee vessels transferring cargo even before a spill tasked with making recommendations on occurs. These regulations are being phased spill prevention and response; requirements in: the first phase (low rate transfers) in Feb- to promptly notify the USCG of any object ruary 2007; the second phase (high rate lost overboard that could cause an obstruc- transfers) in October 2007; and the final tion to a channel; as well as funding for the phase (dispersants & In Situ Burn) in April USCG and the National Oceanic and At- 2008. Further, Washington State recently mospheric Administration (NOAA) to de- proposed a regulation that would effectively velop technology to recover sunken oil. make the pre-booming requirement a non- Final Event: November 2007 non- delegable duty, preventing vessel owners tank vessel spill in in from contracting the pre-booming service to which a container vessel struck the Oakland a third party. This proposal will likely be Bay Bridge spilling 54,000 gallons of bun- withdrawn. These regulations have raised a ker fuel. Oil Spill Response: At the time of number of safety concerns such as whether writing, this response is ongoing with clean vessels transferring more flammable cargo up costs at $61 million, or $1,130 per gallon (e.g. gasoline) should still be pre-boomed (among our four examples, the most expen- and whether pre-booming must take place if sive clean up on a per gallon basis); re- weather and/or sea conditions make it unsafe sources utilized included 1,400 personnel, for personnel working in the small craft util- 41 boats, 38,200’ of boom and seven oil ized for the pre-booming operations. skimmers that totaled 75,000 barrels per day Third Event: 2005 tanker spill on oil removal capacity. Legislative Response: the Delaware River. While proceeding from Historically, California has some of the most an approved anchorage to the oil refinery, stringent oil spill response regulations in the the vessel struck an unchartered submerged country with shoreline protection require- object and punctured a hole in her cargo ments that are in addition to the federal oil tanks, spilling 265,000 gallons of crude oil. spill containment and recovery regulations. Oil Spill Response: Cost (not including third The two primary response organizations op- party claims or natural resource damages) erating in California concluded that it was $165 Million, approximately $623 per gal- not cost effective to meet these new shore- lon (less than either of the much smaller line protection requirements independently. Buzzard’s Bay and Seattle spills); required As a result, California’s Office of Spill Pre- resources included 1,700 personnel, two Oil vention and Response admitted: “The unin- Spill Response Vessels (OSRVs), 191 tended consequences from passing the new smaller vessels, 20 oil skimmers and regulations is that as of Sept. 1, 2007, plan 19 THE ARBITRATOR APRIL 2008

holders currently do not have adequate now take on a higher priority in light of the shoreline protection coverage for covered San Francisco Bay spill. vessels entering non-High Volume ports. Conclusion: The presentation con- Therefore, marine commerce trading in the cluded with a robust interchange of opinions harbors of Humboldt Bay, Monterey Bay, on various matters including: 1) whether the Port Hueneme, and San Diego may be in regulatory changes are truly beneficial, 2) violation of the current regulations.” Subse- whether the safety of human life should be quently, a commercial arrangement was paramount to environmental protection and reached where nontank vessels that had ac- 3) whether there is ever a limit on expecta- cess to both of the primary response organi- tions, especially when politics are involved. zations (NRC and MSRC) via their Protec- For more information, please feel free to tion & Indemnity Clubs could satisfy the contact Steven Candito at 631 224 9141 Ext. regulation by citing both organizations in 110 or via email at [email protected]. their response plans. ______Extreme media attention and politi- cal fallout from the San Francisco Bay spill, 2008 SMA EDUCATION have given rise to additional regulatory pro- COMMITTEE SEMINAR posals: on the federal side there is a proposal “MARITIME ARBITRATION IN NEW to require double hulls for nontank vessels, YORK” to further increase COFR limits, and to im- by Austin L. Dooley, PhD prove the Vessel Traffic System (VTS) with mandatory routing procedures; while Cali- In February 2008, the SMA Educa- fornia State legislators are calling to increase tion Committee conducted the fourth session the response resource requirements for non- of its educational seminar program “Mari- tank vessels to meet those for tank vessels. time Arbitration in New York.” Pending Non-event Driven Legisla- This year’s program was particularly tion: The USCG has pending a number of invigorating as maritime industry profes- spill response requirements that were initi- sionals came from far and near to attend. ated many years ago. Delays in finalization Attendees traveled to New York from Vene- of these regulations resulted from the refo- zuela, Nigeria (via London), Washington cusing of the USCG on homeland security DC, Mexico City, Philadelphia and West- issues post 911, thus, diminishing their abil- chester County (New York), representing ity to address environmental protection mat- the operations, chartering, governmental and ters. The pending regulations include: dis- legal segments of the maritime industry. persant requirements which could be issued Topics covered the full range of is- at any time; salvage & fire fighting regula- sues important to an understanding of the tions which are not expected before spring arbitration process in New York. While 2008; and federal nontank vessel require- emphasis was placed on the practices of ments which were passed into law on Au- New York panels, the international aspects gust 8, 2005, but are still awaiting specific of commercial maritime arbitrations were regulations. The USCG had previously ad- also discussed. The SMA is particularly vised that nontank vessel regulations were a fortunate to have State University of New lower priority than either dispersants or sal- York Maritime College at Fort Schuyler vage and fire fighting requirements; how- Professor Jeffery Weiss as the instructor for ever, the nontank vessel regulations may this program. 20 THE ARBITRATOR APRIL 2008

