Shipping Law 2021 A practical cross-border insight into shipping law Ninth Edition Featuring contributions from: Advokatfirman Vinge KB AF Legal Law Firm Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL Arias, Fábrega & Fábrega BIMCO Bloomfield LP CF – Maritime Legal Services Dardani Studio Legale Dingli & Dingli Emirates Maritime Arbitration Centre (EMAC) Fichte & Co Ganesh & Co. Harris & Co. Maritime Law Office Hill Dickinson International Ince Incisive Law LLC IUNO Advokatpartnerselskab Jurinter Law Firm Kegels & Co Kvale Advokatfirma DA Lee and Li, Attorneys-at-Law Links & Gains Law Firm Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados Moon & Song Mori Hamada & Matsumoto NAVICUS.LAW Q.E.D INTERLEX CONSULTING SRL REMÉ Rechtsanwälte Partnerschaft mbB RICHEMONT DELVISO Rosicki, Grudziński & Co. Seward & Kissel LLP Shepstone & Wylie Attorneys SSEK Legal Consultants Tang & Co (in association with Helmsman LLC, Singapore) TCG Fora Law Office ThomannFischer Tomasello & Weitz VdA, in association with ASP Advogados VdA, in association with GDA Advogados Zhonglun W&D Law Firm
Transcript
Shipping Law 2021A practical cross-border insight into shipping law
Ninth Edition
Featuring contributions from:
Advokatfirman Vinge KB
AF Legal Law Firm
Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL
Arias, Fábrega & Fábrega
BIMCO
Bloomfield LP
CF – Maritime Legal Services
Dardani Studio Legale
Dingli & Dingli
Emirates Maritime Arbitration Centre (EMAC)
Fichte & Co
Ganesh & Co.
Harris & Co. Maritime Law Office
Hill Dickinson International
Ince
Incisive Law LLC
IUNO Advokatpartnerselskab
Jurinter Law Firm
Kegels & Co
Kvale Advokatfirma DA
Lee and Li, Attorneys-at-Law
Links & Gains Law Firm
Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados
Moon & Song
Mori Hamada & Matsumoto
NAVICUS.LAW
Q.E.D INTERLEX CONSULTING SRL
REMÉ Rechtsanwälte Partnerschaft mbB
RICHEMONT DELVISO
Rosicki, Grudziński & Co.
Seward & Kissel LLP
Shepstone & Wylie Attorneys
SSEK Legal Consultants
Tang & Co (in association with Helmsman LLC, Singapore)
TCG Fora Law Office
ThomannFischer
Tomasello & Weitz
VdA, in association with ASP Advogados
VdA, in association with GDA Advogados
Zhonglun W&D Law Firm
Ninth Edition
Contributing Editor:
Julian ClarkInce
DisclaimerThis publication is for general information purposes only. It does not purport to provide comprehen-sive 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.
245 South AfricaShepstone & Wylie Attorneys: Pauline Helen Kumlehn
252 SwedenAdvokatfirman Vinge KB: Michele Fara, Ninos Aho, Paula Bäckdén & Anders Leissner
284 United Arab EmiratesFichte & Co: Alessandro Tricoli, Moaz Forawi & Shehab Mamdouh
290 United KingdomInce: Julian Clark & Reema Shour
298 USASeward & Kissel LLP: Bruce G. Paulsen, Hoyoon Nam & Brian P. Maloney
Welcome
Preface
Julian ClarkSenior PartnerInce
As contributing editor, I am very happy to introduce the 2021 edition of ICLG – Shipping Law. As the Senior Partner of Ince, a market leader in global legal maritime services and solutions, I am delighted that we have been given the opportu-nity to contribute once again to this excellent publication.
The 2021 edition offers a comprehensive overview of maritime law in 40 jurisdictions. The content provides a useful summary of some of the key legal, regulatory, procedural, technical and practical issues that can arise in both “dry” and “wet” shipping matters, from contractual disputes under contracts of carriage to maritime casualties.
The contributors to this edition of the Guide are highly regarded and very experienced maritime law practitioners, who are very well qualified to advise on a wide range of shipping law matters in their respective jurisdictions. The authors of the individual chapters all provide their legal and commercial perspectives on dealing effectively with shipping disputes, whether in court litigation or by way of alternative dispute resolution. I should like to thank each and every contributor for their high-quality input that has allowed this publication to maintain a very high standard over the years.
This edition provides an invaluable insight into key legal and regulatory issues that can arise for the shipping industry and offers at least some potential solutions. This information is particularly important in the light of the numerous legal and practical problems that have arisen globally in the wake of COVID-19. The maritime transport industry is facing a potentially transformed post-pandemic environment and the global maritime legal community is there to provide its advice and support.
The international shipping industry has traditionally been a key contributor to the world economy, being responsible for the carriage of approximately 80% of global trade. The COVID-19 pandemic caused a drop of about 9% in international trade in 2020. Global maritime trade is reported to have declined by about 4.1% in 2020. However, as of April 2021, there are positive indications that the outlook is improving. UNCTAD, in its “Review of Maritime Transport 2020” report, expects maritime trade growth to return to positive territory and expand by 4.8% in 2021, assuming world economic output recovers. Shipping law will, therefore, continue to be of paramount importance in facilitating maritime, and indeed global, trade.
I hope you will enjoy reading this edition and that you will find it to be a key resource for questions of shipping law and regulation in 2021.
Shipping Law 2021
Chapter 1 1
The Changing Face of Maritime Law and Risk – Cyber, E-Commerce, Automation of Vessels
fleet of new 16,000TEU ultra-large container ships scheduled for delivery during 2021. In November 2020, AET’s newbuild vessel, Eagle Passos, delivered by Samsung Heavy Industries, became the first shuttle tanker to be granted an ABS “Smart Notation”, recog-nising the digital capabilities of the vessel’s data communications and network infrastructure.
These are only some instances of the way in which the industry is embracing smart technology. Smart contract usage is also on the rise, particularly electronic bills of lading. Blockchain technology and E-commerce have become a predominant theme in interna-tional trade.
The UK, as part of its “Maritime 2050: Navigating the Future” initiative – which sets out the UK’s long-term strategy for its mari-time industry – has considered the role that technology and inno-vation will play, including in the context of: smart ports; digitalisa-tion; communication; navigation; and exploration. In the Maritime 2050 report, the UK Department of Transport has recognised that new technologies, such as autonomous maritime systems, can make the shipping sector cleaner, safer and more efficient.
However, as with all innovation, digitalisation and automa-tion present the maritime industry with a number of challenges, including: cyber risk; impact on the maritime workforce; lack of uniform standards, for example, in blockchain technology; and regulatory issues, including the effective application of existing regulations to new processes and systems.
This chapter highlights some key developments in mari-time technology, the benefits they bring and the potential risks they present. It considers certain legal, regulatory and practical issues that arise and discusses some of the solutions being imple-mented across the international maritime sector.
The Changing Face of the Maritime IndustryIt will be interesting to see how the shipping industry develops and progresses in the coming years. What is clear, however, is that automation, artificial intelligence, energy efficiency, connec-tivity and “green shipping” will all feature prominently in the future of the maritime industry. The challenge is to maximise the benefits of technological progress, while mitigating against the potential pitfalls and any downside. Industry stakeholders are addressing key issues, including in the following ways.
Cybersecurity and cyber risks
The UNCTAD report referred to above highlights the bene-fits of enhanced digitalisation in the maritime industry, as well as the downside in terms of potentially greater exposure to cyber risks. The report indicates that both the importance of
IntroductionDuring 2020 and into 2021, the COVID-19 pandemic presented the global community with numerous economic, social, physical, legal and humanitarian challenges. The global crisis put inter-national maritime trade under severe pressure and the maritime sector may be dealing with the knock-on effects and consequences for years to come. However, the United Nations Conference on Trade and Development’s (UNCTAD) latest “Review of Maritime Transport 2020” dated November 2020 indicates that the pandemic also highlighted the importance of maritime trans-port to ensuring the delivery of critical supplies and facilitating global trade in times of crisis, as well as during the period of recovery and when the situation becomes normalised. Business continuity has been, and remains, paramount.
Technological innovation and digitalisation are acknowledged as having played a critical role in assisting uninterrupted maritime transport operations and trade processes during the pandemic, while reducing the risk of infection. Labour shortages and lock-downs severely disrupted cargo operations and multimodal trans-port connections. The extent to which human labour is relied on to keep goods moving and supply chains running, and the conse-quences when this is not available, has highlighted the impor-tance of increased automation to ensure business continuity. In ports, for example, it could speed up port and terminal operation processes and reduce vessel waiting times. One positive legacy of the pandemic has, therefore, been to strengthen the case for increased investment in and commitment to enhanced digitali-sation and technological advances going forward. Such develop-ments can only improve the global shipping sector’s resilience to potential disruptions in the future.
In reality, the progress towards a more digitalised, automated and technologically advanced maritime environment has been underway for some years. Whilst the process has moved further forward in the developed world as compared to developing coun-tries, this is without doubt an international trend that will spread slowly but surely across the globe.
“Smart” ships and smart ship technology are clearly the future. In January 2021, class approval was announced for the world’s first “smart” LNG bunkering vessel, FueLNG Bellina. It will supply large ocean-going LNG-fuelled vessels as Singapore’s first LNG bunkering vessel. The vessel is equipped with digital tools to improve vessel performance and maintenance, as well as to enable remote monitoring and real-time support of vessel operations. In December 2020, it was reported that Korean shipping line HMM had completed the implementation of smart ship systems on board twelve 24,000TEU ultra-large container ships. The system will also be installed on HMM’s
2 The Changing Face of Maritime Law and Risk – Cyber, E-Commerce, Automation of Vessels
In fact, a number of sophisticated cybersecurity solutions have already been developed and launched within the global shipping sector. One such offering is InceMaritime, which is the first to provide integrated legal, business and technology services designed to help shipowners and operators in dealing effec-tively with cyber risks and cyber compliance. InceMaritime was launched in February 2021 and offers fully integrated cyberse-curity that protects on-shore and on-vessel OT networks, safe-guards operations and ensures compliance and business conti-nuity. Other similar ventures will no doubt follow.
Regulation, guidance and the law
The IMO’s 2017 “Guidelines on Cyber Security Management” remain a key guide for the maritime industry. In addition, the IMO Safety Committee’s 2017 Resolution, “Maritime Cyber Risk Management in Safety Management Systems”, encourages compa-nies to ensure that cyber risks are appropriately addressed in existing safety management systems as required by the International Safety Management (ISM) Code no later than the first annual verification of the company’s Document of Compliance after 1 January 2021. Owners who fail to comply run the risk of having their vessels detained by port State control authorities who will aim to enforce the IMO requirements in a uniform manner.
In December 2020, the European Commission adopted a proposal for a revised EU Directive on Security of Network and Information systems (NIS). The current NIS Directive has been in force since 2016. The revised NIS2 is aimed at building on the current version and modernising the existing legal frame-work to take into account the increased digitalisation of the EU in recent years and an evolving cybersecurity threat land-scape. NIS2 now has to go through the required EU approval and legislative process, following which it must be transposed into national law by the EU Member States. In the meantime, the European Commission has indicated that it will be imple-menting a new cyber strategy going forward.
In addition, there are an increasing number of industry and government guides and codes setting out recommendations and standards aimed at assisting the maritime industry in protecting against, and managing any fallout from, cyber incidents, as well as complying with IMO and other requirements. Many of these guides are updated regularly to take into account regulatory and other developments.
In November 2020, BIMCO and the International Chamber of Shipping published the second edition of the “Cyber Security Workbook for On Board Ship Use”, specifically designed to help crew prepare, both on the bridge and in the engine room, for cyberattacks. It includes several checklists on how to protect, detect, respond and recover from a cyber incident and offers a guide for the master and the officers. Furthermore, in December 2020, BIMCO published the fourth edition of its “Guidelines on Cyber Security Onboard Ships”. The updated Guidelines take into account the IMO requirements and provide best practices in cyber risk management.
Satcoms giant Inmarsat has published its IMO 2021 Cyber Requirements Research Report, which offers shipowners and managers guidance covering their responsibilities under the new IMO regime and proposes a cybersecurity solution that provides a comprehensive tool to support them towards compli-ance. The report summarises industry exposure to date, iden-tifies the vessel-specific vulnerabilities that have driven regula-tors to act and explores the precedents from outside and inside the maritime sector for IMO rule development. It provides a clear and concise guide to IMO 2021 compliance and the steps required to identify, protect against, detect, respond to, recover
technological advances in the global shipping sector, as well as the challenges this poses for cybersecurity, have been emphasised by the COVID-19 pandemic.
According to the report, the pandemic and its disruptions demonstrated that those who took the lead in terms of techno-logical uptake were better able to weather the storm. The digi-talisation of interactions and information-sharing proved crit-ical to the continuity of maritime transport operations during the pandemic. It helped to maintain continuity in transport operations and trade processes while reducing the risk of conta-gion. Prompt deployment of technological solutions ensured the continuity of business activities and government processes, particularly in cross-border trade and when responding to new consumer expectations in an environment of disrupted supply chains, remote working and increased reliance on E-commerce.
However, these developments brought to the fore height-ened cyber concerns. As a result of the pandemic, companies were less able to protect themselves. Travel restrictions, social distancing and economic recession all contributed to enhanced cyber risk. The report notes that cybersecurity risks are likely to continue growing significantly due to greater reliance on elec-tronic trading and an increasing shift to virtual transactions at all levels. This increases vulnerabilities that can potentially result in disastrous consequences for critical supply chains and services. Further, as ships and ports become better connected and further integrated into information technology networks, the strengthening and implementation of cybersecurity meas-ures become essential.
Cyber risks are not theoretical, they are very real; this is demonstrated by the number of cyber incidents witnessed by the shipping sector in recent years. Just one recent example is the cyberattack in September 2020 on French shipping company, CMA CGM, which took down its worldwide shipping container booking system after two of its Chinese branches were hit by ransomware. This followed on from a malware attack on Swiss-Italian shipping line MSC’s data centre in April 2020, a ransom-ware attack on Chinese shipping company, COSCO, in July 2018 and a geopolitical ransomware attack which indirectly impacted upon the Danish shipping company, APM-Maersk, in 2017. This means that the world’s four largest companies have now all suffered very disruptive cyberattacks. In addition, during 2020, a US-based gas pipeline operator was hit by malware, a US-based cargo facility’s operating systems were infected by ransomware and the operational technology (OT) systems at an Iranian port were hacked. These incidents impacted all infrastructure move-ments, leading to massive backlogs.
In July 2020, it was reported that cyberattacks on the maritime industry had increased by 400% in just 12 months with attacks on OT increasing by 900% over three years with the number of recorded incidents set to reach record volumes by the end of 2020. This does not take into account the unreported incidents.
UNCTAD believes that adopting technological solutions and keeping abreast of the most recent developments in the field will become a requisite in the global maritime industry rather than an option. Consequently, increased investment in technology and adopting solutions that meet the needs of future supply chains are crucial. Developing countries must be given the digitalisa-tion and technological support they need in order to narrow the divide with developed countries and ensure their resilience. At the same time, however, cybersecurity should be strengthened at all levels to combat the increased cyber risk that comes hand in hand with greater reliance on technology. The global maritime industry must, therefore, continue to come up with initiatives and solutions that ensure the benefits of advanced technology and increased digitalisation are not outweighed by the poten-tially catastrophic consequences of cyberattacks.
in the carriage of goods before delivery can be completed and payment made. Shipping transactions could become much more efficient both in terms of time and money spent, if the industry was converted into a paperless and predominantly online sector.
Key advantages of blockchain, therefore, include: increased market access and competition; reduced processing and admin-istrative time and costs; increased efficiency and reduced risk of errors; enhanced cybersecurity; reduced risk of loss or theft of or damage to shipping documents; transparent transactions; elimination of unnecessary intermediaries; and a reduction in processing and administrative costs.
“Smart” bills of lading are already being used relatively regu-larly and are demonstrating savings in both time and money. CargoX, launched in 2018, is just one industry offering providing a smart bill of lading known as a Blockchain Documentation Transaction System (BDTS). Another option is edoxOnline, the first eBL system created (in 2007) implementing block-chain technology. In addition, WAVE was the first of the blockchain eBL providers to be fully decentralised when it completed the world’s first live blockchain trade transaction in 2016. Importantly, all three of these eBL providers have been approved by the International Group of P&I Clubs. The IG has so far recognised six eBL systems or providers.
Blockchain-based systems can also play an important role in improved and reliable tracking and tracing of fuel origins and quality by recording on a distributed ledger information and data collected throughout the bunker fuel supply chain. This can assist shipowners and operators in ensuring that they comply with international maritime emissions regulations and standards. BunkerTrace is an example of a recently established initiative providing marine fuel traceability. It adds synthetic DNA tags to bunkers to track them as they move through the supply chain. Combined with a blockchain ledger, this creates an immutable record of bunker supply making it possible to verify the source and quality of bunkers before they are burned in a ship’s engine.
A number of ports around the world have also been adopting blockchain initiatives, including some Indonesian ports, Rotterdam port and the port of Long Beach, USA. The appli-cation of blockchain technology at ports is designed to make port traffic management more efficient and assist with container stacking, reduce cost and improve security. It may also reduce bureaucracy in port operations, particularly in developing coun-tries, as well as reducing port turnaround time.
Blockchain can also assist certification authorities, such as flag states and classification societies. This would be through converting ship and seafarer certificates into a blockchain-based authentication process whereby the authenticity of approvals can be validated through the common blockchain network.
The DCSA is developing open source standards for electronic bills of lading. A DCSA study found that processing paper bills was three times costlier than eBLs and that the shipping industry could potentially save US$4 billion a year if 50% of the market adopts eBL. The DCSA aims to hit this target by 2030. The DCSA has indicated that eBLs need to be accepted by governments, banks, insurers and other stakeholders if they are to achieve their full potential, although COVID-19 appears to have gone some way to breaking this barrier. A number of DCSA members have reported a sharp increase in the adoption of electronic bills in an effort to keep trade moving notwith-standing the pandemic.
The DCSA has also highlighted some current blockchain shipping initiatives, such as TradeLens, which has a network of around 150 members and is reported to have processed over 23 million containers worldwide. Also worth mentioning is Global Shipping Business Network (GSBN), a consortium that is using
from and report on cyberattacks. Inmarsat has also produced a 2020 Superyacht Connectivity Report which highlights specifi-cally cyber threats aimed at superyachts.
In December 2020, the European Union Agency for Cybersecurity (ENISA) published its updated “Guidelines – Cyber Risk Management for Ports”. These are designed to help European port operators manage cyber risks amidst digital trans-formation and increased regulations. The guidelines were drafted in collaboration with several ports in EU Member States and build on ENISA’s 2019 Port Cybersecurity Report by providing practical scenarios for dealing with current cybersecurity threats.
In 2020, the Digital Container Shipping Association (DCSA) – a consortium of nine container lines established in April 2019 – published a cybersecurity implementation guide to ensure vessel preparedness for the IMO compliance requirements. This guide is in line with BIMCO and National Institute of Standards and Technology cyber risk management framework guide-lines, enabling shipowners to effectively incorporate cyber risk management into their existing safety management systems.
In addition, in February 2021, the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC) published ISO/IEC TS 27110, which provides standardised guidelines for developing a cybersecurity framework for organisations of all type, size and nature. While a non-industry specific development, this document will none-theless be relevant and useful to shipping companies.
Cybersecurity is also covered in the International Ship and Port Facility Security Code, which has been in force since July 2004 in the form of an amendment to the International Convention for the Safety of Life at Sea (SOLAS). It prescribes responsibilities to governments, shipping companies, shipboard personnel, and port/facility personnel to detect security threats and take preven-tive measures against security incidents affecting ships or port facilities used in international trade.
In the UK, there is the Code of Practice on Cybersecurity for Ships of the United Kingdom, issued in September 2017. It is designed to help companies develop cybersecurity assessments and plans, establish mitigation measures and manage security breaches. There is also the Department for Transport’s (DfT) revised cybersecurity guidance, dated January 2020, to future-proof ports and the wider maritime industry against cyber threats.
E-Commerce and BlockchainBlockchain originated as the technology which underpins cryp-tocurrencies such as Bitcoin. It uses distributed data storage technology together with high-grade encryption to record trans-actions, protecting them from malicious revisions or deletion. The high level of trust in the data produced can result in related transactions being triggered, leading to the concept of “smart contracts”. It has been estimated that the global blockchain market may be worth over US$23 billion by 2023. Today block-chain applications (effectively an immutable database almost free of hacking risk due to the in-built verification process) span a whole range of supply chain business solutions.
In the context of the shipping sector, it has been estimated that one shipment alone can generate up to 200 documents and that the cost of administering and processing this documentation in shipping transactions makes up approximately 1/5th of the cost of transporting goods. Blockchain has the potential to improve logistical efficiency in the global shipping industry by reducing, or even potentially eliminating, this paper trail and record-keeping, vastly reducing cost and speeding up the shipping process.
Traditionally, many documents – such as bills of lading, char-terparties, sales contracts, letters of credit, port documents and so on – must pass through the hands of various parties involved
4 The Changing Face of Maritime Law and Risk – Cyber, E-Commerce, Automation of Vessels
costs and emissions. They also reduced human interaction during COVID-19 restrictions. While these UAS could only make small deliveries within a small area, the company is developing a drone that can carry 100kg over 100km that it hopes to launch in the second half of 2021. The Singapore Port and Maritime Authority has also been trialling Airbus drones to improve port surveillance. Furthermore, in June 2020, DNV GL completed the first inspec-tion by an autonomous drone, in this case of an oil tank on a FPSO.
Notwithstanding the advantages that they bring, automation and technological developments have the potential to adversely impact the maritime labour market. There have been concerns that many seafarer roles will become redundant with time as a different set of skills becomes necessary and work routines change. However, much will depend on the extent to which coun-tries take up new technology and automation. The UNCTAD report indicates that developed nations have better capitalised on technological advances and automation – for example, Australia, East Asia, Europe and the US. In comparison, developing coun-tries – for example, African and South American countries – have been adopting technology at a slower rate because of insufficient financial investment and more limited technological resources.
Nonetheless, according to a 2019 report from the International Transport Workers’ Federation, the demand for seafarers is expected to keep growing until 2040, although the impact of technology and automation between 2020 and 2040 will vary according to the skills and tasks performed and workers’ demo-graphic groups. Low and middle-skilled jobs (e.g. cargo handlers, crane operators, dockers) will be more at risk than high-skilled jobs (e.g. ship captains and officers), which are less prone to auto-mation. The high-skilled workers will rely on automation and technology to improve their performance.
Ultimately, however, the maritime labour sector will look very different in the future. There will be less jobs on board ships and more jobs onshore. Retraining, particularly on new technology and automation, will be crucial.
Turning to regulation, it remains unclear whether key inter-national conventions apply. For example, do the UN Law of the Sea Convention 1982 (UNCLOS), the 1974 SOLAS and the International Regulations for Preventing Collisions at Sea 1972 (COLREGS) apply to autonomous vessels? It is also unclear how the civil liability conventions might apply. Some of the issues arising include whether unmanned and autonomous vessels can be classified as ships under some conventions and also what the position might be in terms of regulations that envisage a human element.
The IMO has launched a scoping exercise to assess IMO instruments to see how they might apply to ships with varying degrees of automation. The IMO has a strategic plan (2018 to 2023) to integrate new and advancing technologies in the regula-tory framework. In the interim, in June 2019, the IMO approved interim guidelines for MASS trials. In January 2020, an IMO Subcommittee discussed various issues including the operation of MASS and long-range identification and tracking systems. The Subcommittee’s recommendations will be reviewed by the IMO Maritime Safety Committee (MSC) in due course. Regulatory and other issues related to MASS are also due to be considered by the IMO Legal Committee, as well as the IMO Facilitation Committee. Unfortunately, all the previously scheduled meet-ings to discuss these issues were postponed due to the pandemic.
In 2019, EMSA commissioned a SAFEMASS Study to iden-tify new risks and regulatory gaps. In January 2020, it set up an internal taskforce to act as technical facilitator in relation to autonomous ships. EMSA has also attended the relevant MSC meetings and provided input on MASS and related issues.
In November 2020, Maritime UK launched an updated version of its “Industry Code of Practice for Maritime Autonomous
blockchain to digitalise shipping operations. Other stake-holders reportedly testing out distributed ledger technology for bills of lading include the Israel Ports Company, Pacific International and the Singapore government. Ocean Network Express, the world’s sixth largest container line, has become the latest shipping line to offer fully electronic bills of lading to their customers. India is to integrate eBLs and digital documentation into its electronic port community system.
In its report, UNCTAD noted a significant increase in the use of electronic trade documents during 2020/2021 and notable efforts by governments to keep their ports operational and speed up the use of new technologies and digitalisation. International organisa-tions and industry bodies have called on governments to remove restrictions on the use and processing of electronic trade docu-ments and the need for hard copy documents. The restrictions on physical movement and travel as a result of worldwide lockdowns highlighted the importance of alternative electronic and digital methods of doing business and accomplishing trade deals.
Nonetheless, blockchain technology raises a number of poten-tial challenges for the maritime industry. Among other things, there is a lack of standardisation – blockchain solutions are unreg-ulated and voluntary. In addition, different stakeholders – banks, freight forwarders, ports etc. – use different systems, which makes data exchange complex and reduces interoperability. This problem is particularly obvious, according to the DCSA, in liner shipping where the nature of liner shipping alliances makes inter-operability difficult. Given, however, the benefits that blockchain brings to the global maritime sector, we can expect that key stake-holders will collaborate to address these and other concerns in the coming years in an effort to come up with effective solutions.
Artificial Intelligence and Automated VesselsIn recent years, the shipping community has recognised that Artificial Intelligence (AI) and automation can benefit the mari-time industry in a number of significant ways. Emerging tech-nologies can improve safety and efficiency on board vessels. They can also enhance the sector’s environmental performance.
Work continues on developing maritime autonomous surface ships (MASS), drones and navigation systems. It has been reported that the market for MASS is worth US$1.1 billion annually and that this will grow by 7% each year to US$1.5 billion by 2025. 96% of almost 3,000 patents relating to auton-omous shipping technology worldwide have been registered in China. Other nations are expected to develop and implement autonomous shipping technology in the coming years, although how COVID-19 will impact these expectations is unclear. In the meantime, IBM’s Mayflower autonomous ship project has attracted considerable press attention. This is scheduled to be one of the first transatlantic crossings of a fully autonomous vessel from Plymouth, England, to Plymouth, Massachusetts. The voyage was delayed due to the pandemic, but is expected to commence in Spring 2021 and take approximately three weeks.
Global navigation satellite systems are critical for safe ship navigation. Automatic identification systems (AIS), which track vessels round the world via satellite signals, produce reliable data for ship tracking and analytics, including for insurance purposes. However, there is a risk that these systems can be jammed or hacked, leading possibly to groundings or collisions. AIS tracking can also be disrupted. These satellite systems must, therefore, be strengthened and the European Space Agency is reportedly working on a solution to reduce risks for its services in this area.
The shipping industry is also collaborating on the use of drones. In Singapore, Wilhelmsen and Airbus have been piloting the delivery of maritime essentials to vessels at anchorage via unmanned aircraft systems (UAS). Drone deliveries can save time,
it has faced as a result of the pandemic. Industry stakeholders have noted the benefits of new technological advances that can enhance efficiency, productivity and safety while reducing costs and emissions. However, the significant financial investment required to develop the relevant technology will be crucial, as will the commitment to addressing pressing issues such as cyber risk and seafarers’ welfare.
These concerns should not act as a deterrent. Technology is progress and all progress brings challenges. The maritime industry is well-placed to overcome these challenges if the key players collaborate to address the various issues that arise. Everyone has their part to play, from regulatory bodies to industry associations, from technological innovators to finan-ciers, from lawyers and underwriters to shipowners and opera-tors. It will be interesting to review the situation in 12 months time and see how far we have progressed.
Systems Ships (MASS)”. According to Maritime UK, the acceler-ating pace of change in maritime autonomy required updated guid-ance for those owning and operating MASS. The new Code of Practice focuses on ship systems, as well as including new chapters on cybersecurity, pilotage, dynamic positioning and Vessel Data Recording.
Also in November 2020, BIMCO started to adapt its standard form ship management agreement, SHIPMAN, to make it suit-able for autonomous vessels. The AUTOSHIPMAN will be the first standard form agreement specifically produced for the auton-omous vessel market and is expected to be published during 2021.
ConclusionDuring these unprecedented times, the increased use of tech-nology across the global shipping sector has allowed the global maritime industry to better withstand the numerous challenges
6
Shipping Law 2021
The Changing Face of Maritime Law and Risk – Cyber, E-Commerce, Automation of Vessels
Julian Clark is the firm’s Senior Partner with global responsibility for the firm’s practice sectors and client base both in London and interna-tionally. He is himself an internationally recognised leader in shipping and international trade with over 30 years’ experience in mediation, arbitration and litigation. Julian has for over 15 years been ranked in the world’s leading legal reference guides including Chambers and Partners 2020 where he is described as being “recommended in the market for his strong relationship with P&I Clubs”, The Legal 500 where he is ranked as a member of the Hall of Fame, the US publication Super Lawyers and Who’s Who Legal who rank him as a “Global Leader”. On leaving his previous position as the Global Head of Shipping of another leading London Firm the press commented on his recruitment to Ince as being “a major score”. He is also internationally recognised as an expert in piracy, E-commerce (including blockchain), cybercrime, security and terrorism issues in the maritime field. He is the Chair of the Maritime London Innovation and Technical Committee and Cyber Risk subcommittee of the CMI.
The Ince Group is a dynamic international legal and professional services business with offices in nine countries across Europe, Asia and the Middle East. With over 900 people, including over 100 partners worldwide, The Ince Group delivers legal advice, strategic guidance and business solutions to clients ranging from the world’s oldest and biggest businesses operating across numerous industries to ultra-high-net-worth individuals. Through its entrepreneurial culture and “one firm” approach, the business offers its clients over 150 years of experience, insight and relationships. The Group is driven by a unique team of passionate people whose broad expertise and deep sector specialisms provide their clients with solutions to all their complex legal and strategic needs.
of some municipalities included provisions that allowed or, in certain cases, obliged parties to solve maritime disputes before arbitrators.4
In England, arbitration was a common mode of dispute settle-ment in shipping cases among tradesmen, mainly when the dispute involved any maritime services. In cases where mari-time services were involved, two or more experts were called to resolve the dispute and act as “amiables compositeurs”.
In the 19th century, with the rise of trade and commerce there was a necessity to codify the maritime laws. Considering that nation states were defined by their territory, they started drafting their own national laws. Thus, trade law lost its unanimous character and was limited to the nationalised laws. However, the birth of modern maritime arbitration can be tracked to the American Civil War, and the maritime cases in England that were brought to the English courts. The numerous disputes convinced the Liverpool Cotton Association to start introducing arbitration clauses in their contracts: the affirmation of arbitration in Liverpool led shortly to its adoption in London, and it gradually spread worldwide.5
The Maritime Industry in the UAE and the Need for Specialised Arbitration Services Today, the maritime sector is changing at a fast pace globally. This rapid growth requires immediate consultation and atten-tion from the legal community when disputes arise and need to be resolved. However, despite many transformations in the maritime industry globally, arbitration continues to be well preferred, as it provides parties with a cost-effective, flexible and confidential process to resolve disputes.
The UAE has a long-standing maritime heritage. Strategically located, the UAE’s maritime industry has evolved into a bustling global hub, providing a resourceful trading corridor connecting East and West. Historically, trade has been an important contrib-utor to the UAE’s economy. The UAE’s growth in interna-tional trade traces back to as early as the 1900s when Dubai was declared a free port and cargos were transported through the Dubai Creek. Today, the UAE has become an international port connecting the East and the West. The UAE’s geograph-ical location has given it a comparative, strategic and competitive advantage. In the UAE, the maritime industry is a key economic sector, contributing approximately 60% of the total maritime sector in the Gulf Cooperation Council. One of the largest tran-shipment ports in the world, Jebel Ali port, built in 1979, has a capacity of 19.5 million TEU.6
The UAE holds a strong position as a maritime and trans-portation hub, having between 12 and 15 operating commercial ports, ranking number four on Ports & Logistics in the Leading Maritime Nations of the World 2018 Report by Menon Economics.7
Setting the SceneArbitration is a form of alternative dispute resolution (ADR), used for resolving disputes with no involvement of the national courts. The dispute is decided by one or more persons (the “arbi-tral tribunal”), which renders an arbitration award, where the deci-sion on the dispute is recorded. An arbitration award is final and binding on both parties to the dispute and is enforceable at courts.1
The beginnings of dispute resolution can be found in Ancient Egypt, Greece, the Roman Empire and in Asia. It is claimed that courts of reconcilement that existed among the Greeks and the Romans were known to put an end to litigation by dispute resolution, mainly arbitration.
Hence, it can be said that arbitration is a system of justice that was born of merchants and has been in existence for thousands of years. The earliest law dedicated to arbitration is said to be in England in 1697 and the first arbitral tribunal is believed to have been formed in 1833. With open economies, world trade expanded and the need for international commercial arbitra-tion also increased. Further, the recognition and enforcement of arbitration agreements and awards across different countries led to the establishment of the New York Convention in 1958.
The oceans have always been a source of sustenance, providing food and trade opportunities. The quest for natural resources and wealth gave rise to the establishment of the maritime industry. The oldest maritime regulations have been found in the ancient Egyptian code and the code of Hammurabi – the Babylonian code of law of ancient Mesopotamia. Further sources claim that the oldest systematic maritime code is the Rhodian Sea Law, which was a body of regulations standardising commercial trade and navigation in the 7th century and which shaped the maritime law of medieval Italian cities.
The Rhodian Sea Law regulations focused on liability for the cost of lost or damaged cargo.2 Traditionally, international stand-ards in the shipping industry were a part of the domestic laws, through judicial processes and decision-making. The international character of shipping law and its prominence in the commercial industry set the foundation of the medieval lex mercatoria, which has continuously portrayed arbitration as the most appropriate means of resolving disputes. In early medieval ages, traders formed factu-ally supportable maritime classifications, which contained rules and parts of which have remained and are in use currently.3
Any disputes that arose between the members of the maritime association were settled swiftly according to norm, impartiality and internal rules and procedures of the mercantile courts, or by arbitrators. Arbitrators were merchants of the same city or state generally chosen because of their knowledge of local rules and customs. The growing importance of Italian medieval communities sustained the spread of arbitration: the statutes
8 EMAC and the Development of Maritime Arbitration in the UAE
Aside from panel listing, other members who join are given priority to EMAC-organised events and are awarded discounts on delegate participation and sponsorships at trade events throughout the country. There are no limitations as to who can join as a member. Not only are EMAC’s membership fees competitive but also its rates are kept reasonable to ensure that disputing parties save on administration and other undue costs. Whether disputants choose to seat their arbitration onshore in one of the UAE Emirates or whether they use the DIFC default seat, EMAC’s services and rates remain unchanged. One could argue that it is the convenience, standard of service and choice of seat procedures that are beneficial. It should be remembered that arbitrator, mediator, expert and the parties’ associated legal fees are independent from the arbitration centre fees.
Making Significant StridesSince EMAC’s inception in November 2016, its Board of Trustees and the Secretariat have worked towards carrying out its long-term strategy to provide the highest standard of arbitra-tional excellence through its panel of arbitrators, mediators and experts. EMAC has been established for the maritime industry in the region, and the EMAC team are standing by to actively support specialised dispute resolution.
In 2017, the Centre worked not only to raise awareness of EMAC for those operating in the maritime sector, but also to encourage the region’s legal fraternity to join its panel of arbi-trators and mediators. To increase its global footprint, EMAC successfully introduced itself to the London maritime market in early 2017, and participated in Singapore’s Sea Asia Conference, one of the world’s most recognised shipping and offshore confer-ences. EMAC has also participated in Oslo’s Nor-Shipping, Rio de Janeiro’s IBA Maritime and Transport Conference and Copenhagen’s ICMA XX. Embodying the global reach of the maritime industry, these introductions ensure the world is aware of EMAC’s access to regional and international maritime arbitra-tors, mediators and experts.
At the start of 2018, EMAC announced its plans to take to the UAE’s maritime leaders with the goal of detailing how its services benefit the industry by simply including the EMAC model clause into future contracts.
All this hard work led to the first case referral, received in August 2018. The expected gestational period for any arbitra-tion centre is estimated to be about 10 years. This is a record for an independently managed maritime arbitration centre, and attests to the credibility built by its 14-member Board of Trustees and Secretariat.
2019 saw more one-to-one meetings with industry stake-holders, in order to explain the benefits of EMAC and how it is set to support the community and industry. Through these meetings, the Centre also understands that various organisa-tions have begun to apply EMAC to their agreements, albeit that there is no way to obtain visibility to these agreements until the Centre receives a referral.
EMAC will continue to spread the word by speaking at confer-ences and events and through its series of professional CLPD-accredited, themed breakfast seminars designed to raise aware-ness of the legal issues encountered by the region’s maritime sector.
Digital is the Way ForwardNo industry or service is exempt from technology. Sustainable development includes a move away from traditional paperwork and files. The legal sector has begun to apply digital courts, and blockchain technology is being tested to run cases without paper. As a modern centre, EMAC has set in motion its plan
As the country continues to invest in infrastructure, the mari-time industry continues to expand, and thus more services are required, leading to the establishment of a specialised maritime arbitration centre.
Prior to Emirates Maritime Arbitration Centre’s (EMAC’s) establishment, many regional stakeholders voiced that there was lack of support due to the absence of maritime specialised ADR. This resulted in careful planning with the maritime authorities in the UAE, to establish a centre that understood the needs of the region and the industry, took a modern approach to ADR, and considered jurisdictional preferences. It has been recognised that Dubai is uniquely positioned to offer a common law jurisdic-tion through the Dubai International Financial Centre (DIFC), and with this, maritime contract disputants had the option to hear their cases in English according to common law arbitration proce-dures. The time was right and thus EMAC was founded by Emiri Decree No. 14/2016 in April 2016, and officially began its opera-tions in November 2016.
EMAC and Maritime Arbitration Contributing to the UAE’s ambitions of becoming a leading maritime hub, since inception, EMAC has been active in creating awareness and confidence that its services are designed to meet with international best practices. EMAC is notably the only maritime arbitration centre in the entire Middle East region, offering both institutional and ad hoc arbitration options, as well as fast-track and emergency arbitration, and mediation. With the UAE being a signatory to the New York Convention, EMAC’s arbitration is based on somewhat of a hybrid model,8 following UNCITRAL arbitration standards. Its mediation rules mirror international best practice and are designed to fit in well with smaller claims. Essentially, EMAC’s arbitration offers a light touch case management through its institutional services, whereby a case is administered from notice to award. Parties may, however, wish to administer their cases independently, and this is where EMAC’s ad hoc arbitration may be preferred. Where urgent interim relief is required, EMAC refers to its emergency arbitration rules and in smaller claims, EMAC offers fast-track arbitration rules or mediation. Nevertheless, high-quality arbi-tration services require highly skilled arbitrators and media-tors. With 48 arbitrators, 23 mediators and 24 experts, EMAC is building credibility and trust within the industry.
Becoming a specialised arbitrator or mediator is never easy, and it takes a long time to gain sufficient industry knowledge and experience in the specific field. To reach a stage of substan-tial credibility in maritime arbitration or mediation, most profes-sionals must have decades of experience and be well renowned in the industry. The selection process for disputants as an arbitrator or mediator varies on whether the experience required is primarily an understanding of the law, or an industry-specific subject matter. Therefore, the criteria set for the approval of panel applica-tions at EMAC is high. When EMAC refers to excellence, it filters down to every part of the Centre. Essentially, the exec-utive committee takes into consideration the balance between industry and the legal experience of applicants, as well as their education and reputation. As a young centre, the EMAC exec-utive committee encourages diversity within its panel selection as well as within the new generation of arbitration and media-tion professionals.
EMAC’s membership is available to individuals who wish to join in a personal capacity or as corporates. The two subscrip-tions, based on a 12-month renewal, are valued at 100 USD and 200 USD per annum, respectively. When EMAC set out its rules, it also wanted to make sure that its process is competitive.
across the region, providing services for resolving maritime disputes, through arbitration, mediation and other dispute resolu-tion mechanisms. As the newest addition to the global portfolio of specialised maritime arbitration centres, EMAC is making exceptional strides in a short space of time and will to continue to promote awareness of local, regional and international dispute resolution best practices, and to further support the UAE as it develops into a world-renowned maritime destination.
Endnotes1. O’Sullivan, Arthur; Sheffrin, Steven M. (2003), Economics:
Principles in Action. Upper Saddle River, New Jersey: Pearson Prentice Hall. p. 324. ISBN 978-0-13-063085-8.
2. https://www.britannica.com/event/Rhodian-Sea-Law.3. Goldby, Miriam; Mistelis, Loukas. (2016), The Roles of
Arbitration in Shipping law. p. vii. ISBN 978-0-19-875794-8.4. Gregori, Marco. New Challenges in Maritime Law: De Lege
Lata Et De Lege Ferenda. p. 331.5. Ibid.6. http://dpworld.ae/our-portfolio/jebel-ali-port/.7. https://www.menon.no/wp-content/uploads/2018-
84-LMN-2018.pdf.8. Parties may choose onshore Dubai as the seat or use
EMAC’s default seat – DIFC.
to run a fully digital arbitration process that is secure, efficient and user-friendly. No two arbitration cases are ever the same, hence there are challenges to building such platforms. EMAC’s case manager is well versed in every scenario that is presented in case handling and these all need careful consideration at the coding stage. Most important is the security of documenta-tion and records. EMAC has approached its digital security as a priority, with its servers having undergone penetration testing and having set in place stringent IT security policies that are ISO/IEC 27001:2013 certified. The key to a successful arbitra-tion and mediation online platform is through proper planning. It is not always about being the first, it is about getting it right the first time. Benefits to online filing begins with the ability to run conflict checks, to provide secure credentials and to allow for real time access for disputants and their lawyers.
In addition, hearings can be conducted via video calling, which again saves disputants and EMAC time and money. It is all about heightened efficiency and keeping costs low. Technology helps keep overheads down, and this in turn keeps EMAC’s administration and registration fees competitive. EMAC fully supports environmental sustainability and, by digitising its case management processes, plays its part by limiting the use of paper and stationery.
SummaryAs a not-for-profit organisation with financial and administrative independence, EMAC will continue to work with organisations
10
Shipping Law 2021
EMAC and the Development of Maritime Arbitration in the UAE
Jyothi Mani joined the Case Management team at Emirates Maritime Arbitration Centre (EMAC) in 2018. Jyothi’s remit includes facilitating case management, acting as a liaison in case-related matters between parties and the EMAC executive committee. Having been in Dubai for just short of a decade, Jyothi brings with her a wealth of case management experience from the likes of the Dubai International Arbitration Centre (DIAC). Prior to joining the DIAC, Jyothi worked as in-house counsel for a large corporate in Indian entertain-ment, followed by a role with a legal consulting firm in Dubai dealing with real estate and construction in the UAE. Whilst in India, in her early days of employment, Jyothi was involved with various NGOs dealing with mental health and human rights issues, playing an important role in contributions towards the amendment of the Indian Mental Health Act 1987. She has a Master’s in Law from the University of London specialising in Dispute Resolution with a minor in Maritime Law.“As EMAC has completed its first term of three years, it has made significant contribution in promoting the maritime industry and arbitration within the region. The Centre registering its first case in just 18 months since its establishment is proof enough to understand the impact that EMAC has had”, said Jyothi. “Given the vast array of shipping activity here in the Middle East region, EMAC is definitely well placed to ensure that access is granted to the right services for maritime disputes out of the DIFC, I look forward to growing with EMAC and making it one of the premier maritime arbitration institutions.”
Emirates Maritime Arbitration Centre (EMAC)Dubai International Financial Centre Level 3, Precinct Building 5 (South) P.O. Box: 507333, DubaiUnited Arab Emirates
Emirates Maritime Arbitration Centre (EMAC), the region’s only specialised maritime arbitration centre, was established in response to the region’s growing maritime activity, in accordance with Emiri Decree No. 14 in April 2016, with a formal launch of its services in November of the same year. As an independent, non-governmental, non-profit institution, EMAC has taken significant strides towards building awareness and credibility as a preferred maritime arbitration institution for the Middle East region. Through strategic partnerships and collaborations, the Centre has engaged the maritime community by organising conferences, seminars, workshops, training courses and specialised publications in maritime arbitration and all issues relating to alternative means for dispute resolution.Efficiency in the arbitration or mediation process begins with the inser-tion of a well-drafted dispute resolution clause in an agreement. Through
continued discussion with maritime stakeholders, the team at EMAC are providing further clarity on the benefit of adopting EMAC as the choice institution for alternative dispute resolution services through its flexible rules and reliable support.
The possibility of using private armed guards onboard Portuguese flagged vessels
The International Maritime Organization (hereinafter referred to as “IMO”) has long introduced special measures to protect the lives and well-being of seafarers, cargo and ships from the threat posed by piracy and armed robbery.
This threat remains today and according to the IMO data, a total of 226 incidents of piracy and armed robbery were attempted or performed in 2020.
In October 2019, Portugal introduced a law (Decree-Law No. 159/2019 of 24 October) that enables shipowners of Portuguese flagged ships to hire private security companies, employing armed personnel to be onboard ships, in order to protect them when operating in areas of high piracy risk.
This Law provides the option to hire security compa-nies based in the European Union or European Economic Area. Companies providing private armed security services to Portuguese registered ships are responsible, through their Security Director, for choosing the Security Team Coordinator and for defining: (i) the anti-piracy plan; (ii) the trip plan; and (iii) the in-land transportation plan regarding arms and ammunitions.
In April 2020, by Circular No. 64, the Portuguese Maritime Administration defined the areas considered high piracy risk in accordance with those already identified by the IMO, such as the Gulf of Guinea, Somalia, the wider Indian Ocean, the wider Atlantic Ocean, West Africa, the Red Sea, among others.
By implementing this new Law and by having the high-risk areas for piracy defined by the Portuguese Maritime Administration, Portugal strategically positions its maritime industry on a par with the premium Flag States that allow the use of armed guards on board.
Amendments to the law applicable to vessels registered in MAR
In 2020, by Law No. 56/2020 of 27 August, the Portuguese Government approved critical amendments to the MAR legal framework.
Despite the lockdown and temporary restrictive measures that conditioned the functioning of public services in general into a slowed down pace of legislative processes, political efforts were put in place to enact substantial changes to the MAR legal regime, with the aim of strengthening MAR’s position on an international level.