The two-day course is offered as part In a recent meeting with visitors of the SMA’s mission to educate the general from overseas, the publication issue was public and members of the maritime indus- raised with much of the usual pro and con try about procedures for alternate dispute arguments. It was surprising that the major- resolution (ADR) in the maritime industry, ity view was that the publication of SMA to educate the general public and members awards was absolute and mandatory. In re- of the maritime industry about substantive ality, nothing is farther from the truth. The maritime law and to encourage the use of parties have the option to have their awards ADR for the resolution of commercial dis- treated with confidentiality. The booklet, putes arising in the maritime industry. In- “Maritime Arbitration in New York,” which dividuals or organizations interested in ar- provides an introduction to arbitration, the ranging for attendance at the course should SMA Rules and the Federal Arbitration Act, contact the SMA Education Committee states at p. 3 under the heading “Publica- Chair, Dr. Austin L. Dooley at tions:” [email protected]. ______. . . Awards are pub- lished in New York as a mat- PUBLISH WE DO! ter of course unless, at any time before the issuance of For years, the SMA and its support- the award, both parties re- ers have praised and advocated the publica- quest that the award not be tions of their awards in New York. By the published. time this article is published, the SMA’s li- brary of awards will have exceeded 4,000. Since arbitration is essentially a crea- When the SMA started, the award ture of contract, it follows that the decision publication consisted of photocopies of the of whether or not to publish an award rests actual award with handwritten running with the parties to the contract. It is also for numbers and headnotes. Since they were this reason that the non-publication needs not edited, they also included all the beauty the request by both parties. marks or warts. Fifteen years ago, we As a concluding observation, based changed the award service, reformatting the upon practical experiences, quite a few of awards into a standard program and also go- the SMA arbitrators have issued awards ing digital. However, what has remained which, at the request of the parties, were not unchanged is the fact that the SMA awards included in the award service. I do not reflect the names of the parties, counsel and know the overall numbers of unpublished the arbitrators. awards, but according to my own statistics, In contrast, other arbitration centers out of over 850 awards in which I partici- have emphasized the confidentiality aspect pated, approximately 25 were not published of arbitration and the parties’ entitlement to within the SMA award service. privacy. On the other hand, more recently, arbitration awards have been published in M.W. Arnold those centers with “sanitized” versions, re- dacting the identity of the principals, the vessel’s name and also, on occasion, the ar- bitrators’ names.