IntroductionThe outbreak of the new coronavirus disease (COVID-19) during 2020 has caused a severe brunt throughout the world, especially in the shipping and maritime industry. This widespread pandemic collapsed all supply chains and forced port closures led by lock-down decisions that restricted the transportation of goods and passengers all over the world.
Many developed countries have implemented highly restric-tive preventive measures to combat the spread of the virus; these restrictions caused a halt on their economies and trade with other countries, directly impacting shipping carriers’ earnings and port logistics worldwide.
Portugal is not an exception in this global pandemic economic trend. However, in terms of growth and international perfor-mance, the Portuguese maritime sector has maintained its steady raise for the past five years thanks to the contribution of the Madeira International Ship Registry (hereinafter referred to as “MAR”).
According to statistical data provided by the Regulator of MAR (Sociedade de Desenvolvimento da Madeira S.A.), the total number of vessels registered in MAR has grown more than 7% between 2019 and 2020, increasing from a total of 680 vessels registered in 2019 to a total of 730 vessels by the end of 2020.
Following this trend and despite the uncertainty of the pandem-ic’s evolution, the number of vessels registered in MAR continued to grow and, in the first semester of 2021, the total number of vessels registered increased from 730 to 786 vessels, corresponding to a healthy growth of 7.67%.
Thanks to MAR’s performance and good compliance with the requirements laid down in the international maritime conventions by Portuguese flagged vessels, Portugal continues to progress in the annual assessment carried out by the Paris MOU committee and has once again been included in the White list of low-risk flags.
The outcome of this result can be seen in the latest list published by the Paris MOU Committee; in 2020 Portugal ranks 24th, which represents an improvement from 27th in the previous, pre-pandemic year of 2019.
The resilience and capacity to keep growing despite the inter-national scenario in the maritime industry is anchored on a set of measures adopted by the Portuguese Government to boost the competitiveness of the Portuguese maritime sector, enabling inter-national shipping players to look to the Portuguese jurisdiction for a credible and business-friendly alternative for their businesses.
This chapter aims to highlight some of the measures adopted, in particular those of greater legal and/or operational impact on the maritime industry over the last two years.
12 The Resilience of Shipping in Portugal in Spite of Global Pandemic Turmoil
Even though it is not mandatory to incorporate a shipping company in Portugal to register a ship under the Portuguese flag, companies willing to incorporate and develop their mari-time activities within the MIBC benefit from a set of incentives provided under this special regime, mainly of a tax nature, as long as they are compliant with the underlying substance requirements.
A new Law was published (Law No. 21/2021 of 20 April) on 20 April 2021 amending article 36-A of the Portuguese Tax Benefits Statute (“TBS”), which extended the term of article 33 of the TBS ensuring that the benefits therein provided are in force up until 31 December 2027. Amongst the extended bene-fits is the crew exemption from personal income tax in Portugal, a benefit of crucial relevance within shipping activity.
In addition, the Law extended the deadline for the admission of new companies under the MIBC regime until 31 December 2021 and introduced substantial clarifications, namely what constitutes the number of jobs created for the purposes of eligi-bility for the scheme. In this context, crew members and workers on board ships registered in MAR were duly safeguarded and are considered jobs for the purposes of the regime.
As a result of the above legislative changes and clarifications, the activity of the shipping companies within the MIBC came out stronger in terms of tax and operational incentives.
Rhine Certification
During 2020, the Portuguese flag was sought by European ship-owners with vessels belonging to the Rhine Navigation, who were unable to register and operate their vessels under the Portuguese flag.
Portugal did not immediately ensure the implementation of the Council Regulation (EEC) No. 2919/85 of 17 October 1985, laying down the conditions for access to the arrangements under the Revised Convention for the Navigation of the Rhine (here-inafter referred to as “Regulation (EEC) No. 2919/85”).
This became a drawback and made it impossible to register ships belonging to the Rhine Navigation in Portugal (MAR) in the course of 2020.
Regulation (EEC) No. 2919/85 determines the conditions for access to the arrangements under the Revised Convention for the Navigation of the Rhine relating to vessels belonging to the Rhine Navigation, which establishes the Central Commission for the Navigation of the Rhine, its main mission being to promote the development and ensure the safety of navigation on that river.
Portugal is not a party to the Rhine Convention; however, with the adoption of the Additional Protocol 2 to Convention, the Central Commission for the Navigation of the Rhine granted all Member States of the European Union access conditions to the Rhine identical to those of its Contracting States.
By virtue of the said Additional Protocol, only vessels belonging to the Rhine Navigation are authorised to transport merchandise and persons between two points situated on the navigable inland waterways referred to in the first paragraph of article 3 of the Convention, whereas vessels are recognised through a document issued by the competent authority of the relevant State.
Within this context, the Implementing Regulation annexed to Regulation (EEC) No. 2919/85 determines that the Member States of the European Union shall be accorded equal status with the Contracting States of the Convention.
Although Regulation (EEC) No. 2919/85 is mandatory and directly applicable to the Member States, its implementation into the national legal system was necessary.
As of June 2021, the Portuguese Maritime Authority can certify vessels belonging to the Rhine Navigation. By Decree-Law
Among those changes are: (i) the creation of a differentiated ship mortgage regime; (ii) the improvement of the commercial registration of ships and related legal acts; and (iii) the strength-ening ability of the Maritime Administration to perform its duties.
With regard to the ship mortgage regime, the new Law consol-idates the mortgagee’s position. In addition to the flexibility already granted to the parties to select the law applicable to the mortgage, this new Law strengthens the mortgagee’s interests by introducing the so-called “mortgagee in possession” concept and therefore granting blocking powers in situations of poten-tial sale or encumbrance of the ship by the owner.
Mortgagees also became entitled to pre-approve the register of vessels on a bareboat basis in MAR, as well as to cancel the bareboat charter-in registration in those cases where the mort-gagor fails to comply with its obligations under the mortgage and underlying loan.
As a major step forward into the Information Technology (“IT”) world, the new Law enables the commercial registry of ships to be fully electronic, allowing for the registry applications to be submitted online and proof of registration to be available through digital certificates. Ultimately, the registration process will be paperless with the implementation of a dedicated soft-ware for ship registration.
Finally, this legislative amendment also creates a dedicated tech-nical support team to address efficiently the increasing number of ship registrations, by providing assistance to the Portuguese Maritime Authority and the Technical Commission of MAR on performing their legal and operational duties and competences.
Sea Online Desk
The Sea Online Desk (Balcão Eletrónico do Mar – “BMar”) is the web portal that was created through Decree-Law No. 43/2018, of 18 June with a view to digitalise the procedures towards the issuance of the certificates, licenses and other documents required for the proper performance of activities at sea and certification of seafarers and vessels. The pandemic proved this strategic move to the online platform to be of great value which allowed the smooth running of operations regarding ship regis-tration, regardless of all the social restrictions imposed to the population and public services.
The transition of services and resources to online plat-forms and the recommendation to use digital tools during the pandemic made BMar the tool of excellence for the interac-tion with the relevant Maritime Authorities, providing access to these services 24 hours a day, seven days a week, for both domestic and foreign customers, resulting in very strong growth in the indicators of use of this platform. The portfolio of elec-tronic outputs generated is quite vast.
BMar provides transparency and ease of access to public services (including services shared between the various official entities), while avoiding travelling, duplication of information/documents and focusing on IT as an engine for generating envi-ronmental and economic benefits.
Currently, all digital certificates issued through BMar comply with the IMO criteria.
Consolidation of the shipping companies’ activities and crew benefits within the Madeira International Business Center
The MAR is part of the Madeira International Business Center (hereinafter referred to as “MIBC”), a regime fully approved and integrated within the European Union.
goods represents a handicap that Portugal is willing to overcome.It is therefore expected that Portugal will implement the
Directive in what regards inland waterways, by enacting a Decree-Law incorporating the relevant text of the European Agreement concerning the International Carriage of Dangerous Goods by Inland Waterways and respective Regulations.
ConclusionThe Portuguese Government is committed to the success and prosperity of the maritime sector.
In spite of the pandemic decelerating the economy, discour-aging investment, blocking decision-making processes and causing global uncertainty, Portugal has implemented political, legislative and operational actions with the aim of maintaining the development trend of recent years in the shipping industry.
On 6 May 2021, the Council of Ministers approved the National Strategy for the Sea 2021–2030, a public policy instru-ment that presents the vision, aspirations, areas of intervention and goals regarding the ocean development model.
The main objectives of the Portuguese Government are to enhance the contribution of the sea to the country’s economy and position Portugal as a prevalent maritime nation worldwide.
Portugal will continue to focus on simplifying legislation and adopting strategic procedures to enhance the reputation and competitiveness of its ship registries, while ensuring the tech-nical rigor and proper monitoring of the fleet. MAR is currently ranked as one of the leading European registries; keeping this trend requires full compliance of flag state, port state and coastal state obligations within the IMO.
No. 40/2021 of 1 June, Portugal appointed the competent authority for issuing the documents referred to under paragraph 1 of article 2 and paragraph 2 of article 5 of the Implementing Regulation, and established the sanctions applicable in case of a breach of the obligations.
Under this new Decree-Law, vessels flying the Portuguese flag – and complying with the conditions laid down in the Regulation (EEC) No. 2919/85 – shall become certified for navigation in one of the largest waterways in Europe, with a great positive economic impact for Central Europe.
Complementing this improvement, other legislative initiatives covering inland waterways are currently being prepared, particu-larly the implementation of the Directive 2008/68/EC of the European Parliament and of the Council of 24 September 2008 on the inland transport of dangerous goods (the “Directive”) in what regards inland waterways.
When implementing the Directive back in April 2010, Portugal decided not to apply the provisions on inland waterways in accordance with paragraph 3 of article 1 of the Directive, which permits Member States not to apply Annex III, Section III.1 of the Directive, for one of the following reasons: a) they have no inland waterways; b) their inland waterways are not linked, by inland waterway, to the waterways of other Member States; or c) no dangerous goods are transported on their inland waterways.
Portugal notified the European Commission of its decision not to apply the provisions on transport by inland waterway on the basis of reasons b) and c) above.
Given the proliferation and international recognition of the Portuguese flag abroad, especially in Europe, the absence of a regulatory regime with regard to inland transport of dangerous
14 The Resilience of Shipping in Portugal in Spite of Global Pandemic Turmoil
Shipping Law 2021
Cátia Fernandes is the founder of CF – Maritime Legal Services, a law firm specialised in maritime law. With almost two decades of back-ground in the maritime law and ship finance area, she has vast experience in providing services to international companies in the maritime sector. Cátia acts as legal advisor in relevant cross border transactions on behalf of international shipowners, banks and leasing entities. More specifically, Cátia provides legal assistance in matters related to ship registration, maritime guarantees and privileges, with particular emphasis on ship mortgages. She actively intervenes in complex credit facilities and financing structures secured by mortgages registered in Madeira. Cátia also assists clients in other shipping related matters including regulatory, crewing, labour, tax and social security matters.Cátia often participates in seminars and conferences on maritime law and has also been involved in several projects and legislative initiatives concerning maritime-related issues in Portugal.
CF – Maritime Legal ServicesRua Dr. António José de Almeida25, 3.º andar, 9000-062 Funchal, MadeiraPortugal
Marina Pimenta has 15 years of background in national and international tax law, with a vast experience in matters related to the International Business Center of Madeira (“IBCM”). Marina is experienced in the promotion of the IBCM and the International Shipping Registry of Madeira in several European countries and has been directly involved in relevant legislative projects in the maritime sector in Portugal.Marina provides legal assistance in matters related to the incorporation and management of companies within the IBCM, including regula-tory, commercial, tax and social security matters. Her experience extends to other areas, namely real estate, commercial and corporate law.
CF – Maritime Legal ServicesRua Dr. António José de Almeida25, 3.º andar, 9000-062 Funchal, MadeiraPortugal
CF – Maritime Legal Services is a law firm based in Madeira, Portugal that provides high standard shipping and maritime legal services.CF – Maritime Legal Services is the only law firm in Madeira exclusively dedi-cated to the provision of legal services related to shipping and maritime law, with a particular focus in matters linked to the MAR and to the IBCM.The firm provides legal assistance in the registration of ships, in matters related to ship finance and in the licensing and incorporation of companies within the scope of the Madeira IBC, as well in other shipping related services.Aware of the specificities and challenges of the maritime and ship finance industries, CF – Maritime Legal Services provides high-quality services, client-ori-ented, with the accuracy and knowledge dictated by years of experience.
contracts. Simply put, the CII limits the way ships are operated today. It does so by giving ships a performance rating between A and E – the Carbon Intensity Rating (CII Rating). This will be calculated by a metric called the Annual Efficiency Ratio (AER). The AER will be expanded on later in this chapter. A ship’s annual carbon emissions will be measured against the distance the ship has sailed. Ships that receive a CII Rating of A, B or C will be compliant with the new rules. Ratings D and E will be non-compliant and will require the shipowner to take action to become compliant. It is beyond doubt that the CII regime will have implications on commercial contracts. BIMCO is studying the potential implications on contracts and has started drafting charter party clauses to assist owners and charterers to comply with the new regime. The project has been given the highest priority by BIMCO’s Documentary Committee. Partner at HFW in London, Alessio Sbraga, who is also assisting BIMCO with this important project wrote in an article that: “The CII regime has the potential to directly impact and, in some cases, cut through the fundamental rights and obligations of Owners and Charterers and commercial operators in tradi-tional commercial contracts – most notably time charter parties – and this is likely to lead to disputes”. This will be analysed further in this chapter.
The detailed regulation for both the EEXI and CII has been approved and was formally adopted at the 76th session of the IMO’s Marine and Environmental Protection Committee (MEPC) in June 2021.
2.2. Regulations outside of the IMO
Outside of the IMO, other bodies are also trying to push reduc-tions of emissions from the maritime industry. The European Union (EU) is looking into a regional measure with the possible inclusion of the maritime industry under their existing Emissions Trading System (ETS). It will only be decided over the summer whether this happens. But if it does happen, a lot of things remain unclear – despite the fact that it may be implemented as early as 1 January 2022. For example, it is unclear which vessels and voyages would be covered by the ETS. Will ships be included if they are flagged in an EU Member State? Or will it be voyages that are either to or from a port within the EU? Or perhaps only voyages that are within the EU? And if the potential implementation is voyage based, how will shipowners based outside of the EU report emissions? For time charter parties, BIMCO has done an analysis which concluded that if EU ETS cost will be considered equiva-lent to a tax, due or charge, then it will be the charterers that will have to pay under most existing time charter forms. It should be noted that the final legal framework, enforcement and implemen-tation could change this analysis. This chapter will not expand
1. IntroductionFor the past couple of decades, climate change has been on a steady ascent to the top of political agendas around the world. The climate change agenda is driven by public interest which, in turn, applies pressure on politicians to act now. Most notably, this resulted in the adoption by 196 states of the Paris Agreement in 2015.
In 2012, the maritime industry was responsible for approxi-mately 2.2% of the global emissions. This may seem a relatively small percentage, but put into context it is the same emissions level as the world’s sixth largest emitting country. Shipping, together with all industries, needs to improve in terms of reducing its emis-sions. In 2018, the International Maritime Organization (IMO) adopted its initial GHG Strategy. The target of the strategy is clear: reducing greenhouse gas emissions of the world fleet by at least 40% by 2030 compared to 2008 emission levels. In continu-ation of the initial GHG Strategy, IMO’s latest reaction to the call for action on emissions is amendments to chapter 4 of MARPOL Annex VI. This chapter will seek to clarify the situation and will analyse some of the challenges the new regime presents for current commercial shipping contracts.
2. Upcoming Regulations
2.1. What are the new regulations about?
The amendments to chapter 4 of MARPOL Annex VI can be split into two groups: one group relating to the ship and its design, the Energy Efficiency Existing Ship Index (EEXI); and one group relating to the trading and operation of the ship, the Carbon Intensity Indicator (CII).
The EEXI is an extension of the Energy Efficiency Design Index (EEDI) which entered into force in 2015. Both of the indices are technical frameworks which aim to improve the energy efficiency and curb emissions from a ship construction perspective. The key difference to note is that the EEDI regu-lates and applies to newbuild ships whereas the EEXI applies to all existing ships with a gross tonnage exceeding 400. From a contractual perspective, the EEXI does not pose any major chal-lenges. It is something that will be handled by Flag States and Classification Societies, and it should be considered a onetime event. A ship must obtain a certificate of compliance and if it fails to present such a certificate in a port, it will be detained by Port State Control until it obtains the certificate. For this reason, this chapter will not focus further on the EEXI.
So, EEXI does not create issues for current commercial arrangements for shipping. The same cannot be said for the second group that will, without doubt, have an effect on how responsibilities and rights are allocated under commercial shipping
4. Looking at Challenges in the Current Contractual EnvironmentAs alluded to in section 3, the new CII regime will impact some of the long-standing fundamental principles and concepts under shipping contracts. This section will not offer solutions to the potential issues but rather highlight some of the issues that parties should consider and discuss between them in prepara-tion for the upcoming CII regime.
4.1. Bareboat charter parties
When looking at BARECON 2017, BIMCO’s latest standard bareboat charter party, and other forms of bareboat charter, it is apparent that these do not present a problem in terms of CII implementation. The bareboat charterer will effectively become the owner in all respects insofar as MARPOL compliance is concerned. The bareboat charterer will be the Document of Compliance (DOC) holder and the “Company” as defined in the ISM Code, meaning they are responsible for MARPOL compliance. The bareboat owner does not have to do anything further. Although there is no apparent benefit or consequence of receiving a rating of A, B or C (considering that they are all compliant), it may be the case that parties want to agree as to what rating is required.
It should be noted with respect to EEXI, that it could be the case that the bareboat chartered ship will have to be modi-fied or re-equipped to be compliant. This will obviously only be a discussion under existing long-term bareboat char-ters. BARECON 2017 includes a formula in subclause 13(b) (New Class and Other Regulatory Requirements) to deal with scenarios like this and divides the cost in a fair and balanced way based on factors such as the cost of the modification, the ship’s expected life span and the remaining charter period.
4.2. Shipmanagement agreements
BIMCO’s latest edition of its standard shipmanagement agree-ment, SHIPMAN, is the 2009 edition. SHIPMAN is a service agreement and allows for different types of services to be agreed between an owner and a ship manager. The interesting service in relation to CII is the technical management of a ship. When the managers agree to undertake these services, they assume responsibilities that in effect requires them to ensure that the ship complies with MARPOL. Much like under a bareboat charter agreement, the managers will (in most cases) become the DOC holder and will also become the “Company” as defined under the ISM Code. Clause 4 (Technical Management) of SHIPMAN 2009 stipulates that: “The Managers shall provide technical management which includes, but is not limited to, the following services: … ensuring that the Vessel complies with the require-ments of the law of the Flag State….”
As it was suggested for bareboat charter parties, the parties under a shipmanagement agreement may want to agree as to what rating is required.
If the parties agree to commercial management services in accordance with SHIPMAN Clause 6 (Commercial Management), they may also want to clarify that the services shall be rendered in such a way that the ship achieves a compliant CII Rating.
further on these issues as, at the time of writing, there are too many open questions, but BIMCO will certainly be following the discussions closely and will assist the industry by producing clauses if necessary.
It is not only in the EU that new regulations are being consid-ered. China, for example, has also indicated that they are consid-ering including shipping activities under their national carbon trading scheme. BIMCO will also be monitoring any national developments and will strive to assist the maritime industry.
3. How Does CII Affect Shipping Contracts?The new regulations are set to come into force on 1 January 2023. While this could seem like a distant future, contracts spanning this period are now being negotiated – and some have already been concluded.
BIMCO is actively working to identify the implications for all types of commercial shipping contracts and looking to which types of contracts are time sensitive, and which can wait until a later stage. For example, long-term time and bareboat char-ters as well as shipmanagement agreements spanning 2023 are already being negotiated or have already been concluded. So, these are given top priority by the BIMCO Documentary Committee. Due to the nature of the spot market, voyage char-ters could be left till later, but should still be thoroughly consid-ered. COAs would also need to be considered. The following sections will try and dive into some of the commonly used contracts to analyse where the issues lie.
One of the biggest challenges with the operational aspects of the new regulation is that it is difficult for an owner to comply when it is the charterers giving the employment orders.
At MEPC 76, the last piece of the CII puzzle was slotted in place when it was decided that the metric by which a ship’s CII rating will be calculated will be the AER. The AER works by dividing the ship’s carbon emissions by its DWT miles on an annual basis. The AER data is already being collected and is available through the IMO’s Data Collection System. For a ship to comply with the regulation, owners will, as of 1 January 2023, be required to restrict the operation of a ship in terms of speed, routing and cargo intake. This is because the CII Rating can be improved by operating at a reduced speed and/or slow steaming, by diverting from the shortest or quickest route on a voyage to increase the distance sailed both in ballast and when laden, by reducing cargo intake and by installing energy efficient technology.
3.1. What happens if owners do not comply?
What stands out as the most paradoxical element of the new CII regime is the consequence of non-compliance. As mentioned above, if a ship receives a rating of D or E it is not compliant. The IMO has proposed an incentive-based solution rather than a sanctions-based solution. IMO encourages ports to give incentives to ships that receive ratings of A and B instead of, for example, a rating of C. It is thought that ports could reward such ships with lower port costs. It would, however, seem highly unlikely that ports would have an interest in lowering their income. But what happens if a ship is not compliant? It must submit a plan to become compliant. If it fails to be compliant again the following year – it must submit another plan. This could continue indefinitely and there is no backstop mecha-nism. Perhaps in the future we could see that some ports will not accept ships that, for example, have a rating of E. But as of now, there are no indications that this will be the case.
4.3.3. Complying with Charterers’ voyage instructionsAnother issue that really highlights the importance of the parties cooperating is the fundamental principle that the charterers are the ones who decide where the ships go by giving voyage instructions.
With slight variation in the exact wording, it is clear from the three time charter parties that the Master is under the instruction of the owners. In Clause 8 (Performance of Voyages) of NYPE 2015 it is stated that: “The Master … (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment ….” BOXTIME 2004’s Clause 13 (Master) stipulates that: “The Master … although appointed by the Owners, shall at all times during the currency of this Charter Party be under the orders and directions of the Charterers as regards employ-ment….” A very similar concept is found in Clause 13 (Bills of Lading) of SHELLTIME 4: “The master (although appointed by Owners) shall be under the orders and direction of Charterers as regards employment of the vessel ….”
It is clear that owners will need to have a say in terms of the employment of the ship and how quickly it proceeds – it is important that the parties cooperate and discuss these things so that it is not just the charterers who decide without involving the owner.
4.3.4. Speed adjustmentsAs alluded to previously, one of the ways a ship can reduce its emissions is by slowing down. An interesting observation is that NYPE in Clause 38 (Slow Steaming) includes a provi-sion that allows for slowing down. However, such adjustment of speed is in the hands of the charterers: “The Charterers may at their discretion provide … instructions to reduce speed or Revolutions Per Minute (main engine RPM) and/or instructions to adjust the Vessel’s speed to meet a specified time of arrival at a particular destination.”
The intention of the clause is that when charterers have addi-tional time to meet the ship’s next commitment, they can order the ship to slow down in order to achieve fuel savings. While this does not change anything, it is interesting to note that it is not an unfamiliar concept – although it would have to be turned around to assist owners with CII compliance.
4.3.5. Performance warrantiesUnder time charter parties, the owner will be warranting certain consumption of the ship at certain speeds. This is included in SHELLTIME 4, Appendix B where parties should state the: “Monthly Consumption – Fuel Oil mt”. Clause 48 (Construction) has the effect of incorporating the appendix: “Appendix B: Shell Safety and Environmental Monthly Reporting Template, as attached, shall be incorporated herein.” NYPE 2015 takes a similar approach in Clause 12 (Speed and Consumption): “Upon delivery and throughout the duration of this Charter Party the Vessel shall be capable of speed and daily consumption rates as stated in Appendix A ….”
This is another point that parties need to think about and adjust to allow the ship to be operated in compliance with the new CII regime.
4.4. Voyage charter parties
This section will look at three well-known and frequently used forms of voyage charters: GENCON 1994, ASBATANKVOY and SHELLVOY 6.
4.4.1. Utmost despatchAs is the case for time charter parties, voyage charter parties will invariably include an obligation of reasonable/due/utmost/
4.3. Time charter parties
4.3.1. Utmost despatchWhether a time charter party uses the expression “utmost”, “due”, or “convenient” despatch, the obligation to proceed on the laden voyage with such despatch is impacted by CII. Under the new regime, the owners may well find themselves in a situ-ation where they must sail longer routes or at slower speeds in order to ensure they achieve a compliant CII Rating.
Looking at the well-known and frequently used time charter parties NYPE 2015, BOXTIME 2004 and SHELLTIME 4, it is apparent that the concept of a level of despatch exists under all of these. NYPE 2015 stipulates in Clause 8 (Performance of Voyages) that “… the Master shall perform the voyages with due despatch…”. In Clause 13 (Master) of BOXTIME 2004 it reads that: “The Master shall prosecute all voyages with due dispatch….” Finally, SHELLTIME 4’s Clause 2 (Shipboard Personnel and Their Duties) states that: “(b) Owners guarantee that throughout the charter service the master shall with the vessel’s officers and crew, unless otherwise ordered by Charterers; (i) prosecute all voyages with the utmost despatch....”
This issue is something that needs to be thought about by the parties and should be resolved either by adjusting the existing text of time charters or by incorporating specific clauses to tackle the issue.
4.3.2. Deviation and Off-hireHaving to sail a potentially longer route would not only be a breach of the utmost despatch obligation, it would in many situations also constitute a deviation. Another commonality of popular forms of time charter is a limitation in the right to deviate under the contract. Two of the three contracts deal with deviation in a similar manner, and one deals with it slightly differently. Under NYPE 2015, the ship would be put off-hire if it deviates. It is stipulated in Clause 17 (Off-hire) that: “Should the Vessel deviate or put back during a voyage, contrary to the orders or directions of the Charterers, for any reason other than accident to the cargo or where permitted in Clause 22 (Liberties) hereunder, the hire to be suspended from the time of her devi-ating or putting back until she is again in the same or equidis-tant position from the destination and the voyage resumed there-from.” BOXTIME 2004 adopts a similar approach and states in Clause 9 (Off-hire) the ship will be put off-hire in periods where it is “Unable to Comply with Instructions: If the Vessel is unable to comply with the instructions of the Charterers on account of: … Deviation: In the event of the Vessel deviating (which expres-sion includes putting back, or putting into any port or place other than that to which the vessel is bound under the instructions of the Charterers) other than to save life or property…”. In Clause 3 (Voyage) of SHELLTIME 4, deviation is dealt with differently, namely by way of an indemnity in favour of the charterers in case the owner deviates: “(2) Owners shall be responsible for and indemnify Charterers for any time, costs, delays or loss including but not limited to … deviation expenses … due to any failure what-soever to comply fully with Charterers’ voyage instructions ….”
As far as NYPE 2015 and BOXTIME 2004 is concerned, the deviation situation can be solved through bespoke clauses. Although drafted for a very different circumstance, a recent example of such a clause was the BIMCO COVID-19 Crew Change Clause for Time Charter Parties 2020. The clause was designed to give owners the liberty to deviate for crew changes under tightly defined circumstances. A clause could possibly be drafted to give such right for deviating to allow the ship to comply with the new CII regime.
BIMCO is the world’s largest international shipping association, with around 1,900 members in more than 120 countries. 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.
Some clauses give the owner the possibility of adjusting the speed. An example of such clause is the BIMCO Slow Steaming Clause for Voyage Charter Parties 2012. Under the clause, the owner can adjust the ship’s speed as long as the laycan is met and it further expressly provides that such a reduction does not constitute a breach of the utmost/due despatch obligation. Such a clause will be very helpful in achieving CII compliance. However, it is stressed that proper voyage planning is a prerequisite, because if the laycan does not allow for the ship to slow down enough to become compliant, the clause does not solve anything.
5. ConclusionIt would appear that there is some sort of logical disconnect in the upcoming regulation. Owners will need to predict what a ship’s carbon footprint will be for the next three years and this will be extremely challenging when owners under, for example time charters, are not in direct control of the employment of the ship. The challenge is that owners must achieve compliance, but under the current commercial legal arrangements they do not have the rights to enable them to achieve compliance. To resolve the situation, owners will have to take control of some of the rights that are traditionally charterers’ rights. This will likely be met with some resistance from charterers who will prefer to maintain the status quo, where they can order a ship to proceed as quickly as possible with as much cargo on board as possible.
As touched upon above, a key component in resolving the situ-ation will be to persuade charterers to give up, or adjust, some of the rights they have today. It will be a balancing act to keep owners in compliance and charterers happy. Our initial analysis shows that it is indeed possible to solve the challenges by way of adding additional wording, or by adjusting the existing wording.
BIMCO is actively working to come out with clauses to assist the industry. But as some contracts are already entered into and contracts are already now being negotiated, parties need to have open and frank discussions addressing how compliance will be achieved and it cannot be stressed enough that the parties have to cooperate to solve the issues. This is a challenge for the industry and not just a challenge for owners. Keep an eye out on the BIMCO website for updates on the development of clauses.
convenient despatch, whether it is provided for expressly or implied. Under English law the obligation to set out on the approach voyage in time to reach the load port is an implied term which dates all the way back to The North Anglia (Evera SA Comercial v North Shipping Co Ltd [1956] 2 Lloyd’s Rep 367).
In Clause 1 of GENCON 1994 it is stipulated that: “The said Vessel shall, as soon as her prior commitments have been completed, proceed to the loading port(s) or place(s) …” and for the laden leg it reads that “… being so loaded the Vessel shall proceed to the discharging port(s) or place(s) …”. ASBATANKVOY states in Clause 1 (Warranty – Voyage – Cargo) that the ship shall “with all convenient dispatch, proceed as ordered to Loading Port(s)” and further that after loading, it has to proceed “… direct to the Discharging Port(s) …”. SHELLVOY 6 takes a more generic approach by simply referring to “… from the time when the obligation to proceed to the loadport(s) attaches …”.
If the owner finds himself in a situation where the ship has to sail a longer route to become compliant, additional language, or changes to existing language, will be required. Under ASBATANKVOY the issue is even more clear for the laden voyage, where it is explicitly stated that the ship shall go directly to the discharge port. The parties need to agree on a framework which allows the ship to remain compliant.
4.4.2. Obligation to load a full cargoGENCON 1994 Clause 1 states that the ship at the load port shall “… load a full and complete cargo …”. ASBATANKVOY has similar wording in Clause 1 (Warranty – Voyage – Cargo): “… shall load (always afloat) from the factors of the Charterer a full and complete cargo ….”
As alluded to earlier in this chapter, one of the ways in which owners can ensure the ship is compliant is by limiting cargo intake.
4.4.3. Speed and performance warrantiesUnder a voyage charter party, the owner gives speed and perfor-mance warranties for the ship – whether expressly or implied. Essentially the owner promises that the ship can sail at a defined speed in normal weather conditions. It is important that parties consider what speed they agree to, so as to allow the ship to sail in a way which brings it in compliance with the CII regime.
19BIMCO
Shipping Law 2021
Mads Wacher Kjærgaard is a Manager in BIMCO’s Contracts & Clauses Department. He is involved in the development of BIMCO’s wide range of standard contracts and clauses. Mads is a lawyer and graduated from the University of Copenhagen in 2017. Prior to joining BIMCO in 2018, he was employed at a worldwide credit insurance company. Throughout his studies he was employed by a Danish shipowner in their in-house legal department, dealing with various shipping-related and corporate tasks.
BIMCO is the world’s largest international shipping association, with around 1,900 members in more than 120 countries. 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.
At a domestic level, one must consider the relevant provisions of the Merchant Navy Law, the Environmental Law (Law No. 5/98 of 19 June 1998) and its ancillary regulations and related statutes.
(iii) Salvage/general averageSalvage is governed by the 1910 Salvage Convention, the 1979 International Convention on Maritime Search and Rescue (“SAR”) and, where applicable, the provisions named in the Merchant Navy Law (Article 81 et seq.), the Regulation on the Sea Search and Rescue System (Presidential Decree No. 89/16 of 21 April of 2016) and in the Commercial Code (Article 676 et seq.).
General average is governed by the provisions of the Commercial Code (Article 634 et seq.).
(iv) Wreck removalAngola is not a signatory of the Nairobi International Convention on the Removal of Wrecks, 2007. The removal of wrecks must be dealt with in light of the domestic law, namely the Merchant Navy Law, the Environmental Law and ancillary statutes and regulations.
(v) Limitation of liabilityAngola is not a signatory of the Convention on Limitation of Liability for Maritime Claims. Conversely, both the 1924 International Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Vessels and the 1957 International Convention relating to the Limitation of the Liability of Owners of Seagoing Vessels are applicable. Furthermore, it is important to note that domestic law provides some special rules in respect of the limitation and sharing of liability (e.g., where collision was caused due to fault or wilful misconduct of the crew, damages will be computed and shared 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 accident, all intervening vessels shall be jointly liable for damages and losses arising therefrom).
(vi) The limitation fundThe limitation fund can be established in any way admitted in the law and is dependent on the filing of a proper application before the relevant court. The application must identify/list:■ theoccurrenceanddamages;■ theamountofthelimitationfund;■ howthefundwillbeestablished;■ theamountofthereserve;and■ theknowncreditorsandtheamountoftheirclaims.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe following international conventions are enforceable in Angola: ■ 1910InternationalConventionfortheUnificationofCertain
Rules of Law Related to Collision Between Vessels;■ 1952InternationalConventionfortheUnificationofCertain
Rules concerning Civil Jurisdiction in Matters of Collision; ■ 1952InternationalConventionfortheUnificationofCertain
Rules relating to Penal Jurisdiction in Matters of Collision or other Incidents of Navigation; and
■ 1972InternationalRegulationsforPreventingCollisionsatSea (“COLREGS”), as amended in 1981.
The above conventions are supplemented by domestic regu-lation, notably Article 73 et seq. of Law No. 27/12 of 28 August 2012 (the “Merchant Navy Law”) and Article 664 et seq. of the Commercial Code.
(ii) PollutionThe following international conventions and relevant protocols have been adopted by Angola: ■ 1969 International Convention Relating to Intervention
on the High Seas in Cases of Oil Pollution Casualties, as amended in 1973 and 1991;
■ 1973 International Convention for the Prevention ofPollution from Vessels (“MARPOL 73/78”) and Annexes I/II, III, IV and V;
■ 1990 International Convention on Oil PollutionPreparedness, Response and Cooperation (“OPRC 90”);
■ 1992ProtocoltoAmendthe1969InternationalConventionon Civil Liability for Oil Pollution Damage (“CLC 1969”);
■ 1992 Protocol to Amend the International Conventionon the Establishment of an International Fund for Compensation for Oil Pollution Damage (“FUND”);
■ 1996 International Convention on Liability andCompensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea; and
■ 1996 Protocol to Amend the 1972 Convention on thePrevention of Marine Pollution by Dumping of Wastes and Other Matter, which regulates environmental protection.
this respect, it is noteworthy that when in the presence of: (i) a straight bill of lading, the right to bring a claim remains with the named consignee; (ii) an order bill of lading, only the latest endorsee is eligible to sue; and (iii) a bill of lading to bearer, it is up to the rightful holder at a given moment to sue.
Rights under a contract of carriage may be validly transferred to third parties either by way of assignment of contractual posi-tion or subrogation of rights (which is typically the case when insurers indemnify cargo interests and then seek reimbursement from the carrier), as long as the relevant rules provided in the Civil Code are met.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
In light of Article 3.5 of the Hague Rules, the shipper shall indem-nify the carrier against all loss, damages and expenses arising or resulting from inaccuracies regarding the information (marks, number, quantity and weight) on the cargo to be transported.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The general time bar for claims arising out from contracts is 20 years, although there are certain cases in which this statutory limitation period is shorter. Still, the statute of limitation for cargo claims arising out of contracts ruled by the Hague Rules is one year, counting as from the date of delivery of the goods or of the date when the goods should have been delivered.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
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 and damage caused by an action attributed to the carrier, regardless of its wilful misconduct.
3.2 What are the international conventions and national laws relevant to passenger claims?
Angola is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea. Generally, the rules applicable to the carriage of passengers are set-forth in the Commercial and Civil Codes and the Consumer Law; this is in addition to the individual terms of the contract of carriage.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
As mentioned above in question 2.4, the general time bar for claims arising out of commercial contracts is 20 years. Nevertheless, there are grounds to argue that claims for loss of life or personal injury (including for damages on property) arising out of shipping incidents impose strict liability to the carrier, being, in this case, the applicable limitation period of three years, counting as from the moment that the claimant becomes aware of its rights.
The application must be filed along with the vessel’s docu-ments supporting the calculation of the amount of the fund (e.g., a tonnage certificate).
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Port and Maritime Institute of Angola (“IMPA”), in its role as the Maritime Authority, is the governmental body in charge of investigating and responding to any maritime casualty. In performing its duties, the IMPA is assisted by the local port authorities and captaincy with jurisdiction over the area in which the casualty took place. In the event of (eventual) envi-ronmental damage, environment authorities may also be called to act, notably the Ministry of Environment.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
While investigating marine casualties, the IMPA has the power to question witnesses, crew members, passengers or other persons it deems necessary in order to ascertain the facts and to clarify the reasons that lead to the casualty.
In addition, in its role of supervising entity of the National Coordination of the Sea Search and Rescue Service (“SARMAR ANGOLA”), the IMPA is responsible for, inter alia: (i) moni-toring the carrying out of search, assistance, re-floating and salvage activities; (ii) ensuring the efficient organisation of the means to be employed during the search and salvage operations; and (iii) initiating, performing and coordinating search and salvage operations for ships in distress.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The 1924 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, also known as the Hague Rules, applies. Under the Hague Rules, the carrier is liable vis-à-vis the consignee in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods. Contracts of carriage are therefore governed by the terms of the Hague Rules and the 1888 Commercial Code (Article 538 et seq.), in the absence of detailed provisions set out in the relevant contract.
It is important to note that if the shipment (i.e., loading and place of destination) takes place between two countries party to the Hague Rules, these rules shall apply. However, if the country of destination of the goods is not a signatory to the Hague Rules, then the applicable law would be determined by Angolan courts in accordance with the lex rei sitae principle.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
As a general principle, any party to a contract of carriage who holds an interest over the cargo and can demonstrate that it has suffered losses or damages arising from the carrier’s actions and/or omissions is entitled to sue for losses or damages.
The rights to sue under a contract of carriage assist (1) the shipper, and (2) the rightful holder of the bill of lading. In
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Claims arising from ship sale and purchase contracts do not qualify as “maritime claims” for the purposes of the 1952 Convention. As such, and as stated in question 4.1, those willing to arrest a vessel for an unlisted maritime claim must make use of the provisions of the CPC (in order for measures to be taken, the claimant must provide evidence of the likelihood of its right and justified fear of irreparable damage or damage that is diffi-cult to repair).
4.4 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 options are available?
Assets (e.g., bunkers) belonging to the arrestee may be subject to arrest, provided that it is possible to establish ownership in respect thereof. In addition, the carrier is entitled to exercise a possessory lien over cargo. In this respect, please be advised that pursuant to Angolan law, a lien is only enforceable by opera-tion of the law and not merely by contract. By way of illustration, Article 755 of the Civil Code provides that any debts resulting from shipping services entitle the carrier/creditor to retain goods in its possession until the full discharge of those debts.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Typically, cash deposits (at the court’s order) and bank guarantees are the most effective forms of security. Letters of undertaking (“LoUs”) are acceptable in very limited situations and their acceptance is always dependent on the other party’s agreement.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
There is no standard practice in this regard (this will ultimately depend on the assessment made by the Judge in charge of the file and the specifics of the claim/parties).
4.7 How are maritime assets preserved during a period of arrest?
While the arrest is pending, a custodian appointed by the court is responsible for ensuring the preservation of the assets.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
According to Article 6, paragraph 1, of the 1952 Convention, all questions whether in any case the claimant is liable in damages for the arrest of a ship or for the costs of the bail or other secu-rity furnished to release or prevent the arrest of a ship, shall be determined by the law of the contracting state in whose jurisdic-tion the arrest was made or applied for. Article 7(1) of the 1952
It is worth noting that, in certain cases, the running of the statute of limitation period may be (i) suspended (in which case the period of suspension is not to be counted when assessing if the statute of limitation has expired), or (ii) interrupted (in which case the interruption renders the time already elapsed of no effect and a new statute of limitation will restart counting as from the interruption).
4 Arrest and Security
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?
Angola is a party to the 1952 Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Vessels (“1952 Convention”). Under the 1952 Convention, any person alleging that it holds a maritime claim is entitled to seek the arrest of a ship. A “maritime claim” is deemed to be a claim arising out of one or more of the situations named under Article 1.1 of the 1952 Convention.
Outside the scope of the 1952 Convention, i.e., for the purposes of obtaining security for an unlisted maritime claim (e.g., arrest for a ship sale claim, unpaid insurance premiums, protection and 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 must make use of the provisions of the Angolan Code of Civil Procedure (“CPC”). In this case, and aside from the jurisdiction issue that needs to be properly assessed, in addition to providing evidence on the likelihood of its right/credit, the claimant shall also produce evidence that there is a risk that the debtor/arrestor may remove or conceal the ship (security for the claim) or that the ship may depreciate in such a way that, at the time that the final judgment is handed down in the main proceedings, the ship is no longer available or has substantially decreased in value.
Before ordering the arrest, the arrestee is granted the oppor-tunity to oppose/challenge the arrest application. Please note, however, that if the arrest application is properly filed and duly documented, the court may order the detention of the vessel before summoning the arrestee or granting the arrestee the chance to oppose the arrest application. The arrestee has 10 days to oppose the arrest application/order.
With the arrest in place, the claimant is required to file the initial claim for the main proceedings, of which the injunction will form an integral part, within 30 days of the arrest order. During the proceedings, the parties are free to settle by agree-ment and withdraw the claim. If the main claim should be filed with a foreign court, then the judge dealing with the arrest appli-cation must set out the period within which the claimant must commence proceedings on the merits in the appropriate jurisdic-tion. The defendant is entitled to post a security before the rele-vant court in the amount of the claim brought by the claimant, and seek the release of the vessel pending foreclosure and auction.
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?
A claim arising from a bunker supply may be considered as a maritime claim under Article 1.k of the 1952 Convention.
communications, can only take place in very limited situations (criminal-related matters) and is dependent on a judicial author-isation. Moreover, electronic data cannot be collected randomly and shall only be taken and preserved for the specific purpose it refers to. Where wrongly or illegally collected, the discoveries must be destroyed.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The Angolan judicial system foresees three categories of courts: (i) the Supreme Court, which is the higher body in the hierarchy of the Angolan courts; (ii) the Courts of Appeal; and (iii) the District Courts. Courts of Appeal have jurisdiction to review and revise the District Court’s contested decisions. Likewise, the Supreme Court has a corresponding power as regards contested decisions rendered by the Courts of Appeal. District Courts have jurisdic-tion over the areas in which they are established and can be divided and organised by expertise under the so-called Room of Expertise. Existing since 1997, the Room of Expertise for Maritime Issues has jurisdiction over any maritime dispute submitted to its jurisdic-tion, including, to 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.
In general, Angolan courts will find themselves competent to rule on claims where the parties in dispute and the claim itself have a close connection/link to Angola.
With regard to legal procedures before national courts, these can be generally described as follows:■ Proceedingscommencewiththefilingofaninitialwritten
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, such as inspections or surveys.
■ Serviceismadebytheclerks,inperson.Shippingagentsrepresent owners’/disponent owners’/managers’ interests and can receive documentation on their behalf.
■ Generally, the defendant has 30 days to challenge andoppose the claim. If it fails to present its defence, the facts presented by the claimant are deemed proven (exceptions apply).
■ With theopposition lodged, the judgewill summon theparties and will try to resolve the dispute amicably or, that not being possible, prepare the final hearing.
■ At the final hearing, the witness will be examined andcross-examined by the lawyers representing each party, and the judge may intervene whenever it is deemed neces-sary. At the end, lawyers are required to issue their final arguments verbally.
■ Thejudgewillthenprepareandissuethejudgmentwhich,depending on the amount of the claim, can entail an appeal.
As for the duration of maritime proceedings, as with any other legal proceedings in Angola, this is highly unpredictable. In our experience, excluding arrests and any other interim meas-ures, it should not be expected to take less than one to two years, as it depends on several variables, such as the court’s current caseload.
Convention in turn establishes that the courts of the country in which the arrest was made shall have jurisdiction to determine the case upon its merits if the domestic law of such state gives jurisdic-tion to such courts, as well as in the specific cases set out therein.
As mentioned in the answer to question 4.1, in order to obtain arrest of a vessel under the CPC, the claimant must provide the court with evidence of the likelihood of its right and justified fear of irreparable damage or damage that is difficult to repair.
In the event that the arrest is found to be inadmissible or unjustified or if it expires (e.g., because the main proceedings are not initiated after the arrest is granted), the claimant is liable for the damage caused to the defendant whenever it has not proceeded with reasonable prudence (as per Article 387 of the CPC and Article 621 of the Civil Code). The arrest may be considered wrongful, inter alia, whenever there is a conscious manipulation or omission of facts or imprudence or culpable error in the allegation of facts and in the submission of evidence considered in the decision of arrest taken by the court.
Accordingly, the owner of the vessel can request the payment of compensation by the claimant for any damages suffered as a result of a wrongful arrest, such compensation to be claimed in separate judicial proceedings.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Whenever there is a serious risk of loss, concealment or dissi-pation of property or documents, as well as when it becomes impossible or almost impossible to obtain testimony or certain evidence by way of inspection, parties are free to start an action and file a motion requiring it to be enlisted by the court or taken prior to the hearing. The relevant motion can be lodged when-ever deemed suitable, the applicant always being required to provide due grounds for its request.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
As a general rule, it is up to the parties to establish the object of their claim/proceedings and the judge cannot go beyond the limits of the claim as put forward by the parties. In addition, parties have the burden of presenting the facts of their interest and producing evidence in respect thereof. The court will take into account the evidence produced/requested by the parties, but it is not limited to the same. In fact, the court is also allowed to request and compel the parties to disclose all evidence deemed necessary to the discovery of the truth and/or to the best reso-lution of the dispute.
No specific rules apply to maritime disputes in this regard.
5.3 How is the electronic discovery and preservation of evidence dealt with?
This topic is generally addressed in Law No. 11/20, of 23 April 2020, which sets-forth the regime applicable to cellular identi-fication and localisation and electronic surveillance. According to this new piece of legislation, the use of electronic discovery, either by means of interception of telephonic and telematic
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Due to the lack of resources and celerity of the judicial system, over the past few years the Angolan Government has been making an effort to support the use of alternative dispute reso-lution mechanisms, such as arbitration and mediation. An example of this is the Private Investment Law (Law No. 10/18 of 26 June 2018, as amended), which states that disputes regarding disposable rights may be resolved through alternative means of dispute resolution, notably negotiation, mediation, concilia-tion and arbitration, provided that no special law submits those disputes to the exclusive jurisdiction of judicial courts or to mandatory arbitration.
Considering the fact that the use of arbitral institutions and mediation bodies tends to be more flexible, time-effective and efficient, and granting to the parties more control over the proceedings, they are widely regarded as beneficial by compar-ison to the resort to judicial courts (our experience tells us that judicial claims may drag in courts for years).
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Angola’s legal framework on shipping and maritime matters is fairly complete and follows the international industry stand-ards (please refer to question 8.1 below). Nevertheless, despite the efforts of the Angolan Government and the achievements reached in the past decade, the country needs to continue devel-oping its infrastructure (courts, registries, notaries, public administration, etc.) and support the training and qualification of its citizens. Although proceedings may drag over long periods of time (years), Angola benefits nowadays from a very capable community of judges, lawyers and other legal professionals.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Article 1094 of the CPC sets out that any judgment awarded by a foreign court is, as a rule, subject to review and confirmation by the Supreme Court in order to be valid and enforceable locally (i.e., to obtain the exequatur).
The review and confirmation of foreign decisions under the Angolan CPC is mostly formal and should not involve a review on the merits/grounds of the judgment, but a simple re-exam-ination of the relevant judgment and additional judicial proce-dure requirements. The process must begin with the filing by the interested party of an application to that effect with the Angolan Supreme Court. In order for the foreign decision to be recognised by the Supreme Court, the following set of require-ments must be met:■ Therearenodoubtsthatthejudgmentisauthenticandits
the country in which it was rendered.■ The decision must have been rendered by the relevant
court according to the Angolan conflict-of-law rules.■ ThereisnocasependingbeforeordecidedbyanAngolan
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?For the time being there is no domestic arbitral institution specialised on maritime arbitration. In any event, the Minister of Justice is the entity empowered to authorise the incorporation of arbitration institutions in Angola and there are several arbi-tral institutions currently in existence in the country, including:■ theCentreforExtrajudicialDisputeResolution(“CREL”);■ theAngolanCentreforArbitrationofDisputes(“CAAL”);■ theCEFAArbitrationCentre;■ theHarmoniaDisputeResolutionCentre;■ theArbitralJuris;and■ the Mediation and Arbitration Centre of the Angolan
Industrial Association (“CAAIA”).Still in this regard, it is worth mentioning that the primary
domestic source of law is Law No. 16/03 of 25 July 2003 (the Voluntary Arbitration Law (“VAL”)). The VAL governs both domestic and international arbitration. According to the VAL, arbitration will be of an international nature when international trade interests are at stake, in particular when: the parties to the arbitration agreement have business domiciles in different countries at the time of the agreement’s execution; the place of performance of a substantial part of the obligations resulting from the legal relationship from which the dispute arises is situ-ated outside the countries where companies have their business domiciles; or the parties have expressly agreed that the scope of the arbitration agreement is connected with more than one state.
The general rule under the VAL is that parties are free to submit their disputes to arbitration, with the exception of disputes that fall under state courts’ exclusive jurisdiction and disputes that relate to inalienable or non-negotiable rights. As such, disputes relating to the following issues, inter alia, may be submitted to arbitration: commercial and corporate law; maritime and shipping matters; securities transactions; and intra-company disputes.
The arbitration agreement may consist of either an arbitra-tion clause or a submission agreement. The arbitration clause concerns potential future disputes arising from a given contrac-tual or extra-contractual relationship, whereas the submission agreement arises from existing disputes, whether or not they have already been submitted to a state court. The VAL treats both types of arbitration agreement on an equal footing.
Subject to any special law requiring a more solemn form, the arbitration agreements must be made in writing. An arbitration agreement is considered to be in writing if documented either in a written instrument signed by the parties or in correspondence exchanged between them. The VAL allows arbitration agree-ments to be incorporated in a contractual document that is not signed by both parties simply by reference to general terms and conditions on another contract.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?For the time being there is no domestic alternative dispute reso-lution institution specialised on maritime mediation. Since the approval of Law No. 12/16 of 12 August 2016, setting forth the rules applicable to the establishment and organisation of medi-ation and conciliation procedures as alternative dispute mech-anisms, all procedures are held in the arbitration and media-tion centres named in question 6.1.2 above. This statute allows for disputes in civil, commercial (including maritime), employ-ment, family and criminal matters to be submitted to mediation, provided that they concern waivable rights.
to the shipping sector, these include, to name a few, (i) the Merchant Navy Law – a landmark achievement in terms of ship-ping and maritime legislation, as this is the first statute that seeks to regulate all maritime and port activities in a consistent manner, (ii) the Shipping Agency Regulations, (iii) the Ship-Management Regulations, (iv) the Ship-Merchants Regulations, (v) the Regulations on Seafarers and Maritime Personnel, (vi) the Regulations on Maximum Safety Capacity of Vessels and Ships and (vii) the Regulations on the Beaconing System for the National Maritime Space and Inland Waterways.
In terms of laws and regulations, there are no major devel-opments to report in 2020: with the approval of the new Penal Code (Law 38/20, of 11 November of 2020), actions related to: (a) the unnecessary or not justified destruction of ships pending armed conflicts; (b) maritime piracy, notably those associated to the illegal detention or diversion of ships; and (c) those capable of endangering ship transportation, qualify as crimes for the first time. And there are rumours that the Ministry of Transport and IMPA engaged a team of legal consultants to reform the outdated legal framework on port’s jurisdiction and domain (a hot topic at the moment, as some ports seem to be charging port dues outside the area of their jurisdiction).
As to the future, the Private Investment Law recast, approved in April 2021, is likely to boost investment in the sector (ship-ping & transportation is one of the sectors benefitting the most from the structural reforms foreseen in the Angola Government’s National Development Plan for 2018–2022, as the 20 years concession contract recently awarded to DP World for the multipurpose terminal of the Port of Luanda, illustrates), and one may anticipate that with the enactment of the National Bank of Angola’s Order No. 2/21, of 24 March 2021, which, in a nutshell, requires shipping agents, port services providers and owners of foreign flagged vessels calling Angola to settle port charges exclusively in hard currency, is likely to face severe opposition from local industry players, who, in view of existing hurdles and limited access to hard currency, may see their activ-ities at risk.
AcknowledgmentsThe authors would like to thank Filipe Rocha Vieira, managing associate at VdA, and Ivo Mahumane, associate at VdA, for their assistance in preparing this chapter.
court, except if it was the foreign court which prevented the jurisdiction of the Angolan court.
■ Thedefendantwas servedpropernoticeof the claim inaccordance with the law of the country in which the judg-ment was rendered, except in cases where, under Angolan law, there is no need to notify the defendant, or in cases where the judgment is passed against the defendant because there was no opposition.
■ Thejudgmentisnotcontrarytothepublicpolicyprinci-ples of the Angolan state.
■ The decision rendered against the Angolan citizen/company does not conflict with Angolan private law, in cases where this law could be applicable according to the Angolan conflict-of-law rules.
After the application is filed, the court must serve notice of the same on the defendant. Once notice is served, the defendant may oppose the exequatur if any of the above requirements are not met.
If the defendant opposes the exequatur, the applicant may reply to the defendant’s arguments. Afterwards, the case follows various procedural steps until the decision is made on whether to grant the exequatur. The losing party may still appeal against the court’s decision.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Angola has acceded to the 1958 New York Convention, by means of Resolution 38/16 of 12 August 2016. Angolan courts are now required to give effect prima facie to an arbitration agreement and award rendered in another signatory country to the New York Convention. Where the arbitral award was not granted by another contracting state, to be enforceable it must have previ-ously been reviewed and confirmed by Angola’s Supreme Court (see question 7.1 above).
8 Updates and Developments
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.
Over the past 10 years Angola has steadily approved a number of statutes aimed at strengthening the legal framework relating
26
Shipping Law 2021
Angola
José Miguel Oliveira joined VdA in 2015. He is a partner at VdA’s Oil & Gas practice. Before joining the firm, he worked for six years at Miranda Correia Amendoeira. In 2008, he was seconded to the Corporate and Commercial Law Department at Eversheds International LLP’s London office. From 2002 to 2008 he worked at Barrocas Sarmento Neves.Over the years he has amassed extensive experience within the international shipping industry, particularly across African jurisdictions, where he has been particularly active in assisting all sorts of industry players, from owners, charterers, P&I Clubs, shipbrokers, ship managers, ship agents, freight forwarders, port operators and stevedores, to commodities traders on all types of wet and dry shipping matters. In addition, he provides regular advice on regulatory matters to oil companies and service providers to the offshore oil & gas industry, notably in respect of the use and employment of rigs, FPSOs, support 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 under-standing of the local and neighbouring industries and the respective legal environments.
Marcelo Mendes Mateus joined VdA Legal Partners integrating ASP Advogados in 2016. He is Senior Associate of Litigation & Arbitration. Before joining the firm, he worked for four years at SMM, Advogados as an Associate and Trainee Lawyer. In 2016, he worked at ABS Consultus as a legal adviser actively involved in company’s incorporation and private investments. Over the years he has gained deep knowledge on matters of shipping and specialised in maritime litigation.
ASP AdvogadosEdifício Dália Plaza - Av. de Portugal31 - 35, 9.º AndarLuandaAngola
Vieira de Almeida (VdA) is a leading international law firm with more than 40 years of history, recognised for its innovative approach and impres-sive track record in corporate legal services. The excellence of its highly specialised legal services covering several sectors and practice areas, enables VdA to overcome the increasingly complex challenges faced by its clients.VdA offers robust solutions grounded in consistent standards of excel-lence, ethics and professionalism. VdA’s recognition as a leader in the provision of legal services is shared with our clients and teams, and is attested by the most relevant professional organisations, legal publica-tions and universities. VdA has successively received the industry’s most prestigious international accolades and awards.Through the VdA Legal Partners network, clients have access to 12 juris-dictions, with a broad sectoral coverage in all Portuguese-speaking and several French-speaking African countries, as well as Timor-Leste.
Angola – Cabo Verde – Cameroon – Chad – Congo – Democratic Republic of the Congo – Equatorial Guinea – Gabon – Mozambique – Portugal – São Tomé and Príncipe – Timor-Leste.
the existence of the Maritime Salvage and Coordination Centre (“The MRCC”), which manages the incident for all authorities concerned.
(ii) Pollution■ The International Convention Relating to Intervention
on the High Seas in Cases of Oil Pollution Casualties, 29th November 1969 and Protocol to the Convention, 2nd November 1973 (“The Intervention Convention”).
■ TheInternationalConventionforthePreventionofPollutionof the Sea by Oil, 12th May 1954 as amended (“OILPOL”).
■ The International Convention for the Prevention ofPollution from Ships, 2nd November 1973 and Protocol to the Convention, 17th February 1978 (“MARPOL 73/78”).
■ The1982UnitedNationsConventionon theLawof theSea, 10th December 1982 (“The Montego Bay Convention” or “UNCLAS”).
■ The 1992 Protocol to the International Convention onCivil Liability for Oil Pollution Damage, 27th November 1992, as amended in 2000 (“The CLC 1992”).
■ The1992ProtocoltotheInternationalConventionontheEstablishment of an International Fund for Compensation for Oil Pollution Damage, 27th November 1992, as amended in 2000 (“The 1992 Fund Convention”).
■ The International Convention on Civil Liability forBunker Oil Pollution Damage, London, 3rd March 2001 (“The 2001 Bunker Oil Convention”).
■ The 2003 Protocol Establishing a Supplementary Fund(“The 2003 Supplementary Fund”).
■ EUDirective2005/35,O.J.L255/11,30th September 2005 as amended, has been implemented into Belgian law by various Acts.
■ TheBelgianStatuteof20th January 1999 on the Protection of the Marine Environment in the Sea-areas under Belgian Jurisdiction, as amended (“The Marine Protection Act”). This Statute implements various International Treaties and EU Directives. It holds criminal liability provisions, reverses the Burden of Proof and authorises authorities to intervene in case of incidents threatening the (marine or other) envi-ronment. Substantial fines and possible incarceration are provided for.
■ TheBelgian Statute of 6th April 1995 for the Avoidance of Pollution by Vessels, as amended (“The Discharging of Polluting Substances Act”). This Statute also implements various International Treaties and EU Directives. It holds criminal liability provisions, reverses the Burden of Proof and authorises authorities to arrest vessels which are not in compliance. Substantial fines and possible incarceration are also provided for.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) Collision The location of the incident, the type of vessels and the persons involved determine the applicable rules. A collision between sea-going vessels on the high seas will be subject to different rules from a collision between barges or sea-going vessels on internal waterways. Specific rules that derogate from the The International Regulations for Preventing Collisions at Sea, 1972 as amended from time to time (“The COLREGS”) apply to rivers and canals. This is often disregarded by foreign legal practitioners.
The following conventions and regulations are applicable in Belgium:■ TheInternationalConventionfortheUnificationofCertain
Rules of Law with respect to Collision between Vessels, Brussels, 23rd September 1910 (“The 1910 Collision Convention”).
■ TheInternationalConventiononCertainRulesconcerningCivil Jurisdiction in Matters of Collision, Brussels, 11th May 1952 (“The 1952 Brussels Civil Jurisdiction Convention”).
■ TheInternationalConventionfortheUnificationofCertainRules relating to Penal Jurisdiction in Matters of Collision, Brussels, 10th May 1952 (“The 1952 Brussels Penal Jurisdiction Convention”).
1974 as amended (“SOLAS”) and its annexes. ■ EURegulation864/2007,11th July 2007 (“Rome II”).■ Various local navigation regulations regarding the territo-
rial sea, the ports, the rivers and canals (“The Local Navigation Regulations”).
The above list is not complete but contains the most essen-tial provisions. Once it comes to determining liability, other provisions may be relevant. As an example, please refer to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, the International Safety Management Code, the International Ship and Port Facility Security Code, etc.
Also, if refuge is needed as per the EU Directive 2002/59 (as amended), various legal provisions empowering authorities to take all necessary measures, inclusive of indicating a place of refuge, are applicable. The cooperation between Federal, Regional and local authorities, with each of them having separate legislative powers and the resulting ever-changing legislation, is solved by
(Belgian or Regional) could until 1st September 2020 benefit from a LLMC Overall Limitation Fund. At present it seems that interior waterway barges cannot limit liability at all. They may be obliged to lift the wreck on instruction of the authorities.
We expect this to change in the near future as the intention is to make the Strasbourg Convention on the Limitation of Liability in Inland Navigation (“CLNI”) fully applicable.
It is best to remember from this that if the law allows for a limi-tation of liability for wreck removal the owner can avoid having to proceed with a wreck removal by setting up the proper Limitation Fund.
What about recovery or recourse claims for wreck removal by the owner of the wreck against another responsible person? It may depend on the exact cause of action as to how a claim against a liable party other than the owner is to be brought: ■ against theLLMC1996orCLNIpropertyfundsetupby
that party (if possible); ■ againstaseparateWreckRemovalLimitationFundtobeset
up by that party (if possible); or■ ifnolimitationforwreckremovalwhatsoevercanbeinvoked
by the liable party other than the owner of a sea-going vessel.
(v) Limitation of liabilityApplicable regimeLimitation of liability in Belgium has been ruled since 1st December 1989 by the London Convention regime. Since 1st September 2020 this has partially changed.
For sea-going vessels, the following legislation is applicable:1. The Convention on Limitation of Liability for Maritime
Claims, dated 19th November 1976 (“The LLMC Convention”).2. The Protocol of 1996 dated 2nd May 1996 (“The 1996 Protocol”).3. The 2015 Leg 5(99) IMO resolution raising the amounts
(“The IMO Resolution”).4. The New Belgian Maritime Code.
For non-sea-going vessels, a specific limitation regime was applicable until 1st September 2020. Under a statute law of 1st
September 2020, the CLNI is to apply for interior waterway barges. However, Belgium has not ratified the CLNI yet. This could mean that, at present, owners of interior waterway barges are not entitled to limit lability at all. We expect this situation to change by the proper ratification of the CLNI.ProceedingsA Limitation Fund is set up in two stages. Both stages can be dealt with within a few days.
First, a person who is (potentially) liable requests authorisa-tion from the Court to set up a fund and indicates the amount of security to be issued. Unless a cash payment is proposed, the identity of the guarantor must be acceptable to the Court. The Court Order determines the period within which the amounts must be paid or secured. A fund administrator is appointed.
Secondly, and as soon as the amount of the fund has been paid, 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 constituted.
If limitation of liability can be invoked, one can do so without setting up a fund. This is useful in circumstances where there is only one claim arising out of an incident.
At the level of jurisdiction and opposability of the Limitation Fund, the Brussels Convention on Jurisdiction regime should also be considered. This regime is determined by the 1968 Treaty on Jurisdiction, the Lugano Conventions and EU Regulation 1215/2012.
Distinction needs to be made between the regime for sea-going vessels and interior barges.
■ Various legal instruments, by the Federal State and theRegions, each within their authority in the implementation of Directive 2009/98 EC on Waste (“The Waste Directive”).
■ The International Convention for the Control andManagement of Ships’ Ballast Water and Sediments 2004 (“The Ballast Water Management Convention”), which entered into force in Belgium on 8th September 2017.
The above list is by no means exhaustive. Only the most rele-vant laws, treaties and conventions have been listed. One should also remember that international legislation, whether originating from the International Maritime Organization (“IMO”) or the European Union, obliges Belgium to enact these provisions regu-larly. Usually, the Belgian authorities do so by amending the above local legislation. IMO regulation is simply published in the Official Belgian Gazette, the text itself is not inserted in the Maritime Code.
(iii) Salvage/general average ■ The 1989 London Salvage Convention has been fully
enacted “as is” in Belgium.■ IfthecontractprovidesforspecificG/Arules,theymay
be applied. If not, the Belgian Maritime Code provides for specific G/A rules. On the 10th June 2021 further legisla-tive changes passed parliament resulting in some assets on board not having to contribute.
(iv) Wreck removal The 2007 Nairobi Convention on wreck removal has been appli-cable since 17th April 2017. The effect was limited, however, as Belgium and its regions have their own wreck removal legisla-tion. Still, the applicable legislation is complex and applicability is determined by the location of the wreck (Exclusive Economic Zone (“EEZ”), territorial waters, inland waters) and the type of vessel (sea-going vessels, non-sea-going vessels, estuary vessels)
In general, under that legislation, it is the duty of the owner (a definition which includes the owner, charterer (be it a time char-terer or a voyage charterer) or operator) to remove the wreck and its contents when ordered by the authorities to do so.
Case law as to the relationship between the obligation to remove the wreck and the right to limit liability has been devel-oping in recent years. Again, due to the legislative changes applicable since 2020, the rights and obligations of owners to limit liability are also determined by the location of the wreck (EEZ, Belgian territorial waters and Regional waters) and the type of vessel (sea-going vessel/interior waterways barge).Sea-going vessels – in EEZ or Belgian territorial watersA new statute law is applicable since 1st September 2020 (see ques-tion 8.1). It is not possible anymore for sea-going vessels to set up a Limitation Fund for wreck removal under the new regime if the incident occurred in the EEZ or in Belgian territorial waters.Sea-going vessels – in Regional waters The owner, charterer (be it a time charterer or a voyage char-terer) or operator of a previously sea-going vessel can set up a fund for Wreck Removal. This fund is separate from the Limitation of Liability for Maritime Claims (“LLMC”) Overall Limitation Fund. In January 2017, the Supreme Court ruled that once a wreck removal fund is set up for a sea-going vessel, the authorities are no longer entitled to demand the owner, char-terer or operator to remove the wreck at the owner’s expense. We expect the Regional authorities to change the statute law to the effect that just as in Belgian territorial waters it will not be possible anymore for sea-going vessels in Regional waters to avoid wreck removal by filing a wreck removal Limitation Fund. Interior bargesThe owner, charterer (be it a time charterer or a voyage char-terer) or operator of an interior barge in whatever waters
inclusive of incarceration in respect of persons presumed to have committed a crime. The location of the alleged crime and its consequences on the Belgian territory are also of importance to determine the authority.
■ The Court Surveyor is appointed by the Court at therequest of a party having an interest in determining specific facts. He/she is not appointed by a party but by the Court, and his/her mission is to inform the Court as to the facts. Every step taken is to be defended and all parties to the Court surveying proceedings must be invited. The Court Surveyor remains under the order and control of the Court who appointed him/her.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Important: The New Belgian Maritime Code: A new statute law has been applicable as of 1st September 2020. It fundamentally changed the regime in respect of cargo claims. Surprisingly, a new Act of Parliament of 10th June 2021 changes that regime again. Last but not least, those new changes are up for change again. This comment is valid for most of what is explained under this section.
Until 31st August 2020: Belgium adhered to the Hague-Visby rules with the SDR protocol. The rules are incorporated in art. 91 of the Belgian Maritime Code.
The application of art. 91 of the Belgian Maritime Code is mandatory for all carriage under a negotiated Bill of Lading from and to a Belgian port. Note the addition of “and to” in the Belgian Maritime Code. This is an amendment to the Hague-Visby regime which only applies on all carriage “from” a convention state. But beware: this mandatory application applies in favour of the third-party bearer of the Bill of Lading only (see further).
The application of art. 91 of the Belgian Maritime Code is not mandatory on carriage which is:■ notfromaHague-VisbystateornottoaBelgianport;or■ bywayofanon-negotiabledocument(suchasaseawaybill).
If Belgian law applies to such carriage (by virtue of contract (for example, an applicable clause in the Bill of Lading or by application of Rules of International Private Law)), the Hague or Hague-Visby Convention applies, if given force of law or enacted in the country of loading.
As of 1st September 2020 , until 20th June 2021:The application of the Hague-Visby rules as they will then be implemented in the New Belgian Maritime Code, is not limited to negotiable documents.
For the sake of completeness, we should refer briefly to the carriage of goods over the interior waterways, where different legal provisions apply; and in international carriage, International Conventions such as the Budapest Convention on the Contract for the Carriage of Goods by Inland Waterway (“The CMNI”) apply. The CMNI contains provisions regarding liabilities as well as exonerations and limitations thereof.
As of the application of the Act of 10th June 2021:The situation will again very much be as prior to 1st September 2020, although not completely.
(vi) The limitation fund LLMC Limitation Fund for sea-going vessels The LLMC will apply but Belgium has issued reservations as per art. 18 LLMC. One cannot limit liability for sea-going vessels in Belgium under the LLMC regime for: ■ Claims in respectof the raising, removal,destructionor
the rendering harmless of a ship that is sunk, wrecked, stranded, or abandoned, including anything that is or has been on board of such ship.
■ Claims in respect of the removal, destruction or therendering harmless of the cargo of the ship.
Limitation for these claims may be possible under other legal provisions such as the Belgian wreck removal legislation referred to above.
1.2 Which authority investigates maritime casualties in your jurisdiction?
This is referred to in question 1.3.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
A distinction is to be made between Informative Authorities, Administrative Authorities, the Public Prosecutor and Judicial Authorities, and the Court Surveyors appointed at the request of a party having an interest.
The investigative authority FEBIMA has the task of collecting evidence in order to advise how to avoid a similar incident in the future. EU Directive 2009/18, O.J. 28th May 2009, obliges Member States to set up such a body. FEBIMA has authority for marine casualties and incidents whenever at least one of the following criteria is met:■ ABelgian-flaggedvesselwasinvolved,irrespectiveofthe
location of the casualty.■ ThecasualtyoccurredwithintheBelgianterritorialseaor
Belgian internal waters, irrespective of the flag of the ship.■ AsubstantialBelgianinterestwasinvolved,irrespectiveof
the location of the casualty or the flag of the ship. FEBIMA can investigate such cases, including the hearing
of witnesses, without anyone being able to hamper their efforts. FEBIMA can detain ships and any objects involved in an incident. It may also destroy objects for public health and safety reasons. Removing any object involved in an incident without the permission of FEBIMA is prohibited. Findings of FEBIMA are for a different purpose from that of the findings of others. Its findings cannot be used in legal proceedings. A recent incident in Belgian waters had FEBIMA and a Court Surveyor analyse the same facts. A comparison of FEBIMA findings with those of the Court Surveyor indicated that the Court Surveyors had carried out a more in-depth investigation.
■ The Administrative Authorities can, within their juris-diction, decide what happens in case of maritime inci-dents. They can investigate, impose securities (P&I letters or bank guarantees), direct the vessel in one way or another, prohibit passage, impose conditions on passage, etc. Findings by their investigators are presumed correct unless the contrary is proven. These findings may be used to initiate criminal proceedings.
■ The Public Prosecutor and the Judicial Authorities can,within their jurisdiction, undertake any kind of action
(iv) The Terms of Carriage (Bill of Lading terms)A choice-of-law clause contained in the Bill of Lading does not alter the mandatory application of the Belgian Maritime Code (Hague-Visby rules). Those rules are applicable irrespective of the Law chosen in the Bill of Lading. This approach seems to be strengthened in the new Belgian Maritime Code which will apply as of 1st September 2020.
A foreign jurisdiction or arbitration clause is in conflict with the protection given the Belgian Maritime Code (Hague-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 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 (Hague-Visby rules) and cannot be opposed by the third-party holder 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 and under the conditions set out in art. 3 of the Hague-Visby rules. This approach seems to be strengthened in the new Belgian Maritime Code which will apply as of 1st September 2020. Surprisingly, exactly the opposite seems to be true in the changes enacted on 10th June 2021. Again, readers of this section should absolutely NOT bank on their prior knowl-edge of Belgian Law and ask for specific advice. Matters have changed and keep on changing in this respect. The date of the incident and consequently the applicable statutory provi-sions must be assessed prior to knowing what the rights and defences are.
(v) Incorporation of Charter party provisions into the Bill of Lading Incorporation towards third-party holder of the Bill of LadingReferral to a Charter party in the Bill of Lading results in incor-poration of those terms insofar as the terms are:■ not in conflict with the Maritime Code (Hague-Visby
rules) or other rules of a protective nature; and■ infavourofthethird-partyholderoftheBillofLading.
In applying those principles, the Antwerp Court of Appeal accepted in May 2017 that a carrier is bound by a referral in the Bill of Lading to an identifiable Charter party. If the Charter party referred to is provided in a permanent seaworthiness warranty, the carrier can lose its due diligence defence under the Hague-Visby rules. Clauses in the Charter party which were contrary to the Hague-Visby rules (such as the arbitration clause) could be disregarded by the cargo interests.Incorporation towards the holder of the Bill of Lading who is not a third partyReferral to a Charter party in the Bill of Lading results in incorpo-ration of those terms insofar as the terms are not in conflict with rules of a protective nature.
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 inclusive of its arbitration clause are opposable to the receiver who presented the Bill of Lading to the carrier for delivery of the goods. This may, as of 1st September 2020, partially be different under the New Belgian Maritime Code.
(vi) Claims in tortCargo claims against a shipowner who did not issue the Bill of Lading are dealt with as per the above principles based upon the in rem liability of the shipowner.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
(i) Who to sueA cargo claim can be brought not only against the carrier under the Bill of Lading but, in certain circumstances, also against the owner of the vessel even if the owner is not the contractual carrier. The owner is then considered liable in rem for losses or damages to the cargo. The owner’s liability, which is in rem, is to be deter-mined as if he were the contractual carrier. The claim can also be brought against both the carrier and the owner, who are jointly liable towards the cargo claimants for loss and damage.
This has changed as of 1st September 2020, and changed again as soon as the act of 10th June 2021 was applicable.
(ii) Title to sueIn principle, only the holder of the Bill of Lading has title to sue. If the Bill of Lading is held by an agent for an undisclosed principal, which is the standard situation in Belgium whenever a freight forwarder presents the Bill of Lading to the carrier, it is only the agent who has title to sue.
This changed as of 1st September 2020. Both the receiver and the shipper will have title to sue. Under the new act of 10th June 2021 this changes again. Consequently, readers of this section should absolutely NOT bank on their prior knowledge of Belgian Law and ask for specific advice. Matters have changed and keep on changing in this respect. The date of the incident and conse-quently the applicable statutory provisions must be assessed prior to knowing what the rights and defences are.
(iii) The relationship between the holder of the Bill of Lading and the carrierIn some countries, the receiver under a Bill of Lading acquires the rights of the shipper. In other countries, the receiver’s rights and obligations are derived from the title issued by the carrier only, i.e. the Bill of Lading and its Terms of Carriage without any rights under the initial contract of affreightment having trans-ferred to the receiver.
The Belgian Supreme Court (Cour de Cassation) has, on many 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 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 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 conflicting terms, these Charter party terms will prevail. The protection given by the Hague-Visby rules will not apply in principle.
■ Asbetweenthecarrierandthereceiverwhoisathird-partyholder of the Bill of Lading, the Bill of Lading terms only will apply. Here there is an important correction: the terms are not opposable to the third-party holder if they conflict with art. 91 of the Belgian Maritime Code (Hague-Visby rules). Art. 91 of the Belgian Maritime Code (Hague-Visby rules) then applies mandatorily (by way of minimum protec-tion) if a negotiable Bill of Lading is issued to cover the trans-port of goods from or to a Belgian port.
This is as of 1st September 2020, partially different under the New Belgian Maritime Code.
note the Belgian legislation (Act of 13th January 2012 and Royal Decree of 13th June 2012) incorporating the Regulation.
■ Regulation (EU) No 1177/2010, 24th November 2010, concerning rights when travelling by sea and inland water-ways, amending Regulation (EC) 2006/2004. Also, please note the Belgian legislation (Act of 22nd June 2016) incor-porating the Regulation.
■ The Belgian Statute Law on Travel Contracts, B.S., 1st December 2017, as amended (“The Travel Contracts Act”).
The New Belgian Maritime Code of 4th April 2019 (arts 2.3.2.19–2.3.2.29) .
3.2 What are the international conventions and national laws relevant to passenger claims?
Please see question 3.1.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The two-year time bar is regulated according to art. 16 of the Athens Convention.
If the claim arises out of a “Travel Contract”, the time bar can be one or two years depending on the subject matter of claim.
4 Arrest and Security
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?
Ships arrest and the 2019 New Belgian Maritime Code:A new statute law is applicable as of 1st September 2020. Most but not all changes in respect of ships arrest are cosmetic.
(i) Arrest of a sea-going vesselBelgium adhered to the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-going Vessels, 10th May 1952 (“The 1952 Arrest Convention”).
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.
In such a maritime claim, the arrest may concern:■ anyshipownedbythedebtoroftheclaim;and■ thevessel in respectofwhich themaritime claimarose,
even if the debtor of the claim is not the owner of the arrested vessel (example: arrest of a vessel for claims against a charterer of that vessel). In September 2016, the Belgian Supreme Court decided that if such arrest includes deliveries such as bunkers made to the vessel, the arrest must be based on a commitment entered into by the char-terer or shipowner, or an obligation which can be attrib-uted to them under the doctrine of trust.
(ii) Arrest of other assetsThere may be a possibility to arrest other assets such as bunkers on 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 have a maritime claim as per art. 1.1 of the 1952 Arrest Convention.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Uncharacteristically dangerous cargoThe shipper has the obligation to deliver the goods as contrac-tually agreed and must take all precautions to avoid the goods damaging the vessel or other goods, or harming the interests of another party.
The shipper is liable for all consequences of misdeclaring goods. A fault, neglect or act of the shipper, his agents or his servants is to be proven by the one who suffered damages.
If the goods are uncharacteristically dangerous without the carrier being made aware of such fact, the shipper is liable under art. 4.6 of the Hague-Visby rules. Such liability may well be objective.
Goods subject to sanctionsA distinction is to be made between sanctions that were imposed prior to sailing and those imposed after sailing. If the sanc-tions preceded the sailing, the contract is annulled. If they are imposed after the sailing, the vessel with the cargo is obliged to return the freight and payment will be due for a one-way trip. The Contract of Carriage may provide for a different regime.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The time bar to consider depends on many different factors, including not only the capacity of the claimant, but also the contractual relationship and a possible mandatory application of statute law. The subject matter of the claim also has relevance.
Many claims start based on the premise that a one-year time bar applies, which is wrong. This is usually correct in most cargo claims, but not always. Depending on the capacity of the claimant, shorter time bars as agreed in contract could be applicable.
Extensions of time bars in combination with the title to sue are also a minefield. Over and again, we see how time-bar extensions are given to a person who has no title to sue. Once the matter has been time-barred, the person who has title to sue is barred from doing so.
Only one “rule” can be applied in such matters, which is to always seek advice.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Passenger rights are determined by the normal rules of contract. Passengers also benefit from the protection instituted by EU Regulations and the Athens Convention, as amended by the 2002 Protocol. Some Belgian legislation is also relevant. The following apply:■ The Athens Convention relating to the Carriage of
Passengers and their Luggage by Sea, 1974 (“The Athens Convention” or PAL 1974).
■ The2002ProtocoltoPAL1974(“The PAL Protocol 2002”) as of 23rd April 2014 (but see application by virtue of Regulation (EU) No 392/2009).
■ Regulation (EU) No 392/2009, 23rd April 2009, on the liability of carriers of passengers by sea in the event of accidents. Note that this Regulation reinforces the PAL Protocol 2002, which was already applicable. Also, please
(iii) Lien on cargoWhen receiving goods, it is sufficient to believe that the party 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.
Owners of cargo carried by sea will have difficulty avoiding a lien because carriers in general tend to believe that the party which delivers the goods for carriage is entitled to conclude contracts in respect of such goods, even if such party is not the owner of the goods in question.
This principle does not alter the rights of holders of Bills of Lading. If a party is a holder of a freight prepaid Bill of Lading, a lien on the cargo is, in principle, not possible.
(iv) Sister ships, associated ships, piercing of the corpo-rate veilSister ships are those where all the shares in the vessel (but not all of the shares in the corporations which own separate vessels) belong to the same physical or legal person. Sister ships can be arrested if they belong to the debtor of the claim.
There is no such thing under Belgian law as a right to arrest just on the basis of beneficial ownership.
In order to arrest the assets of one for claims against another, one must either pierce the corporate veil, prove collusion or establish fraud. In order to come to such a finding, Belgian case law applies factors which are similar to the “alter-ego” relation-ship findings in US case law.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
ArrestAn authorisation to arrest a vessel must be obtained from an Arrest Judge. This is a specialised Judge within the Court of First Instance.
An ex parte request indicating the parties, the facts and the claim is presented to the Judge, together with the evidence. The arrestor must allege a maritime claim.
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 claim.
The most time-consuming part of an arrest is the analysis of the file and the preparing of the arrest papers. Obtaining the order itself and having it served usually only takes a few hours.
Release from arrestOnce arrested, the vessel can only be released by agreement between the parties or by Court order.
A Court order ordering the release usually means that the case was brought in Court again, all parties to the conflict were heard and the Judge ordered the release.
Arrest proceedings do not initiate the case on the merits itself. Separate proceedings in Belgium or elsewhere must be initiated to that effect.
SecurityAn agreement is reached usually when adequate security is given.
The security is to be given by a first-class bank within the jurisdiction, unless parties agree on an alternative. This may change in the near future. An Act of Parliament is in the works in this respect. An undertaking of a P&I club which is a member of the international group or a payment into Court would also be acceptable.
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?
Yes, it is. In September 2016, the Belgian Supreme Court decided that if an arrest includes deliveries such as bunkers made to the vessel, the arrest must be based on a commitment entered into by the charterer or shipowner, or an obligation which can be attrib-uted to them under the doctrine of trust. Case law since then seems to generally accept that, with deliveries (such as bunkers) to a vessel, there is an apparent authority from the owner or the charterer so that, unless the supplier explicitly indicates not to consider the owner or the charterer as the debtor, the order is attributable to such owner or charterer.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Sea-going vesselsIt is possible under the 1952 Arrest Convention applicable in Belgium to arrest a vessel for: a) disputes as to the title to or ownership of any ship; b) disputes between co-owners of any ship as to the owner-
ship, possession, employment, or earnings of that ship; orc) the mortgage or hypothecation of any ship.
Only in as far as the claims arising out of the sale and the purchase of a ship can be categorised under one of the maritime claims described is an arrest of the vessel possible.
Interior bargesWhenever the arrest regards a non-sea-going vessel, it is possible to arrest for any type of claim on the condition that:■ theclaimissufficientlycertain,dueandquantifiable;and■ thereiscelerity.
4.4 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 options are available?
(i) Claims relating to a vessel: arrest of the “guilty” sea-going vesselIn a maritime claim, the arrest may concern:■ anyshipownedbythedebtoroftheclaim;and■ thevessel in respectofwhich themaritime claimarose,
even if the debtor of the claim is not the owner of the arrested vessel (for example, arrest of a vessel for maritime claims against a time or voyage charterer of that vessel).
A sea-going vessel is considered to be the guarantee for all mari-time claims related to it, irrespective of the identity of the debtor of the 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 owner is not the debtor and is not bound personally, his vessel serves as a guarantee for maritime claims in this respect.
(ii) Arrest of other assetsThere may be possibilities to arrest other assets such as bunkers on board the vessel or funds in the hands of third parties such as the ports-agent of the debtor or of a bank. These arrest possibil-ities exist even if one does not have a maritime claim as per art. 1.1 of the 1952 Arrest Convention.
of the Court Survey if one wants the Survey to be opposable to that party. An invited party is entitled to bring his own private surveyors and legal counsel.
The Court Surveyor usually proceeds immediately with the necessary fact-finding. In maritime incidents, the experience is that the first investigative steps are taken by the appointed Court Surveyor within a few hours of being appointed. This is an advantage for those who wish to be aware of the facts as soon as possible. A Court Survey is a defended action and all parties will obtain the same factual information at the same time.
The Court Surveyor is appointed by the Court and remains under the Court’s control. The Court Surveyor’s duty is to the Court and thus not to any of the parties involved in the incident. This results in an objective “fact-finding report” which consti-tutes a factual basis for a Belgian or foreign Court.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Belgian law does not have a general obligation to disclose all available evidence within Court proceedings. Every party must prove its case on the basis of the evidence it presents. If another party can prove that it is likely that someone holds relevant evidence, it may ask the Judge to order the submitting of such evidence. In order to obtain such an order from the Court, one must establish that the evidence exists, that the party who is asked to surrender the evidence has it in its possession, and that the evidence is relevant to the case.
This being said, all parties to proceedings must collaborate in properly informing the Court.
5.3 How is the electronic discovery and preservation of evidence dealt with?
The preservation and discovery of electronic evidence follows the same rules as the general rules of evidence.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
(i) Proceedings: timingA distinction needs to be made between fact-finding proceed-ings and proceedings on the merits.
Fact-finding proceedings depend to a large extent on the complexity of the case. A collision matter resulting in a wreck removal by a specialised salvor which takes over a year will take longer than straightforward cargo damage due to leaking hatch covers. Due to the fact that Court surveying proceedings are a defended action, parties will be perfectly aware of the evidence being collected by the Court Surveyor. Nowadays, the Court order that initially appoints the Court Surveyors provides that the final Survey report must be filed within a few months of the appointment.
Proceedings on the merits begin or proceed once all of the evidence is available. It takes about 10 months between start-up and decision if there are only two parties to the proceedings. One should add two months per additional party.
The security is to guarantee the claim. If the vessel is arrested for a claim against someone other than the owner, it is that claim which must be secured. An owner cannot release his vessel from an arrest by having a bank issue a guarantee securing claims against the owner when the claim is against the charterer. The bank guarantee is to secure claims against the charterer.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
The Court may order that a counter security is to be given. It is at the Court’s discretion as to whether or not a counter secu-rity is to be given. Where a counter security is ordered it should be provided within a determined timespan (usually 72 hours) in which the obtained arrest order to the vessel has been effec-tively notified, rather than when the request has been filed at the Court. As long as the order has not been used by the arrestor, no counter security is to be given.
4.7 How are maritime assets preserved during a period of arrest?
The arrest is a conservatory measure which otherwise does not change the rights and obligations of the owner. The costs of an arrest (crew, port dues, hire, etc.) therefore remain with the owner.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
An arrest or the maintaining of an arrest is considered wrongful and damages could be awarded if a tort has been committed. Consequently, even if the Court lifts the arrest because it is of the opinion that there is no cause for arrest, this does not automati-cally mean that the arrest is unlawful. A stricter test is applicable.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Any party taking an interest can ask the President of the Commercial Court to appoint a Court Surveyor with a mission to determine the causes and circumstances of the incident and determine the extent of the damages. In case of utmost neces-sity, this can be requested by way of an ex parte application. The most time-consuming part of the application is the analysis of the file and the preparation of the application. Obtaining the order itself and having it served usually only takes a few hours. Even if there is an exclusive foreign arbitration or jurisdiction clause, the Belgian Courts have authority to appoint a Court Surveyor, including under the 1958 New York Convention (Arbitration) regime or the Brussels I bis regime (Regulation No 1215/2012) on condition that the Court Survey is to be executed at least partially in Belgium. Two Court decisions of 2015 clearly confirm this.
The Court Survey is a defended action. This means that any party having a conflicting interest must be invited at any step
before the Court for Undertakings or the Civil Court depending on the liability being limited.
Within those Courts there may be specialised maritime cham-bers. This is especially true in the larger maritime centres such as Antwerp.
On the Appeal level, there are dedicated maritime and trans-port Appeal Courts.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There is no arbitration institute exclusively for maritime matters. The Belgian-based arbitration institution, CEPANI, has some maritime arbitrators and consequently deals with maritime arbitration.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There is no ADR institute exclusively for maritime matters. CEPANI deals with maritime ADR.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The Belgian specialised maritime Courts, also on an Appeal level, have had an extensive knowledge of maritime and trans-port matters for over two centuries. They are dedicated, perma-nently and, almost exclusively, dealing with those matters. Consequently, there is great trust by most market participants in those Courts. The specific constitution of Commercial Courts may also explain that trust. A Commercial Court comprises three Judges, one professional Judge and two lay Judges. The lay Judges are chosen from commercial fields that are to be judged; for example, the maritime chamber of the Commercial Court may be composed of a lay Judge who, in daily professional life, is a (or working for a) shipowner and the other one is a marine cargo underwriter. They advise the professional Judge on everyday practice. Consequently, there is considerable exper-tise present within the Commercial Court.
The above paragraph explains why there is no real need felt for arbitration. Most arbitrations are ad hoc and in maritime insurance matters.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Pros:A mature maritime market holding a cluster of expertise including:■ amaritimeBarwithover200yearsofexperience (estab-
lished in 1810);■ various specialised maritime lower Courts exclusively
dealing with shipping and transport matters (maritime chambers within the Courts of commerce);
■ a specialisedmaritime and transport chamberbefore theCourt of Appeal;
■ highly specialisedmarine surveyors, working exclusivelyfor the Courts and appointed to give an independent report on facts in a defended action;
■ language flexibility of the majority of maritime partieswhere a minimum of three languages (up to five) are spoken, enabling the swift and cheap usage of evidence in Court in their original language;
■ swiftCourtprocedures(aboutoneyear)fornormalmarinework. This has changed substantially in recent years;
Interlocutory proceedings in transport and maritime matters usually do not take as long. Depending on the specific circum-stances, a judgment is obtained within a few hours of issuing the writ, when no real defence or an unreasonable defence is put up, to a few weeks in heavily contested claims.
(ii) Proceedings: the CourtsTransport and maritime matters are brought before a maritime and transport chamber of the Commercial Court. Such Court consists of one full-time professional Judge and two lay Judges who, in their professional life, usually work within a field of shipping, transport or marine insurance. At Appeal level there is a specialised maritime chamber within the Court of Appeal.
All arrest matters are brought before the Arrest Judge. For urgent arrest matters, out-of-Court office hours are available.
(iii) Proceedings: the stagesWrits are served by a Court bailiff. The writ will indicate the parties to the proceedings, the essential facts, the reasons for liability, the date on which to appear, the Court before which to appear and the claim (usually in that order).
If the defendant does not appear on the date indicated in the writ, a default judgment may be obtained by the claimant at the hearing.
If the defendant appears, the Court will invite the parties to give their idea of the time schedule and, within a few weeks, issue an order holding specific dates for the exchange of written submis-sions and a date for a hearing. Quite often, parties mutually agree on a schedule and the Court will then confirm such schedule.
(iv) Proceedings: the costsThe losing party pays the legal costs of the proceedings, with the exception of the lawyers’ fees, which remain for the account of the party who instructed the lawyer.
The legal costs of the proceedings are in essence the cost of the writ and service thereof, the Court Surveyor costs, the Court costs and a symbolic Indemnification for Proceedings (“IfP”) calculated on the basis of the amount claimed. This IfP varies from €97.50 for low amounts claimed in easy matters to €39,000 for complicated proceedings in claims of over €1 million. This IfP can be considered a part of the lawyers’ costs.
A tax of 3% on the condemnation is due by the losing defendant (no tax is due on judgments condemning to less than €12,500).
(v) Proceedings: the interestsInterest is set by law on a yearly basis where the calculation is based on the average Euribor of the preceding year +2%. For the year 2020, it is 1.75%.
(vi) ArbitrationThere is very little arbitration in maritime incidents. Most arbitra-tion is in marine insurance. Arbitration is usually on an ad hoc basis.
(vii) Mediation and ADROther than counsels trying to come to a settlement, media-tion is not commonly used in purely Belgian maritime disputes. In multi-jurisdictional disputes where the same facts give rise to disputes in various jurisdictions and tribunals, there is a tendency to mediate.
6.1.1 Which national courts deal with maritime claims?The competent Court “ratione materiae” depends on the subject matter of the claim.
A ships arrest will be before the Arrest Judge. A cargo claim will be before the Court for Undertakings (also referred to as the Commercial Court). A limitation of liability will either come
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.
The new Belgian Maritime CodeThe reader should be aware that a new Belgian Maritime Code applies as of 1st September 2020. This new Code has profound consequences on many of the questions and answers given above. Some fundamental aspects of maritime law may change fundamentally. Belgium even steps out of some International Maritime conventions. Obviously, case law will need to develop on these new statutory provisions. Further changes can be expected. In June 2021 parliament passed an act which regarded mainly pleasure crafts and autonomous sailing. Surprisingly, the Act also provides some changes to the Law that has been in application since 1st September 2020. Some of the changes are fundamental and alter the economic balance achieved in the New Belgian Maritime Code.