21 THE ARBITRATOR APRIL 2008

(MORE ON) SMA AWARDS practitioner who needs immediate access to basic data, but, at the same time, through Here is the latest – Michael Marks Section A, provides in-depth information on Cohen has brought to my attention the case the important agreements relating to interna- of Waterfront Shipping Co. Ltd. v. Trafigura tional commercial arbitration. When I AG (Engl. Commercial Court October 31, checked with the publishers on the price tag, 2007) before The Hon. Mrs. Justice Gloster, I was initially slightly shocked thinking DBE. The case involves the application by about the good old days, but when you stop the defendant, Trafigura, for a summary to think about having to do research at to- judgment denying a demurrage claim as day’s billing rates, the first case may already time-barred under the terms of the charter easily cover the cost of the book. I think it party, particularly due to the Owners’ failure is this point which validates the work by to produce “supporting documentation” Messrs. Horn and Hopkins as an efficient within 90 days of discharge of the cargo. In and compelling tool for the international her decision, Justice Gloster stated, “. . . I lawyer and others involved in the arbitral am supported in this conclusion by certain process. arbitral decisions; see, for example, The On a somewhat more parochial note, DEVINE STAR SMA 2883 (July 16, 1992)” but without effect upon the overall benefits I think it is of interest that Justice of the handbook, there are a couple of points Gloster, as she stated, could have relied on which may be considered in a future re-issue English precedent and English tests, but of this text. nevertheless thought it to be appropriate to More specifically, the coverage of reference the SMA award. the USA consists of the standard overview I count on Michael, and, in fact, all section; part Y.1, the Federal Arbitration of you faithful readers of this periodical, to Act; Y.2, American Arbitration Association; continue watching out for further SMA ref- and Y.3, Maritime Arbitration Rules. The erences and help make this a permanent fea- Y.3 caption does not identify the rules as ture of THE ARBITRATOR. Thank you. being those of the Society of Maritime Arbi- ______trators, as was done for the other maritime arbitration groups. I also noticed the ab- BOOK REVIEW sence of the SMA name in the preface of by M.W. Arnold this book (at p. ix), which is surprising, as the LMAA and the SMA have traditionally ARBITRATION LAW HANDBOOK been recognized as the premier maritime Edited by Ben Horn and Roger Hopkins arbitration organizations. of Faegre & Benson LLP If you should vacillate on whether or published by INFORMA, London 2007 not to buy, err on the side of buying – if it 1016 pages, soft cover, ₤210 does not provide immediate success, it cer- tainly will prove educational. This new publication certainly fills a ______void in the current arbitration libraries. It not only identifies arbitral institutes and as- PEOPLE AND PLACES sociations in over 20 countries, but it also provides a general overview as well as the New Members laws in force, procedural rules and applica- Robert John Flynn, Michael J. Hand ble statutes and conventions. As such, it is a and Peter S. Wiswell have become full unique and ready reference tool for the busy members of our association. For their biog- 22 THE ARBITRATOR APRIL 2008

raphies and contacts, please access the SMA Association (NAMEPA), in conjunction website (www.smany.org). with the New York Maritime Inc. (NYMAR) and the North American Mari- On the Move time Ministry arranged for a Response Christopher Mansuy, formerly with Simulation Program at the Harvard Club. De Orchis & Partners, has joined the firm of The purpose of the program was to learn Mahoney & Keane. Chris can be reached at about the state of readiness by the Coast [email protected]. Guard, state and local governments and the private sector in the event a casualty similar New York University Announces Lloyd to that with the COSCO BUSAN in San C. Nelson Professorship in International Francisco would occur in New York harbor. Law The session was led by Captain Robert New York University School of Law O’Brien, Commander, Coast Guard Section has established the Lloyd C. Nelson Profes- New York and Captain of the Port of sorship in International Law. The goal of NY/NJ, and was ably assisted by members the professorship is to promote international of his command (CDR Brian Willis, LCDR arbitration and recognize the important role Ernie Morton, CDR Gregory Hitchin). of arbitration in dispute resolution. The pro- Dennis Farrar, representing the New York fessorship was established to honor Lloyd State Department of Environmental Conser- for his many decades of work as an arbitra- vation, Gary Pearson, New Jersey State De- tor and the enormous contribution he has partment of Environmental Protection, Cap- made to arbitration. Lloyd was an officer tain Mike Grodeska and Sven Van Batavvis and member of the Society of Maritime Ar- of Miller Environmental, Ed Levine of the bitrators from its earliest days. National Oceanic and Atmospheric Admini- stration and Mark Hanafee of APM/Maersk. There will be an inaugural event to Greg Linsin of Blank Rome LLP com- celebrate the founding of the professorship mented on the legal implications resulting which presently is scheduled for October 7, from a spill. The SRO crowd of approxi- 2008 at New York University Law School. mately 120 attendees provided for a lively The event will feature the first Lloyd C. question and answer session. Nelson Lecture on International Law to be It certainly was an informative and given by the professor who has the honor of topical seminar which demonstrated the being awarded this professorship. New state of semper paratus of all entities in- York University expects to announce the volved. first Lloyd C. Nelson Professor in the spring The program was followed by a re- or summer of 2008. ception sponsored by Blank Rome Maritime, Please save the date of October 7, Gallagher Marine Systems, Inc. and SIGCO. 2008 and plan to attend the inaugural Lloyd The SMA members who attended were L. C. Nelson Lecture in honor of Lloyd’s Bulow, T. Fox, D. Martowski, K. Mord- memory. We will keep you posted with fur- horst, P. Wiswell and this editor. ther details as they become available. You If anyone should be interested in can also contact [email protected]. contacting the organizing and supporting organizations, their respective websites are: What if . . . the COSCO BUSAN Hap- www.namepa.net, www.nymar.org and pened in New York?? www.namma.org. Are we prepared? ______