What are the consequences in as far as this publication is concerned?Once the New Belgian Maritime Code, including its recent changes of June 2021, are applicable, the guidelines given in this guide must be verified with a local counsel in order to determine their correctness.
NoteThe New Belgian Maritime Code is applicable as of 1st September 2020. This new statute law has fundamentally changed Belgian maritime law in many respects, and has been subject to further changes by the Act of 10th June 2021. Specific counselling must be obtained.
■ extended case law on almost any point of shipping law,enabling reasonable predictions for those who are in the know; and
■ lawyers’ fees are low in comparison to most otherjurisdictions.
on the amount they are condemned to pay; and■ lawyers’feesarenotrecoverablebythewinningparty.An
IfP is due (see question 6.1 (iv)).
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 shouldbe considered. This regime is determined by the 1968 Treaty on Jurisdiction, the Lugano Conventions and EU Regulation 1215/2012 (Brussels I bis).
A foreign decision is recognised without the need to initiate proceedings. If the decision needs to be enforced, an ex parte application to the Court asking for the decision to be declared enforceable in Belgium needs to be filed.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
■ TheConventionontheRecognitionandEnforcementofForeign Arbitral Awards (“The 1958 New York Convention”).
Arbitration, Geneva, 21st April 1961 (“The Geneva Arbitration Convention”).
If an award is to be enforced, an ex parte application to the Court asking for the award to be declared enforceable in Belgium needs to be filed.
36 Belgium
Shipping Law 2021
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. 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 and, increasingly, the law on autonomous vessels.For further information, readers are invited to search the web, where they will find many publications by different members of the firm.
Kegels & Co Mechelsesteenweg 1962018 AntwerpBelgium
Belgium-based Kegels & Co law firm handles commercial law matters and particularly matters related to the maritime, transport and logistics indus-tries, international trade and related customs, as well as banking and insur-ance 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 inter-national 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.
and therefore is subject to environmental civil liabilities. Therefore, civil liability may be, in theory, extended to any party involved in the activity that was the cause of the environmental degradation. Although the strict civil liability regime does not require the exist-ence of negligence or fault, a causal link between the damage and the activity must be evidenced.
In addition, there is other legislation that rules on matters related to prevention and consequences of pollution to the sea: (i) Law No. 9,537/1997, which rules the safety of waterway traffic in Brazilian jurisdictional waters; (ii) Law No. 9,605/1998, which rules the environmental criminal liability; (iii) Law No. 9,966/2000 and its Decree No. 4,136/2002, that foresee rules for control, inspec-tion, prevention and sanctions related to environmental damages, including oil pollution or harmful substances into the sea caused by ships; and (iv) Law No. 12,305/2010, which provides for the National Policy for Waste. This matter is also regulated by the Brazilian Maritime Authority Standards (NORMAM) issued by the Directorate of Ports and Costs.
Brazil has ratified the: (i) 1969 International Convention on Civil Liability due to damages caused by Oil Pollution (CLC/1969), enacted by Decree No. 79,437/1977; (ii) International Convention on Prevention of Pollution Caused by Ships (MARPOL 73–78), enacted by Decree No. 2,508/1998; and (iii) 1972 Convention on the Prevention of Marine Pollution by Dumping of Wastes and other Matter, enacted by Decrees No. 87,566/1982 and 6,511/2008.
(iii) Salvage/general averageBrazil has ratified the: (i) 1910 Convention for the Unification of Certain Rules of Law relating to Assistance and Salvage at Sea, enacted by Decree No. 10,773/1914; (ii) 1989 International Convention on Salvage, enacted by Decree No. 263/2009; and (iii) 1979 International Convention on Maritime Search and Rescue, enacted by Decree No. 85/1991.
According to Law No. 7,203/1984, the owner shall reimburse all the expenses resulting from the incident, if damage to third parties and the environment was avoided. It is important to highlight that all vessels are obliged to assist others in distress.
(iv) Wreck removalLaw No. 7,542/1986, grants the Brazilian Maritime Authority, or any other authority with delegated powers, the power to order wreck removal by the responsible party, if it is deemed a danger or an obstacle to navigation or a threat of damage to third parties or the environment. NORMAM No. 10 also establishes the require-ments and procedures for obtaining a permit for wreck removal.
The responsible agent, its insurer and the cargo owner will be jointly and severally liable for the damages that may harm third parties, the environment and navigation safety. If the
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe Brazilian Maritime Authority is the competent body to inves-tigate the causes of an accident and apply administrative penalties.
The Brazilian Commercial Code (Law No. 556/1850) sets forth that the captain or crew will be liable for the damage caused to a ship, its cargo and third parties in case of negligence, recklessness, and malpractice or non-compliance to maritime regulations. The Brazilian Code of Civil Procedure (Law No. 13,105/2015 – CPC) also provides the duty to indemnify all damages incurred in case of a casualty.
Brazil has ratified the: (i) 1972 Convention on the International Regulations for Preventing Collisions at Sea (COLREG 72 or RIPEAM), enacted by Decree No. 80,068/1977; (ii) 1910 Brussels International Convention for the Unification of Certain Rules of Law with Respect to Collision Between Vessels and Protocol of Signature, Brussels, enacted by Decree No. 10,773/1914; (iii) 1928 International Convention of Private Law, enacted by Decree No. 18,871/1929; (iv) 1974 International Convention for the Safety of Life at Sea, enacted by Decree No. 87,186/1982 and updated by Decree No. 9,988/2019; (v) 1978 SOLAS Protocol, enacted by Decree No. 92,610/1986; (vi) 1965 Convention on Facilitation of International Maritime Traffic, enacted by Decree No. 80,672/1977; and (vii) 1982 United Nations Convention on Law of the Sea, enacted by Decree No. 1,530/1995.
(ii) PollutionThe Brazilian environmental law imposes an obligation to recover or compensate for environmental damages on liable individuals and legal entities, as well as criminal and administrative sanctions ranging from fines to imprisonment (individuals), for any conduct or activity that resulted in damage to the environment or violated environmental law.
Under a civil perspective, the liability for environmental damages is strict, meaning that the negligence of the polluter does not need to be proven, assuming that the causal link between the polluting activity performed by the polluter and the environ-mental damage is verified, as set forth in the Brazilian National Environmental Policy Act (Law No. 6,938/1981).
The National Environmental Policy establishes that any indi-vidual or company, public or private, directly or indirectly respon-sible for any environmental degradation, is considered a polluter,
preventive measures and conducts for the safety of navigation. The Navy Special Attorney Office is responsible for analysing the inquiry prepared by the Harbour Master and formally filing the case with the Admiralty Court.
The authorities will have powers to request documents, infor-mation, interrogate witnesses, inspect the vessel, stop the opera-tion, and seize the vessel.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Article 749 of the Civil Code provides that the carrier must trans-port the cargo to its destination, taking all measures to watch over the goods and deliver in the time and conditions agreed. The carrier must provide compensation for any damages arising from its failure to deliver cargo, whether partially or entirely, or any damages to the cargo, except in case of force majeure or act of God.
The Commercial Code, Law No. 9,611/1998 (multimodal trans-port law) and the Decree-Law No. 116/1967 also provide for rules related to the transport of goods over the sea.
Brazil is not a signatory of international conventions that exclude or minimise the responsibility of carries, such as the Hague Rules, the Hague-Visby Rules, and the Hamburg Rules.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
According to The Civil Code, the liability of a carrier begins from the moment that the cargo is received and ends when the cargo is delivered to its destination, limited to the value declared in the bill of lading.
Strict civil liability is applied to the carrier of goods, who has the burden to evidence if there is any cause to exclude the liability, such as acts of God, force majeure, cargo failure, victim’s exclusive guilt, and vicarious liability.
Precedent No. 161 of the Federal Supreme Court determines that a clause of “no indemnification” under a transport contract is ineffective.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The carrier is entitled to file a claim for a breach of contract. Pursuant to the Civil Code, the shipper must provide an accurate description of the cargo and the cargo must be properly packed.
The Commercial Code provides that shippers are liable for damages that may result, without knowledge and consent of the captain, to goods whose departure or entry is forbidden and any other unlawful activities carried out at the time of loading or unloading.
If the shipper provides false or inaccurate information, the carrier can claim damages arising from such information, according to article 745 of the Civil Code.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The time bar applicable to claims related to lack of content, decrease, losses or damages to the cargo is one year, counted from the date of the discharge of the cargo, according to Decree-Law
responsible agent did not proceed with the wreck removal, the Federal Government will incorporate the wrecked assets within five years.
(v) Limitation of liabilityAccording to the Brazilian Civil Code (Law No. 10,406/2002), anyone who causes damage to another is obliged to fully repair the losses and damages caused. The indemnification is measured by the extent of the damages.
From a contractual civil liability standpoint, as a general rule, the Civil Code sets forth that, in the event of a contractual breach, the indemnification should only cover the effective direct damages (danos diretos) and loss of profit (lucros cessantes) suffered by the indem-nified party, as a direct and immediate result of such contractual breach. Indirect damages (danos indiretos) (damages arisen from supervening related events that increase the damages already directly suffered by the indemnified party) are not indemnified.
Brazilian law does not allow for the indemnification of “puni-tive or exemplary damages”; this is not a concept adopted in Brazil.
According to Brazilian courts (including the Superior Court of Justice (STJ)) and doctrine, clauses of limitation of liability agreed between the parties under a commercial contract are valid. However, scholars and courts also understand that contractual limitations of liabilities must be disregarded in the event of gross negligence (culpa grave) or wilful misconduct (dolo).
When it comes specifically to the transport of goods, article 750 of the Civil Code rules that the indemnity related to cargo damage is limited to the value declared in the bill of lading. Concerning the transport of passengers, the sole paragraph of article 734 of the Civil Code sets out that it is licit to request the value of luggage to limit the indemnity for material damages.
Brazil is also a member of the 1924 Convention for the Unification of Certain Rules of Law relating to Limitation of Liability of Owners of Seagoing Vessels (1924 Brussels Convention), enacted by Decree No. 350/1935, that sets forth certain rules relating to the limitation of the liability of owners of seagoing vessels.
(vi) The limitation fundBrazil did not sign the 1971 Fund Convention nor any of its further protocols.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Maritime Authority, by means of the Port Captaincy, is the main authority competent to investigate maritime casualties. Depending on the casualty (if it causes death or environmental damages, for example), the Federal Police will start a criminal investigation. If there is any environmental damage, in addi-tion to the criminal and administrative investigations, envi-ronmental authorities may investigate and apply fines, and the Public Prosecution Office may investigate the causes of the acci-dent and, then, file a class action.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Port Captaincy is competent to investigate accidents or facts of navigation. The Harbour Master sends the administrative inquiry to the Admiralty Court, for judgment. The Admiralty Court is competent to define the nature, causes, circumstances, and extent of the accident or fact of navigation and, finally, to appoint responsible persons and apply penalties, proposing
39Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados
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?
According to the Commercial Code and the 1929 Brussels Convention, credits arising out of ship suppliers, including bunkers, are considered privileged.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Title and security interests over Brazilian flagged vessels must be registered in the Admiralty Court to be valid against third parties. Mortgages over foreign-flagged vessels will be governed by the laws of the country’s flag.
As a general rule, enforcement of a mortgage can only be made through judicial court proceedings, because mortgages do not transfer title or property to the creditor.
It could be possible to arrest a vessel as a precautionary measure against the shipowner seeking the protection of future enforcement for a certain amount that could be a contract for the sale and purchase of a ship (arrest in personam).
The Commercial Code and the 1929 Brussels Convention set out that the outstanding price of the vessel is a privileged credit, which is also an argument for arresting the vessel if the ship-owner is the debtor.
4.4 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 options are available?
If, because of the maritime claim, the vessel is arrested, the alternatives are either payment of the debt or offering a coun-ter-guarantee to release the vessel.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
In Brazil, both personal and in rem guarantees are acceptable, and these include P&I letters of undertaking, bank guarantees and judicial deposit and insurance guarantees (for example, judicial surety bond).
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
It is not a standard procedure. However, according to particu-larities of the case, the judge may request a security to ensure the payment of eventual losses in case of a wrongful arrest, e.g. in case the arrestor is a foreign company without assets in Brazil.
4.7 How are maritime assets preserved during a period of arrest?
The preservation of the asset is the responsibility of the owner. The Judge may assign a judicial depositary and might also grant an early disposal of the vessel, to ensure its preservation.
116/1967 and Precedent No. 151 of the Federal Supreme Court. The time bar is suspended if there is an ongoing investigation with the Admiralty Court.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Pursuant to the Civil Code and Consumer Protection Code (Law No. 8,078/1990): the carrier is liable for damages caused to the passengers and its luggage, except for reasons of force majeure. Clauses excluding liability are not valid. The carrier can request a declaration of the value of the luggage to set an indemnifica-tion limit.
The Consumer Code provides that the consumer is vulnerable to the service provider under the contract; therefore, the mari-time transport contract will be interpreted to the benefit of the passenger (consumer), for example, in cruise travels.
3.2 What are the international conventions and national laws relevant to passenger claims?
Claims related to maritime passengers are regulated by the Civil Code and the Consumer Code, since Brazil has not ratified any international convention related to passenger’s transport.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
As per article 27 of the Consumer Code, the passenger has five years to file a claim against the carrier in case of damage.
4 Arrest and Security
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?
The Commercial Code authorises the arresting of vessels for securing a claim. There are two types of arrest: in rem, which is the right to arrest under a properly constituted privileged credit (1926 Brussels Convention and Commercial Code); and in personam, which is a precautionary measure against the ship-owner seeking the protection of a future enforcement for a certain amount, through which the debtor’s assets are judicially seized. The CPC foresees the grant of urgency protection when there are elements that evidence the probability of the right and the danger of damage or risk to the useful result of the proceed-ings ( periculum in mora and fumus boni juris), per article 300.
The judge can order the arrest of the vessel by notifying the competent Harbour Master to forbid the vessel to set sail from Brazilian jurisdictional waters. Regardless of the arrest, the ship-owner will have the opportunity to file a defence and it is allowed to pay the debt or offer a counter-guarantee to release the vessel.
Brazil did not ratify any international conventions related to the arrest of ships, such as the 1952 International Convention on the Arrest of Seagoing Ships and the 1999 International Convention on Arrest of Ships.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Brazil does not provide for the use of discovery in legal claims. In that sense, it does not have a procedure for electronic discovery nor does it provide for a special manner in which electronically stored information should be preserved and shared. In Brazil, each party is responsible for producing its own evidence and parties are not privy to the opposing party s evidence.
Furthermore, the CPC, the Law on electronic proceed-ings and the Law on elaboration and archiving of documents in electromagnetic media do not mention electronic evidence nor prescribe a specific manner in which it should be preserved, despite the fact that electronic proceedings and therefore, digi-talised evidence, are very common in Brazil.
Finally, in 2020, the Brazilian Law on data protection came into force (Law No. 13,709/2018), providing rules for the processing and storage of personal data, including in digital media, by a natural person or a legal entity under public or private law, with the purpose of protecting fundamental rights.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The Admiralty Court in Brazil (Law No. 2,180/1954), based in the state of Rio de Janeiro, exerts authority all over the national territory as an Administrative body, auxiliary to the Judiciary. It has jurisdiction to rule on marine, river and lake navigation accidents, deciding on the culpability and issuing penalties to liable shipowners, navy officers and seamen. The judgments, although not binding to judicial courts, are considered of high technical relevance and important value to judicial proceedings.
Regarding the Judiciary branch, Brazil has a two-block system, where cases can be filed before Federal or State Courts. Disputes between private litigants are usually held in local State Civil Courts. The Federal Courts are only competent to rule on maritime issues when a Brazilian navy vessel or a federal public entity is involved.
As a general rule, lawsuits in Brazil may last between three to 10 years, depending on the complexity, number of defend-ants and appeals.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There are several arbitral institutions in Brazil with experi-ence in major disputes, including maritime cases, such as: the International Court of Arbitration of the International Chamber of Commerce (ICC); the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (CAM-CCBC) – the largest arbitration institution in Brazil; the Chamber for Arbitration and Mediation of CIESP-FIESP (CMA); the Brazilian Center for Mediation and Arbitration (CBMA); and the Chamber of Conciliation and Arbitration (FGV). Usually, a regular commercial arbitration procedure lasts one to three years, which means that arbitration is faster than court proceedings.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
As the arrest is a preliminary injunction, it shall be deemed as wrongful arrest in case the final judgment is contrary to the arrest or the injunction ceases to be effective in any legal hypothesis. In this regard, in the course of the proceeding, the affected party shall prove that the arrest was illegitimate. There are no specific provisions related to wrongful arrest in Brazil, thus, general provisions of civil liability shall be applied, since, according to the Brazilian Civil Code, anyone who causes damage to another is obliged to fully repair the losses. Also, pursuant to article 302 of the CPC, one is liable for losses that the preliminary injunc-tion may have caused to the opposing party, if the final decision is unfavourable to the party that sought the relief.
The arrested party shall need to seek compensation in the same proceeding of the arrest, and the arrestor shall be liable for all the losses the measure has caused to the other party, including judicial and attorney fees.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
The CPC allows requests for the anticipated production of evidence (articles 381 to 383), as long as the request: (i) justifies why the early production is necessary before the lawsuit is actually filed; (ii) shows a well-founded fear that the evidence will not exist/perish until the action is filed; (iii) shows that such evidence may assist in the resolution of the dispute by parties themselves; and (iv) demon-strates that the evidence may avoid a potential dispute.
In addition, any of the parties may request the production of documentary or physical evidence (article 396) after the lawsuit is filed, to order the other party to present documents or phys-ical evidence that are in their possession. The court may compel the party who refuses to collaborate with the production of evidence and impose penalties.
Regarding administrative procedures with the Admiralty Court, the production of evidence is gathered by the Port Captaincy. It is also possible to request the early production of evidence before the Admiralty Court, in the same hypothesis described above.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
There are no discovery proceedings under Brazilian law. However, the court may order the parties to produce evidence if it deems it necessary (articles 370 and 378 of the CPC).
Although the parties have the duty to cooperate with the court to clarify the truth (article 378), plaintiffs ordinarily have the burden to prove their case (article 373). The burden of proof may be shifted in certain cases when the evidence that can demonstrate a fact (or that exonerates a party) is impossible to be produced without a burdensome procedure to the plaintiff.
Article 5, LXIII, of the Federal Constitution states that no party is required to produce evidence against itself. This consti-tutional guarantee seeks to avoid courts ordering parties to produce incriminating evidence in legal proceedings.
41Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Recognition and enforcement of foreign judgments is governed by the Federal Constitution, CPC, the Decree No. 4,657/1942 and the Internal Rules of the STJ.
The recognition and enforcement of any foreign judgments must be ratified by the STJ. To file the homologation request to the STJ, the following requirements must be observed regarding the decision: (i) it must be final, i.e., when no further appeal is possible; (ii) the defendant must have been duly summoned; (iii) it must be certified by the Brazilian Consulate and translated by a Brazilian certified translator; and (iv) it cannot violate public policy, human dignity, national sovereignty and good morals. It is important to highlight that the STJ cannot review the merits of the foreign decision during such recognition process, but only analyse whether it complies with the legal requirements.
After recognition, enforcement may be sought by the inter-ested party, following the same rules applicable to the domestic arbitral awards set forth in article 515 of the CPC.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Recognition and enforcement of foreign arbitral awards is governed by the Federal Constitution, Arbitration Act, NY Convention, CPC and the Internal Rules of the STJ.
A foreign arbitral award will only be effective after being recognised by the STJ. Recognition is subject to certain formal requirements, such as: (i) the award must be final and binding; (ii) the defendant must have been duly summoned; (iii) the award must be certified by the Brazilian Consulate and trans-lated by a Brazilian certified translator; and (iv) it cannot violate public policy, human dignity, national sovereignty and good morals. The award is also subject to the material requirements set forth in article V of the NY Convention. Furthermore, it should be noted that the STJ cannot review the merits of the foreign arbitration award during such recognition processes, but only analyse whether it complies with the legal requirements.
After recognition, enforcement may be sought by the inter-ested party, following the same rules applicable to the domestic arbitral awards set forth in article 515 of the CPC.
8 Updates and Developments
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.
The Bill of Law 4.199/2020, known as “BR do Mar” is under discussion in Brazilian Congress and aims to improve Cabotage in Brazil.
The National Waterway Transportation Agency (ANTAQ) enacted the Resolution 41/2021, in last April, that allows Companies operating in oil exploration and production activities to enter into Charter Agreement for the Charter of Supply vessels.
Brazil has enacted the Maritime Labour Convention on April 12 2021, that consolidates and updates 68 conventions and recom-mendations for the maritime industry adopted by the International Labor Organization (ILO).
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Since the enactment of the Mediation Act (Law No. 13,140/2015), which regulates both judicial and extrajudicial mediation, the use of mediation in Brazil has increased substantially. The bodies mentioned in question 6.1.2 also deal with mediation, as CMA, CBMA and CAM-CCBC.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
First, lawsuits can be filed before Brazilian Courts when at least one of the following circumstances occurs: (i) defendant is domi-ciled in Brazil; (ii) obligation must be performed in Brazil; or (iii) claim arises from facts occurred in Brazil (article 21, CPC).
Regarding the advantages of Brazil’s jurisdiction, some state courts are specialised in maritime law. For example, in Rio de Janeiro, all lawsuits concerning this subject are assigned to one of the courts in the Commercial Division, which have a high expertise on complex disputes.
In addition, over the past few years, the use of arbitration in Brazil has soared, especially due to the advent of the: (i) Law No. 13,129/2015, that provided important amendments and innova-tions to the Arbitration Act; (ii) CPC entered into force in 2016; and (iii) recently ratified Bidding Law (No. 14,133/2021), that encourages the use of alternative dispute resolution methods in conflicts involving the Public Administration.
Also, as mentioned in question 6.1.2, there are various specialised arbitration and mediation institutions in Brazil that are highly specialised in maritime issues. The efficiency and costs of these institutions shall also be taken into consideration by the parties when establishing the dispute resolution clause for their agreements.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Brazil has a specialised Admiralty Court with competence over maritime accidents and facts – for which rulings are regarded as technical evidence for court procedures.
Also, obtaining injunctive relief in Brazil can be faster than in other jurisdictions. It is possible to obtain provisional remedies within 24 to 72 hours, depending on the urgency of the request and the court to which the claim is referred.
Additionally, Brazilian courts and case law are usually very pro-arbitration and other alternative dispute resolution mecha-nisms; courts are very protective of the parties’ choice to settle their dispute via arbitration or by any other dispute resolution mechanism.
However, Court proceedings tend to be lengthier than in other jurisdictions – lawsuits may last from three to 10 years, depending on complexity. Moreover, foreign judgments and arbitral awards must be recognised before the STJ, which can take between one to five years.
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Shipping Law 2021
Brazil
Nilton Mattos focuses his practice on shipping & port and offshore transactions (M&A, financing, regulatory and contractual matters). He also has experience in corporate law, public law and dispute resolution (including proceedings before regulatory agencies and international arbitrations). He has worked at the London office of Freshfields, Bruckhaus Deringer and was a secondee in the offices of BP Energy, Petrobras, and China National Petroleum Corporation (CNPC) in Rio de Janeiro.
Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga AdvogadosPraia do Flamengo, 200, 11º andarRio de Janeiro, RJ, CEP 22210-901Brazil
Flávio Spaccaquerche Barbosa has experience in litigation and arbitration, advising and representing clients in court proceedings and in domestic and international arbitrations. His clients are from a variety of economic sectors and he focuses on oil & gas, maritime and construction disputes, among other infrastructure-related matters. As an arbitration specialist, he is the former regional representative of the ICC Young Arbitrators Forum for the Latin America Chapter, and former member of the ICC arbitrator appointing committee for the Brazilian National Committee. He is a member of the Advisory Council of the Arbitration & Mediation Center of the American Chamber of Commerce for Brazil and arbitration director of the CBMA.
Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga AdvogadosPraia do Flamengo, 200, 11º andarRio de Janeiro, RJ, CEP 22210-901Brazil
Mattos Filho Advogados is a Brazilian premier, full-service law firm with offices in São Paulo, Rio de Janeiro, Brasília, Campinas, New York and London, with a team of more than 600 lawyers. Our Shipping & Ports department is the “one-stop shop” for major industry players and complex transactions. We can provide you with tailor-made advice in a variety of matters, including: assistance on regulatory issues (e.g. public bids for port terminals, tonnage and flag issues, fleet restructuring); drafting and nego-tiation of operational agreements (charter, shipbuilding, purchase and sale, transportation, crew, etc.); as well as transactional matters (M&A, corpo-rate restructuring, financing and refinancing, bankruptcy, as well as the implementation of complex integrated projects, such as gas-to-power and rail-to-port). Our experience in litigation includes administrative, arbitral and judicial disputes involving breach of charter parties, cargo, the arrest of vessels, foreclosure of mortgage and liens, collision and salvage. www.mattosfilho.com.br
to its vessel, it then has the right to claim an indemnity against the owner of the other vessel(s) for the excess paid.
■ Value of enquiries and investigations performed by theChilean 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 administrative summary enquiry initiated by the Chilean Maritime Authority are held to be true unless there is evidence to the contrary. In all other cases, the final resolu-tion pronounced in the administrative summary enquiry will be considered in the civil proceedings as an expert’s opinion.
■ Subsequentsinking:if,afterbeinginvolvedinacollision,avessel sinks during the course of its navigation to the port or place of destination, its loss is deemed a consequence of the collision, unless there is evidence to the contrary.
■ ChileisaStatePartytotheConventionontheInternationalRegulations for Preventing Collisions at Sea 1972 (COLREGS).
(ii) PollutionSince February 2001, the most important legal development in Chilean maritime law was the ratification of the 1992 Protocol to the International Convention of Civil Liability for Oil Pollution Damage (CLC 1969). As a result, for marine pollution incidents that have occurred on or after July 16, 2003, the 1992 Protocol (CLC 1992) applies. For any contamination other than “oil”, as defined in the CLC 1992, that is being “carried in bulk as cargo”, Chile applies the provisions contained in the Law of Navigation (Decree Law No. 2222). These provisions are essen-tially composed of the original text of the CLC 1969 with some amendments.
On March 25, 2015, Chile incorporated the amendments to the 1992 Protocol adopted in October 2000, thereby increasing the limitation amounts.
(iii) Salvage/general averageThe Chilean regulation of salvage services is inspired by the 1981 Montreal Conference Draft, which later became the Convention on Salvage 1989.
With regard to general average, normally the same is regulated by the parties’ agreement in the respective contract. However, for those rare occasions when the norms contained in Book III of the Code of Commerce apply, the same incorporates the alphabetical rules of the York-Antwerp Rules 1974.
(iv) Wreck removalIf a wreck occurs within Chilean territorial waters and it results in a danger or hindrance to navigation, fishing activi-ties, preservation of the environment or other shore-based
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionLiability for a collision is determined by the following rules:■ Fortuitous or doubtful collision: if a collision between
two or more ships occurs owing to circumstances beyond their control or to an unavoidable accident, or if there are doubts about the originating cause of the accident, the damages are individually borne by each victim.
■ Collision attributable to unilateral fault or negligence: ifthe collision is the result of wilful intent or fault of the captain, pilot or members of the crew of a vessel, all the damages are borne by the vessel’s owner.
■ “Bothtoblame”collision:ifthecollisioncouldbeblamedon, or is the fault of two or more vessels, the total amount of damages is borne by the owners of each vessel in propor-tion to the blame assigned by the Court which hears the first action for loss and damages.
■ Collisionandtowage:asageneralrule,boththetugandthe tow are liable to third parties for their own neglect in towing pursuant to the towage provisions set forth under the Code of Commerce. However, in the case of a colli-sion with another vessel not involved in the manoeuvre, the following rules apply: (i) if the control of the towage was being handled by the tug, the convoy will be consid-ered a single unit of transport for the purposes of third-party liability; or (ii) if the control of the manoeuvre was being handled by the tow, this vessel (i.e. the tow) is liable.
■ Liability relating to death or injuries resulting from acollision: the responsible parties are jointly liable for the payment of indemnities to third parties for death or inju-ries resulting from the collision, notwithstanding the right of each one to file a claim against the other for any payment made in excess of the share or proportion of blame. Regarding damage to cargo, there is no joint liability between the vessels at fault and each owner must pay the damages related to the cargo damaged in its own vessel in accordance with what is established by law or under the respective charterparties or carriage of goods by sea contracts. If, by application of this rule or due to direct actions from the owners of the cargo transported in the other vessel(s) that collided, an owner or carrier pays a bigger proportion than the percentage of blame assigned
1.2 Which authority investigates maritime casualties in your jurisdiction?
In the event of a casualty, the Chilean Maritime Authority – which is a part of the Chilean Navy – will appoint a Maritime Prosecutor who will conduct an administrative summary enquiry (locally referred to as the “ISA”), which aims to estab-lish the cause of the casualty as well as the responsible parties. The ISA attempts to determine the administrative liabilities, which may be involved and may result in sanctions, which are normally fines and/or suspensions. Naturally, the result of such an enquiry will have an impact on civil liability arising from the same casualty. In determining the civil liability of the parties involved in a collision, the facts established as decisive causes of it in the final resolution pronounced in the ISA commenced by the Chilean Maritime Authority will be held to be true unless there is evidence to the contrary.
In all other cases, the final resolution pronounced in the ISA will be considered in the civil proceeding as an expert’s opinion.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Maritime Prosecutor (locally referred to as the “Fiscal”) will conduct the investigation with ample powers to collect evidence (the VDR download, for instance), documents, go on board to carry out inspections, request copies of certificates and other documents, take statements from the crew, etc. Until the time the Fiscal is satisfied that he has collected all the evidence needed to conduct the enquiry the vessel will not be granted clearance to depart, and as a result, will be de facto detained.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Chile is a State Party to the 1978 Hamburg Rules. In fact, Chile incorporated them into the Code of Commerce even before they came into force internationally on November 1, 1992. However, regard must be given to the fact that the Chilean enactment of the Rules is not identical to the international text of the same.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Under Article 984 of the Code of Commerce (equivalent to Article 5 of the Hamburg Rules), the carrier will be considered liable for loss resulting from loss of or damage to the goods, as well as from delay in delivery, if the occurrence which caused the loss, damage or delay took place when goods were in his charge as defined in Article 982 of the Code of Commerce (equivalent to Article 4 of the Hamburg Rules), unless the carrier proves that he, his servants or agents took all measures that could reason-ably be required to avoid the occurrence and its consequences (equivalent to Article 5 of the Hamburg Rules).
The burden of proof of “all the measures reasonably required to avoid the occurrence and its consequences” lies on the carrier and would be the same as Article 4.2 (q) of the Hague Rules. Among the measures reasonably required are those of making
activities, the Maritime Authority will order the proprietor, owner or vessel operator to take appropriate measures for the purpose of commencing, at his cost, the immediate signalling, removal or extraction of the remains, until conclusion, within the time limit fixed for this purpose by the Maritime Authority. If the propri-etor, owner or operator does not commence or conclude the work within the prescribed time limit, the wreck shall be deemed to have been abandoned and the proprietors, owners or operator shall be liable to a fine of up to 2,000 gold pesos per net registered tonne of the vessel, or up to a maximum of 50,000 gold pesos in other cases. The Maritime Authority will also be empowered to proceed with the removal and to dispose of or sell the vessel, her cargo and remains, by means of a public or private tender. If the wreck does not become a danger or hindrance for the above-mentioned activities, the time limit for the removal would be one year. The removal shall be carried out under the terms which the Maritime Authority may point 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 that are sinking, drifting and/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.
(v) Limitation of liabilityAlthough Chile has neither ratified nor acceded to any of the inter-national limitation conventions, the Chilean Code of Commerce has taken its provisions from both the 1957 Brussels Convention and the 1976 London Convention. The Chilean system essentially follows the 1957 Convention but, as far as the amount of limitation is concerned, it follows the 1976 Convention. Chile has not incor-porated the Protocol of 1996 to the 1976 London Convention.
(vi) The limitation fundIn (v) above, we have indicated that the Chilean system follows the 1976 Limitation Convention regarding the amount of limita-tion. Regarding tonnage limitation, the vessel owner (or other persons entitled to limit liability) does not necessarily have to set up a limitation fund. However, when a decision is made to do so, the request has to be presented before the Tribunal indi-cated in Article 1211 of the Code of Commerce. The petition will have to comply with a number of requirements set out in Articles 1210 to 1219 of the Code of Commerce. Chiefly among them, the petition will have to provide details of the incident, the amount of the limitation fund and the amount of money or other guarantee to set up the fund. Normally, limitation funds are set up on the basis of Letters of Undertaking (LOU) issued by the corresponding Protection and Indemnity (P&I) Club in which the vessel involved in the incident is entered. The petition has to include a list of creditors. The main effect of the limitation fund is that any person having a claim against the fund is barred from exercising any rights against other assets of the party seeking to limit, and if any ship or other property of the party seeking to limit has already been arrested, it must be released.
In the event of pollution, the corresponding limitation fund will need to be set up according to the CLC 1992 or the Law of Navigation (which, as indicated above, essentially comprises the original text of the CLC 1969 with some amendments) sepa-rately, that is to say, in addition to any tonnage limitation fund that may be set up. One of the main differences between the tonnage limitation fund described above and any eventual pollu-tion limitation fund, is that the person entitled to limit liability resulting from pollution has to set up the fund no later than when answering the first lawsuit.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The time-bar limit applicable to passenger claims is two years from the date on which disembarkation took place. In case of death resulting from injuries sustained on board, the time limit will be counted from the date of the death, but the time limit may not exceed three years after disembarkation took place. Finally, the six-month time limit in case of termination of the contract of passage will be counted from the day of the cancellation of the voyage or the events that prevented the voyage from continuing.
4 Arrest and Security
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?
The list of privileged credits (i.e. credits which enjoy a special status and may be deemed to be statutory liens) is contained in Articles 844 to 846 of the Code of Commerce. The creditor or titleholder of a listed privileged credit may request the duty Civil Court of the port where the vessel presently is or is expected to arrive, to place the vessel under arrest.
Chile has neither ratified nor acceded to any of the International Conventions regulating the arrest of ships. However, according to the “travaux préparatoires” of Book III of the Code of Commerce, the drafting committee took into consideration the International Conventions of 1926 and 1967 on maritime liens and mortgages. In any event, the grounds for arrest are found in Book III of the Code of Commerce.
In addition to ship arrest, under the Code of Civil Procedure it is possible to obtain a court ruling ordering the retention of goods. The retention (in this case, of a vessel) requires (if requested as a prejudicial measure) counter security from the petitioning party as well as evidence for the petition to be granted. In addition, only a vessel under the ownership of the debtor may be retained.
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?
Yes, a bunker supplier may arrest a vessel for a claim relating to bunkers supplied by them to that vessel invoking privileged credits listed in Article 846 Nos 2 and 4 (credits concerning the supply of products or materials, which are indispensable for the trading or conservation of the vessel; and credits in respect of disbursements incurred by the master, agents or third parties, on account of the owner, for the purpose of trading the vessel, including agency services).
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Yes, it is possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship invoking privileged credits listed in Article 846 No. 1 (credits in respect of the sale price, construction, repair and equipment of the vessel).
the vessel seaworthy and of properly and carefully loading, stowing, carrying, keeping, caring for and discharging the goods carried. The duty to 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 carrier but also has to identify the occurrence that caused the loss, damage or delay.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
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 agents. As a general rule, the shipper, his servants or agents have a “several” liability for loss or damage arising from their fault or neglect. This liability is unlimited. In the case of dangerous goods, Article 1013 of the Code of Commerce (equiva-lent to Article 13 of the Hamburg Rules) declares that the shipper must mark or label dangerous goods as such. In addition, the shipper must inform the carrier of the dangerous nature of the goods and, if necessary, the precautions to be taken. If the shipper fails to do so and the carrier or actual carrier does not otherwise have knowledge of their dangerous nature, Article 1013 of the Code of Commerce details the different consequences that such failure will generate for the shipper. In short, the shipper will be liable to the carrier or any actual carrier 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.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The time-bar limit applicable to cargo claims under the local enactment of the Hamburg Rules is two years from the date on which discharge ends. This time limit may be interrupted by the valid service of the lawsuit. Service to one claimant suffices to interrupt the time-bar period in respect of all defendants.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
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 to this Convention. Nevertheless, its provisions were incorporated into the Chilean Code of Commerce.
3.2 What are the international conventions and national laws relevant to passenger claims?
As indicated in question 3.1 above, Chile is not a State Party to the Athens Convention nor to any of its Protocols. The Chilean regulation only incorporates the Athens Convention 1974, including its Protocol of 1976.
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Article 1208 of the Code of Commerce establishes a fact-finding inspection procedure, which may be requested to the duty Civil Court with jurisdiction over the place where the inspection will take place. This procedure allows the interested party to request an inspection or survey to take place before the commencement of the proceedings. This request will be granted when the facts are likely to disappear and may involve the vessel, her cargo or any other fact likely to disappear. In addition, Article 1209 of the Code of Commerce establishes an evidentiary prejudicial measure, which allows the interested parties, when they agree to do so, to carry out evidentiary measures requested in Court or prejudicial measures in an out-of-court stage, provided that the attorneys of the interested parties are in attendance.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Generally speaking, this matter is governed by the norms contained in the Code of Civil Procedure. When a Court issues an order to exhibit documentation, the party against which that order has been granted must attend to it. Failure or refusal to exhibit the documentation requested not only makes that party lose its right to produce such 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 to accept, when a party has requested it, any other means of evidence 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 documentation or argue any objections that they have made.
Any party may request the exhibition of documents that are in possession of the other party or a third-party, provided that the documents have a direct relation with the dispute and are not secret or confidential.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Electronic evidence is acceptable in Chilean proceedings. In the case of electronic evidence, the Court will summon the parties to a hearing in which the electronic piece of evidence (a computer download, an email, a website, etc.) will need to be reproduced, exhibited or played so the same may be perceived by the parties and the Court.
4.4 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 options are available?
Ship arrest is an in rem precautionary measure. Normally, it is exercised as a prejudicial precautionary measure. As a result, a ship may be arrested in order to exercise a privileged credit irre-spective of the debtor.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
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 equiva-lent. LOUs can be presented, and are accepted by the Tribunals, if they have been agreed with the arresting party to be an acceptable guarantee. The presentation of an LOU as an alternative guar-antee without the arresting party’s consent will normally result in the Court submitting the situation to the arresting party, who will have three working days to consider their decision.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
The only situation in which the Court will always demand counter security from the petitioning party is in the event of a retention of goods mentioned at the end of question 4.1. However, in case of a ship arrest, the Court will not demand counter security provided the petitioning party presents evidence that may be considered by the Court as a presumption of the right (the privilege credit) being claimed. If the Court considers that the evidence presented is not enough or the petitioner declares that he is not in possession of it, the Court may request counter security.
4.7 How are maritime assets preserved during a period of arrest?
The vessel owner will be in charge of maintaining the vessel during the period of arrest. These costs may be recovered from the petitioning party in the event of a wrongful arrest.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The vessel owner may file an objection against the ruling which places the vessel under arrest. This opposition is normally presented in the event that there is no privileged credit or the priv-ileged credit has expired. The arrest may also terminate in case of failure to commence substantive proceedings within the time limit of 10 or 30 working days. This results in the immediate cessation of the arrest and in liability for the arresting party. In these cases, the arresting party would be liable for the actual damages and the loss of earnings that the arrest may have generated.
judgments require the obtainment of an exequatur from the Supreme Court of Chile. The exequatur is a formal authorisation that has to be granted by the Supreme Court of Chile before any foreign judgment can be enforced in Chile. If there is no special treaty with the country where the judgment was handed down – in which case the enforcement will be regulated by it – the recognition and enforcement of foreign judgments is governed by the principle of reciprocity. The normal procedure may be summarised as follows: (a) The judgment has to be legalised and translated by the
official translator of the Minister of Foreign Affairs. Afterwards, the translated and legalised copy of the judg-ment has to be filed before the Supreme Court either by the party concerned or by an attorney with sufficient facul-ties (Power of Attorney). Alternatively, to the legalisation of the document, the same may be apostilled.
(b) The Court will notify the party against whom the judg-ment will be enforced who, in turn, will have 15 working days to express his or her views.
(c) Then, the Court Prosecutor will express his opinion. Furthermore, a period of proof could be opened if the Court requires it.
(d) Finally, if the exequatur is granted, the enforcement will be entrusted to the Tribunal which would have decided the case if the dispute had been tried in Chile.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The situation regarding the recognition and enforcement of arbi-tration 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 Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention). When the foreign award has been issued in a State Party to this Convention, its provisions will apply together with the norms of Law No. 19,971 (“Ley sobre Arbitraje Commercial Internacional”), which complements the norms of the New York Convention. Chile is also a State Party to the “Convención Interamericana sobre Arbitraje Comercial e Internacional”.
8 Updates and Developments
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.
As of January 2019, Chilean Law (Article 136 of the Law of Fishing and Agriculture) contemplates a crime in case of marine pollution committed with mere fault. Also, as of February 2019, Chile became a State Party to the MLC 2006.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?All maritime matters are subject to compulsory arbitration in the first instance. This general rule has a number of exceptions including, among others, pollution matters, the arrest of vessels, setting up a limitation fund, small claims, etc.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There is no specialist arbitral body dealing with maritime disputes in Chile. There are, however, a number of commonly appointed maritime arbitrators.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There is no specialist alternative dispute resolution body dealing with maritime mediation in Chile.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Since maritime matters are subject to compulsory arbitration in the first instance, there is a number of commonly appointed maritime arbitrators who are well-versed in maritime matters, especially in disputes in which the Hamburg Rules are applicable.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
While the procedure before the arbitrator will be subject to the ordinary rules applicable to ordinary proceedings under the Chilean Code of Civil Procedure, the parties may, by common agreement, modify these rules.
Any party wanting to avoid the application of the Hamburg Rules should not refer their disputes to Chilean Tribunals. In addi-tion, arresting vessels in Chile is extremely easy. Finally, since the general time-bar limit is two years, this may present an advantage for claimants, compared with those in Hague Rules jurisdictions.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
According to the relevant provisions of the Chilean Code of Civil Procedure, the recognition and enforcement of foreign
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Shipping Law 2021
Chile
Leslie Tomasello Weitz’s qualifications and professional background include:■ LL.B. (Universidad de Valparaíso) obtained on May 2, 1994.■ LL.M. (University of Southampton) obtained on May 28, 1996.■ Postgraduate course in Economy and Finance for Lawyers from the Universidad de Chile (2005).■ Professor of Maritime Law with the Law Faculty of the Universidad de Valparaíso since 1997.■ Editor of the Anuario de Derecho Comercial y Marítimo de la Facultad de Derecho y Ciencias Sociales de la Universidad de Valparaíso.■ Languages: Spanish; and English.■ Specialises in Maritime Law, International Trade and Corporate matters.
Tomasello & Weitz6 Norte 745 of. 1505Viña del MarChile
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 signif-icant 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.
b) Article 9 of the Provisions by the PRC Supreme Court on Several Issues Concerning Trial of Dispute Cases over Ship Collision;
c) Article 17 of the Several Provisions of the Supreme People’s Court Concerning Trial on Dispute Cases Related to Limitation of Compensation 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.
(v) Limitation of liabilityIn 1980, China acceded to the International Convention on Tonnage Measurement of Ships 1969 and, in 1997, ratified the Convention on Limitation of Liability for Maritime Claims 1957, which only applies to Hong Kong, China. Although China does not ratify the Convention on Limitation of Liability for Maritime Claims 1976 (“1976 Convention”), Chapter XI of the Maritime Code of the PRC is mainly based on the 1976 Convention. In addition, the key provisions include the Several Provisions of the Supreme People’s Court Concerning Trial on Dispute Cases Related to Limitation of Compensation Liability for Maritime Claims, and the Provisions Concerning the Limitation of Liability for Maritime Claims for Ships With a Gross Tonnage Not Exceeding 300 Tons and Those Engaging in Coastal Transport Services As Well As Those for Other Coastal Operations issued by the Ministry of Communications and approved by the State Council of the PRC.
(vi) The limitation fundChapter XI of the Maritime Code of the PRC, the Several Provisions of the Supreme People’s Court Concerning Trial on Dispute Cases Related to Limitation of Compensation Liability for Maritime Claims, and Chapter IX of the Special Maritime Procedure Law of the PRC are the key provisions dealing with the limitation fund.
1.2 Which authority investigates maritime casualties in your jurisdiction?
According to Chapter VII of the Maritime Traffic Safety Law of the PRC (issued on 29 April 2021, effective on 1 September 2021); Chapters III and IV of the Regulations of the People’s Republic of China on the Investigation and Handling of Maritime Traffic Accidents and etc., the Marine Safety Administration of the PRC (“MSA”) shall be responsible for the investigation of mari-time casualties.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionChina has formally ratified the 1910 Collision Convention, and the provisions contained within the Maritime Code of the People’s Republic of China (“PRC”) are almost based on this Convention (Chapter VIII, Articles 165–170). The Maritime Code of the PRC provides how to distribute liabilities to parties in different situa-tions. The Provisions of the Supreme People’s Court on Several Issues Concerning Trial of Ship Collision Disputes and Provisions of the Supreme People’s Court Concerning Trial of Property Damage Compensation in Cases of Ship Collision and Contact are also key provisions. In addition, the International Regulations for Preventing Collisions at Sea of 1972 (“COLREGS 1972”) are also highly relied on when determining the liability of vessels in a collision.
(ii) PollutionChina is a signatory to the International Convention on Civil Liability for Oil Pollution Damage (“CLC”) 1969 and 1992, as well as the International Convention on Civil Liability for Bunker Oil Pollution Damage (“Bunker Convention”). In addi-tion, Provisions of the Supreme People’s Court on Several Issues Concerning Trial of Dispute Cases over Compensation for Ship-sourced Oil Pollution and Regulations of the Supreme People’s Court on Several Issues Concerning the Hearing of Compensation Dispute Cases of Marine Natural Resources and Eco-Environment Damage are the key provisions in China.
(iii) Salvage/general averageChina ratified the International Convention on Salvage 1989 in 1993 with reservations of Article 30 paragraph 1, items (a), (b) and (d). The key provisions also include Chapters IX and X of the Maritime Code of the PRC, and Chapter VI of the Maritime Traffic Safety Law of the PRC (issued on 29 April 2021, effective on 1 September 2021).
(iv) Wreck removalChina is not a signatory to the Wreck Removal Convention, and China has no specialised law or regulation on wreck removal. However, there are some specific provisions scattering in different laws and regulations, including: a) Article 207 (4) and the second paragraph in the Article of the
charge of the cargo (“Period of Carrier’s Responsibility”). Pursuant to the Maritime Code of the PRC, the carrier shall be liable for the loss of, or damage to, the cargo during such period, unless provided otherwise by the law.
The Maritime Code of the PRC provides that carriage of goods in containers at sea starts from the time when the carrier takes over the goods at the port of loading and ends at the time when the goods are delivered at the port of discharge. The responsibility of the carrier with respect to non-containerised goods covers the period during which the carrier is in charge of the goods, starting from the time of loading of the goods onto the ship until the time the goods are discharged therefrom.
(2) The carrier can be discharged from their liability if they can prove that the loss of or damage to cargo during the period of carrier’s responsibility arose from relevant causes, including but not limited to the following, which are almost the same as the terms under Article 4.2 of the Hague-Visby Rules:a) fault of the Master, crew members, pilot or servant of
the carrier in the navigation or in the management of the ship;
b) fire, unless caused by the actual fault of the carrier; c) force majeure and perils, dangers and accidents of the sea or
other navigable waters; d) act of the shipper, owner of the goods or their agents; ore) nature or inherent vice of the goods.
(3) The carrier shall deliver the cargo at the designated port of discharge within the time expressly agreed upon. Otherwise, the carrier shall be liable for the loss of, or damage to, the goods caused by delay in delivery due to the fault of the carrier, except those arising or resulting from causes for which the carrier is not liable as provided for in the relevant Articles of Chapter IV of the Maritime Code of the PRC.
(4) The carrier is under an obligation to deliver the cargo against the presentation of the original bill of lading (“B/L”). Where the holder of an original bill of lading suffers loss due to the carrier’s delivery of goods without the original bill of lading, such holder may require the carrier to bear the liability for breach of contract or bear the tort liability.
(5) The carrier’s liability for the loss of or damage to the cargo shall be limited to an amount equivalent to 666.67 Special Drawing Rights (“SDR”) per package or other shipping unit, or 2 SDR per kilogram of the gross weight of the cargo lost or damaged (whichever is the higher) except where the nature and value of the cargo had been declared by the shipper before shipment and inserted in the bill of lading, or where a higher amount than the amount of limitation of liability had been agreed upon between the carrier and the shipper.
(6) The maritime court at the place of departure, destina-tion or transhipment, or at the place of domicile of the defendant, has jurisdiction over cargo claims brought against the carrier. The agreement of jurisdiction is, in principle, valid. However, a foreign court jurisdiction/arbitration clause in the B/L is rarely held as having a binding effect against the shipper/the receiver/the cargo underwriters, unless the latter parties confirm.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The carrier may claim against the shipper in the following circumstances under Chinese law: (1) Article 66 of the Maritime Code of the PRC stipulates that
the shipper shall have the cargo properly packed and shall
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
In the event of a collision, grounding or other major casualties in China, in accordance with the provisions of Chapter VII of the Maritime Traffic Safety Law of the PRC (issued on 29 April 2021, effective on 1 September 2021) and the Regulations of the PRC on the Investigation and Handling of Maritime Traffic Accidents, the parties shall report to the MSA about the acci-dent, and the MSA shall investigate into the accident, for which it has the power to:a) question the persons concerned; b) demand the persons under investigation to provide written
documents and a testimonial form; c) demand the parties involved to provide logbooks, engine
room logs, wheel-bell records, radio operation logs, course records, charts, data of the vessel, functions of the naviga-tion equipment and instruments and other necessary orig-inal papers and materials;
d) examine certificates of the vessels, installations and the relevant equipment and certificates of the personnel, and verify seaworthiness of the vessels and technical condi-tions of the installations before the accident;
e) inspect damage to the vessels, installations and goods, and ascertain casualties of personnel; and
f) conduct on-site investigation and collect relevant mate-rial as evidence. During the investigation, the MSA may record the proceedings using photography and video equipment, and may resort to other means of investigation as permitted by law.
The MSA is entitled to, for safety purposes, refuse the ship’s entry into the port or to order the ship to depart from the port. The MSA also has the power to detain the vessel or equipment from sailing from the port if the vessel/equipment is unseaworthy, has not finished the investigation, has not provided proper secu-rity or has not paid the relevant charges to the authorities.
The MSA shall, according to the investigation, issue a report on findings concerning maritime accidents to ascertain the causes of said accidents and to determine the administrative liabilities of the parties concerned.
The MSA has the power to impose penalties on the parties concerned based upon the investigation, and shall report the case to the procuratorate authority if the accident is very serious.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
China is not a signatory to any of the following: Hague Rules; Hague-Visby Rules; Hamburg Rules; or Rotterdam Rules. The Maritime Code of the PRC deals with marine cargo claims and its provisions mainly originate from the Hague Rules, Hague-Visby Rules and some of the Hamburg Rules. The Civil Code of the PRC will also apply in case the Maritime Code of P.R.C has no provision on some specific issue.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
(1) The key principle applicable to cargo claims brought against the carrier is to prove that cargo loss and/or damage occurred in the period during which the carrier was in
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The key provisions are stipulated in Chapter V of the Maritime Code of the PRC, especially including: (1) Article 111 of the Maritime Code of the PRC, stipulates
that the period of carriage of passengers by sea commences from the time of embarkation of the passengers and termi-nates at the time of their disembarkation, including the period during which the passengers are transported by water from land to the ship or vice versa, if such cost of transport is included in the fare. However, the period of carriage does not include the time when the passengers are at a marine terminal or station, on a quay or on any other port installations. The period of carriage for the cabin luggage of the passengers shall be the same as the period of carriage for passengers by sea. The period of carriage for luggage, other than cabin luggage, commences from the time when the carrier, or his servant or agent, receives it into his charge and terminates at the time when the carrier, or his servant or agent, redelivers it to the passengers.
(2) Article 114 of the Maritime Code of the PRC, stipulates that during the period of carriage of the passengers and their luggage, the carrier shall be liable for the death of or personal injury to passengers or the loss of or damage to their luggage resulting from accidents caused by the fault of the carrier or his servant or agent committed within the scope of his employment or agency. The claimant shall bear the burden of proof regarding the fault of the carrier or his servant or agent, with the exception, however, of the circumstances specified as follows: a) If the death of or personal injury to the passengers
or loss of or damage to the passengers’ cabin luggage occurred as a result of shipwreck, collision, stranding, explosion, fire or the defect of the ship, it shall be presumed that the carrier or his servant or agent has committed a fault, unless proof to the contrary has been given by the carrier or his servant or agent.
b) As to any loss of or damage to the luggage other than the passengers’ cabin luggage, unless the carrier or his servant or agent proves to the contrary, it shall be presumed that the carrier or his servant or agent has committed a fault, no matter how the loss or damage was caused.
(3) Article 115 of the Maritime Code of the PRC, stipulates that if it is proved by the carrier that the death of or personal 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 liability may be exonerated or appropriately miti-gated. If it is proved by the carrier that the death of or personal injury to the passenger or the loss of or damage to the passenger’s luggage was intentionally caused by the passenger himself, or the death or personal injury was due to his health condition, the carrier shall not be liable therefor.
(4) Article 116 of the Maritime Code of the PRC, stipulates that the carrier shall not be liable for any loss of or damage to the monies, gold, silver, jewellery, negotiable securi-ties or other valuables of the passengers. If the passenger has entrusted the above-mentioned valuables to the safe-keeping of the carrier under an agreement for that purpose,
guarantee the accuracy of the description, mark, number of packages or pieces, weight or quantity of the cargo at the time of shipment. The shipper shall indemnify the carrier against any loss resulting from inadequacy of packing or inaccuracies in the aforementioned information.
(2) Article 67 of the Maritime Code of the PRC stipulates that the shipper shall perform all necessary procedures at the port, customs, quarantine, inspection or other compe-tent authorities with respect to the shipment of the cargo, and shall furnish to the carrier all relevant documents concerning the procedures the shipper has gone through. The shipper shall be liable for any damage to the carrier resulting from the inadequacy, inaccuracy or delay in delivery of such documents.
(3) Article 68 of the Maritime Code of the PRC stipulates that, at the time of shipment of dangerous cargo, the shipper shall, in compliance with the regulations governing the carriage of such goods, have them properly packed, distinctly marked and labelled and notify the carrier in writing of their proper description, nature and the precautions to be taken. In case the shipper fails to notify the carrier or notifies him inac-curately, the carrier may have such goods landed, destroyed or rendered innocuous when and where circumstances so require, without compensation. The shipper shall be liable to the carrier for any loss, damage or expense resulting from such shipment. Notwithstanding the carrier’s knowledge of the nature of the dangerous goods and his consent to carry, he may still have such goods landed, destroyed or rendered innocuous, without compensation, when they become an actual danger to the ship, the crew and other persons on board or to other goods.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
It is stipulated in Article 257 of the Maritime Code of the PRC that the limitation period for claims against the carrier with regard to the carriage of goods by sea is one year, counting from the day on which the goods were delivered or should have been delivered by the carrier. Within the limitation period or after the expiration thereof, if the person allegedly liable has brought up a claim of recourse against a third person, that claim is time-barred at the expiration of 90 days, counting from the day on which the person claiming for the recourse settled the claim, or was served with a copy of the process by the court handling the claim against him. The limitation period for claims against the carrier with regard to voyage charter party is two years, counting from the day on which the claimant knew or should have known that his right had been infringed.
According to the Reply of the Supreme People’s Court Concerning the Time Limits for the Carrier’s Claims Against the Shipper, the Consignee and the Holder of the Bill of Lading, the time limits for the carrier’s claims against the shipper, the consignee and the holder of the bill of lading with regard to the carriage of goods by sea shall refer to the above provisions and are also limited to one year, counting from the day on which the claimant knew or should have known that his right had been infringed.
The provision on the time limits is mandatory under the Maritime Code of the PRC, and can only be protected by way of filing a claim with the court, commencing arbitration or the liable party confirming the agreement to fulfil their obligations. Under Chinese law, the parties’ agreement on extending the time limits is invalid.
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?
Article 23 of the Special Maritime Procedure Law of the PRC provides that: “If any of the following circumstances exists, a maritime
court may arrest the involved ship:(1) where the shipowner is held responsible for a maritime
claim and is the owner of the ship when the arrest is executed;
(2) where the bareboat charterer of the ship is held respon-sible for a maritime claim and is the bareboat charterer or the owner of the ship when the arrest is executed;
(3) where a maritime claim is entitled to a mortgage of the ship or right of the same nature;
(4) where a maritime claim relates to ownership or posses-sion of the ship; or
(5) where a maritime claim is entitled to a maritime lien. A maritime court may arrest other ships owned by the
shipowner, bareboat charterer, time charterer or voyage charterer who is held responsible for a maritime claim, when the arrest is executed, with the exception of the claims related to ownership or possession of the ship.
No ship engaging in military or government duties may be arrested.”
The applicable procedure for the arrest of vessels mainly includes: a) A written application for arrest of vessels shall be filed with
the competent maritime court for applying the arrest of the vessel. The application shall clearly set forth the claims, the reasons for arrest, the information of the vessel to be arrested and the amount of requested security, and shall be supported by relevant evidence. As a matter of procedure, the applicant shall file the Certificate of Goodstanding, the Certificate of Legal Representative and the Power of Attorney. If it is a foreign applicant, such documents shall be notarised and legalised. In some cases, the court may approve the notarised/legalised documents to be provided later.
b) If the maritime court accepts an application for the arrest of the vessel, it will order the applicant to provide a counter-security. If the applicant refuses to provide such counter-security, the application shall be denied.
c) The maritime court shall, within 48 hours after the accept-ance of the application, issue a ruling and the corre-sponding arrest order, which will then be served on the vessel by the court. The court may order some administra-tion (for example, the MSA) to assist in detaining the vessel.
d) The time limit for the arrest of the vessel is 30 days. The applicant shall, within the 30-day period, file a lawsuit before the court or commence arbitration pursuant to the arbitration agreement. Otherwise, the arrested vessel will be released. If the applicant files a lawsuit, or applies for arbitra-tion within 30 days, and if the applicant applies for the arrest of the vessel in the process of judicial or arbitral proceedings (either in China or other countries), the time limit for the arrest of the vessel shall not be restricted to 30 days.
e) If the owner provides a satisfactory security as requested, the maritime court shall make a ruling to release the arrested vessel. If the owner fails to provide satisfac-tory security at the expiration of the 30-day period, and
the carrier shall be liable for compensation in accordance with the provisions of Article 117 of this Law. Where the limitation of liability agreed upon between the carrier and the passenger in writing is higher than that set out in Article 117 of this Law, the carrier shall make the compen-sation in accordance with that higher amount.
(5) Article 117 of the Maritime Code of the PRC, stipulates that the limitation of liability of the carrier under each carriage of passengers by sea shall be governed by the following: a) For death of or personal injury to the passenger: not
exceeding 46,666 SDR. However, the carrier and the passenger may reach a higher limitation of liability in writing.
b) For loss of or damage to the passengers’ cabin luggage: not exceeding 833 SDR.
c) For loss of or damage to the passengers’ vehicles, including the luggage carried therein: not exceeding 3,333 SDR.
d) For loss of or damage to luggage other than those described in subparagraphs b) and c) above: not exceeding 1,200 SDR.
The carrier and the passengers may reach an agreement with respect to the deductibles applicable to the compensation for loss of or damage to the passengers’ vehicles and luggage other than their vehicles. However, the deductible, with respect to the loss of or damage to the passengers’ vehicles, shall not exceed 117 Units of Account per vehicle, whereas the deductible for the loss of or damage to the luggage other than the vehicle shall not exceed 13 Units of Account per piece of luggage per passenger.
3.2 What are the international conventions and national laws relevant to passenger claims?
China has ratified the Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea 1974 and the Protocol of 1976 to the Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea of 13 December 1974. Apart from the relevant provisions of the Maritime Code of the PRC mentioned above, Section Two (Passenger Transport Contract) under Chapter XIX (Transport Contracts) of Part Two (Typical Contracts) of Book Three (Contracts) of the Civil Code of the PRC is also relevant to passenger claims.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
It is stipulated in Article 258 of the Maritime Code of the PRC, that the limitation period for claims against the carrier with regard to the carriage of passengers by sea is two years, counting respectively as follows: (1) claims for personal injury: counting from the day on which
the passenger disembarked or should have disembarked;(2) claims for death of passengers that occurred during the
period of carriage: counting from the day on which the passenger should have disembarked, whereas those for the death of passengers that occurred after the disembarkation but resulted from an injury during the period of carriage by sea, will be counted from the day of the death of the passenger concerned, provided that this period does not exceed three years from the time of disembarkation; and
(3) claims for loss of or damage to the luggage: counting from the day of disembarkation or the day on which the passenger should have disembarked.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Yes. Pursuant to Article 4 of the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Arrest and Auction of Ships, where the maritime claimant applies for the arrest of a ship, the maritime court shall order the maritime claimant to provide counter-security. However, there are some exceptions where the court may allow to not provide counter-security, for example, in cases where the maritime claimant applies for the arrest of the ship due to disputes over the service contracts of seamen or the personal injury compensation at sea and in sea waters, and both the facts and the rights and obligations of the parties are clear.
4.7 How are maritime assets preserved during a period of arrest?
There is no clear provision for this and it is a controversial issue in practice, with particular regard to that who should be respon-sible for the preservation during that period. According to the Guiding Opinions of the Fourth Division of Civil Trial of the Supreme People’s Court and the Chinese Maritime Safety Administration on Regulating the Investigation of Maritime Traffic Accidents and the Trial of Maritime Cases, it appears that the owners or user of the assets shall have the duty to preserve the asset, i.e.: “the arrested ship shall be equipped with sufficient competent crew on duty to ensure the safety of the ship. The maritime safety administration may take compulsory measures to equip the arrested ship with crew or order the arrested ship to shift. The maritime safety administration and the maritime court shall notify each other of the information and give neces-sary cooperation in the work related to the safety supervision of the arrested ship and the movement of the ship.”
In summary, there are two ways to arrest ships:a) after a maritime court orders to impose preservation upon
a ship, with consent of the maritime claimant, it may allow the ship to continue the operation by way of restraining the disposition or mortgage of the ship; and
b) the court shall issue an order of arrest to a specific ship, and force the ship to berth at a certain place. During the period of arrest, the owner and operator of the ship shall lose the right to dispose of the ship and the right to use the ship. Without the consent of the court, the ship shall not be allowed to continue its production and operation, nor shall the ship leave its anchorage.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Generally speaking, it is relatively difficult and also rare for an arrest of a vessel to be judged as a wrongful arrest in Chinese legal practices, unless the substantial claims against the owner, bareboat charterers or the vessel, for which the arrest action was carried out, are proved to be totally groundless in law or false.
In case there is a wrongful arrest of a vessel, a vessel owner who suffers losses or additional costs is entitled to file a lawsuit against the applicant who carried out the wrongful arrest, before the maritime court, for the loss of use and the additional port costs and other expenses incurred as a result of the wrongful
it is inappropriate to further arrest the vessel, the appli-cant may, after filing a lawsuit or applying for arbitration, request the maritime court to sell the vessel by auction.
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?
Yes, such an arrest is possible. In accordance with Article 21(12) of the Special Maritime Procedure Law of the PRC, with respect to maritime claims for providing of supplies or rendering of services in respect of ship operation, management, maintenance or repair, an application may be made for the arrest of a vessel. This provision does not highlight whether it is the physical or contractual supplier that is entitled to the arrest. However, it should be noted that the bunker payment claim is not a maritime lien and such arrest shall be subject to the circumstances set out in question 4.1; principally, the shipowner or the bareboat char-terer shall be the liable party for the bunker payment and is the owner or the bareboat charterer of the vessel to be arrested.
For example, the arrest would not be approved by the court in the case of the time charterer being the liable party for the bunker payment instead of the owner/bareboat charterer, or in case the old shipowner is liable for the bunker payment but the ownership has been changed to a new owner prior to the intended arrest.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Yes, such an arrest is possible. In accordance with Article 21(22) of the Special Maritime Procedure Law of the PRC, with respect to maritime claims concerning a dispute arising out of a ship sale contract, an application may be made for the arrest of a vessel. It should be noted that, according to this article, the arrest shall be limited to the vessel involved in the sale and purchase and not against other vessels.
4.4 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 options are available?
The claimant may apply to the court for preservation of the respondent party’s other properties to obtain security, including but not limited to, preservation of the goods carried by the ship, the bunkers of the ship, the freight due to the respondent party, the monies in bank accounts, stocks, real estate and vehicles, etc.
In addition to the above, another kind of relief is that the appli-cant may apply for a maritime injunction before court to compel the respondent party to act or refrain from action to prevent the legitimate rights and interests of the claimant from being infringed.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Security shall be in the form of cash or surety, mortgage or pledge. It can be cash, real estate or a letter of undertaking (“LOU”) issued by a bank or an insurance company in China. The LOU of a foreign P&I Club or a foreign bank or insurance company will not be acceptable to the Chinese court, unless agreed by the applicant.
any other visible and recognisable output media, shall be deemed as an original copy of the electronic data.
(2) When preserving the audio-visual materials and electronic data, the People’s Court shall require the person under investigation to provide the original carrier. If it is indeed difficult to provide the original carriers, copies thereof may be provided. Where a copy is provided, the People’s Court shall state the source of the copy and the production process in the investigation record.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Cases of maritime claims shall be under the jurisdiction of mari-time courts. In China, there are 11 maritime courts at present, which are located in Beihai, Dalian, Guangzhou, Haikou, Nanjing, Ningbo, Qingdao, Shanghai, Tianjin, Wuhan and Xiamen.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The China Maritime Arbitration Commission (“CMAC”) is deemed as a specialist arbitral body dealing with maritime disputes. In addition, the China International Economic and Trade Arbitration Commission (“CIETAC”) and various local arbitration institutes in China deal with maritime disputes as well.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?The CMAC has established three specialist maritime mediation centres, which are located in Chongqing, Shanghai and Tianjin for such work.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The maritime courts, arbitral institutions and specialist mediation centres build different levels of maritime dispute resolution mech-anisms, which provide professionals specialising in dealing with maritime claims and help to settle disputes sooner in various ways.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
The existence of specialised maritime courts, maritime arbitra-tion institutes and the mediation centres in China, as well as a significant amount of cases handled, ensures the sufficient training of the practitioners. They are well-known for their effi-ciency and professionalism.
The notarisation and legalisation of the certificate of incor-poration/goodstanding and the Power of Attorney, etc. might be a burden for the foreign parties if the case is referred to the court. The request of producing original documents in the court proceedings may also be troublesome for the parties.
arrest. In this respect, the vessel owner has to provide supporting evidence about the losses sustained. If a favourable judgment is issued by the maritime court for the owner’s claim for wrongful arrest, the owner would be able to enforce the counter security that was posted by the application to the court at the time of applying for an arrest order, as well as other assets of the applicant, by way of raising enforcement application before the maritime court.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
The claimant may file an application with the maritime court for the collection and preservation of evidence, prior to or during an action/arbitration. Prior to the action/arbitration, such applica-tion shall be filed with the maritime court of the place where the evidence subject to preservation is located.
Pursuant to the Special Maritime Procedure Law of the PRC, a party may apply to court before starting the proceedings with a request to preserve maritime evidence, but the applicant must prove the urgency of the matter for the court to accept the request, and that failure to impose evidence preservation immediately will result in loss or difficulty in obtaining the evidence. The court may seal up the evidence or take the copies, duplicates or photo-graphs, or make a video recording or take the extracts or record of inquests. It may also take the original evidence where necessary.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
According to the Civil Procedure Law of the PRC, the general position is that the parties shall disclose the evidence to prove their own cases. Nevertheless, pursuant to the Interpretations of the Supreme People’s Court on the Civil Procedure Law of the PRC, one party is entitled to apply to court to order the respondent party to disclose some specific documents. The Several Provisions of the Supreme People’s Court on Evidence for Civil Actions (amended in 2019) provides further specific arti-cles to detail such rules relating to the disclosure order.
As to the maritime disputes, there are no specialised rules, except for the ship collision case. The Special Maritime Procedure Law of the PRC provides that the parties shall finish the production of evidence and file an investigation form before a hearing, and the parties are not allowed access to the other parties’ evidence until having finished the production of evidence and issued a note to the court stating the completion of provision of evidence.
5.3 How is the electronic discovery and preservation of evidence dealt with?
According to the Several Provisions of the Supreme People’s Court on Evidence for Civil Actions (amended in 2019), the following rules shall be followed:(1) Any party who presents any electronic data as evidence
shall provide the original carrier. A duplicate copy of elec-tronic data produced by its producer that is consistent with the original copy, or a printout of electronic data or
Article 283 of the Civil Procedure Law of the PRC stipu-lates that where an arbitration award of a foreign arbitral institu-tion requires recognition and enforcement by a People’s Court of the People’s Republic of China, a party shall apply directly to the intermediate People’s Court at the place of domicile of the party against whom enforcement is sought or at the place where the property thereof is located, and the People’s Court shall process the application in accordance with an international treaty concluded or acceded to by the People’s Republic of China or under the principle of reciprocity.
China has been a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). Thus, the court shall grant recogni-tion and enforcement of the application according to the New York Convention or under the principle of reciprocity.
8 Updates and Developments
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.
Recently, China has been committed to establishing the International Maritime Judicial Centre with the promotion of the Belt and Road Initiative. With regard to the International Maritime Judicial Centre, China is strengthening the training of maritime lawyers, arbitrators and judges, and improving the maritime judicial environment in a variety of ways which include, but are not limited to, amending the Judges Law of the PRC, etc.
Additionally, according to the legislative programme of the Standing Committee of the National People’s Congress, China is also engaged in enacting or amending the maritime laws, to establish a better maritime legal system and to be geared towards international maritime laws. We expect that both the maritime courts and arbitration institutions will become a main and reli-able way to deal with international maritime disputes, and will enjoy a worldwide prestigious reputation in the near future.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Regarding the jurisdiction, in accordance with Article 11 of the Special Maritime Procedure Law of the PRC, the application of the recognition and enforcement of a judgment or written order of a foreign court shall be filed with the maritime court of the place where the property subjected to execution or of the place where the person subjected to execution has its domicile. In case of no maritime court in the aforesaid place, the application shall be filed with the intermediate People’s Court.
According to Article 282 of the Civil Procedure Law of the PRC, the international treaty concluded or acceded to by the PRC and the principle of reciprocity are taken by the Chinese court as the basis to examine an application or request for recog-nition and enforcement of an effective judgment or ruling of a foreign court.
Based on the above, the Chinese court will not grant recogni-tion and enforcement if the foreign judgment violates the basic principles of the laws of the PRC and the sovereignty, security and public interest of the PRC.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Regarding the jurisdiction, in accordance with Article 11 of the Special Maritime Procedure Law of the PRC, the application of the recognition and enforcement of foreign maritime arbitral award shall be filed with the maritime court of the place where the property or the person subjected to execution has its domi-cile. In case of no maritime court in the aforesaid place, the application shall be filed with the intermediate People’s Court.
56
Shipping Law 2021
China
Gary Wu has been practising maritime & admiralty laws and insurance laws for more than 10 years. Gary Wu is experienced and specialised in handling cases and disputes arising from bills of lading and marine casualties, including ship collision, ship’s contact with wharf, oil pollu-tion from ship and salvage, and is also experienced in handling disputes over ship building and repair, marine insurance and recovery, logistic transportation, and other commercial affairs.
Zhonglun W&D Law Firm, Shanghai Office11th Floor, Tian An Plaza, No.338Nanjingxi Road, Huangpu DistrictShanghai, 200003China
Established in 1992, Zhonglun W&D Law Firm (Zhonglun W&D) is one of the first partnership law firms approved by the Ministry of Justice. After years of development, it has become a large full-service law firm based in China with the goal of establishing its international presence. Its head-quarters are located in Beijing and the firm has more than 20 offices in China and abroad (e.g. London, Paris and Léon). Zhonglun W&D has been rated as one of the Top 10 law firms in China and the Top 20 law firms in Asia by Asian Legal Business (ALB) and other authorities more than once.
www.zhonglunwende.com
Hector Fan worked as a marine officer in ocean vessels after graduating from Shanghai Maritime University. He was also awarded a Master of Law from Shanghai Jiao Tong University. He has conducted maritime and admiralty legal service for many years, and is especially skilful in matters of marine collision, marine pollution, personal casualty, salvage, wreck removal and marine insurance, etc.
Zhonglun W&D Law Firm, Shanghai Office11th Floor, Tian An Plaza, No.338Nanjingxi Road, Huangpu DistrictShanghai, 200003China
Forrest Zhu obtained his LL.B. and LL.M. in maritime law from Dalian Maritime University. Before he became a shipping lawyer, he worked for Dalian port authority and headquarters of Sunshine P&C insurance company. He is skilful and uses flexible strategies to solve complicated cases. He is good at communicating with the courts, authorities and negotiating with concerned parties. Forrest has extensive expertise in dealing with disputes over personal death and injury, collision, wreck removal, oil pollution, GA, salvage, and is also experienced in handling disputes over port affairs, marine insurance, bill of lading, charterparties, logistic transportation and international trade.
Zhonglun W&D Law Firm, Shanghai Office11th Floor, Tian An Plaza, No.338Nanjingxi Road, Huangpu DistrictShanghai, 200003China
Nick Yuan provides legal services for international P&I Clubs, banks, and international law firms as well as shipping, oil, logistics, insurance, trading and financial leasing companies. He specialises in dealing with disputes over shipping (both dry and wet), logistics, international trade, insurance, energy and corporate. Nick is listed in the “One Thousand Foreign-related Lawyers Talent” by the Ministry of Justice of the PRC, and also rated as “Recognised Practitioners in Shipping and Maritime Practice in Northern China” by Chambers and Partners.
Zhonglun W&D Law Firm, Tianjin OfficeBuilding A, 38th Floor, Ronghui PlazaIntersection of Changjiang Road and Sanma Road Nankai District, Tianjin, 300110China
The Law expressly prohibits the pollution of the waters where Cuba exercises its jurisdiction. The Law also establishes the obligation for the Shipmasters to notify immediately the Harbour Master of the jurisdiction where the pollution occurred even if the pollution comes from the vessel under his command or any other, including if such pollution happened out of Cuban waters but could affect them.
The Harbour Master once receiving such information must notify the competent bodies for the exercise of the corresponding legal and response actions, in accordance with current environ-mental legislation.
Any responsible person for the pollution becomes civilly and/or criminally liable for the damages that arise.
In addition to Law No. 115, the Law No. 81 of 1997, “Environmental Law” establishes a regime of fines and sanctions for administrative, civil and criminal liability. This regime of fines and sanctions reaches both natural and legal persons.
Civil liability is applicable for action or omission of any conduct by which the environment is damaged. It is preferable that the rehabilitation of the environment will be sought than any economic compensation or charging of a civil liability.
Criminal responsibility for an action or omission of conduct that goes against the protection of the environment will be classi-fied and sanctioned in accordance with the Criminal Code.
(iii) Salvage/general averageThe salvor has the right of maritime lien over the vessel and other properties saved until the salvor’s rights are guaranteed.
Decree No. 317, establishes, inter alia: the obligations of both salvor and owner; the criteria for the reward; and the amount of special compensation up to a level of 30%, despite a higher percentage being acceptable but never higher than 100% of the expenses incurred by the salvor.
The time limit for the legal action to claim payment for salvage services is two years, counting as from the date the salvage services concluded.
Cuba signed the Salvage Convention 1910 but never rati-fied it, nor is Cuba a contracting State of the so-called Salvage Convention London 1989. However, this fact does not prevent a Cuban salvor signing a Lloyd’s Open Form (“LOF”) that implic-itly submits to the London Salvage Convention 1989 containing the criteria for the salvage award, acceptance of SCOPIC clause, Lloyd s guarantee, and arbitration clause too, and which has been very frequently used without any obstacles.
The general average appears to be mentioned specifically in articles 111, 112 and 113 of Law No.115 and articles 190 to 211 (both inclusive) of Decree No. 317. General average is widely
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe legal framework in relation to collision is basically composed of Law No. 115 of 2013, “Maritime, River and Lake Navigation Law”, Decree No. 317 of 2013 “Regulation of the Law No. 115” and COLREG 72 (by accession of 7 November 1983). Any procedure in Cuba before courts arisen as a consequence of a collision is ruled by the “Civil, Administrative, Labour and Economic Procedural Law” No. 7 of 1977 as amended by the Decree Law No. 241 of 2006, Criminal Code and any other rele-vant legislation that may be applicable at that time.
The Law No. 115 extends the scope of collision to pleasure and sporting boats and “naval artifacts” (e.g. floating cranes, barges, tugs, and other crafts and vessels).
The Law applies also to damage caused to others without contact as a result of an incorrect manoeuvre during navigation.
It is noteworthy that the term used in Cuban law for the “collision” between vessels is “abordaje”. The term collision is used for the so-called “allision” or collision to a fixed object.
In case of a collision involving a tugboat and a towed vessel, both are considered as one for the purposes of liability against third parties when the direction is held by the tugboat.
The civil, administrative and criminal liability may be applied in matters of collision.
The parties involved in the collisions become obliged to facil-itate reciprocally the inspection to evaluate the damages suffered and circumstances.
The time limit to claim damages which have arisen from a collision is five years after the casualty occurred.
(ii) PollutionArticle 43 of Law No. 115 establishes that the National Maritime Authority is in charge of enforcing preventive measures in Cuban jurisdictional waters on environmental pollution pursuant to national legislation and in the International Conventions of which Cuba is a contracting party.
The National Maritime Authority is none other than the Cuban State, represented through the Ministry of Transport and the Ministry of Home Affairs.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The same authorities mentioned in question 1.2. It is fair to say that those ministries and others ministries (including the Ministry of Defence) and entities work very closely and coordinate to respond in a very effective manner to any casualty response in the event of collision, grounding or any other major casualty.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The international convention in force in Cuba is the Hague Rules.The national law relevant to maritime cargo claims is widely
covered by Decree Law No. 317 in articles 253 to 275 (both inclu-sive). These articles rule the responsibilities of the carrier and Shipmaster towards the cargo laden on board the vessel. This does not contradict the Hague Rules as article 275 states that rele-vant international convention of which the Republic of Cuba is a contracting State applies in addition to the provisions of such Decree Law No. 317.
The Civil Code in article 435 also establishes the liabilities for the carriage of goods by the carrier. As per article 436, the carrier is obliged: to keep the goods transported in appropriate safety conditions; provide the service within the expected reasonable time in the case of perishable goods and can reject those whose condition does not allow the due fulfilment of this obligation; and important issues relating to carriage of goods. These obligations do not differ to those stated in the above-mentioned provisions.
Law No. 7 covers the procedures under national laws for marine cargo claims in article 746.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
As per article 253 of Decree Law No. 317, the carrier is not responsible for the loss or damage which arises due to the unsea-worthiness of the vessel, unless it is due to the lack of reasonable diligence on the part of the carrier to maintain the vessel in a seaworthy condition or to ensure it is properly armed, equipped or provisioned. The burden of proof of the said lack of reason-able diligence on the part of the carrier or any other person who demands such exemption of responsibility rests with the carrier.
Similarly, the burden of proof rests with the carrier whom intends to exonerate itself from liability for damages or losses arisen – among other causes – from: decrease in volume or weight of the goods, or from any other loss or damage resulting from a hidden defect, special nature or vice of the goods; insuf-ficient packaging; insufficiency or imperfection of the marks; action or omission by the shipper, goods’ owner, his agent or representative; and fire, unless it was the carrier’s fault.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Decree No. 317 governs in articles 254, 256, 259 and 265 that the carrier can demand indemnity from the shipper for damages
treated in those articles, although under standard principles and fundamentals internationally used. One claim to consider is that the acts and contributions under the concept of general average is governed by what the parties have agreed to, and in the absence of it by the provisions of the mentioned articles.
York-Antwerp Rules apply if the parties have agreed on it.
(iv) Wreck removalWreck removal is slightly regulated by the Law No. 115 in article 101. The National Maritime Authority is the authority in charge of deciding the adoption of the necessary measures of signalling and removal when a ship is sunk or stranded and constitutes a danger or an obstacle to the navigation, port operation, fishing, or other maritime activities related to navigable waters, or for the preser-vation of the marine environment, or in the interest of the State.
Wreck removal will always be at the Shipowner or shipping company’s costs. The National Maritime Authority shall decide the time limit for the wreck removal to be executed, although the maximum limit is one year as from the date the casualty happened.
A guarantee to ensure the wreck removal or elimination of all remains must be obtained by whoever executes the removal.
Cuba is not a contracting State of the Nairobi International Convention on the Wreck Removal.
(v) Limitation of liabilityCuba is not a contracting party of the Convention on Limitation of Liability for Maritime Claims, 1976 (“LLMC 1976”), nor of its Protocol of 1996.
In general terms, there is no express or implied level of limi-tation of liability in the national law for maritime claims, except in the carriage of goods by sea under the Bill of Lading, whereby the limit is established by the Hague Rules applicable in Cuba and in matter of marine insurance, whereby the limit of liability is as agreed in each relevant policy.
(vi) The limitation fundIn accordance with the status of IMO treaties 2021, Cuba is not a contracting State to any of these Conventions nor their Protocols: ■ International Convention on Civil Liability for Oil
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Ministry of Transport and Ministry of Home Affairs, both of which represent the Maritime National Authority. However, the entity of the Ministry of Transport that is directly involved in handling the investigations is the Directorate of Safety and Maritime Inspection. At the same time, the Habour Master of the Cuba Coast Guard subordinate to Home Affairs and any other body designated by the same can intervene in the investigations.
of the property; and to claim compensation for damages arisen from unlawful acts. Unlawful acts under Cuban law means those acts that cause damage or harm to someone.
4 Arrest and Security
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?
For a party seeking to obtain security for a maritime claim against a vessel owner, the option is to apply for the conserv-atory arrest under the procedure established by Law 7 (“Civil, Administrative, Labour and Economic Procedural Law”) as amended by the Decree Law No. 241 of 2006. Cuba is a contracting State by accession of the International Convention for the Unification of Certain Relating to the Arrest of Sea-Going Ships, Brussels, 1952 (herein called “Arrest Convention 1952”).
The petition of the conservatory arrest filed before the compe-tent court can be requested before filing the claim, together with the claim or at any time after the proceedings on the merits have started. In the first scenario, the claimant should not necessarily demonstrate the credit, but must attach to the petition “prima facie” documentary evidence from which the true and current existence of the debt can be inferred; therefore, the conservatory arrest is granted by a competent court as a remedy for security always pending a court judgment or arbitral award on the merits.
The closed list of maritime claims that may give rise to a ship arrest are the same as those listed in the Arrest Convention 1952, but including “port charges”.
War and public vessels cannot be arrested; however, if a public vessel is performing commercial trading, she can be.
The standard time period for the court to grant or deny the arrest is 13 working days counting from the next day the petition is filed in court. This period of 13 days is split as follows: three days to serve the notice of arrest application to the defendant; and 10 days for a hearing to take place as to decide the arrest or not. Nonetheless, based on urgency or any other justified reasons, the claimant may request the court to grant the arrest before such standard time period.
Once granted, the conservatory arrest before the claim on the merits is filed in court, the time limit to file such claim is 30 days counting from the next day when the conservatory arrest is effected. This time limit period either applies for filing the claim in a Cuban court or in any other jurisdiction where the parties have agreed to settle the dispute, even through arbitration.
A procurement of the executory arrest can be applied to execute an irrevocable credit granted by a final judgment or award.
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?
Yes. This credit is within the list of debts by which a vessel can be arrested.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
This type of claim is not specifically included in the closed list of maritime claims mentioned in question 4.1 above, by which a vessel can be arrested. However, if the claimant provides the court preliminarily convincing grounds to grant the arrest
suffered as a result of the claims of a third party holder’s Bill of Lading as a consequence of the inaccuracy of the information provided by the shipper on the apparent state, nature, number marks, quantity and weight of the goods received.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
According to article 284 of Decree No. 317, the time limit to start legal actions arising from a charter party is one year.
The time limit to start legal actions for claiming compensa-tion for losses, damages or delays suffered by the goods, starts counting from the delivery of the goods to the receiver or from the day the goods should have been delivered.
Besides, the Civil Code could be suppletorily applied for that which has not been regulated in the aforementioned article, in which case the time limit to claim damages is one year also (article 115).
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The provisions applicable can be found in Law No. 115 (articles 137, 138 and 139), Decree Law No. 317 (article 315) and the Civil Code (articles 432 and 433).
Law No. 115 governs the carrier is responsible for damages caused to passengers due to a maritime accident during this service, unless it is proven the carrier is not liable for it. We should understand this wording covers all types of damages caused to the passenger.
Besides, when the trip is suspended due to the carrier’s fault or the Captain, or for any other reason, or due to unforeseen circumstances or force majeure, the passengers have the right to be reimbursed with ticket costs or can make use of it if the service is restored.
Complementarily, Decree Law No. 317 rules the passenger is the bearer of its own luggage on board and the Captain is not responsible for what the passenger keeps under his immediate and personal custody, unless the damage actually comes from the Captain.
The Civil Code, as suppletory legislation, governs that the carrier is liable for the loss, non-delivery or deterioration of the luggage trusteed to him, unless he proves that he acted with due diligence; in which case, the carrier will not be responsible for the damages suffered by the luggage the passenger carries in his personal custody.
3.2 What are the international conventions and national laws relevant to passenger claims?
Cuba is not a contracting State of the Athens Convention Relative to the Transport of Passengers and their Luggage by Sea, 1974 (“PAL 1974”), nor of any of its protocols PAL 1976, PAL 1990 or PAL 2002.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The time limit in relation to passenger claims is one year in accordance with article 116 of the Civil Code, and the nature of causes to claim in this specific matter are: to recover possession
authorisations for the movements and security manoeuvres of the ship; and contracting the necessary insurances; among others.
As common practice in recent times, the appointed protection entity is the port authority of the jurisdiction where the arrested vessel is.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The test for wrongful arrest appears when the defendant demon-strates the conservatory arrest was granted on wrong, malicious or erroneous grounds.
The remedies available for a vessel owner to claim losses caused by a wrongful arrest is to claim counter security if the wrongful arrest is declared or accepted by the court in charge. Despite that, the owner can claim damages that arise from the wrongful arrest in the most convenient forum if it is legally feasible.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
There is not a specific procedure available for evidence preserva-tion like in any other jurisdiction; its preservation rests with the parties involved of course, and with the authority, official, public registry or entity responsible to take care of it.
For access to evidence that cannot be physically provided by the parties themselves, the parties can propose to the court, or even the court may at its sole discretion, order its delivery to the evidence possessor either in a document or any other physical evidence, including declarations of experts, witnesses, among others.
The pre-action disclosure (called in local law: “actos preparato-rios”) is governed by the Law No. 7, in articles 216 to 222 (both inclusive). The petitioner requests the court to order any one or some of the provided steps to preserve physical evidence including declarations of witnesses.
After the physical evidence has been identified by the peti-tioner, the possessor becomes responsible to keep it under custody and to preserve it in the same current state, unless the court decides its deposit or conservatory attachment.
If the claimed hides, resists, refuses or uses unjustified excuses to avoid complying with the provisions of the law regarding the steps for pre-action disclosure, he shall compensate damages to the petitioner along with the claim.
Once the preparatory act has been carried out, the petitioner must file the claim within the next 20 days, otherwise, those pre-action acts become null and void and the file will be defini-tively closed. In this case, the petitioner will have the obligation to indemnify all damages arisen from failing to file the claim.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Disclosure obligations (called in local law “práctica de pruebas”) of the evidence proposed by the parties in their respective state-ments of claim and the response to the claim happens at the
arising from contracts for the sale and purchase of a ship, the court could consider it and grant the arrest; but it must be the understanding that such grounds have base on any one of the listed maritime claims, otherwise the arrest could not be ordered, or if ordered, could be considered a wrongful arrest when the case is heard on the merits.
4.4 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 options are available?
Options available are the same as those explained above; however, the action taken by the claimant should be an action in rem arisen from any one of the listed maritime claims, otherwise the court could dismiss the application to arrest. Liens over the cargo can be effected, but not on the exact same basis as for a vessel.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
The securities are not expressly named, thus the forms of secu-rities acceptable by the Cuban courts are a P&I letter of under-taking, bank guarantee, cash deposit before Lloyd’s Agency or any other the court considers claimable. In fact, all such mentioned forms of securities have been accepted for several years.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Yes, it is. In accordance with the procedural law, the court should order a counter security from the claimant in response to the consequential damages and loss of profits that may arise from conservatory arrest. The quantum for the counter secu-rity is fixed at the court s discretion, but taking into considera-tion the amount of the debt.
The law does not mention what form of counter secu-rity should be provided by the claimant. The practice most commonly used is where the funds for the counter security in the amount ordered by the court is lodged through a Cuban bank that provides certification of such deposit. Other forms of claimable counter security could be accepted by the court.
4.7 How are maritime assets preserved during a period of arrest?
All assets on board at the time the arrest takes place must be preserved during the whole period of time the arrest is in force.
Articles 817 and 818 of Law No. 7 establish that the ordering court, as well as notifying the order to the parties concerned (claimant and defendant) and once coordinated with the Ministry of Transport, appoints the entity to provide the protec-tion services. The appointed entity must proceed to determine the place where the aforementioned protection services will be performed and adopt any appropriate protection measures that the court will be duly informed about.
Such designated entity, in addition to the general obliga-tions, will be responsible for: taking care of the conservation of the arrested vessel; ensuring, where appropriate, the repatria-tion of officers and crew members but guaranteeing a minimum manning on board; handling, with the Harbour Master, the
can vary depending on the particular circumstances of each case, such as disclosure of evidences, exemptions filed by the parties, counterclaim if any and how busy the acting court is, among others. Havana Court decisions are more delayed compared with other provincial courts. Enforcement proceedings are faster.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Maritime arbitration, like other commercial disputes, is solely handled by the Cuban Court of International Commercial Arbitration of the Chamber of Commerce of the Republic of Cuba. Decree Law No. 250 of 2007, its Rules and the Bylaws govern the Court of Arbitration s activity, organisation and operation.
The Cuban arbitrators comprising the panel of arbitrators are highly specialised in different commercial areas, including the maritime sector.
The procedure is very simple and similar to the international standards applicable to commercial arbitration. Despite this, the approximate timescale of an arbitration process as from when the claim is filed until the award is claimed takes no less than six months, although it can vary depending on the particular circum-stances of each specific case. This delay is mostly because of the arbitrators’ professional agendas.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Like arbitration for maritime disputes, the Cuban Court of Commercial Arbitration handles mediation in accordance with the mediation procedures. Qualified mediators compose the panel.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The principal advantages for each one of the bodies are the following: ■ Usingthenationalcourt:lessexpensiveingeneralterms,
and the judgment is subject to appeal by any one of the parties.
■ Using the arbitral body: arbitrators usually have moreknowledge in maritime law and international trade matters than most provincial court judges; the procedure is more flexible; the Economic Court of the Supreme Court can declare the nullity by petition of any of the parties if any one of the requirements listed in article 825 of the Law No. 7 was not duly complied with.
Mediation like in any other jurisdiction is a very short and less traumatic process because the settlement is reached by mutual consent of the disputing parties.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Pros: 1. In general terms, all legal proceedings before court and
arbitration are handled in an expedite manner within the procedure’s timeframe.
2. Judges, although not highly specialised in maritime law, are familiar with it because the maritime law forms part of the curriculum in all law schools of the country.
3. No resolution either in the judicial and arbitration system is based on corruption acts.
time of the hearing, or after the hearing but only by the court s decision. Besides and without prejudice, the court may accept any request by the parties or decide at its sole discretion to order the disclosure of any evidence before the hearing takes place or during it or later if necessary.
Except for those that must be disclosed in the hearing, the disclosure of evidence must take place no less than five days in advance of the date scheduled for the hearing.
The evidence consists of documents, including electronic or digital ones, expert opinions, judicial recognition, and state-ments of expert witnesses or experts and other means recog-nised and regulated by Law No. 7.
The facts the court considers having admitted by the parties do not need to be proven. No evidence has a pre-set validity.
Additionally, the court is obliged to take all necessary meas-ures conducive to ensuring the protection of confidential infor-mation provided within the process.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Electronic evidence is admissible by Law No. 7; however, there is no specific rule for its discovery and preservation. Therefore, its authenticity rests with each party involved in accepting or refusing it, with the same discovery and preservation treatment as any other physical evidence. The court could determine also if the evidence is admissible or not, and if necessary, take proper actions to verify such authenticity.