On February 27, 2008, the North American Marine Environment Protection 23 THE ARBITRATOR APRIL 2008

SOME PERSONAL NOTES probably have already done a few arbitra- tions and are old hands at the trade. The Maritime Advocate What I am trying to say is that this As many of the readers know, for cannot be a newsletter and have a quarterly more than nine years, I was a part owner and publication schedule. So, if you read an ar- contributing editor to THE MARITIME ticle that you have seen before – you can ADVOCATE. When we decided to cease skip to the next one. And if you are really publishing the magazine in 2007, the owner- frustrated or annoyed, write to the editor. ship changed, but the name continued on the I’d just like to hear from you. internet, and my good friend Chris Hewer continues as the editor. At this time, my in- In Memoriam volvement in THE MARITIME ADVOCATE online is limited to being an Neil J. Carry, a long-time member of occasional contributor. I fondly remember the Society of Maritime Arbitrators and those years gone by and appreciate the long friend and colleague of many in the mari- memories of “our” early readers. I am also time industry, passed away in Stamford, CT very grateful to Chris for being a regular on January 27, 2008 at age 85. contributor to this publication. Neil graduated from Kings Point in THE MARITIME ADVOCATE 1944. Later on he served as president and online is now published by After Office CEO of Pan Ocean Anco Tanker Service. Hours Ltd. If you want to stay in touch He was also a founding member of the Con- with Chris, you can reach him at necticut Maritime Association and a past [email protected] or visit the website Commodore of the Rudder Club of New www.avoarchive.com. York. Tom Fox, a close friend of Neil’s, Identity Crisis? has prepared a touching account – “A Re- membrance” – which he plans to share with Some of you may recall watching all their friends. Thank you, Tom. Sesame Street with your children or grand- Klaus Mordhorst signed the Neil J. children and hearing Kermit the Frog sing Carey guest book: “Another wonderful, “It’s not easy being green.” It’s not easy wise and witty man of the sea has left the being a quarterly either. bridge for good. We shall miss you, dear When I start preparing for a new is- Neil.” sue, I usually have some topics which are not “date stamped,” such as the “Time Bar” article or the “Commercial Man” piece, be- For THE ARBITRATOR cause they address subjects of continued in- terest, even though they have been ad- Manfred W. Arnold dressed previously. Bill Rooney’s splendid [email protected] article about the environment and industry is important, but its impact would not be di- Society Of Maritime Arbitrators, Inc. minished if I had published it in the next is- 30 Broad Street, 7th Floor sue. On the other hand, the coverage of the New York, NY 10004-2402 DG HARMONY decision in this issue has (212) 344-2400 • FAX: (212) 344-2402 been overtaken by the reports in daily or weekly publications and, as such, it’s yes- E-mail: [email protected] terday’s news. Similarly, the announcement Website:http://www.smany.org of new SMA members – by now they