In case of an arbitration, the procedure goes in the same direction.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?National courts that deal with maritime claims are the Economic Courtroom of each provincial court. These Courtrooms deal, inter alia, with: legal actions as a result of facts or acts related to transport and maritime traffic; requests for a conservative arrest of ships in accordance with the international conventions to which the Republic of Cuba is a contracting party; petitions on enforcement procedures in relation to recognised credits; actions to claim damages, of a non-contractual nature, caused by third parties arisen on commercial activities; and petitions on enforce-ment of the national arbitration award.
Any controversy to be settled by international commercial arbi-tration by express or implied agreement of the parties, or by provi-sion of law or international agreements, are excluded to be heard by such Courtrooms; however, the Courtroom may provide assis-tance without prejudice at the request of the parties or require-ment of the relevant Arbitration Tribunal.
Disputes involving Cuban flag vessels that have arisen from navigation or maritime traffic, in internal waters or the terri-torial sea, or outside of them, are heard and settled by Havana Provincial Court s Economic Courtroom.
The timescale to settle a dispute through the ordinary process in the first instance could take no less than six months, although it
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.
1. Declaration of Abandonment: There is a matter ruled by Law No. 115 relevant to shipowners, lawyers, insurers and ship operators. This provision solves an old claim of the long laying up time of vessels, better to say “cuasi” abandoned vessels, and addresses measures to safeguard navigation and protect the marine environment.
Articles 18 to 25 (both inclusive) govern that foreign vessels could be declared abandoned in favour of the Cuban State when extraordinary circumstances occur, but they are in the territorial sea or internal waters of the Republic of Cuba, or in any of its port facilities, clearly within the jurisdiction of the Cuban State.
The two circumstances are: (i) owner’s express decision to abandon the vessel in favour of the Cuban State; or (ii) by an Administrative Declaration of the National Maritime Authority.
In the first case, the decision rests with owners only. In the second case, the causes to start such administrative
process are listed in the law. The procedure contemplates to notify the owner or the shipping agency, as well as the Flag State; it also includes the deadlines to apply.
The Ministry of Transport or Home Affairs, as the case may be, can order the provisional shifting of the vessel to a safe place at the owner’s expense when the vessel affects or represents a danger to the safety of navigation, port operations, fishing or other activities related to inland waterways, or represents an imminent or potential pollution risk to the marine environment.
The Administrative Declaration of Abandonment is ordered by a final resolution published in the Official Gazette of the Republic and communicated to the State of Flag of the ship.
2. USA sanctions to Cuba: (i) within the sanctions system imposed to Cuba by USA called “embargo” (“blockade” by the Cuban Government) is the Torricelli Act that, among other prohibitions, rules that ships owned or operated by foreign companies calling at Cuban ports will be banned to call at USA ports for a period of 180 days; (ii) USA sanctions prevent the free money transfer in US$ to or from Cuba. This obviously could affect any security or counter security in case of a ship arrest or average bond, therefore any payment even reflected in US$ must be made in a different currency; and (iii) USA sanc-tions affect that many insurance companies refuse to cover risks involving Cuba and Cuban seafarers resident in Cuba.
Cons:1. Perhaps the lack of the advanced means, technology and
logistics to do the job more efficiently. For example, in the current circumstances of the pandemic, implementing virtual hearings as we have seen in other countries faces many limitations.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
The enforcement of judgments of foreign courts is based on two applicable scenarios. The first is according to those treaties Cuba grants the necessary effectiveness for such recognition and execu-tion; and the second applies in case no treaty is in force.
In the first case, any multilateral or bilateral treaty that may apply will rule it.
In the second case, article 483 lists the six obligatory require-ments. The lack of one of these requirements could prevent the foreign judgment from being enforced in Cuba. As per article 484, the petition to enforce a foreign judgment will be made to the Supreme Court, except if, according to an international agree-ment, it corresponds to another court.
The Supreme Court shall give 10 running days to the party affected by the pretended enforcement to hear its allegations. This time limit shall count as from the day the notice for the hearing is served to its domicile. Once the hearing has been effected, or term for it has elapsed, the court should accept or refuse the enforcement without option to appeal. If the court accepts the enforcement, it will then order the court of the jurisdiction where the affected party is domiciled to proceed with the enforcement.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
In 1975, Cuba joined the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958. Therefore, foreign judgments and arbitration awards can be recognised and enforced in Cuba, but only when the petition for the recognition and enforcement of awards is granted in the terri-tory of another contracting State and related to disputes arising from legal relationships, whether contractual or not, as consid-ered commercial by Cuban law.
Under article 824 of Law No. 7, prior to enforcing the foreign award, the Economic Courtroom of the Supreme Court has to grant the recognition of the award for which enforcement is pretended.
63Q.E.D INTERLEX CONSULTING SRL
Shipping Law 2021
Luis Lucas Rodríguez PérezEducation: Law Degree, University of Havana. Master’s Degree (LL.M.), INESEM in Maritime Law & Business, (INESEM), Mr. Rodríguez’s studies focused on Maritime, Port, Commercial Law and International 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 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. Position: Founding and Senior Partner of the firm Q.E.D INTERLEX CONSULTING SRL and Of Counsel to the international law firm Russin Vecchi & Heredia Bonetti (https://www.rvhb.com). Member of the Instituto Iberoamericano de Derecho Marítimo – IIDM (Ibeoramerican Institute of Maritime Law).Areas of Practice: Maritime law (including, and not limited to, charterparties, admiralty, ship finance, marine insurance, marine salvage, marine construction and dredging, and port terminals) and foreign investment. He also deals with international commerce, litigation and ADR. Professional Expertise: Practising Lawyer since 1983. Professor and speaker on maritime law at various institutions. Mr. Rodríguez has attended several national and international seminars as a delegate, including those of the International Salvage Union. Languages: Spanish and English.
The firm is essentially a consulting firm that was incorporated in the 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).The team comprises five lawyers, plus another two externally associ-ated lawyers and four associated experts in different areas of the marine industry. One of the partners is based in the USA but no longer involved in the day-to-day activity of the firm. We continue to uphold organisational and quality standards and are strengthening our relationships and cooperation with other law firms and service providers, both local and international.
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.
Damage of 1971 and its Protocol of 1992 (the Fund Convention), providing for the compensation for damage occurring after a pollution incident.
■ TheInternationalConventiononthePreventionofMarinePollution by Dumping of Wastes and Other Matters of 1972 (Law No. 38/1990).
■ The International Convention on the Protection of theMarine Environment and the Coastal Region of the Mediterranean and its Protocols and amendments of 1995 (the Barcelona Convention 1976).
■ TheUnitedNationsConvention on the Law of the Sea1982 (Ratification) Law of 1988 (Law No. 203/88).
■ The Basel Convention on the Control TransboundaryMovement of Hazardous Wastes and their Disposal of 1989 (Law No. 29(III)/1992), as amended.
■ TheInternationalConventiononCivilLiabilityforBunkerOil Pollution Damage of 2001 (the Bunker Convention), providing for the recovery of expenses after a pollution incident from oil used as a ship’s bunkers.
■ TheInternationalConventionontheControlofHarmfulAnti-Fouling Systems on Ships of 2001 (the Anti-Fouling Convention).
■ The Convention on Access to Information, PublicParticipation in Decision-Making and Access to Justice in Environmental Matters of 1998 (the Aarhus Convention) (Law No. 33(III)/2003).
■ The International Convention on the Control andManagement of Ships’ Ballast Water and Sediments of 2004 (the Ballast Water Management Convention).
■ TheInternationalConventiononLiabilityandCompensationfor Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea of 1996 (the HNS Convention) and for Matters Connected Therewith Law of 2004 (Law No. 21(III)/2004) (not yet in force).
II. European regulations and directives:■ Regulation (EC) No. 782/2003 on the prohibition of
organotin compounds on ships, to prevent the poisoning of marine life that can occur when such compounds are used as anti-fouling systems on ships.
■ Regulation(EU)No.530/2012ontheacceleratedphasing-inof double-hull or equivalent design requirements for single-hull oil tankers, to prevent pollution in marine accidents.
and verification of carbon dioxide emissions from maritime transport.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe relevant laws/conventions in force in relation to collision are the below: ■ Cyprushasadopted,bywayofsuccession,theConvention
for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910 (the Collision Convention 1910) (extended to Cyprus on 1 February 1913);
■ COLREGs (Ratification) and for Matters ConnectedTherewith Law of 1980 (Law No. 18/80) are also applicable in Cyprus (as seen in The Ship BAYONNE (1994) 1 C.L.R. 54 and in The Ship NATALEMAR, (1999) 1B C.L.R. 1079);
■ The International Convention for the Unification ofCertain Rules Concerning Civil Jurisdiction in Matters of Collision 1952 (Ratification) Law of 1993 (Law No. 31(III)/93); and
■ The International Convention for the Unification ofCertain Rules Relating to Penal Jurisdiction in Matters of Collision or other Incidents of Navigation 1952 (Ratification) Law of 1993 (Law No. 32(III)/93).
The Cypriot courts can hear any claim for damage done to or caused by a ship in an action in rem. The presence of the res within the territorial jurisdiction of the Cypriot Courts is necessary to enable the service of the writ of summons.
Proceedings can be initiated against the owners of the vessel, subject to their residence or place of business being in Cyprus. If the owners are not Cyprus residents, in personam proceedings are contin-gent on the rules of court relating to services out of jurisdiction.
(ii) PollutionI. International conventions:■ TheInternationalConventiononthePreventionofPollution
from Ships of 1973 as modified by the Protocol of 1978 (the MARPOL 73/78 Convention) and its amendments.
■ The International Convention on Civil Liability forOilPollution Damage of 1969 and its Protocols of 1976 and 1992 (the CLC Convention) and Amendments of 2000, providing for the recovery of expenses after a pollution incident from oil when carried as cargo.
■ TheInternationalConventionontheEstablishmentofanInternational Fund for Compensation for Oil Pollution
■ TheWrecksLaw,Chapter298,regulateswrecksinCyprus.More specifically, it is a private maritime law that regu-lates inquiries into wrecks and provides for the custody and disposal of wrecked property. Under Cyprus law, the Permanent Secretary of the Shipping Deputy Ministry to the President is the Receiver of a wreck.
(v) Limitation of liability■ TheConventiononLimitationofLiability forMaritime
Claims (LLMC) of 1976 and of its Protocol of 1996 Amending the Said Convention and for Matters Connected Therewith Law of 2005 (Law No. 20(III)/2005).
■ The Merchant Shipping (Shipowners’ Insurance forMaritime Claims) Law of 2012 (Law No. 14(I)/2012) which implemented the Directive 2009/20/EC of the European Parliament and of the Council of 23 April 2009 on the insurance against maritime claims subject to the limitations of the LLMC.
■ TheLLMCclearlystatesinArticles2and3whichclaimsare not subject to limitation of liability. The owner, char-terer, manager, operator and a salvor of a seagoing ship is eligible to limit their liability. In addition, an insurer is subject to the limitation of liability for maritime claims.
■ TheLLMC96liabilitylimitswereincreasedasfrom8June2015 under the tacit acceptance procedure provided by Article 8 of the 1996 LLMC Protocol. The new increased liability limits have been adopted by virtue of Resolution LEG.5 (99) of the IMO Legal Committee dated 19 April 2012.
According to the Resolution LEG.5 (99) of the IMO Legal Committee dated 19 April 2012, Article 3 of the 1996 LLMC Protocol is amended as follows: a) in respect of claims for loss of life or personal injury, the
Units of Account”;■ “800 Units of Account” shall read “1,208 Units of
Account”;■ “600 Units of Account” shall read “906 Units of
Account”; and■ “400 Units of Account” shall read “604 Units of
Account”.b) in respect of any other claims, the reference to:
■ “1millionUnitsofAccount”shallread“1.51millionUnits of Account”;
■ “400 Units of Account” shall read “604 Units ofAccount”;
■ “300 Units of Account” shall read “453 Units ofAccount”; and
■ “200 Units of Account” shall read “302 Units ofAccount”.
The Merchant Shipping (Liability of Carriers of Passengers by Sea in the Event of Accidents) Law of 2014 (Law No. 5(I)/2014) also applies in Cyprus, and applies to carriage of passengers falling within the scope of the EU Passenger Liability Regulation (EC) No. 392/2009, which incorporates certain provisions of the 1974 Athens Convention relating to the Carriage of Passengers and their Luggage by Sea. Cyprus is not a contracting member of the Athens Convention, but through Law No. 5(I)/2014, which transposed the EU Passenger Liability Regulation into its national law, has incorporated certain provisions of the Athens Convention as acquis communautaire and not at the level of inter-national convention.
(vi) The limitation fundThe Protocol of 1992 Amending the International Convention for the Establishment of an International Fund for Compensation
■ TheWasteDirective1975/442/EEC.■ Directive 2000/60/EC establishing a framework for
Community action in the field of water policy.■ Directive 2004/35/CE on environmental liability with
regard to the prevention and remedying of environmental damage.
■ Transposition–ImplementationofCommissionDirective(EU) 2015/2087 of 18 November 2015 amending Annex II to Directive 2000/59/EC of the European Parliament and the Council on port reception facilities for ship-gener-ated waste and cargo residues.
■ Directive (EU) 2016/802, relating to a reduction in thesulphur content of certain liquid fuels.
III. Bilateral agreements:■ The Agreement Between Cyprus, Israel and Egypt for
Cooperation in Combating Major Marine Pollution Incidents in the Mediterranean Law of 2001 (Law No. 21(III)/2001).
■ The Agreement on Merchant Shipping with theGovernment of the Arab Republic of Egypt signed on 26 November 2006.
■ TheMemorandumofUnderstandingBetweentheRepublicof Cyprus and the Arab Republic of Egypt in the Field of Environmental Protection signed on 26 November 2006.
IV. Domestic law:■ TheFisheriesLaw–Chapter135anditsRegulations.■ TheControlofWaterPollutionandSoilLawof2002(Law
No. 106(I)/2002).■ The Solid andDangerousWasteLawof 2002, (LawNo.
(iii) Salvage/general average■ TheConvention for theUnificationofCertainRules of
Law Relating to Assistance and Salvage at Sea and Protocol of Signature, Brussels, 23 September 1910 (extended to Cyprus on 1 February 1913) is applicable in Cyprus.
The salvage contract is mostly enforced by the Cyprus Courts and in the assessment of a salvage operation, the Courts in Cyprus apply the common law principles on salvage (as upheld in The Ship “Yamama“ and her Cargo and Freight (1985) 1 C.L.R.328).
In the absence of a salvage contract, or if the contract is silent in relation to the salvage operation, Part III of the Wrecks Law is applied.
According to Article 4 of the Carriage of Goods by Sea Law, Chapter 263, the Hague Rules are applicable to charter parties if they are expressly incorporated and if there is an express state-ment in the bill of lading (this was seen in The Ship Dama and another v TH. D. Georghiades S.A. (1980) 1 CLR 386, Kounnas and Sons Ltd v Zim (1966) 1 CLR 181 and in Said Hamade v Anthimos Demetriou Ltd a.o. (1994) 1 J.S.C. 443). Subject to this, the Hague Rules are applicable only for shipments from a port of Cyprus abroad or to another port of Cyprus (Article 2 of Cap. 263). However, as upheld in Company Loizos Louca & Sons Ltd v The Company Batsi Shipping Ltd and another (1992) 1B CLR 979, if a general paramount clause is incorporated in the bill of lading, the Hague Rules apply notwithstanding Article 2 of the Carriage of Goods by Sea Law, Chapter 263.
The UK Bills of Lading Act of 1855 applies in Cyprus by means of Articles 19 and 29 of the Courts of Justice Law of 1960 (Law No. 14/1960), as seen in The Ship LIPA (2001) 1B CLR 1220. In the absence of an express choice of law in a bill of lading or charter party, Article 5 of the Rome I Convention Regulation (EC) No. 593/2008 applies.
Despite the fact that Cyprus has not ratified the Hague-Visby Rules, it has adopted most of the Rules’ provisions and incorpo-rated these into domestic law.
Cyprus has not ratified the Hamburg Rules and the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2009 (the Rotterdam Rules).
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The Courts of Justice Law (Law No. 14/1960) incorporates the English Bills of Lading Act of 1855 (Articles 19 and 29) as it was decided in Stavros Georgiou & Son (Scrap Metals) Ltd v The Ship LIPA (2001) 1B CLR 1220 and it regulates the transfer of rights under contract of carriage.
Any party to a contract of carriage can sue for damages against the carrier, as well as consignees of goods named in a bill of lading and endorsees of a bill of lading, having acquired full proprietary rights by reason of consignment or endorsement.
The ownership of the cargo will depend on the way the parties deal with each other (as seen in Andreas Orthodoxou Limited v Dimitriou Tilliri Limited (2007) 1B CLR 1247), and such dealings may or may not include the transfer of the bill of lading.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
If the Hague Rules apply, then the shipper is under an obligation to properly declare cargo. Therefore, if the shipper fails to make an accurate declaration of cargo, then he will be prima facie liable to the carrier for damage to the ship on the basis of strict liability.
Furthermore, if the shipper fails to declare cargo or misde-clares cargo which is hazardous, they may also be liable for damage caused to other cargo.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The Limitation of Actionable Rights Law No. 66(I)/2012 (the Limitation Law) and Tort Law (in relation to negligence) regu-late the time limits. In addition, the Limitation Law, entered into force on 1 January 2016, prescribes all legal time bars in relation to all legal actions, including the maritime cargo claims.
for Oil Pollution Damage of 1971 and Matters Connected Therewith (Amendment) Law of 1997 (Law No. 15(III)/97), which is applicable in Cyprus and sets out the maximum amount of compensation which is 300,740,000 special drawing rights.
The Regulation (EC) No. 392/2009 of the European Parliament and of the Council of 23 April 2009 on the liability of carriers of passengers by sea, requires a minimum of 250,000 special drawing rights as a compulsory insurance for ships carrying more than 12 passengers. Ships must obtain a certif-icate from their flag state confirming that insurance or other financial security is in force.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The authorities that are responsible for the investigation of maritime casualties in Cyprus are the following: ■ theMarineAccidents InvestigationCommittee (MAIC);
and■ theShippingDeputyMinistry(SDM).
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The MAIC (as defined in question 1.2 above) was established on 19 December 2013 by virtue of the Marine Accidents and Incidents Investigation Law of 2012 (Law No. 94 (I)/2012).
The MAIC is not an enforcement or prosecuting body. The legislative framework under which the MAIC operates, is provided in the aforesaid Law No. 94(I)/2012, which transposed the EU Directive 2009/18/EC into Cyprus’ legislation.
MAIC is an independent Committee responsible for the investigation of all types of marine accidents (casualties and inci-dents) and it is assisted by the Marine Accidents and Incidents Investigation Service. Marine accident notifications should be addressed to the MAIC.
The objective of the MAIC when investigating accidents, is to minimise their future occurrence, by inspecting and estab-lishing their causes and circumstances. Therefore, its purpose is not to apportion liability. Nevertheless, it will not refrain from issuing a comprehensive report on the causal factors of acci-dents, as blame or liability can be inferred from them.
The Shipping Deputy Ministry’s Circular 17/2014, the Shipping Deputy Ministry of Cyprus continues to be responsible for investi-gating marine accidents for certain types of ships, i.e.: (a) ships not propelled by mechanical means, wooden ships of primitive build, pleasure yachts/crafts not engaged in trade, unless they are or will be crewed and carry more than 12 passengers for commercial purposes; or (b) fishing vessels with a length of less than 15 metres according to the Shipping Deputy Ministry’s Circular 17/2014.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
■ The International Convention for the Unification ofCertain Rules of Law Relating to Bills of Lading and Protocol of Signature, Brussels 25 August 1924 (extended to Cyprus on 2 June 1931) by way of succession.
■ CarriageofGoodsbySeaLaw,Chapter263, theHagueRules are applicable in Cyprus.
■ inthecaseoflossofordamagetoluggage,fromthedateof disembarkation or from the date when disembarkation should have taken place, whichever is later.
The law of the Court seized of the case shall govern the grounds for suspension and interruption of limitation periods, but in no case shall an action under this Convention be brought after the expira-tion of any one of the following periods of time: a) a period of five years beginning with the date of disembarkation of the passenger or from the date when disembarkation should have taken place, whichever is later; or (if earlier), b) a period of three years begin-ning with the date when the claimant knew or ought reasonably to have known of the injury, loss or damage caused by the incident.
Notwithstanding the above, the period of limitation may be extended by a declaration of the carrier or by agreement of the parties after the cause of action has arisen. The declaration or agreement shall be in writing.
4 Arrest and Security
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?
Under Cyprus law, the Supreme Court of Cyprus has exclusive first instance jurisdiction to hear any admiralty actions. The provisions of Law No. 14/60 specifically states that the relevant law is the English law applicable at the time of Cyprus’ decla-ration of independence. Therefore, the applicable law is the English Administration of Justice Act 1956 (English Act 1956) which must be read in conjunction with the Cyprus Admiralty Jurisdiction Order 1893 which regulates the procedure before the Court. In order to be able to apply for a maritime lien, it is a prerequisite that the action is in rem.
A party in an Admiralty action (the Applicant) filed with the Cyprus courts has various options available to it against the other party to such action (the Respondent). The best option avail-able is of course arresting a vessel. If the Applicant is successful in arresting the vessel, the Respondents’ vessel owners, will have to file a guarantee for the claim if they want to release the vessel. In such a way, the Applicants will have security for their claim which they can then enforce, in case they are successful with their claim. If the Respondents are not willing to file such guarantees as the court requests, the Applicants will still have the vessel as security. If the Applicants then prove successful with their claim, they can then apply to sell the vessel to satisfy their claim.
There are a number of other interim measures that an Applicant could apply for. One of these is a freezing order (otherwise called a Mareva injunction) to freeze the bank accounts and/or assets in aid of the claim. This is considered an order based on the rules that can be found in section 32 of Law No. 14/1960 and the principle of a Mareva injunction is based on an English decision in the case of Mareva Compania Naviera S.A. v International Bulkcarriers S.A. (1980) 1 All E.R. 213 and the subse-quent case law in Cyprus. There are a number of other orders that an Applicant could apply for such as a Chabra injunction and a “Norwich Pharmacal” order amongst others.
In terms of applying for an interim order in Cyprus, Law No. 14/60 sets down three criteria which all need to be satisfied in order for any Applicants to be successful in their application for an interim order. These three criteria are the following: (a) the Applicants need to prove that there is a serious matter
being adjudicated in the proceedings;
In Cyprus the following time bars apply in general:(a) Three years for actionable rights on negligence.(b) Six years for actionable rights pertaining to a contract,
including loan agreements.In addition to the above, under Cyprus law the parties to an
agreement have the right to adopt time bars.Cyprus has not ratified Hague-Visby Rules, Hamburg Rules
or the Athens Convention 1974 which contain certain limi-tation provisions, but Cyprus has ratified the Civil Liability Convention of 1992.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The Provisions of the Regulation (EC) No. 392/2009 of the European Parliament and of the Council of 23 April 2009 on the liability of carriers of passengers by sea in the event of acci-dents are fully applicable in Cyprus as an EU Member State.
3.2 What are the international conventions and national laws relevant to passenger claims?
Cyprus is not a contracting member of the Athens Convention; however, Law No. 5(I)/2014 has implemented the EU Passenger Liability Regulation (EC) No. 392/2009, which incorporates certain provisions of the Athens Convention into its national law. Furthermore, the Shipwrecked Passengers Law, Chapter 297, and the LLMC Convention 1976, as amended by 1996 LLMC Protocol and the Regulation (EU) No. 1177/2010 concerning the rights of passengers when travelling by sea and inland waterway are also applicable in Cyprus.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The time limits in Cyprus in relation to passenger claims operate as follows: ■ The limitationperiod is threeyears fromthe timewhen
the plaintiff suffered for bringing a claim in negligence, including claims for personal injury or other passenger claims, from the time when the plaintiff sustained damage or, where the negligence caused fresh damage continuing from day to day, from the time the damage ceases to occur. If the passenger claim is based on breach of contract, the limitation period is six years from the date the cause of action has accrued.
■ In addition, Regulation (EC) No. 392/2009 providesthat any action for damages arising out of the death of or personal injury to a passenger, or for the loss of or damage to luggage, shall be time-barred after a period of two years.
The limitation period shall be calculated as follows: ■ inthecaseofpersonalinjury,fromthedateofdisembarka-
tion of the passenger; ■ inthecaseofdeathwhichhasoccurredduringcarriage,
from the date when the passenger should have disem-barked, and in the case of personal injury occurring during carriage and resulting in the death of the passenger after disembarkation, from the date of death, provided that this period shall not exceed three years from the date of disem-barkation; and
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
The type of security is usually in the form of a Cyprus Bank Guarantee or cash.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
The claimant is required to post a security bond by way of a Cyprus Bank Guarantee, in respect of damages that the defendant vessel might suffer if the arrest proves to be wrongful. The amount of the security to be provided is at the discretion of the Court, which will take into account all circumstances of the case. Usually, 10% to 30% of the claimed amount will need to be put up, although in exceptional cases, we have seen the court order as much as 50% of the claimed amount.
4.7 How are maritime assets preserved during a period of arrest?
The Admiralty Marshall and/or the Deputy Admiralty Marshal is responsible for the safe custody, supervision and care of the arrested property. Therefore, the Admiralty Marshal acts as the custodian/bailee of the arrested property, having the duty to ensure that the property and crew of the vessel (when the arrested property is the vessel) are safe and in good condition or health at all times, and to comply with the relevant orders issued by the Court in the course of the legal proceedings from which the arrest order originates. The Admiralty Marshal procures the safe custody of the property with the less possible cost, without compromising the safety of the property and crew.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The test is whether the arresting party is guilty of mala fides or crassa negligentia. The Cyprus courts implement the English principle that was decided in the case The “Evangelismos” (1858) 12 Moo. P.C. 352 which stated the following: “Undoubtedly there may be cases in which there is either
mala fides or that crassa negligentia which implies malice, which would justify a Court of Admiralty giving damages, as in an action brought at common law damages may be obtained. … the real question in this case … comes to this: is there or is there not reason to say that the action was so unwarrantably brought with so little colour, or so little foundation, that it rather implies malice on the part of the Plaintiff, or that gross negligence which is equivalent to it?”
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
One of the injunctions that Cyprus courts are permitted to issue under the provisions of Article 32 of Law No. 14/60 mentioned
(b) the Applicants need to prove that they have a good case and good chances of them being entitled to the claims being made by them; and
(c) the Applicants need to prove that if the interim orders are not issued, it will be difficult or impossible for justice to be served at a later stage.
It must be noted that any Applicant to such actions would have to be able to provide the Courts with the necessary guaran-tees that the Courts may order. In case this is not possible, the Applicant will not be able to apply to have the arrest order drawn up by the Courts.
In terms of what is considered a maritime lien, Cyprus follows the English case law on this matter and specifically, the defini-tion of a maritime lien that was provided in the case The “Bold Buccleugh” (1851) 7 Moo. P.C. 267. In The “Bold Buccleugh” four cate-gories of claim were listed as giving rise to a maritime lien: (i) damage done by a ship; (ii) salvage; (iii) seamen’s wages; and(iv) bottomry and respondentia.
Further to the above categories, a maritime lien was also granted by statute for master’s wages and disbursements, the definition of which was provided in the case The “Orienta” [1895] P. 49 (C.A.) which states that “the real meaning of the word “disbursements” in Admiralty practice is disbursements by the master, which he makes himself liable for in respect of necessary things for the ship, for the purposes of navigation, which he, as master of the ship, is there to carry out – necessary in the sense that they must be had immediately – and when the owner is not there, able to give the order, and he is not so near to the master that the master can ask for his authority, and the master is therefore obliged, necessarily, to render himself liable in order to carry out his duty as master”.
As a side note, it is worth mentioning that the Cyprus courts, as they apply the English Act 1956, have the authority to arrest a sister ship which would fall within the provisions of Section 3(4) of the English Act 1956.
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?
Yes, it is possible.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
No, this is not possible unless the dispute gives rise to a claim relating to the possession or ownership of the ship or the owner-ship of a share therein (under Law No. 14/1960).
4.4 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 options are available?
A party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo who is seeking security, can (if they possess a maritime or statutory lien) arrest the vessel, including the cargo being on board the vessel. A Mareva injunction, which is distinguished from a warrant of arrest against the vessel, is also an option which has been recog-nised by Cypriot case law.
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?As already mentioned, the Supreme Court of Cyprus is the court that deals with the Admiralty cases, both in first instance and in its appellate jurisdiction, for both in rem and in personam claims (section 19 of Law No. 14/60). The District Courts can also hear any cases that have been referred to it by the Supreme Court, as per the provisions of section 22B of Law No. 14/60.
The action is commenced with the filing of a writ of summons, which is similar to a general endorsed claim in the civil courts, and once the action is served, the procedures start running in terms of filing the statement of claim and defence etc. The 1893 Rules set down the relevant procedures that need to be followed together with the timeframes.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There are no specialist arbitral bodies that deal only with mari-time disputes in Cyprus. The Cyprus Arbitration and Mediation Centre (CAMC) is a centre which is operated by the Cyprus Bar Association and which allows for the resolution of matters via arbitration, if the parties thereby agree. The said centre has its own Rules, as with most arbitration centres. This centre, however, is in its infancy and it is unknown whether it will be put to use to deal with maritime claims.
A second arbitration centre has been in the works for a few years now which has stated that its focus will be maritime issues but it has not been set up as of yet.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Despite the fact that alternative dispute resolution has been promoted in Cyprus, including with the passing of the Law Providing for Certain Aspects of Mediation in Civil Matters (Law No. 159(I)/2012), the use of it is not yet widespread and parties usually prefer to follow the traditional route of litigation. Mediation law and practice is not commonly used for these types of claims. This may be because of the nature of mediation in itself as a dispute resolution mechanism.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Litigation is still the most common of dispute resolution mech-anisms used in Cyprus. The rights of parties are governed by both statutory and common law themes. The use of precedents and common law can be seen as an advantage by many as it gives the parties certain safeguards that the courts are unlikely to make any decisions that are different to any previous cases. Another great advantage of the use of the Cyprus legal system is the cost effectiveness of it as the legal fees are set down by the Cyprus Bar Association and are usually capped.
As the Supreme Court of Cyprus stated in the Avila Management case (in question 5.1), “common law, malleable and flexible, helped always by the principles of equity, never stopped evolving, developing and adapting to the demands of the
is the “Anton Piller” order. An “Anton Piller” order can be applied for when the Applicant can show to the Courts that there is a danger that evidence will be destroyed unless an order is issued to preserve it. The “Norwich Pharmacal” order is another order that can be applied and which is used for disclo-sure purposes. In a decision issued in 2012 by the Supreme Court of Cyprus in the case Avila Management Services Limited and others v. Frantisek Stepanek and others (2012) 1 CLR 1403 (Avila Management), the principles followed for the issuance of “Norwich Pharmacal“ orders were set down. In that instance, the court stated that the conditions for the examination and issuance of “Norwich Pharmacal” orders were summarised in the case Mitsui & Co Ltd v. Nexen Petroleum UK Ltd [2005] EWHC 625 where the following was said: “(i) a wrong must have been carried out, or arguably carried out, by an ultimate wrongdoer; (ii) there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and (iii) the person against whom the order is sought must: (a) be mixed up in so as to have facilitated the wrongdoing; and (b) be able or likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued”.
Apart from the disclosure that can be ordered based on the above injunctions, there are no other provisions that may allow a party to obtain pre-action disclosure and disclosure can only be undertaken during the process of the litigation proceedings.
Furthermore, there is the option of Article 30 of the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963 to 2005 (Law No. 45/1963 as amended), which is referred to in question 4.3, seen in Compania Portuguesa De Transportes Maritime of Lisbon v Sponsalia Shipping Company Ltd (1987) 1 CLR 11, Pastella Marine Co Ltd v National Iranian Tanker Co Ltd (1987) 1 CLR 583 and in Constantinos Athanasiou Gerasakis v Waft Shipping Company Ltd (1989) 1E CLR 10.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The Admiralty Rules of 1893, despite the fact that they have been applicable for over 120 years, were very forward thinking in their provisions. Sections 91 to 98 (both inclusive) contain the necessary provisions for “Interrogatories” as the specific section is called. Section 91 allows a party to request answers on any material matters and in such a case, to apply to the Court for leave.
In relation to disclosure, sections 93 and 98 allow for disclo-sure in maritime disputes. Section 93 provides that “the Court of Judge may, on the application of any party to an action and without notice to any other party, order that any other party shall make discovery, by affidavit, of all documents which are in his possession or power relating to any matter in question therein”. Section 98 provides that “the Court or a Judge may at any time during the pendency of an action order the discovery upon oath and production by any party of any documents in his custody or possession or under his control relating to any matter in dispute in the action and may deal with such documents when produced in such manner as shall seem just”.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Electronic discovery is not something that can be done in Cyprus. As far as the preserving of evidence goes, please see the above under question 5.1.
the instance of not being permanent residents of the Republic of Cyprus will have appointed an authorised representative in the Republic of Cyprus; or
(2) the total (100%) of the shares of the ship are owned by one or more corporations, which have been established and operate:■ inaccordancewiththelawsoftheRepublicofCyprus
and who have their registered office in the Republic; ■ in accordance with the laws of any other Member
State (EU/EEA) and have their registered office, central administration or principal place of business within the European Economic Area and which will have either appointed an authorised representative in Cyprus, or ensured that the management of the ship is entrusted in full to a Cypriot or a Community ship management company, having its place of business in Cyprus; or
■ outside Cyprus or outside any other Member State(EU/EEA) but controlled by Cypriot citizens or citi-zens of Member States and have either appointed an authorised representative in Cyprus or ensured that the management of the ship is entrusted in full to a Cypriot or a Community ship management company, having its place of business in Cyprus.
The corporation is deemed to be controlled by Cypriots or citizens of any other Member States, when more than 50% of its shares are owned by Cypriots or citizens of any other Member States, or when the majority of the Directors of the corporation are Cypriot citizens or citizens of any other Member State.
An authorised representative may be a Cypriot citizen or a citizen of any other Member State, who is resident in Cyprus, or a partnership/corporation/branch established in accordance with the laws of Cyprus, which has its place of business in the Republic of Cyprus.
The common practice of those wishing to register their ships under the Cyprus flag, is to incorporate a company in Cyprus.
In addition to the above, Cyprus is a signatory to all inter-national maritime conventions on safety, security, pollution prevention, maritime labour and health and safety, giving full and complete effect to their provisions. Furthermore, there are bilateral agreements with more than 25 countries, through which Cyprus’ registered vessels receive either national or favoured national treatment in various ports.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
The recognition and enforcement of foreign judgments are enforced based on the below conventions/principles/ regulations:
I. EU judgments:■ EURegulationsNo.44/2001andNo.1215/2012[Brussels
I Regulation (recast)].■ EURegulationNo.805/2004.■ EU Regulation No. 861/2007 (European Small Claims
Procedure). Following the accession of The Republic of Cyprus to the
European Union in 2004, the judgments from the Courts of EU Member States (also including Switzerland, Norway and
economic and social development of English society. Through decisions of eminent jurists, the background that provided the arsenal or the shield in dealing with the rapidly evolving situa-tions, local and global, was always formed, slowly, carefully and steadily. Norwich Pharmacal decrees fall within this frame-work of law, affecting all countries that apply the philosophy of Anglo-Saxon law”.
This excerpt best shows how the Cyprus legal system has the capability to adapt to ever changing circumstances and situations.
Arbitration and other ADR bodies, as already mentioned above, are not yet developed in Cyprus. However, arbitration in particular has many advantages as a dispute resolution mech-anism as it offers the parties great flexibility on the procedure chosen, the appointment of an arbitrator, while they may reach an agreement on any other procedural issue such as the language, place and time of the procedure. Depending on the complexity of each case, ADR in Cyprus may be considered a cost-effective option, while it is less time-consuming than court proceedings.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
As an island, the history of the sea and shipping in Cyprus, traces back 1000 years. Interestingly, as of today, the modern history of maritime and the shipping sector in Cyprus is thriving. The country constitutes the largest ship management centre in Europe, whilst it is listed among the top five worldwide. The Cypriot Ship Registry is classified as the 11th largest in the world, and the third largest in Europe.
The shipping industry is considered to be one of the top priorities of the Cypriot government. Cyprus’ commitment and support to the shipping industry, has been demonstrated by the creation of the Shipping Deputy Ministry. The Shipping Deputy Ministry was established on 1 March 2018, under Law 123(I)/2017.
Undoubtedly, the Cyprus Tonnage Tax Scheme (TTS) is considered to be one of the greatest advantages of the Cyprus shipping industry. The European Commission agreed on 31 December 2019 to prolong the TTS until 31 December 2029.
Notably, the Shipping Deputy Ministry has recently intro-duced new provisions of the tonnage tax system which relate to environmental incentives, there is a reduction of tonnage tax up to 30% for owners of Cyprus ships that use mechanisms for the environmental preservation of the marine environment and the reduction of the effects of climate change.
On top of the tax advantages, there are further advantages such as the following:■ easy registration procedures, relatively low costs of
New York and Brussels;■ nocrew/officernationalityrestrictions;■ morethan25MerchantShippingBilateralAgreements;■ fullprotectionforfinanciersandmortgagees;and■ ShippingDeputyMinistryservices,whichareefficientand
of high quality, providing full time support to the Cyprus registered vessels.
It is worth mentioning that Cyprus offers an open registry. Ship owners who are not Cypriot Citizens or Citizens from a Member State of the EU, can also register their fleet in Cyprus, subject to compliance with the requirements of ownership. The ownership requirements are the below:
A ship may only be registered in the Register of Cyprus Ships if:(1) more than 50% of the shares of the ship are owned:
company, in aid of the arbitration proceedings. As the New York Convention is applicable, the courts will not usually get involved in the actual case unless it is against public policy in the country of enforcement.
In relation to the enforceability of a foreign arbitration award in Cyprus, the case law on the matter refers mostly to proce-dural issues that arose and may have affected the registration. Specifically, the decisions that have been issued in Cyprus on this issue mostly relate to procedural issues that the respondents claim for non enforcement.
In a first instance decision of a judge who is now a Supreme Court judge, the judge refers to a book called “Guide to the Interpretation of the 1958 New York Convention: A Handbook for Judges (May 2012 Edition)” which expressly states the following: “The purpose of the New York Convention is to promote
international commerce and the settlement of inter-national disputes through arbitration. It aims at facil-itating the recognition and enforcement of foreign arbi-tral awards and the enforcement of arbitration agreements. Consequently, courts should adopt a pro-enforcement approach when interpreting the Convention.”
“A court seized with an application to enforce an award under the Convention has no authority to review the deci-sion of the arbitral tribunal on the merits and replace it by its own decision, even if it believes that the arbitrators erred in fact or law. Enforcement is not an appeal of the arbitral decision.”
It is important that the Applicants ensure they have an original copy of the agreement/deed which shows that they agreed to go to arbitration as that has been the grounds for objection in certain cases. The clients need to also make sure that they have the orig-inal arbitration decision in their possession as this was another of the grounds of objection that came up in the case law.
Under Article IV of the New York Convention, “to obtain the recognition and enforcement mentioned, the party applying for recognition and enforcement shall, at the time of the application, supply: (a) the duly authenticated original award or a duly certified copy thereof; and (b) the original agreement referred to in Article II or a duly certified copy thereof”. Once the Applicant can prove that he has these two documents, the burden of proof then shifts to the Respondent to prove any of the defences to enforcement that can be found in Article V. The courts will check whether the arbitral decision relates to a commercial or related matter and if this is a foreign award. The reasons that a decision may not be enforced in Cyprus can be found in Article V of the New York Convention which specifically mentions the following:
Article V1. Recognition and enforcement of the award may be refused,
at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:(a) the parties to the agreement referred to in Article II
were, under the law applicable to them, under some incapacity, or 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;
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbi-trator or of the arbitration proceedings or was other-wise unable to present his case;
(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided
Iceland), can be recognised and enforced in Cyprus, without any declaration of enforceability being required.
The EU Regulations apply to all judgments dealing with civil and commercial matters whatever the nature of the Court or tribunal of the EU Member State (the EU Reg. 1215/2012 applies to Denmark, contrary to the EU Reg. 805/2004 and EU Regulation No. 861/2007, which do not apply to it). The EU Regulations do not extend to revenue, customs or administra-tive matters.
II. Non-EU judgments:The overseas judgments are recognised and enforced in Cyprus through the Foreign Courts Judgments (Recognition, Registration and Enforcement) Law of 2000 (Law No. 121(I)/2000), and is based on bilateral or multilateral treaties and conventions between Cyprus and third (non-EU) countries (such as the Hague Convention on Foreign Judgments in Civil and Commercial Matters and the Convention on the Recovery Abroad of Maintenance).
III. UK judgments:It is worth mentioning here that with the UK’s exit from the EU, there is now a gap in the enforcement of such decisions within EU countries, including Cyprus. We are awaiting the decision regarding the UK’s accession to the Lugano Convention of 2007 for the recognition and enforcement of decisions, but the European Commission has recommended that the UK’s appli-cation be declined. The Brexit deal was silent on the matter of the future judicial cooperation for civil litigation. The only way that it will be possible to enforce such judgments in Cyprus would be by using the relevant provisions for the enforcement of commonwealth judgments, mentioned hereinbelow.
IV. Commonwealth judgments:The judgments derived from the Courts of Commonwealth coun-tries are recognised and enforced in Cyprus by means of the Foreign Judgments (Reciprocal Enforcement) Law of 1935, Cap 10, as amended by the Reciprocal Execution of Certain Judgments of the Commonwealth Countries Law of 2000, (Law No. 130(I)/2000).
V. Common law:The enforcement of foreign judgments in Cyprus can also be effected by a common law action. The common law rules apply to the recognition of judgments in civil and commercial matters which originate from jurisdictions outside the EU that have not concluded relevant treaties with Cyprus.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Arbitration proceedings are regulated in Cyprus by the Arbitration Law, Cap 4, which relates to domestic arbitrations and the Law on the International Commercial Arbitration of 1987, (Law No. 101/1987), which deals with the international commercial arbitrations (Iguasu Enterprises Ltd & Another v Voice International Ltd & Another).
Cyprus is a party to the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention) and so any arbitration deci-sion issued by a contracting party to the New York Convention, can be enforced in Cyprus under the terms of it. Also, as a side note, if you have arbitration proceedings that have started in a contracting party to the New York Convention, you can file an application in Cyprus to freeze any assets of the Cypriot
Notably, it is important to highlight that the Shipping Deputy Ministry has shown resilience during the COVID-19 crisis, by introducing special arrangements and urgent provisional meas-ures. Albeit challenges the whole world has encountered, SDM has maintained a high-quality service. Amid the COVID-19 crisis, INCE Cyprus has concluded multiple transactions with the Shipping Deputy Ministry, confirming that the different working practices have retained the same, high quality stand-ards without any disruptions.
In addition to the above, the Shipping Deputy Ministry announced a new initiative, aimed at facilitating crew changes during the COVID-19 pandemic. Subject to the May 2020 guidelines, crew changes for vessels have been possible in Cyprus, provided that certain conditions relating to the safety and wellbeing of the seafarers were fully complied with. The relevant decrees issued by the Ministry of Health, permitted the long-term stay in the anchorage of vessels, including cruise ships (warm lay-up). Importantly, further to the Health Decree issued by Ministry of Health on the 28 May 2021, the Shipping Deputy Ministry has published a revised circular (3 June 2021), outlining the relevant changes on the conditions for the crew changeover process.
Crucially, in support of recommendations from the International Maritime Organisation, the European Union, the International Labour Organization and the International Chamber of Shipping, such measures have received the full support of Cyprus. Acknowledging the importance of seafarers as key workers and their particularly vulnerable role during the crisis, the process has been formalised to promote safe and efficient shipping operations as a priority.
In addition to the above, the goal is to introduce further initia-tives, aimed at enhancing the competitiveness of our flag and the unparalleled work of Cyprus’ maritime industry.
that, if the decisions on matters submitted to arbitra-tion can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced;
(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbi-tration took place; or
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:(a) the subject matter of the difference is not capable of
settlement by arbitration under the law of that country; or(b) the recognition or enforcement of the award would be
contrary to the public policy of that country.
8 Updates and Developments
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.
Two key developments which have been referred to earlier, are the creation of the Shipping Deputy Ministry in March 2018 and the extension of the Tonnage Tax Scheme, which subject to the approval by the EU will continue to be in operation for the next 10 years.
73Ince
Shipping Law 2021
Marianna Lamari is a Senior Litigation Lawyer in the firm’s Limassol office. With 19 years’ experience, Marianna is an experience litigator with a varied practice spanning admiralty, property and corporate law. She is a member of the Cyprus Bar Association and a Member of the Chartered Institute of Arbitrators, having successfully completed all four Modules in International Arbitration, and is fluent in both Greek and English.
Vasiliki Malta is an Associate Lawyer in the firm’s Limassol office. She is a Cyprus qualified lawyer and mainly advises clients in the shipping and corporate department.Vasiliki has undertaken work experience with a well-known law firm in London specialising in shipping law. After returning to Cyprus, Vasiliki has successfully completed her training period and been admitted to the Cyprus Bar Association.Her areas of expertise, inter alia, include, shipping law (including ship management, ship registration and ship security issues), corporate and commercial law as well as contract law, Vasiliki is currently involved in a number of proceedings at Admiralty Court. She can draft, negotiate and conclude a wide range of agreements, including but not limited to commercial contracts (i.e. share purchase agreements, pledge agreements, guarantees) and other legal documents. Additionally, Vasiliki has managed to effectively settle cases out of the Court in favour of her clients.
The Ince Group is a dynamic international legal and professional services business with offices in nine countries across Europe, Asia and the Middle East. With over 900 people, including over 100 partners worldwide, The Ince Group delivers legal advice, strategic guidance and business solutions to clients ranging from the world’s oldest and biggest businesses operating across numerous industries to ultra-high-net-worth individuals. Through its entrepreneurial culture and “one firm” approach, the business offers its clients over 150 years of experience, insight and relationships. The Group is driven by a unique team of passionate people whose broad expertise and deep sector specialisms provide their clients with solutions to all their complex legal and strategic needs.
registered shipowner in case of pollution by mineral oils as defined in the CLC and subject to the limitation of liability in that conven-tion. If the pollution is caused by gross negligence or with intent, then the limits do not apply. As with the convention, it applies only to vessels carrying oil in bulk (tankers).
In addition, Denmark is a party to the 2003 International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunker Convention). It follows that a registered shipowner is also strictly liable for loss or damage caused by discharge of bunkers.
Denmark is a party to the 1973 Convention on Prevention of Pollution of Ships as amended by the 1978 and 1997 Protocols (MARPOL 73/78). Denmark is a party to the 1996 International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea as amended by the 2010 Protocol (HNS Protocol). The Danish enactment of the convention has been prepared and awaits accession to the protocol by the EU. Until then, a shipowner or operator is strictly liable for damage to the environment caused by events other than the escape of oil in bulk or bunker oil.
Finally, EU rules on waste including Directive 2008/98 (Waste Directive) may have an impact on the legal position of parties other than registered owners under the above conven-tions, or ship operators under Danish law.
(iii) Salvage/general averageDenmark is a party to the 1989 International Convention on Salvage. It follows that salvage is based on the “no cure, no pay” principle; however, with special compensation for unsuccessful salvage where the efforts of the salvor have been to the benefit of the environment (“environmental salvage”). Salvage requires the presence of danger, assistance to a vessel or navigable construction or asset, and mobile or permanent offshore installations that are not engaged in the exploration or production of oil and minerals.
The criteria for setting the size of the award are those found in the convention.
Since the DMSA on salvage is not mandatory except the rules concerning “environmental salvage”, Lloyd’s Open Form (LOF) contracts are commonplace, and those or other salvage contracts will be respected to the extent they are not unreason-able and made under the influence of danger. Owners of salved assets, including vessel and cargo, are liable to pay salvage, and the salvor may exercise a maritime lien on the asset until it has been paid or security, including for interest and costs, has been provided. The International Salvage Union (ISU) standard forms and similar forms are common.
The 1974 York-Antwerp Rules as amended 1990 (YAR) have been incorporated into the DMSA and apply to the extent no other rules, including other versions of the YAR, have been
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionDenmark is a party to the 1910 Collision Convention (Convention for the Unification of Certain Rules of Law with respect to Collision between Vessels) and this is enacted in chapter 8 of the Danish Merchant Shipping Act (DMSA), also at times referred to as the Danish Maritime Code.
Accordingly, the principles of distribution of liability between colliding vessels in that convention apply.
If one vessel is wholly at fault, it will be fully liable for all damages to the other vessel, its cargo and for injuries to persons on board that vessel.
If both vessels are partially at fault, blame will be apportioned between them and, in a departure from ordinary Danish law, they are only liable to vessels and cargo to the extent they are so found liable. Both vessels are jointly and severally liable for personal injury, however. If it is clear that both vessels are at fault but blame cannot be apportioned, each vessel will bear 50 per cent of the losses.
In recent years, blame has been apportioned in quarters, thirds and halves. Should there be no information to establish whether the vessels are at fault, or should the court find that the collision occurred as a result of a fortuity, the vessels will not be liable.
These principles apply equally to collisions involving more than two vessels and to near-miss situations. The rules on collision apply to ships as well as mobile offshore units when under tow, but not to fixed installations such as piers, pipelines or fixed offshore installations. The basis of liability is fault/culpability, although breach of public law regulations such as the Danish enactment of the Collision Regulations, regulations to further safety at sea or the facts of the case such as breakdown of machinery may have an impact on the likelihood that a vessel will be found liable.
The single liability principle applies between the vessels.
(ii) PollutionDenmark has ratified and enacted the 1992 International Convention on Civil Liability for Oil Pollution Damage (CLC) as well as the 1992 International Convention on the Establishment of an International Fund for Compensation of Oil Pollution Damage (Fund Convention) and the 2003 Supplementary Fund (Fund). This entails that liability is strict and channelled to the
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The DMAIB fully investigates incidents as described in ques-tion 1.2 in Danish and Greenlandic waters, though investiga-tions regarding foreign ships may be agreed and left with the authorities of the flag state.
The purpose of the DMAIB investigation is to ascertain the events and reasons for the accident in order to prevent similar accidents in the future, but not to establish liability.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Denmark is a party to the International Convention for Unification of Certain Rules of Law Relating to Bills of Lading 1924 with its Visby Protocol and SDR Protocol (Hague-Visby Rules). In addition, however, Denmark has enacted certain elements of the Hamburg Rules into the DMSA to the extent these are not repugnant to the Hague-Visby Rules. Denmark has signed the Rotterdam Rules; however, these have not yet been ratified.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Being a Hague-Visby state, a carrier subject to Danish law is responsible for loss or damage to the goods occurring during the period of responsibility if notification of loss or damage has occurred within three days of delivery, unless the carrier can show that its liability is not involved. The “Hague-Visby cata-logue” of exemptions of liability does not apply. The carrier must instead show that the loss or damage was not caused by fault or neglect by it or any person for whom it is responsible.
In addition, the period of responsibility extends to the entire time the carrier has the goods in its custody, rather than from tackle to tackle. This period may extend to road, rail or air carriage before or after the ocean carriage in question. In addi-tion, there are specific provisions on deck carriage and carriage of live animals, which derogate from the Hague-Visby Rules. The fire and error in navigation exceptions to liability apply.
A contractual and performing carrier are jointly and sever-ally liable to the cargo interest. However, if it is expressly agreed that a part of the carriage is performed by a named performing carrier, the contractual carrier can be exempt from liability for loss or damage caused by an incident occurring whilst the goods are in possession of the performing carrier.
Liability may be limited to SDR 2 per kg or SDR 667 per package, whichever is higher, unless the damage resulted from an act or omission of the carrier caused with intent to cause damage, or recklessly and with knowledge that such damage would probably occur.
The DMSA rules apply to both bills of lading and sea waybills. Charterparties may be incorporated into bills of lading and, if successfully incorporated, they will govern the contractual relationship between cargo interest and carriers; however, the DMSA will prevail where the charterparty conflicts with it.
The DMSA applies on a mandatory basis and the Danish courts will take jurisdiction on a mandatory basis in case of
agreed between the parties. Owners of assets subject to general average contribution are not personally liable for the contribution; however, they may be required to assume such liability in exchange for the assets being delivered. The standard general average bond and guarantee forms issued by average adjusters are common and accepted.
(iv) Wreck removalDenmark is a party to the 2007 Nairobi International Convention on the Removal of Wrecks (Wreck Removal Convention) and so the Danish authorities can order a wreck to be removed by the shipowner, or that work be carried out on the wreck to ensure sufficient depth for safe passage above the wreck.
Should the shipowner fail to do so, the authorities may carry out the 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.
(v) Limitation of liabilityDenmark is a party to the Convention on Limitation of Liability for Maritime Claims 19 November 1976 and its 1996 Protocol. The parties entitled to limit liability are the owners of the ship, including parties who equip, crew and operate the ship for their own account. This includes users, charterers, managers and parties providing services in direct connection with salvage operations (the imputed tonnage being 2,000 tons). The ambit of parties included may be wider than in other jurisdictions, and may include freight forwarders. Those for whom the ship-owner is responsible and the shipowner’s insurers may also limit liability. The limits are set out in the protocol and there are special limits set for vessels less than 300 tons. In addition, the DMSA allows for an increase of the limits as per article 8 of the 1996 Protocol. Limits may be breached where the damage is caused with intent to cause such loss or damage, or recklessly with the knowledge that such damage would probably occur.
It is thought that the EU directives regarding waste, particularly their rules on “polluter pays”, may have an impact on the above.
(vi) The limitation fundIt is not a condition for invoking the right to limit liability that a fund be established. A fund may, however, be established in the Maritime and Commercial High Court if legal proceedings have been commenced in Denmark; that is, a claim form has been issued or the vessel has been arrested in Denmark.
The fund is established upon application to the court, which will require payment of funds into the court in cash, by first-class Danish bank guarantee or, in appropriate circumstances, a guar-antee provided by an insurer.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Danish Maritime Accident Investigation Board (DMAIB) investigates accidents on Danish and Greenlandic ships and acci-dents on foreign ships in Danish or Greenlandic waters. The accidents investigated are those that happened in direct relation to the operation of a ship. This could be grounding, collision, falling overboard, fire or explosion, etc. Deliberate damage to a ship falls outside the scope of the DMAIB’s work.
The investigation begins with the collection of information, which is analysed and processed into an accident report aimed at answering the following three questions: what happened; how did it happen; and why did it happen?
3.2 What are the international conventions and national laws relevant to passenger claims?
Please refer to question 3.1.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The general Danish time bar is three years; however, it is expressly stated in the Danish Limitation Act that if a specific regulation derogates from this, then the specific regulation applies.
According to the DMSA, the period of limitation regarding delay of carriage of passengers or passengers’ travel goods is two years after the day the passengers or baggage were discharged.
According to the DMSA, the period of limitation is suspended by initiating legal action before the expiry of the limitation period. Any agreement made before the incident amending this is void. However, once the incident giving rise to the claim has occurred, an agreement precluding or prolonging a period of limitation can be adopted by the parties.
As mentioned, the Danish Limitation Act provides that specific provisions regarding periods of limitation take prece-dence over the general rules. On the other hand, there is an assumption that the general Danish provisions will supplement the special provisions.
This could be relevant because the general provisions regarding suspension of time provide that the period of limita-tion only begins to run once the claimant is or ought to be aware of the claim and is suspended if the tortfeasor acknowledges the claim. If the general rules supplement the DMSA, such rules would also apply to passenger claim.
It is thought that it takes a great amount of certainty to conclude that a limitation specifies that the rule was not meant to be supplemented by the rules in the Danish Limitation Act. However, it is not yet settled in Danish case law whether the fact that the DMSA is based on a convention, and thus international law, excludes the rule of assumption and makes the limitation rules in the DMSA exhaustive.
4 Arrest and Security
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?
Denmark is a party to the 1952 International Convention Relating to the Arrest of Seagoing Ships. Accordingly, arrest of vessels may be made for the claims set out in that convention.
Arrest may be made of the vessel in respect of which the mari-time claim lies and sister ships, that is the vessel owned by the same shipowner. Sister-ship arrest is not available regarding disputes concerning property rights to a ship, possession, use or revenues of the ship or mortgages in a ship. Arrest of associated ships is not possible.
As a general rule, the owner of a vessel must be liable for a claim for arrest to be possible. The exception is where the claim is secured by a lien (see below).
To arrest a vessel, the arresting party must submit an applica-tion for arrest with the Enforcement Court. The arresting party must show that there is a maritime claim, but does not need to raise a presumption that the claim will succeed on its merits. In addition to the application, the arresting party must provide
carriage to and from Denmark and, in appropriate circumstances, including pre-carriage or carriage after discharge into Denmark by another mode of transport. These provisions will, however, yield to the Brussels Regulation and the Lugano Convention.
A choice of law in a charterparty and reference to the charter-party in a bill of lading is insufficient; the reference in the bill of lading must include a specific reference to the jurisdiction clause as well.
Suit time is one year.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Dangerous cargo must be declared and the cargo interest must give prior warning that the goods are dangerous and precautions must be taken.
Failure to do so may mean that the shipper is strictly liable to the carrier (and performing carrier) for damage and loss arising out of the carriage of the dangerous cargo. In addition, the carrier is permitted to unload, render innocuous or destroy the goods as necessary, without compensation to the cargo interest. Danish law may in appropriate circumstances distinguish between a shipper who is a charterer/has booked space on a liner vessel and a shipper who has not entered into the contract of carriage directly. Only the former may incur strict liability although a receiver who has char-tered/booked space may have a recovery claim against the latter.
Where non-dangerous goods are concerned, the shipper is liable for loss or damage arising out of the shipper’s fault or negligence, including misdeclaration.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
According to the DMSA, the time limit in relation to cargo claims expires one year after the goods were delivered or should have been delivered.
This time period may be extended if the parties agree after the cause of action has arisen.
Recovery claims from a contractual to a performing carrier must be brought within one year after the contracting carrier was found liable to pay in court or paid as part of a settlement. This claim may be advanced for up to 10 years after the original claim arose.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Denmark is a party to the 2002 Protocol to the 1974 Athens Convention relating to the carriage of passengers and their luggage by sea.
In addition, EC Regulation 392/2009 on the liability of carriers of passengers by sea in the event of accidents, incorporating the Athens Convention into EU law, is applicable in Denmark.
These rules cover intra-Danish carriage as well and have been extended to small vessels carrying less than 12 passen-gers. Passenger ships, including small ships, are required to have mandatory insurance to cover a range of their potential liabilities.
The DMSA thus covers passengers’ rights and grants almost the same rights as EC Regulation 392/2009. However, the passengers have a few additional rights under the regulation.
other cargo owners; and 4) claims of the carrier pursuant to the contract of carriage including freight, provided that these claims are valid against the party requesting delivery.
A shipowner may establish a contractual lien on freight and sub-freight. The act of perfection is notification of this assign-ment to the charterer or sub-charterer.
A shipyard has a non-statutory right of retention in the vessel built or repaired for payment of its remuneration, provided the vessel is in its possession or under its control.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
A vessel owner will usually be required to provide security to avoid arrest or for the release of an arrested vessel without the underlying claim being resolved. The amount of security is a matter for the discretion of the Enforcement Court, but 130–140 per cent of the total claim is normally sufficient. The forms of security normally accepted by the courts are cash deposits, first-class Danish bank guarantees and letters of undertaking from Clubs and first-class insurers.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
An arresting party must expect to provide security for damages and inconvenience of an arrest should this turn out to be unlawful. The security is decided by the Enforcement Court and is usually set at five days’ hire of the particular vessel. The security accepted is usually a cash deposit or a first-class Danish bank guarantee.
4.7 How are maritime assets preserved during a period of arrest?
Typically, the vessel will be preserved in the harbour in which it was arrested and can only be moved with the acceptance of the Enforcement Court. In general, the arresting party is not liable for the costs of maintaining the arrest, though in certain situa-tions costs may accrue.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Within one week of the arrest, the arresting party must commence confirmatory proceedings to decide whether the arrest was legal or wrongful. These proceedings will often be stayed if the underlying claim is subject to jurisdiction elsewhere. The test of the court in the confirmatory proceedings is whether the conditions for arrest were met. This entails trying to ascertain whether the claim is a maritime claim within the meaning of the DMSA and other conditions for arrest (which are few) was met. Should the court conclude that the arrest was wrongful – that is, illegal, not that it fails on the merits – the arrest will be lifted and the arresting party will be strictly liable for the damages and losses incurred by the vessel owner. The vessel owner can then claim payment of all losses proximately caused by the arrest and demand satisfaction in the counter guarantee.
counter security in case the claim is wrongful. The counter secu-rity usually amounts to five days’ hire of the arrested vessel.
Assets other than vessels may be arrested for non-maritime claims according to the Danish Administration of Justice Act. Such arrest may be made if it is not yet possible to execute a judg-ment and the arresting party can show that, if the arrest is not permitted, the possibility of obtaining payment will be severely reduced. This option is normally unattractive where vessel arrest is possible, as the Enforcement Court’s requirement as to security is higher than five days’ hire.
Once a claimant has acquired judgment or has another enforceable instrument, arrest is not possible. Instead, the avenue for enforcement is to levy execution on the debtor’s property, including a vessel. Execution will ultimately entail the forced sale of the asset.
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?
Bunker suppliers can arrest vessels for claims for delivery of bunkers where the owner is liable for the delivery. Danish law does not recognise delivery of bunkers as a statutory lien and, accordingly, arrest of a vessel for supply of bunkers to a char-terer is not possible.
Bunker suppliers may, however, arrest in accordance with the aforementioned procedure for arrest under the Danish Administration of Justice Act. The target of such arrest could be the arrest of any asset owned by the debtor, including bunkers on board a vessel.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Claims relating to the title of a vessel and the ensuing security rights are considered to be maritime claims, and give rise to maritime arrest. Other claims such as claims for defects, faults or lack of performance compared to the sale contract are not maritime claims. Arrest may therefore only be effected for these claims as non-maritime arrest.
4.4 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 options are available?
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) wages and other sums due to the Master and crew in respect of their 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 connection with the operation of the ship if the claim is not based on contract or salvage; 5) wreck removal; and 6) contributions in general average.
The following claims give rise to a lien on cargo: 1) claims for salvage and contribution in general average; 2) claims relating to the carrier or Master having made agreements, taken measures or made payments on behalf of the cargo owner; 3) claims by a cargo owner for reimbursement for goods sold for the benefit of
5.3 How is the electronic discovery and preservation of evidence dealt with?
This is not applicable.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?A maritime claim can be filed at either a regular first instance city court or the Maritime and Commercial High Court, which has a special competence regarding maritime claims. If a mari-time claim is filed at the city court and a party to the dispute requests so, the claim will be transferred to the Maritime and Commercial High Court.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The Nordic Offshore and Maritime Arbitration Association (NOMA) settles disputes by arbitration. NOMA was estab-lished in 2017 on the initiative of the Danish, Swedish, Finnish and Norwegian maritime law associations. NOMA’s rules are based on the UNCITRAL arbitration rules.
According to the rules, NOMA has jurisdiction when the parties have agreed to refer a dispute to NOMA. The reference may be a contract term or agreed by the parties before or after a dispute has arisen.
Three arbitrators will be chosen jointly by the parties. The place of the arbitration will be the place agreed upon by the parties before the dispute arose. If the parties have not agreed on a place, the place will be decided by the arbitral tribunal.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?NOMA offers mediation as well.
When the tribunal has been appointed, a case management conference will be initiated.
If the parties at this meeting agree, a mediator will be appointed by the arbitral tribunal.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Denmark has a single representation system (no need for both solicitors and barristers) and a relatively smooth, quick and informal system leading to relatively low cost. Further, there is access to a dedicated maritime court and good experience in the maritime law community of shipping matters.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Danish court proceedings and arbitration are flexible and informal. No power of attorney is required to commence proceedings and evidence is not required to be notarised. The Maritime and Commercial High Court accepts documentation in English and translations do not generally have to be authorised.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
In case of a serious marine incident, the DMAIB will usually collate evidence, interview the crew and issue a report. The report is public, but the documentation so obtained will not be available to the public or interested parties afterwards. Shipowners may therefore wish to ensure that documentation presented to the DMAIB is provided only in copy, or that a copy is retained for their own purposes.
Under the DMSA, in certain instances a party with an indi-vidual interest in the accident may request that a maritime enquiry be held in court. If the court allows it, any person involved in or with knowledge of the event can be required to give evidence as a witness before the court, and documentation can be presented. The enquiry will not result in any findings of the court as to liability or other legal issues but is purely a fact-finding mission.
In other cases, the Danish courts may be requested to appoint a court expert to deliver an expert opinion, to hear a witness before trial if there is good reason to do so or, in limited circum-stances, to order that evidence, in the form of documents, be presented to the court.
Whilst an expert opinion is virtually always allowed, the other steps are at the discretion of the court. None of these steps involve a finding of the court, and the party requesting the steps must bear the costs of the procedure. However, under more recent Danish law, the party that may be deemed to have “lost”, once a joint expert report is rendered, may be required by the court to pay the cost of other parties to that procedure.
Expert opinions obtained by a party unilaterally are usually allowed by the court if they have been obtained prior to the commencement of proceedings. After proceedings have commenced, unilateral reports are permitted where the parties agree to each obtain their own opinion, whereas the court will otherwise normally require the parties to agree a joint expert.
The rules regarding expert reports after the commencement of trial are in a state of change, and it remains to be seen whether unilateral reports will be common going forward. It is consid-ered, however, that a joint expert report will have greater eviden-tial value than unilateral reports in any event.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Danish law does not, as a point of departure, operate with disclo-sure. Each party will decide what documents to present to the court. Under the Danish Administration of Justice Act, however, a party may request a court order for the opponent and, in certain circumstances, a third party to deliver up evidence such as docu-ments (including electronic documents), recordings, etc. The party requesting such disclosure must, however, show what is to be proven by the request and why the documents are (only) in the possession of the opposing or third party in question. The scope for “fishing expeditions” is therefore relatively narrow. The consequence of not adhering to a court order for disclosure is that the court may make adverse inferences at its discretion.
Since Danish law does not operate with disclosure, this general point of departure also applies to maritime disputes.
No other judgments are recognised and enforceable in Denmark, although Denmark is preparing to enact the Hague Convention of 30 June 2005 on Choice of Court Agreements. This may, therefore, apply if the convention comes into force and to the extent it applies to a maritime claim.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Denmark is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Foreign arbitration awards of most other countries are therefore recognised and enforceable in Denmark.
8 Updates and Developments
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.
There are no current trends or future developments in this regard.
The costs of Danish court proceedings are manageable when likened to comparable jurisdictions, and judgments are handed down reasonably fast. The Maritime and Commercial High Court is competent throughout the country and has great exper-tise in maritime matters.
Trials are usually conducted in a reasonably short space of time and judgment handed down within four to six weeks of the hearing.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Although Denmark generally has a reservation in its EU participation on legal affairs, through a bilateral agreement, Regulation 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters applies in Denmark. Similarly, Denmark is a party to the Lugano Convention.
As a consequence, judgments handed down by courts in either the EU or the EEA are recognised and enforceable in Denmark.
Denmark is not, however, a party to Regulation 805/2004 on the European Enforcement of Uncontested Claims.
80 Denmark
Shipping Law 2021
Mads Poulsen was born in 1971, graduated in 1998 from the University of Copenhagen, and obtained an LL.M. in Maritime Law from the University of Southampton in 1999.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.
IUNO AdvokatpartnerselskabNjalsgade 19C, 3rd Floor2300 Copenhagen S Denmark
IUNO is an international firm. Using the newest technology and an untradi-tional approach, we provide highly specialised advice in the most important business law areas to a clientele consisting mainly of large and medium-sized companies in Denmark and abroad.One of the core areas of the firm’s specialism is shipping and transport.
breakdowns. There are no relationships established between salvage contract parties (i.e. salvors and owners) or circum-stances under which assistance is considered one or the other. Thus, any salvage action at sea is regulated by contracts which the salvors and owners may enter into (like the standard Lloyd’s Open Form contract (LOF)), by the internationally accepted practice or by an administrative act of the competent authority, which is the Navy, in accordance with the authority granted by Law No. 3003 on Police Ports and Coasts of 10 July 1951.
In general terms, there is no specific regulation stipulating the usage of a specific salvage contract, so it would be at the discre-tion of the salvor and owner or insurers, as the case may be, or even the local authority. This means that if a LOF rules the salvage operation, then regulations other than those established in the Dominican Republic and London Salvage Convention of 1989 criteria, including a Special Compensation Protection and Indemnity Clause (SCOPIC), can apply.
Other general averages and their treatment as such are clearly defined in Article 400 of the Code of Commerce. This Code does not make reference to the option of whether they can be adjusted in accordance with generally accepted international rules or not; it only states very simply that the goods – which will be priced in the place of cargo – the freight and half of the vessel shall contribute in proportion to the value. Interestingly, it is not established that the general average should not be compulsorily adjusted or liquidated under Dominican law. However, if the matter is referred to Dominican law, the rule set forth in Article 408 states that there shall be no claim for general average if the value thereof does not exceed one per cent of the total value of the ship and goods, excluding the value of freight.
(iv) Wreck removalThe main legal regulation regarding wreck removal is Law No. 3003 of 1951, On Port and Coastal Police. This Act, in its Articles 66 and 67, includes the treatment to be given to the wreck, including certain procedures and measures. Article 66 defines the obligations of the owners and Captains to report to the Harbour Master if the vessel is abandoned and not wrecked, and to ensure the delivery of all documents regarding the ship.
Article 67 of said Law establishes, among other items, that the removal of vessels in Dominican waters may be carried out by their owners with previous permission from the Harbour Master; he will monitor the operation and determine the conditions that must be in place when these may affect navigable routes. The time allowed to perform the removal may be extended, or the Harbour Master (Comandancia de Puertos) can also run or adminis-tratively order the removal or demolition of the wreck with prior notice to the Consul of the country under which the flag of the shipwrecked vessel was registered.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionCasualties are well listed in the Code of Commerce. In the case of a collision, the Code of Commerce clearly states that the damaged vessel may not proceed against the other vessel. In a collision where the responsibilities cannot be estab-lished, damages will be equally assumed by the vessels which have caused and suffered damages, whose estimation will be performed by experts. However, in this type of accident and specifically in a collision, one of the main causes is non-compli-ance with the regulations of the International Convention for the Safety of Life at Sea (SOLAS), which are also requirements for vessels in Dominican territorial waters; the Navy is respon-sible for their implementation, control and monitoring.
With respect to other casualties, such as grounding and others of greater magnitude, they are not clearly regulated or defined in the Code of Commerce, thus limiting them and only classifying them in casualty lists as particular or general average.
In situations of collision and shipwreck, as well as other major accidents that prevent the ship from sailing or where the damage is applied to at least three-quarters of the ship (CTL), these situ-ations are considered causes of abandonment to insurers.
(ii) PollutionIn the specific case of pollution, the country has modern national legislation expressed in Law No. 64-00 and in other sectorial regulations under its laws. However, it is mainly Law No. 64-00 that sets forth administrative powers, civil and crim-inal responsibilities, among other relevant aspects. This leaves the Courts to impose penalties for the violation of the law on environmental issues. These responsibilities include the marine environment.
Environmental regulations are complemented by the Constitution of the Republic, the same Law No. 64-00, the Criminal Code, the Criminal Procedure Code, the Civil Code, and other environmental laws and international conventions and treaties to which the Dominican Republic is a party.
(iii) Salvage/general averageSalvage is also provided in the Code of Commerce, but in a very profuse way and without a clear definition of it or its treatment, as the Code is limited; it considers salvage only within general
1.2 Which authority investigates maritime casualties in your jurisdiction?
The relevant authority for the investigation of maritime casu-alties is the Navy of the Dominican Republic through the Harbour Master. They also carry out maritime inspections, among other duties.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Harbour Master has full power to handle any marine casualty within the territorial waters of the Dominican Republic; such powers include all the recommendations and measures they consider necessary and reasonable. Such a power is also extended to maritime inspections in general because they have the duties of the Port State Control so that they can detain the vessels when they do not comply with the applicable international regulations.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
From a national perspective, cargo claims in the Dominican Republic are regulated by the Commercial Code, the Civil Procedure Code and the Civil Code as national laws. In terms of international law, the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (Hague Rules) apply. Claims are judged by the Commercial Court or Civil Court, essentially according to the nature of the case.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The basic principles in the exercise of claims against the carrier are the first carrier’s liability under the Hague Rules, and the grounds established by the Code of Commerce, among others, are the following:■ the loading costs are the shipper’s, as are the discharge
costs and the costs for reloading the other goods to be transported; and
■ theMaster Captain cannot retain the goods aboard hisship for lack of payment of freight, but, at the time of discharging, may demand that the goods are deposited with a third party until the freight is fully paid.
The Civil Code also regulates the obligation of any person (whether natural or juridical) to repair the damage done to another, either by the person, persons under their charge or their property.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The carrier may, under any circumstances, initiate a claim for damages against the shipper for misdeclaration having veri-fied the same, and it is recommended that the Master issues his protest within 24 hours of knowing such misdeclaration. The Master is also entitled to unload the goods on board the ship if they have not been reported or if they have been required to pay higher freight costs in place for that kind of merchandise.
A wrecked vessel can be topped in sale by an administrative procedure followed by the Harbour Master. Eventually, and in the case of dispute over ownership of the shipwrecked vessel, the 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 navi-gation safety or the environment may be affected.
As shown, this regulation refers only to the physical aban-donment of the shipwrecked vessel without reference to the abandonment to insurers, which is regulated by the Code of Commerce in Articles 369 to 396.
The regulation regarding wreck removal makes it a condi-tion not to use a specific contract; therefore, it would be at the discretion of the owner and the insurers or the local authority regarding the underwriting of some of the international agree-ments on the removal of wrecks.
(v) Limitation of liabilityThe Dominican Republic’s law does not contemplate any limi-tation of liability, leaving its determination to the discretion of the Civil and Commercial Court with competency to hear the case in question; such determination is based on three core prin-ciples commonly accepted by most of the laws: (i) repair of the damage; (ii) repair of the moral damage; and (iii) lucrum cessan, perhaps most importantly of all for the purpose of determining the maximum range of responsibility. Civil liability is clearly contained in Articles 1382, 1383 and 1384 of the Civil Code.
That is, the limit of liability that is often established or identified in the case of maritime accidents is not regulated by Dominican law and is governed only by the principles already stated.
Of course, on claims for damage to cargo, the limit is set by the Hague Rules, to which the Dominican Republic is a party.
In cases of environmental pollution specifically, there is no limit of liability determined for the polluter, although it should be noted that Law No. 64-00 on the Environment estab-lishes liability without prejudice to the penalties provided by law; anyone who causes harm to the environment or natural resources will have responsibility for damage that may result, in accordance with this Act and the relevant statutory provisions. It shall also repair the damage materially, at its expense, if this is possible, and pay compensation according to law.
The reparation of the damage is to restore the situation prior to the event, where possible, on the compensation of the damage and the damage caused to the environment or natural resources, communities or individuals.
To determine the magnitude or the amount of damage incurred, the Court will consider the reports prepared by the technicians and inspectors and formal reports evacuated from the Ministry of Environment and Natural Resources and other state environmental agencies, without prejudice to the evidence and surveys that the trial judge himself required, ex officio or upon request.
In addition to administrative and civil responsibility, criminal responsibility is also supervised by Law No. 64-00 and is subject to random sanction; this regulates the levels of fines applicable to those responsible for lesser damages. It should be under-stood that the levels of fines should not be confused with limits of liability as they are distinct concepts.
(vi) The limitation fundThe limitation funds follow the same concept of liability. However, in some specific cases, the seizure of assets for example, the Civil Procedure Code states in Article 557, second
paragraph that in no event should the unavailability caused by the retentive seizure exceed twice the value of the debt incurred.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Time limits in relation to passenger claims operate the same way as for commercial or civil claims, as described in question 2.4.
4 Arrest and Security
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?
There are two options for the arrest of ships, one of a conserv-atory character and the other of an executable character. Both are protected in the Code of Commerce, Law No. 603 on Naval Mortgages and Act No. 222-92. Law No. 603 on Mortgages protects the right of seizure of the ship and sets a mortgage lien that may be exercised.
The procedure for exercising the lien is contained in the Civil Procedure Code as amended by Act No. 845 of 1978, although the Code of Commerce also provides certain basic procedural rules to be followed.
The Code of Commerce defines the degree of privilege of the loans that fall on a ship and the reasons that justify them as being required or extinct. However, the Code is silent on defining the types of credits considered maritime liens, an omis-sion which is overcome with the aforementioned Convention.
From the reading of Article 199 of the Code of Commerce, it is inferred that a vessel may be seized on an “action in personam” by a non-marine claim and an “action in rem” for a maritime claim privileged or established in that law.
Its Article 215 sets a limit on lien contrary to the usual legal practice in many countries, and establishes that a ship ready to sail cannot be 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 Commerce states that a ship is ready to sail when (and only when) the Captain is in possession of the departure documentation.
The limitation set forth in Article 215 is extended to other circumstances by Law No. 222-92, which states that for ships in port being loaded with local goods in transit or contracted cargo, the Dominican Port Authority shall, as a pre-requisite, require that the claimant provide at its expense the funds needed for the transfer 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 subject to an administrative act as a sine qua non pre-requisite.
A judge will grant conservatory arrest when, in addition to the same requirement that all the formalities have been complied with in the demand for payment, there is urgency and an immi-nent danger that the goods can somehow disappear and the debt-or’s insolvency may 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 documents prove and justify the existence of a credit, may vary between 30 and 45 days. There may be other circumstances in which the period is reduced.
One issue to comment on is the lien, in the sense that reten-tion of cargo is regulated by the lien. This means that any lien on cargo shall be there on commercial grounds but not under Dominican law. This commercial action could be considered unlawful if the cargo interests so request to the Court.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Based on the nature of maritime cargo claims differing in some merits with others, there is no clear definition or refer-ence to such maritime claim. The time limits to commence legal proceedings before the Courts are as follows: ■ The two-year time limit established by the law for the
actions held on contractual civil liability is the best appli-cable to maritime cargo claims. This time limit is appli-cable in cases where it has not been expressly set that it is for a longer period.
■ Oneyear:Forlegalactionincriminalcivilliability.Thislimit is applicable in cases not expressly set by law for a longer period.
■ Sixmonths:Forlegalactioninquasi-criminalcivilliability.This limit is applicable in cases where a limit has not been expressly set by law for a longer period.
Time limits for summons after the lawsuit is filed in Court vary depending on the country where the defendant is placed. For instance: if the defendant is placed in the Dominican Republic, the ordinary time limit is eight working days but can be less depending on the urgency. In Europe, excluding Russia and North African countries or territories, the ordinary time limit is 60 working days. When a defendant’s domicile is abroad, the summon process is through the local Prosecutor who should request the Ministry of Foreign Affairs to proceed accordingly.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The provisions are the Civil Code and the Code of Civil Procedure, based on the same principles as stated for civil claims. The vessel or other assets under the property of the owner (or demise charterer) can be seized, but only under a civil claim.
3.2 What are the international conventions and national laws relevant to passenger claims?
The Dominican Republic appears not being a contracting state of the International Conventions relevant to passenger claims. All passengers’ claims are ruled by the Civil Procedure Code and could be heard by the Commercial Court of Civil Court depending on the merits of the claim.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
There is no standard procedure for the Court to order the provi-sion of counter security where an arrest is granted. The judge may or may not request the claimant to prove their solvency or prove their having a guarantor or a bond.
4.7 How are maritime assets preserved during a period of arrest?
The Court is obliged to resolve the matter as the assets are preserved by appointing a physical person who becomes respon-sible for the preservation of the asset for the full period of the arrest. This person is named in the document notifying the arrest. Only the Court shall make any change to this person. It should also be considered that, in the case of vessels, the rele-vant authorities, i.e. the Harbour Master and Port Authority, are constantly monitoring the condition and safety/security of all vessels and other maritime means in their respective jurisdiction which, in some way, helps to preserve the arrested asset in case of any potential risk.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The test for wrongful arrest appears when the requirements contemplated in the Dominican Civil Procedure Code and in the Code of Commerce to establish the lawful arrest are broken, also if the arrest granted is based on wrong, malicious or erro-neous grounds.
The remedies available for a vessel owner to claim losses caused by a wrongful arrest, is to counter-sue the claimant with those relevant proofs in accordance with the civil procedure rules aforementioned.
If the wrongful arrest, although better to say wrongful deten-tion, is a result of an action of opposition (oposición) as mentioned in question 6.3.3, owners can also sue the claimant such damages suffered.
The law gives rights to claim an indemnity from any faulty party that causes damages to others, so this principle is appli-cable to a wrongful arrest.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
All steps to preserve or to obtain evidence should be made inside and during the civil procedure; therefore, there is no specific procedure allowing an interested party to take any steps or action to preserve evidence.
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?
It is 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, since the nature of the credit is the same as recognised by the law for other similar credits over a vessel; however, due to the usual lack of knowledge and expe-rience 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 convinced of granting the arrest.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Indeed, it is possible, in the case where an economical damage arises, for one of the parties, or if the ownership is not trans-ferred as per terms and conditions agreed.
The “opposition” as explained in question 6.3.3 could also work for the claimant, but action is an ex parte administrative attempt and not a Court’s resolution, although the effects could be in some way similar in preventing the vessel to sail.
4.4 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 options are available?
It should be noted that, in this case, and taking into consider-ation the fact that cargo is not subject to special treatment as ships are, there are two options applicable, both regulated in the Civil Procedure Code.
The first is an ex parte action under the legal basis of Article 557 (amended by Law No. 1471 of 1947), which provides that any creditor may, by virtue of title, and under private authentic signature, seize retentively what is held by a third party and the sums and effects belonging to the debtor, or oppose the delivery of these items to their address. In any case, the unavailability caused by the embargo shall exceed twice the value of the debt by which the embargo is originated. Another issue to consider is the fact that it does not establish a defined deadline for resolu-tion of this ex parte action.
The second option is to follow the common procedure for seizure of conservatory goods by a resolution of the Court.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Article 215 of the Commercial Code provides that the arrest of a ship can be prevented by providing bail; however, the security to lodge is not clearly stated, and it remains at the discretion of the Court to accept even a Bank Guarantee, a Letter of Undertaking from a P&I, or any other kind of security. It is always understood that such guarantee documents should not contain unreasonable terms and conditions that leave the claimant defenceless, or in some way prejudice and/or reduce the rights of the claimant.
The average time for the granting of an award is about five to six months.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?The body for dealing with maritime mediation in the Dominican Republic is the same for arbitration: the CRC. There is no parallel body for mediation.
However, the parties involved in the dispute are free to agree an arbitration ad hoc beyond the CRC mentioned.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Using the national Court: The main advantages of using national Courts that can be noted are the cost compared with an arbitra-tion proceeding, and that the judgment could be appealed if it does not satisfy one of the parties.
Using the arbitral body: The advantages of using the CRC as the arbitral and mediation body are composed of the arbitrators and mediators being much better qualified in maritime matters than judges, which would mean a better balance of fairness in the decision. A final solution and award could be achieved in a shorter timescale than a judgment.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Pros: 1. Judges and other people linked to the maritime industry
are gaining more experience in maritime matters. 2. Transparency of the public bodies in the maritime sector is
constantly improving. 3. Easier access to justice. 4. ADR practice is also constantly being improved in all
orders, to the benefit of those who refer their matters to arbitration and mediation.
Cons:1. Maritime legislation is still outdated with respect to
current trends and international treaties and conventions on the subject.
2. The lack of knowledge, practice and expertise of the judges in maritime matters.
3. Apart from legal action against an arrest which, as mentioned previously, is granted by a judge by means of a resolution, 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 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 any legal force or validity although, in reality, it has an effect because, in many cases, people who should make a decision to use it will inhibit it in detriment of the rights of the presumed debtor; such opposition works like an ex parte retention right.
4. Processes are too long and slow, and sometimes the judge does not have a definite deadline by which to sentence, specif-ically on conservatory ship arrests, although the Court may decide a shorter timescale at its sole discretion under Articles 417 and 418 of the Civil Procedure Code, respectively.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Disclosure obligations in Courts are also ruled on in civil proceedings; the disclosure can be made in two different stages: one at the same time as filing the claim; or as requested by the Court, depending on the stage of the proceedings.
Disclosure obligations of parties in maritime claims to the civil or commercial disclosure are different and managed in a manner other than the one stated in the previous paragraph.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Electronic discovery, e.g., emails and WhatsApp messages, is accepted but printed evidence or expert evidence must be provided to the Court who will keep it in the case folder.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?This depends on the nature of the case. In maritime claims arising from labour claims, they are heard by the Labour Court’s jurisdiction with regard to the merits contained by the Labour Code. However, for the procedure of arrest of a vessel, the matter should be referred to the Commercial Court.
Other commercial maritime claims arising from a breach of contract, and any other commercial matters, are heard by the Commercial Courts or Civil Courts, as is applicable.
In general terms, a case timescale could take 14 months (approximately) plus another 14 months (approximately) if there is an appeal. However, in the 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 embargoed; this may also occur if the complainant constitutes a sort of guarantor or justifies their argument. The resolution of the President shall be enforceable, notwithstanding opposition or appeal.
In maritime cases, when any party is not domiciled, as in matters relating to rigging mouth provisions, baggage, careening, and repair of ships ready for their departure, and other urgent matters and provisional citations made on a daily or hourly basis, the procedure can be carried out without prior notification, and the case will be susceptible to resolution executable immediately.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There is no specific arbitral body that deals with maritime claims only. However, any dispute where the parties are in agreement, or which was agreed in the relevant contract, can be referred to and settled by the Centre for Alternative Dispute Resolution (Centro de Resolución Alternativa de Controversias – CRC) under the umbrella of the Chamber of Commerce and Production of Santo Domingo under the arbitration procedure of Law No. 489-08 enacted on 7 October 2008.
disability of a party; invalidity of the award under (or by virtue of) the law, to which the parties have adhered, of the country that issued the award; failure of due process; or that the award rests with controversy, not the arbitration agreement, or exceeds the terms of the arbitration agreement. According to the law of the Dominican Republic, the object of the dispute is not capable of settlement by arbitration, and the recognition or enforce-ment of the award would be contrary to the public policy of the Dominican Republic.
The execution of a foreign award will be brought before and resolved by the competent Courts of Justice and, among other requirements, one must submit the original award and the arbi-tration agreement or the contract that contains it.
8 Updates and Developments
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.
The Dominican Republic is very close to enacting the Maritime Commerce Law, which is currently being discussed by the National Congress (Parliament) technical commission. Once such Law has been enacted, it can then be said that the country has grown in the maritime sector.
Education and interest in Maritime Law and related matters are constantly increasing and the public bodies are paying more attention to this industry, trying to revert to the slogan “we are an island with our backs to the sea”.
There has been relatively increased interest on the part of some Government bodies connected to the maritime sector in placing the country in the international industry, as should have been the case for a long time.
A project of law proposing that the Dominican Maritime Administration bring the law of the Dominican Republic into line with the new international regulations and trends has been submitted to the relevant committee of the National Congress. This project of law essentially focuses on protecting the activities of the Dominican Maritime Administration, ports, infringements and administrative sanctions in the area of national shipping, port seafarers, vessel registration and other aspects of national interest. The project being considered by the National Congress does not replace many other laws in maritime matters including the Code of Commerce, although there are, without a doubt, certain aspects of the non-abolished regulations that will be amended.
To date, no clear moment is foreseen when this will finally be passed and the expected law enacted.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
The recognition of foreign judgments is protected under the Civil Code and the Civil Procedure Code as amended by Law No. 834-78 which, very briefly, states under Article 122 that a judgment of a foreign Court and acts received by the officers are enforceable in the territory of the Republic in the manner and in the cases provided by law.
In this regard, the Code of Private International Law of 1928 also applies, which is known as the Code of Bustamante and to which the Dominican Republic is a party. As basic princi-ples, the following rules must be observed: it has jurisdiction to hear the case and judge according to the rules of this Code; the judge or Court decides that the parties are to be summoned in person or through a legal representative for the judgment; the judgment does not contravene public order or public law of the country in which it was executed, which is enforceable in the state in which it was rendered and 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 require-ments to be considered authentic in the state where appropriate; and the judge or Court must do what is required in state law to satisfy the judgment.
The process begins when suing is filed in the Court for obtaining execution (exequatur), and the Court will verify the rele-vant requirements and start the process in accordance with the provisions of the Civil Procedure Code until the final sentence.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The recognition and enforcement of foreign arbitral awards is governed by Law No. 489-08 on Commercial Arbitration, which expresses appreciation of the execution of foreign awards in the Dominican Republic; such procedure follows the applicable law, treaties, agreements or conventions in force in the country; also, in that order, the Dominican State undertakes to recognise the authority of judgments and arbitration while granting its imple-mentation in accordance with the rules of procedure.
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:
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Shipping Law 2021
Luis Lucas Rodríguez PérezEducation: Law Degree, University of Havana. Master’s Degree (LL.M.), INESEM in Maritime Law & Business, (INESEM), Mr. Rodríguez’s studies focused on Maritime, Port, Commercial Law and International 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 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. Position: Founding and Senior Partner of the firm Q.E.D INTERLEX CONSULTING SRL and Of Counsel to the international law firm Russin Vecchi & Heredia Bonetti (https://www.rvhb.com). Member of the Instituto Iberoamericano de Derecho Marítimo – IIDM (Ibeoramerican Institute of Maritime Law).Areas of Practice: Maritime law (including, and not limited to, charterparties, admiralty, ship finance, marine insurance, marine salvage, marine construction and dredging, and port terminals) and foreign investment. He also deals with international commerce, litigation and ADR. Professional Expertise: Practising Lawyer since 1983. Professor and speaker on maritime law at various institutions. Mr. Rodríguez has attended several national and international seminars as a delegate, including those of the International Salvage Union. Languages: Spanish and English.
The firm is essentially a consulting firm that was incorporated in the 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).The team comprises five lawyers, plus another two externally associ-ated lawyers and four associated experts in different areas of the marine industry. One of the partners is based in the USA but no longer involved in the day-to-day activity of the firm. We continue to uphold organisational and quality standards and are strengthening our relationships and cooperation with other law firms and service providers, both local and international.
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.
■ The International Convention on Civil Liability for OilPollution Damage (1969) (CLC) , as well as its 1976 and 1992 Protocols.
■ The International Convention on Civil Liability forBunker Oil Pollution Damage (2001). The Arab Republic of Egypt, on the other hand, made the following reser-vation: “To ensure the freedom of use of the Suez Canal and its ports, the Arab Republic of Egypt hereby declares that the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, does not apply to ships passing through the Suez Maritime Canal.”
■ TheConventiononthePreventionofMarinePollutionbyDumping of Wastes and Other Matters, as amended (1972)(LC) and its 1996 Protocol (LC PROT 1996).
■ TheInternationalConventionfortheSafetyofLifeatSea(SOLAS 1974), as amended, and its 1978 (SOLAS PROT 1978) and 1988 (SOLAS PROT 1988) Protocols.
■ The International Convention for the Prevention ofPollution from Ships (1973) (MARPOL), and its 1978 Protocol (MARPOL PROT 1978).
Egypt is a signatory to the Barcelona Convention for the Protection of the Marine Environment and the Mediterranean Coastal Region (1995).
(iii) Salvage/general averageArticles 302–316 of the Egyptian Maritime Trade Law No. (8/1990) govern salvage operations. Several issues are addressed in the pieces, including the following:■ executionofsalvageactivitiesinsideEgyptianjurisdiction;■ thedutytorenderassistance;■ therightsofsalvors;and■ severalotherissues.
Furthermore, Egypt is a signatory to the International Convention on Salvage (1989), which, in many ways, mirrors the Egyptian Maritime Trade Law.
(iv) Wreck removalThe following are the most important wreck removal and regu-lations in the Egyptian jurisdiction:■ Marine disasters and wrecks are covered by Law No.
(79/1961).■ DecreeNo. (260/2018) of theMinister of Transport on
the terms and conditions for providing licenses for the recovery of shipwrecks and naval units submerged in Egyptian national waters.
■ DecreeNo.(360/2018)oftheMinisterofTransportontheorganisation of the recovery of marine wreckage.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe Egyptian Marine Trade Law No. (8/1990) is the most impor-tant domestic law governing Egypt’s maritime and shipping issues. From articles 292–301 of the same statute, on the other hand, expressly address collision accidents.
Furthermore, the Law of Marine Disasters and Marine Wrecks No. (79/1961) governs further aspects of marine disasters. The types of conditions that are considered a marine disaster, for example, are listed in Egyptian legislation. According to the article, “the phrase “Marine Disaster” can be used to describe accidents such as a vessel’s wreckage, run aground occurrences, or the vessel’s encountering any risky condition”. (1). Furthermore, the Egyptian Body for Maritime Safety (EAMS) is defined in article 8 as the main authority in charge of conducting investi-gations and questioning any necessary witnesses, including the ship’s crew, in the event of an accident.
In addition, the Arab Republic of Egypt has ratified several international conventions relating to marine collisions, including:■ The International Convention for the Prevention of
Collisions at Sea (1972) (COLREGS).■ The International Convention for the Unification of
Certain Rules Relating to Penal Jurisdiction in Matters of Collision or Other Navigational Incidents (1952) is a treaty that was signed in 1952 (with reservation allowed by article 4 of the convention).
■ TheInternationalConventiononCertainRulesRelatingto Civil Jurisdiction in Collision Cases (1952).
■ The International Convention for the Unification ofCertain Rules of Law Concerning Maritime Assistance and Salvage (Brussels 1910).
(ii) PollutionIn terms of pollution occurrences, the Egyptian Maritime Trade Law, in conjunction with the Environment Law No. (9/2009) and its Executive Regulations issued by Prime Minister Decree No. (338/1995), governs pollution incidents.
In terms of international agreements on pollution liability, Egypt has ratified or acceded to several environmental treaties, including:■ The United Nations Convention on the Law of the Sea
and security requirements, as well as the verification of associated documentation and certification.
■ Monitor the technical standardsofEgyptianvessels andmaritime units, whether locally built or purchased from abroad, to ensure that they meet international technical requirements, to issue Registration Certificates and track the actions taken against them, and to issue and revalidate Seaworthiness Certificates and the necessary navigational permissions.
■ Takepartinsearchandrescue(S&R)andmaritimepollu-tion initiatives for the sea.
■ Conduct exams and provide sailors with CompetencyCertificates, Maritime Passports, and Sea Service Certificates.
■ Monitor the standards of Egyptian and foreign vesselscalling on Egyptian ports and/or crossing Egyptian terri-torial waters, and grant certificates and licenses in compli-ance with applicable international standards, conventions, and memorandums of understanding.
■ Establishprofessionalrequirementsformasters,officers,engineers, boilers, seafarers, fishermen, divers, and everyone else who works at sea.
■ Update the trainingofferedby specialised institutes andcentres that qualify the ship’s crew to meet worldwide standards.
■ Maintain the safetyofnavigation in territorialwatersbyoperating, maintaining, and fully using radio and radar beacons.
■ Toensuresafety in territorialwaters,makeplans, imple-ment means of navigational traffic, identify waterways and passages, and issue navigational reports and alerts.
■ Follow the comparable globally applicable laws, draughtmarine salvage and pollution legislation, supervise their implementation, and collaborate with relevant agencies.
■ Create local and/or international personnel trainingprograms to help them improve their performance following internationally accepted standards.
■ Followtheproperproceduresintheeventofamaritimecollision or other accidents or casualties such as fire or sinking, investigating the incident in collaboration with specialist agencies, issuing relevant reports, and endorsing maritime reports (sea protests).
■ Create sharing enterprises, alone or with partners, withthe approval of the Minister of Transportation to carry out tasks within its purview.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The Hamburg Rules (1978) are the relevant rules in Egypt for marine cargo claims under the United Nations Convention on the Carriage of Goods by Sea (Hamburg, 1978). Egypt, on the other hand, has adopted the United Nations Convention on Contracts for the International Sale of Goods (CISG), which may apply in certain instances.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The Hamburg Rules set out the basis of liability of the carrier in article 5. In the Egyptian jurisdiction, the same principles apply to both inbound and outbound goods carriage. “The carrier is
Egypt is not a contracting state to the Nairobi International Convention on the Removal of Wrecks, except for the agreements already mentioned.
(v) Limitation of liabilityArticles 81–91 of Egypt’s Maritime Trade Law No. (8/1990) govern all aspects of liability limitation. Egypt has also ratified the Convention on Limitation of Liability for Maritime Claims (LLMC 1976). Many aspects of liability limitation, such as the right of limitation, claims subject to limitation, and many other features, are covered by both the Convention and the Maritime Trade Law. Despite this, Egypt did not sign the LLMC Protocol (1996).
(vi) The limitation fundThe Egyptian Maritime Trade Law does not provide any formal-ities for the establishment of a limitation fund. A side to a dispute, on the other hand, can raise a limitation defence and insist on its implementation. Egypt is likewise a signatory to the LLMC 1976, which may be advantageous to the party seeking such relief in Egyptian courts. As previously stated, P&I Club letters are not commonly accepted in Egyptian courts; there-fore, when requesting the establishment of a limitation fund, it is advisable to use cash payments or bank guarantees.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Egyptian Authority for Maritime Safety (EAMS), which was formed by Presidential Decree No. (399/2004), is respon-sible for investigating maritime casualties.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
According to article 3 of Law No. (399/2004), the EAMS is competent to:■ Manageandregulatemaritimenavigationsafetyfollowing
international instruments to which Egypt is a party, as well as related laws and decrees, such as those relating to shipping safety and security, along with those relating to the safety of navigation in territorial waters, EEZ, and Egyptian ports not under the control of the Port Authority.
■ Represent Egypt in international maritime organisationsand other maritime safety-related organisations.
■ Exchange technical information with all internationalports and provide marine aid and services to all ships in Egyptian territorial waters and the EEZ, establish mari-time passages, and issue maritime alerts and notices to comply with territorial water safety regulations.
■ Exchangetechnical,professionalskills,andresearchinthefield of marine safety with international, regional author-ities and organisations, as well as developed countries, to raise the standards of safeguarding ships and ensure their safe passage.
■ Plan,design,install,monitor,upgrade,andmaintainlight-houses and navigational aids across national coasts, terri-torial waters, and the Exclusive Economic Zone, as well as provide necessary approvals and/or certification.
■ TheAuthorityandcompetententitieswillmonitormari-time safety standards and the quality of services they provide, and they will use the necessary procedures to verify maritime means of transport compliance with safety
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Claims relating to the death or injury of passengers are time-barred for a period of two years, according to the Egyptian Maritime Law No. (8/1990). Luggage claims are likewise governed by the same rules.
Second, claims for delays in arrival are subject to a six-month statute of limitations.
4 Arrest and Security
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?
An arrest can be used to secure a claim that falls under the concept of “Maritime Claims” as defined by the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships, which was established in 1952. As article 1 (1) specifies, a claim emerging from one or more of the following is referred to as a “Maritime Claim”:(a) any damage caused by a ship, whether caused by collision
or otherwise;(b) any loss of life or bodily harm caused by a ship or arising in
connection with the operation of a ship;(c) salvage;(d) any agreement of the use or rental of a ship, whether by a
charter party or otherwise;(e) a contract for the carriage of cargo by ship, whether by a
charter party or otherwise;(f ) any loss or damage to commodities, including baggage,
transported by ship;(g) the overall average;(h) bottomry;(i) towage;(j) pilotage;(k) any products or materials supplied to a ship for her opera-
tion or maintenance, wherever they may be found;(l) charges and dues for the construction, maintenance, or
equipment of any ship; (m) wages of Masters, Officers, or crew;(n) Master’s disbursements, including disbursements made on
behalf of a ship or her owner by shippers, charterers, or agents;
(o) disputes over the title to or ownership of any ship;(p) disputes between ship’s co-owners over ownership, posses-
sion, employment, or revenue; or(q) any ship’s mortgage or hypothecation ….
Second, under article 59 of the Maritime Trade Law No. (8/1990), it is permissible to arrest a ship in connection with a maritime claim on the order of the Chief of the Competent Court of First Instance or his agent.Procedure of ArrestTo have a vessel arrested, the claimant must make an applica-tion to the Chief of the Court of First Instance ( Judge of Urgent Affairs) for an order of security arrest.
The following points must be included in the application for security arrest:■ Asuccinctdescriptionofthedebt.■ Justificationsforsubmittinganapplication.
liable for loss resulting from loss of or damage to the goods, as well as from delay in delivery, if the occurrence which caused the loss, damage, or delay occurred while the goods were in his charge as defined in the article 4 unless the carrier proves that he, his serv-ants, or agents took all reasonable measures to prevent the loss, damage, or delay”, according to article 5.1 of the Hamburg Rules.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
“The shipper must mark or label dangerous products as dangerous in a reasonable manner”, according to article 13 of the Hamburg Rules, and if he fails to do so, he is liable to the carrier or any actual carrier for any loss resulting from the transpor-tation of such goods. Furthermore, the shipper is liable to the carrier for damages resulting from inaccuracy or disinformation in connection to the general character of the goods, their marks, number, weight, and amount as given by him for insertion in the bill of lading, according to article 17 of the Hamburg Rules.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Article 20 of the Hamburg Rules governs the time restrictions for marine cargo claims, stating that: “Any action relating to the carriage of goods under this Convention is time-barred if judicial or arbitral proceedings have not been initiated within a period of two years”. The Egyptian Maritime Trade Law No. (8/1990) follows the same time limit guidelines.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The following regulations apply to maritime passenger claims under articles 256–272 of the Egyptian Maritime Trade Law:(1) The carrier is liable for damages caused by the death or
injury of passengers while the carriage contract is being carried out.
(2) Unless the carrier can show that the delays were caused by circumstances beyond his control, the carrier is liable for damages resulting from delays in the transport contract’s execution.
(3) If it is demonstrated that the damage to carry-on baggage was caused by his fault or neglect, the carrier is liable.
(4) If it is established that the losses or injuries occurred as a result of the carrier’s fault or negligence, the carrier cannot claim limitation of culpability.
3.2 What are the international conventions and national laws relevant to passenger claims?
Articles 256–272 of the Egyptian Maritime Trade Law No. (8/1990) govern passenger claims. Egypt is also a signatory to the Athens Convention on Passenger and Luggage Transportation by Sea (1974).
4.4 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 options are available?
The creditor can exercise a lien over cargo as security for a marine debt against the debtor under articles 158 and 159 of the Egyptian Maritime Trade Law No. (8/1990).
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
P&I Club letters of undertaking are not frequently accepted, according to judicial practice; nonetheless, bank guarantee letters and cash deposits are known to be accepted in the Egyptian jurisdiction.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
The Egyptian Maritime Trade Law No. (8/1990) does not require counter security.
4.7 How are maritime assets preserved during a period of arrest?
During the arrest period, the owner of the maritime asset is responsible for its preservation and maintenance.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Any claim for unlawful arrest must be proven by the claimant, and the court will compensate the ship-owner for the damages and losses sustained as a result of the wrongful arrest.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
The parties to a disagreement are responsible for presenting evidence and requesting it from the court, according to the Egyptian Code for Civil and Commercial Procedures No. (13/1968). The court may, however, order the collection of evidence at its discretion by appointing experts to assist it, seeking witness statements, and asking for oral and documen-tary evidence from the disputed parties. As a result, a witness is required to attend in court and respond to any questions posed by the court or the parties’ attorneys. Extensive examination, on the other hand, is usually not permitted in Egyptian courts.
■ Proof that the claim complies with article 60 of theEgyptian Maritime Law No. (8/1990) and article 1 of the 1952 Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships.
To prevent denial for obtaining an order of arrest, the appli-cation must be accompanied by the official papers relevant to the claim.
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?
Yes, article 60 of the Egyptian Maritime Trade Law No. (8/1990) lays forth a list of claims that might lead to a ship’s arrest, including:■ Portandwatercoursestasks.■ Expenses incurred for the removal, pick-up,or liftingof
wrecked goods and merchandise.■ Damages incurred by the ship as a result of collisions,
pollution, or other maritime mishaps.■ Casualtiesandbodilyinjuriescausedbytheshipasaresult
of its use and exploitation.■ Contractsanddeedsrelatingtotheuseorrentaloftheship.■ Theship’sinsurance.■ Contractsforthetransportationofcommoditiesunderthe
terms of a leasing agreement or a bill of lading.■ Destruction or damage to commodities and luggage
conveyed by the ship.■ Salvageandrescueoperations.■ Jointlosses.■ Tuggingtheship.■ Pilotingworks.■ Suppliesofmaterialsor tools required for theoperation
or maintenance of the ship, regardless of the source of supplies.
■ Shipbuilding,repairs,andfurnishing,aswellasexpensesincurred at drydocks and dockyards for the ship.
■ Theshippingagenciesincurredsalariesandcompensationfor the captain, ship officers, and crew members.
■ Captains, ship-forwarders, ship-charterers, or shippingagencies incurred money on behalf of a ship or ship-owners.
holding, exploiting, and operating rights, or the rights of ship-owners in common to the proceeds of the ship’s use and exploitation.
■ Marinemortgage.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Yes, the list specified by article 60 (17) of the Maritime Trade Law No. (8/1990) includes conflicts over ship or vessel ownership. However, it should be noted that disputes over a vessel’s owner-ship are exempt from the use of Egyptian Maritime Law article 61, which allows a sister ship to be arrested if the ship under claim is unavailable.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Although there are no specific arbitral institutions in Egypt dedicated to maritime issues, the Cairo Regional Centre for International Commercial Arbitration (CRCICA) is the most important arbitral institution for commercial arbitration in general.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?For marine conflicts, there are no specialist ADR bodies. The parties’ agreement determines which institution they will use.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The main benefit of using Egyptian national courts is that the claimant can commence arrest processes quickly. Other ADR approaches, on the other hand, allow a faster resolution of the conflict, as well as confidentiality, which many parties prefer.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
In the marine and shipping sector, the Arab Republic of Egypt is a major landmark. The Egyptian Courts have dealt with a variety of marine issues thanks to their 15 commercial ports and 29 specialised ports. Egypt is also a signatory to several interna-tional treaties and agreements on maritime issues, all of which are following international norms.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Egypt is a member of the Hague Conference on Private International Law as a contracting state (HCCH). In addition, for a foreign judgment to be enforced in Egypt, an enforcement request must be made to the competent jurisdiction’s court. The foreign judgment must, however, meet the following requirements: (a) Egyptian courts must not have jurisdiction over the
matter, and the foreign court that rendered the verdict has authority under its international jurisdiction standards.
(b) The parties have been served with notice of the proceed-ings and have been properly represented before the compe-tent court.
(c) According to the laws governing the foreign court’s law, the decision or award is final and binding.
(d) The foreign ruling does not conflict with a previous award or judgment issued by Egyptian courts, and it does not go against current public policy concerns.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Foreign arbitral awards shall be enforced by the following proce-dures, according to the most recent modifications of the Egyptian Arbitration Law No. (27/1994):(1) The Court of Appeal should receive an enforcement request.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
In the statement of claim and the statement of defence, the Egyptian Code for Civil and Commercial Procedures requires the parties to produce evidence to support their claims. Furthermore, at the request of a party to the dispute, the court may mandate the disclosure of certain documents during the course of the proceedings.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Electronic instruments are admissible as evidence in civil, economic, and administrative transactions, according to article 15 of Law No. (15/2004) on Electronic Signatures and the Establishment of the Information Technology Industry Development Authority (ITIDA). They must, however, comply with the terms and regulations outlined in this Law, as well as the technical and technological rules outlined in the Executive Regulations. As a result, article 18 of the Law specifies the condi-tions that must be met for electronic devices to have the same determinative force as writing, which are:■ Theexclusivelinkbetweentheelectronicsignatureandthe
signer. ■ The exclusive control of the signer over the electronic
in the electronic document or electronic signature’s data.In addition, article 9 of the New Executive Regulations stip-
ulates that, along with the requirements of article 18 of the E-Signature Law, a technical control must be carried out using the following criteria:(1) The ability to identify the time and date of creation of the
electronic writing, or an official or non-official electronic document must be technically available. Such accessi-bility must be provided through an independent electronic archiving system that is not controlled by the author of the writing or the parties involved in it.
(2) The source of the electronic writing or an official or non-official electronic document, as well as the level of the creator’s control over that source and the media utilised in its creation, must be technically available.
Once it is possible to determine the conclusiveness of an elec-tronic writing – or an official or non-official electronic docu-ment made without human interaction partially or entirely – ensure, (a) the time and date of creation of the documents, and (b) the documents have not been tampered with.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime disputes in Egypt are subject to the jurisdiction of Economic Courts by Law No. (146/2019) revising the require-ments of Law No. (120/2008) on the Establishment of Economic Courts.
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.
The following are the most recent developments in Egypt that are directly related to the maritime sector:■ The issuance of the new Customs Law No. (207/2020),
replacing the Law No. (63/1966).■ The Presidential Decree No. (54/2020) requiring
Presidential permission before awarding a licence to create an international marina, without prejudice to the restric-tions of Law No. (12/1984) on Irrigation and Drainage.
■ The Prime Minister Decree No. (1847/2020) on estab-lishing Abu Suma Marina.
■ TheprovisionsofLawNo.(120/2008)ontheEstablishmentof Economic Courts were amended by Law No. (146/2019).
(2) A copy of the arbitration agreement, an Arabic translation of the award ratified by an authorised entity if the award is rendered in a foreign language, and a copy of the minutes verifying the filing of the award in the registry of the competent court should also be included in the request.
(3) An application for depositing the award with the compe-tent court’s clerical division should be filed.
The Ministry of Justice’s Arbitration Technical Bureau will decide whether the application is accepted or refused after deter-mining that:(1) The award did not breach the Arab Republic of Egypt’s
public order or resolve a disagreement that could not be resolved through negotiation.
(2) The application for the deposit has been submitted to the appropriate competent court.
However, until the deadline for initiating a nullity action has passed, the request for enforcement of an arbitral award will be denied. If those conditions are met, and there is no earlier Egyptian ruling on the identical subject, as well as no violation of Egyptian public policy concerns and a legitimate notification of the arbitral award, the award will be executed without review.
94 Egypt
Shipping Law 2021
Mohamed Mostafa Agamy is the Founder and Managing Partner of Links & Gains Law Firm. Agamy is a bilingual lawyer and a driven profes-sional legal consultant; with a proven track record of over 18 years of leading successful international legal transactions. Agamy has a diverse business area of expertise across North Africa and the Middle East. Prior to establishing Links & Gains Law Firm, Agamy was the Head of Legal at BG (Shell) & Petronas LNG Downstream JV, successfully leading negotiations and closing key settlement agreements to preserve and enhance shareholder value. He is professional with legal analysis and reasoning across the legal statuary of regions and monitors disputes before courts in both Egypt and abroad.Agamy is certified in “Contract Laws” from Harvard University edX 2018, and has a LL.M. in International Legal and Commercial Transactions.Agamy was appointed to expert cross-border Associate (“CBA”) exclusively for Egypt, particularly in M&As, corporate transactions, commer-cial litigation, advisory on due diligence with exposure awareness for high rank legal issues in the oil & gas and energy sectors; with expertise in aviation, shipping, logistics and taxation.
Links & Gains Law FirmVilla 1-A, Victory SquareDegla MaadiCairoEgypt
Omar Elzayat is an Attorney and Legal Research Specialist at Links & Gains Law Firm. Elzayat specialises in corporate legal affairs, commer-cial and Investor-State Arbitration. In addition, he is a legal research specialist who carries out research on a variety of legal topics. Elzayat holds a LL.B. degree from Ain Shams University, Egypt and is currently studying for a LL.M. degree at Middlesex University London.
Links & Gains Law FirmVilla 1-A, Victory SquareDegla MaadiCairoEgypt
Links & Gains Law Firm is an independent, specialised law firm, based in Cairo, Egypt, that links with a diverse international association of lawyers and advisors across the globe. Our core areas of practice are commer-cially oriented, with deep expertise in maritime and shipping law, oil & gas & renewable energy, and wide range of corporate legal services.
(ii) PollutionCivil liability:Civil liability arising from oil pollution in France is governed by articles L5122-25 et seq. and articles R5122-3 et seq. of the Code of Transports, article 1240 of the Civil Code, article L160-1 of the Environmental Code, the EU Directive 2004/35/EC of 21 April 2004 on environmental liability with regard to the preven-tion and remedying of environmental damage, the 1992 Civil Liability Convention, the 1992 Fund Convention, the 2003 Supplementary Fund Protocol, the 2001 Bunker Convention and the IMO-related resolutions.
Under the 1992 Civil Liability Convention, the owner of the vessel causing pollution damage, including the registered owner or, in the absence of registration, the person(s) owning the vessel at the time of the incident, is strictly liable for the said damage. No claim for compensation for pollution damage under the Convention or otherwise may be made against the servants or agents of the owner or the members of the crew, the pilot or any other person who, without being a member of the crew, performs services for the ship, any charterer, manager or oper-ator of the ship, any person performing salvage operations with the consent of the owner or on the instructions of a competent public authority, any person taking preventive measures, or their servants or agents. This exclusion, which is not reproduced in the 2001 Bunker Convention, does not apply in case of wilful miscon-duct. An action in tort can be brought against all entities not excluded by the 1992 Civil Liability Convention.
Rights of compensation are extinguished if no action is brought within three years from the date of the incident and in any event after six years from the date of the incident that caused the damage.
Owners of ships subject to the 1992 Civil Liability Convention and their insurers can invoke the limits of liability provided in the Convention and the subsequent amending Protocols, subject to the constitution of a limitation fund. These limits are broken in case of wilful misconduct. Where the pollution damage exceeds the limits of liability, claimants can seek the contribu-tion of the 1992 IOPC Fund and, when applicable, the 2003 Supplementary Fund.
Under articles L160-1 et seq. of the Environmental Code, in case of environmental damage, the liable entities can be ordered to take necessary prevention or remedial measures and can be subject to administrative proceedings initiated by the competent prefect of the concerned area.
Following a recent reform of the French Civil Code, the State, the public prosecutor, the French agency for biodiversity, the local authorities and any person having capacity and interest
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionCollisions are governed by the 1910 Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels, which provisions are reproduced into French domestic law (article L5131-1 et seq. and article R5131-1 of the Code of Transports). When appreciating the conduct of the vessels involved in a colli-sion, French courts would refer to the 1972 Convention on the International Regulations for Preventing Collisions at Sea (COLREGs), whereas issues in connection with civil and crim-inal jurisdiction will be determined respectively by the 1952 Convention on Certain Rules Concerning Civil Jurisdiction in Matters of Collision and the 1952 Convention for the Unification of Certain Rules relating to Penal Jurisdiction in Matters of Collision or Other Incidents of Navigation, and by the 1982 United Nations Convention on the Law of the Sea (Montego Bay).
Under the 1910 Convention, each vessel shall be liable for the sustained damages to the extent of its contributory fault, such fault being appreciated with reference to the COLREGs. If it is not possible to determine the degree of faults, the liability shall be apportioned equally, while in the event of an accidental collision, each vessel shall bear its own damages.
In case of total loss, damages must enable the victim to purchase a similar vessel on the market.
Cargo owners can seek compensation through an action in tort against the non-carrying vessel at fault and/or an action in contract against the carrying ship.
In respect of damages caused by death or personal injury, the vessels in fault are jointly and severally liable to third parties, including crewmen or passengers, subject to a right of recourse between the said vessels.
Actions for recovery of damages arising out of a collision must be introduced within two years from the date of occurrence of the collision, while recourse actions are time-barred within a year from the date of payment.
Collisions can give rise to criminal liability, under articles L5242-4 and L5263-1 of the Code of Transports and article 223-1 of the Penal Code.
up to 100% of the expenses incurred. Claims with respect to salvage are extinguished if no action is introduced within two years from the date when the salvage operations are terminated.
General average:The legal framework is drawn by articles L5133-1 et seq. and articles R5133-1 et seq. of the Code of Transports, whose provi-sions are not mandatory. In practice, maritime contracts refer to the York-Antwerp Rules, first adopted in 1890 and regularly updated since then.
The Rules apply when measures are taken to preserve the vessels and their cargoes from a common peril. Only losses, damages or expenses, which are the direct consequence of the general average act, shall be allowed as general average. Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the common maritime adventure, but this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault.
The 2016 Rules provide that, subject to any mandatory rule on time limitation contained in any applicable law, an action must be brought within a period of one year after the date upon which the general average adjustment is issued. In no case, such action shall be brought after six years from the date of termination of the common maritime adventure.
Under French law, any legal action arising from general average must be brought within a period of five years as of the date of termination of the common maritime adventure.
(iv) Wreck removalThe Nairobi International Convention on the Removal of Wrecks of 18 May 2007 was ratified by France on 7 July 2015. The Convention permits a State party to take measures to remove a wreck that is a hazard to navigation or the marine envi-ronment. The Convention holds the owner liable for the cost of locating, marking and removing the wreck provided they are reasonable and proportional to the hazard faced, and without prejudice to the owner’s right to limit liability.
The owner of the wreck can also be liable in contract, in case of breach of a contractual obligation, or in tort, if damage is caused to a third party. The public authority can also be liable for the damage caused by a wreck, when the necessary measures are not applied in good time.
Articles L5142-1 et seq. and articles R5142-1 et seq. of the Code of Transports set rules in relation to the ownership, sale and disposal of wrecks.
When the wreck infringes the public domain, the liability of the owner can be sought before the administrative courts.
(v) Limitation of liabilityFrance has ratified the 1976 Convention on Limitation of Liability for Maritime Claims and its amending Protocol of 1996, which provide that shipowners, including the registered owner, the charterer, the manager and the operator of a vessel, salvors, persons for whose acts the shipowner or the salvor are responsible and the insurers of particular liabilities have the right to limit their liability. These limits, as increased following the entry into force on 8 June 2015 of the IMO Resolution Leg. 5(99) of 19 April 2012, do not apply when the carrier or his agents are liable for wilful misconduct.
French domestic law reproduces the same principles and limits (article L5121-1 et seq. of the Code of Transports). However, liability insurers are not listed among the direct beneficiaries of the right to limit liability, so that they cannot invoke such right if no limitation fund has been constituted.
to act, will be entitled to seek the compensation of ecological damage, defined as being the damage resulting from significant harm to the elements or functions of the ecosystem or to the collective benefits drawn by human beings from the environ-ment (article 1246 et seq. of the Civil Code). Such action may be exercised within a period of 10 years from the date of knowledge of the damage (article 2226-1 of the Civil Code).
Criminal liability:Criminal liability is ruled by MARPOL 73/78, SOLAS 1974, the 1982 Montego Bay Convention, the 1990 Convention on Oil Pollution Preparedness, Response and Cooperation, the Erika packages, the EU Directive 2008/99/EC on the protection of the environment through criminal law, the EU Directive 2005/35/EC as amended by EU Directive 2009/123/EC on ship-source pollution and on the introduction of penalties for infringements, the EC Regulation 93/2007 amending EC Regulation 2099/2002 establishing a Committee on Safe Seas and the Prevention of Pollution from Ships (COSS), the Code of Transports, the Environmental Code and the Penal Code.
The offence consists of any discharge, whether voluntary or involuntary, from the vessel of oil or oil mixtures that does not correspond to the specific conditions of the MARPOL Convention.
The offence is deemed committed by the master of the vessel, the owner or operator of the vessel and/or any person who has a power of control or management in the operation of the vessel.
The offence can be deemed legitimate if discharge has been provoked by the state of need, the order of the law or the command of the legitimate authority, whereas liability can be excluded in the case of force majeure or pollution caused by damage to the ship or its equipment and aggravated in case of deliberate breach of a particular obligation of safety or prudence imposed by law or regulation or gross negligence that exposes the environment to a risk of a particular gravity that could not be ignored, or that as a consequence causes irreversible damage to the environment or causes a particular gravity to the environment.
Sanctions encompass imprisonment for up to 10 years, fines of up to 1,000,000 euros, disqualification from public tenders, prohibition to make a public appeal for funds and publication in newspapers.
The limitation period is of one year if the offence amounts to a contravention and three years if it corresponds to a misdemeanour.
(iii) Salvage/general averageSalvage:The International Convention on Salvage dated 28 April 1989 has been ratified by France and its provisions incorporated into the Code of Transports (article L5132-1 et seq.).
Property salvage is optional, while salvage of life, to prevent or minimise damage to the environment or in the event of a collision, is mandatory.
Salvage does not have to be agreed in writing. Yet, in practice, parties refer to salvage contract forms such as the Lloyd’s Open Form (LOF) and the Villeneau agreement.
The salvor is liable in case of a fault during the salvage oper-ations but can invoke the limitation of liability provided under article L5121-1 et seq. of the Code of Transports. If the salvage is successful, the salvor shall receive a reward on the basis of the “no cure no pay” principle, taking into account various perfor-mance criteria. The salvor who participates in a salvage opera-tion in which there is a threat of environmental damage is enti-tled to special compensation from the owner of the concerned vessel equivalent to the aggregate of the expenses incurred. If the intervention of the salvor does prevent or minimise damage to the environment, the special compensation is increased to
by the Protocols of 23 February 1968 and of 21 December 1979, is applicable to bills of lading relating to the carriage of goods between ports in two different States, while domestic carriage is subject to articles L5121-1 et seq., articles L5422-1 et seq., articles L5423-1 et seq., articles R5422-6 et seq., articles R5423-1 et seq., arti-cles D5422-1 et seq. of the Code of Transports, and articles 3, 12, 32 and 44 of the Decree n°66-1078 of 31 December 1966.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
It is a system of strict liability. The carrier is liable if reservation is made on delivery, or within three days from delivery when the damage is not apparent, unless proof is brought that the damage has been caused by one or more of the excluding events mentioned in the Convention or French law, as applicable. Limits of liability are applicable, unless the damage results from the wilful misconduct of the carrier. Action must be brought within a year from the date of delivery of the goods, or from the date on which the goods should have been delivered in case of total loss. Any recourse action must be brought within three months from the date of exercise of the principal action or from the date of settlement.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The shipper is liable to indemnify the carrier against any damage or liability resulting from an inaccuracy of the description of the goods on the bill of lading.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Action must be brought within one year from the date of delivery of the goods in case of damage or partial loss, or from the date on which the goods should have been delivered in case of total loss.
This period may be extended by agreement concluded between the parties after the cause of action has arisen. It is interrupted by the recognition of the right of the claimant by the debtor, by service of a writ of summons or by enforcement of an act through bailiffs and is suspended in case the claimant is unable to act as a result of any impediment resulting from law, an agreement or force majeure.
Any recourse action must be brought within three months from the date of exercise of the principal action or from the date of settlement.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The EU Regulation n°392/2009 on the liability of carriers of passengers by sea in the event of accidents, dated 23 April 2009, which incorporates the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974 and its Protocol of 2002, governs international and domestic carriage of passengers by ship. The provisions of the Code of Transports (article L5421-2 et seq. of the Code of Transports), of the Law n°66-420 of 18 June 1966 on maritime affreightment and
(vi) The limitation fundAny person entitled to limit and alleged to be liable may constitute a limitation fund. This right can be exercised in front of the court where proceedings are pending or before any legal proceedings are initiated. The constitution of the limitation fund is made through an application submitted to the president of the Commercial Court of the port of registry, if the vessel flies the French flag, or of the port where the vessel has been arrested if it is a foreign ship. Orders are then issued to open the procedure of constitu-tion and designate the liquidator and the method of constitution of the fund then, after the funds are deposited or the equivalent guarantee provided, to acknowledge the constitution of the fund. Creditors are informed by way of a registered letter and publica-tion in the journal of legal notices. Once all claims are produced, a statement is drawn and the fund is subsequently distributed.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The BEAmer is the official body under the authority of the general inspector for maritime affairs entrusted with investi-gating maritime casualties concerning vessels flying the French flag or occurring in French internal waters or territorial seas. It also intervenes outside the territorial waters whenever the casualty concerns a French-registered ship, leads to the death or serious injury of French nationals or has caused or threatens to cause serious harm to the French territory, the environment and installations or structures over which France has jurisdiction. It does not determine liability or apportion blame.
When a casualty is likely to have been caused by an offence or to be qualified as one, investigations are undertaken by the Public Prosecutor or the Investigating Judge, as the case may be, according to the rules of criminal procedure.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Regional Operational Centres for Monitoring and Rescue (CROSS), located on the French coast, monitor sea traffic and pollution events. They cooperate with the BEAmer, which is also entitled to conduct enquiries when a marine casualty, wherever it may occur, leads to the death or personal injury of French nationals or causes or threatens to cause serious harm to the French territory or the environment.
According to article L5281-1 et seq. of the Code of Transports, the interregional director of the sea, whenever informed of a sea casualty, carries out through public officers an administrative investigation, with a view to determining the circumstances of the casualty and taking any urgent measures.
In case of urgency, the maritime prefect and the concerned or neighbouring port authorities must take all necessary actions, including deviation of the vessel, to ensure the safety of persons and assets and to prevent any damage to the environment.
When the casualty is deemed to be the result of a criminal offence, investigations are also led by the police and the judicial authorities.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading of 25 August 1924, as amended
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?
France ratified the Brussels Convention Relating to the Arrest of Seagoing Ships of 10 May 1952. The Code of Transports (articles L5114-20 et seq., articles R5114-15 et seq.), and the Code of Civil Procedures of Execution (articles L111-1 et seq. and arti-cles R112-1 et seq.) are also applicable.
Under the Brussels Convention, ships may be arrested for any of the “maritime claims” identified in article 1 of the Convention. Under the domestic legislation, ships can be arrested for any prima facie claim that the petitioner may have against the owner of the ship.
The arrest can be made within the same day in case of urgency, if all the necessary documents are provided in due time. The petition must be substantiated with any document evidencing the existence and the cogency of the claim. When the petition is grounded on the Brussels Convention, the documents must also demonstrate the maritime nature of the claim. No original or notarised documents are required. The documents supporting the petition must be handed to the ruling judge.
The arrest of a ship is challenged by writ of summons served upon the arrestor, which is deemed to have elected domicile at the offices of its lawyers and/or bailiffs. The writ, which does not need to be translated, summons the arrestor to appear before the judge who ordered the arrest at a hearing that could be scheduled at the first convenience of the judge or his/her substitute, including the same day of the arrest.
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?
Both physical and contractual bunker suppliers are entitled to arrest the vessel to which bunkers have been supplied, whether under the 1952 Brussels Convention or under French domestic law. If, since the supply, the property of the vessel has been transferred to a third party, the arrest of the vessel is still possible if it is established that the claim is secured by a maritime lien, i.e. that the supply was ordered by the Master of the vessel and inter-vened within six months before the arrest.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Both physical and contractual bunker suppliers are entitled to arrest the vessel to which bunkers have been supplied, whether under the 1952 Brussels Convention or under French domestic law. If, since the supply, the property of the vessel has been transferred to a third party, the arrest of the vessel is still possible if it is established that the claim is secured by a maritime lien, i.e. that the supply was ordered by the Master of the vessel and inter-vened within six months before the arrest.
carriage contracts (article 47 to 49), and of the Tourism Code (article L211-1 et seq.) only apply subsidiarily.
For loss suffered as a result of the death of or personal injury to a passenger caused by a shipping incident, the carrier is liable unless the incident is the result of an act of war, hostilities, civil war, insur-rection or force majeure or was wholly caused by an act or omission done with the intent to cause the incident by a third party.
For loss suffered as a result of the loss of or damage to luggage other than cabin luggage, the carrier shall be liable unless the carrier proves that the incident, which caused the loss, occurred without the fault or neglect of the carrier.
For loss suffered as a result of the death of or personal injury to a passenger not caused by a shipping incident, or as a result of the loss of or damage to cabin luggage, the carrier is liable if the inci-dent, which caused the loss, was due to the fault or neglect of the carrier.
The liability of the carrier can be limited unless there is wilful misconduct.
Actions against the carrier must be brought within two years.
3.2 What are the international conventions and national laws relevant to passenger claims?
The international conventions and national laws are:■ The Athens Convention relating to the Carriage of
Passengers and their Luggage by Sea 1974 and its Protocol of 2002, which is incorporated in the EU Regulation n°392/2009 on the liability of carriers of passengers by sea in the event of accidents, dated 23 April 2009.
■ ArticlesL5421-2et seq. of the Code of Transports, articles 47 to 49 of the Law n°66-420 of 18 June 1966 on maritime affreightment and carriage contracts, and articles L211-1 et seq. of the Tourism Code.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Actions against the carrier must be brought within two years from the date of disembarkation of the passenger in the case of personal injury; in the case of death occurring during carriage, from the date when the passenger should have disembarked; in the case of personal injury occurring during carriage and resulting in the death of the passenger after disembarkation, from the date of death, provided that this period shall not exceed three years from the date of disembarkation; and in the case of loss of or damage to luggage, from the date of disembarkation or from the date when disembarkation should have taken place, whichever is later.
This time limit may be extended by a declaration of the carrier or by agreement of the parties after the cause of action has arisen and is subject to the same causes of interruption and suspension mentioned above (see question 2.4).
No action can be brought after the expiration of a period of five years from the date of disembarkation of the passenger or from the date when disembarkation should have taken place, whichever is later; or, if earlier, after the expiration of a period of three years from the date when the claimant knew or ought reasonably to have known of the injury, loss or damage caused by the incident.
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Provided no substantive action has already been started, a peti-tion can be filed before the president of the commercial court, with a view to obtaining an order summoning the adverse party not to dispose of specific evidence or authorising conservative measures or designating a court surveyor with the aim being for them to intervene as a matter of urgency and record facts and statements. In the absence of urgency, the court survey can be sought through a writ of summons served on the adverse party. If proceedings on the merits have already been initiated, the above measures can be requested from the ruling judge or from the competent judge of execution.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Under French procedural laws, parties are free to communicate the documents that serve their own interests and demands and are not compelled to disclose all documents in connection with the dispute or those that may be requested by adverse parties. However, any party could ask the ruling judge to summon another party to produce any document that it is known or supposed to hold, and which is deemed to be necessary for the dispute assessment.
The same applies to maritime disputes.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Under French procedural laws, there is no specific provi-sion relating to the electronic discovery and preservation of evidence. It is interesting to note, however, that the French National Chamber of Bailiffs has developed a tool to store emails (Mailicys.fr), for ease of evidence.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims must be brought before commercial courts, save for when one of the parties is not a trader, in which case civil courts are competent. Proceedings before both courts are started on the basis of a writ of summons that is served on the defendant through bailiffs and that is subsequently regis-tered at the designated court. Thereafter, parties exchange written submissions until the court sets a hearing for the final oral pleadings and subsequently, a date to issue the judgment. Proceedings in general last for one to two years. An appeal can
4.4 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 options are available?
France ratified the Brussels Convention on Maritime Liens and Mortgages dated 10 April 1926, incorporated into arti-cles L5114-7 et seq. of the Code of Transports. An additional maritime lien is provided under article L5114-8 of the Code of Transports (“the shipping agent’s claim for disbursements paid outside the port registry of the vessel”).
A maritime lien would allow the arrest of the vessel irrespec-tive of the fact that the claim is not directed against its owner or demise charterer.
As regards cargo, under French law, the carrier, the owner and/or demise charterer are entitled to exercise a lien on the cargo subject to the carriage concerned by the claim (articles L5422-8, L5433-9 and L5423-3 of the Code of Transports).
A maritime claim could also allow the attachment of any assets, other than the vessel or the cargo, as the case may be, belonging to the debtor on the basis of an ex parte application, if it is estab-lished that it seems grounded in principle (prima facie claim) and that there are circumstances likely to threaten its recovery (article L511-1 of the Code of Civil Procedures of Execution).
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
As a matter of principle, any security that would be equivalent to the guarantee offered by the arrest of the ship for the recovery of the claim is acceptable. In practice, French judges accept bank guarantees, cash deposits and P&I letters of undertaking. Security would need to cover the exact sum for which the arrest of the ship has been ordered. This sum often includes a provi-sion for interests and costs.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
It is not common practice that French courts require counter security as a prerequisite for the arrest of a ship. Yet, judges have the discretion to decide otherwise.
4.7 How are maritime assets preserved during a period of arrest?
The owner of the arrested assets is responsible for their main-tenance during the period of arrest. The arrestor may also be authorised to take maintenance measures during the period of arrest for the account of the owner in case of failure of the latter.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
An arrest is deemed wrongful when it is established that it has been undertaken with obvious bad faith or malice. The shipowner will then be entitled to claim damages for the consecutive financial year or other loss suffered.
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Recognition of European judgments:The EU Regulation n°1215/2012 of 12 December 2012 (recast) is applicable. A judgment issued in a Member State shall be recog-nised in France without any special procedure being required.
Enforcement of European judgments:A judgment given and enforceable in an EU Member State shall be enforceable in France on the basis of a mere application filed before the court where the enforcement is sought, enclosing a copy of the judgment satisfying the prerequisites to establish its authenticity and a certificate issued as per the EU Regulation n°1215/2012.
Enforcement of foreign judgments:A procedure of enforcement must be introduced, by way of a writ of summons, before the civil court of first instance of the place where the defendant is located or the judgment is to be enforced. The court will verify that the judgment has been issued by a competent foreign court, that it does not infringe substantive or procedural rules of international public order and that it is not tainted with fraud. If all prerequisites are met, the court will issue a decision ordering the enforcement of the foreign judgment. This decision is subject to the usual recourses known under French procedural laws.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
France has ratified the 1958 New York Arbitration Convention. Enforcement of arbitration awards is sought by way of an appli-
cation filed before the president of the civil court of first instance of Paris, enclosing original certified copies of the award and of the arbitration agreement. After verifying that the arbitration court was indeed competent, lawfully constituted and did rule as per its assigned mission, that the rights of defence have been respected and that the award is not contrary to international public order, the president of the civil court will issue a decision ordering the enforcement of the foreign award. This decision is subject to the usual recourses known under French procedural laws.
8 Updates and Developments
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.
Further to the Law n°2019-1428 dated 24 December 2019 on mobility orientation, authorising the Government to order meas-ures to enable the navigation of autonomous ships, a ministe-rial order was issued on 20 May 2020 to outline the conditions and methods of navigation trials of maritime floating surface or submarine engines being developed, whether autonomous or remotely controlled, as to ensure the security and safety of persons and properties as well as the preservation of the environment.
be lodged against the judgment before the corresponding Court of Appeal. After the exchange of submissions, the Court of Appeal sets a date for the closure of the debates and a date for the final pleadings. Appeal proceedings last one to two years. A recourse can be brought against the judgment of the Court of Appeal before the Supreme Court in Paris. The Supreme Court only rules on issues of law and does not reconsider the facts of the matter. Proceedings are monitored by Supreme Court lawyers and usually last between one and two years. Either the Supreme Court confirms the judgment of the Court of Appeal and the matter is deemed definitely closed, or it quashes the judg-ment of the Court of Appeal and the matter must be heard again, in law and in fact, by a different Court of Appeal or Chamber of the initial Court of Appeal designated by the Supreme Court.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Arbitration can be run by arbitrators freely designated by the parties or by a specialised body, such as the Chambre Arbitrale Maritime de Paris (CAMP), which is commonly designated in mari-time contracts or following maritime disputes. The CAMP has its own rules and is seized on the basis of a simple request outlining the purpose of the arbitration and identifying the parties. Proceedings usually last for six months to one year.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Although not yet widespread in French maritime practice, medi-ation and ADR can be envisaged before mediators or concil-iators mutually designated by the parties or before specialised bodies.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Proceedings before French courts are relatively cheap and deci-sions are, in practice, in line with the established case-law. An enforceable decision can also be obtained relatively rapidly.
Arbitral proceedings in France are cheap compared to other jurisdictions.
Mediation and ADR are not commonly used in the maritime field but would also be relatively cheap and fast.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Costs are relatively low, and proceedings can be engaged and terminated rapidly in cases of urgency.
No Power of Attorney (POA) is needed, which can be of interest when urgent measures need to be taken.
Proceedings can last for a long time when numerous parties are involved.
The winning party does not recover the entire costs incurred in the proceedings (lawyers and bailiffs fees, translation costs, etc.); French courts usually grant a reduced lump sum indem-nity in this respect.
101RICHEMONT DELVISO
Shipping Law 2021
Henri Najjar is registered at the Paris Bar and is admitted to intervene before all French courts. He holds a Master’s Degree in Business and Taxation law (Paris II – Assas, FR) and an LL.M. in Insurance Law, Carriage of Goods by Sea and International Trade (Soton, UK).Henri advises and handles litigation in all matters in connection with the maritime, insurance and international trade practice and represents various shipowners, charterers, freight forwarders, P&I Clubs, and civil liability and H&M insurers.He has also developed an expertise in the set-up of agencies and joint ventures worldwide.Henri is Member of the Association Française de Droit Maritime, the International Bar Association and the Instituto IberoAmericano de Derecho Maritimo as Vice-President for France.Henri is author of the JurisClasseur Transports outline on the Events of the Sea: collision; salvage; towage; general average (Lexis-Nexis); and of the JurisClasseur Transports fascicule on Oil Pollution and regularly intervenes as a speaker at the IBA, IMLS and Shiparrested.com seminars.
RICHEMONT DELVISO is an international law firm specialised in maritime law, transport law, insurance law, business law, international trade law and employment law.RICHEMONT DELVISO provides a global legal assistance, covering, advising, drafting and reviewing contracts, setting up and following-up structures, projects and ventures of all kinds as well as mediating and managing all judicial and arbitral disputes.RICHEMONT DELVISO is also increasingly involved in assisting clients in auditing and assessing risks that may arise from their business operations, including the impact of applicable legislation and regulation.With offices in Paris, Marseilles and Ajaccio, and a regional office in Douala (Cameroon), RICHEMONT DELVISO intervenes anywhere in metropolitan France and in French overseas departments and territories, as well as in all the Central and West African francophone countries.
RICHEMONT DELVISO has a very large international network of correspond-ents, which allows the law firm to provide rapid and efficient legal assis-tance throughout the world.
on Third Party Liability in the Field of Nuclear Energy. Further, Germany has ratified the 1971 Convention relating to Civil Liability in the Field of Maritime Carriage of Nuclear Material.
Finally, it should be noted that the EU Directive 2008/98 (“Waste Directive”) is in force in Germany and has been imple-mented into national law. The respective provision might apply if waste is shipped or lost overboard.
(iii) Salvage/general averageGermany has ratified the 1989 Salvage Convention (“Salvage Convention”) without the stipulation to make the provisions of the Salvage Convention being directly applicable by law. Instead, Germany has incorporated the provision of the Salvage Convention into the German Commercial Code (see sec. 574 ff HGB). As per sec. 576 HGB, the principle of “no cure, no pay” applies strictly with one exception: even if the salvage oper-ation itself turned out to be unsuccessful, the salvor is enti-tled to claim remuneration if environmental damages have been prevented or minimised by measures taken by the salvor. The provisions of the German Commercial Code regarding salvage are non-mandatory. Therefore, the parties to a salvage operation are free to agree on salvage contracts including any choice of applicable law (for example the Lloyd’s Open Form (“LOF”)). If no salvage contract has been agreed, German law will be applicable if an underlying contract between the parties to a salvage operation is subject to German law (e.g. the tug engaged under a towage contract, being subject to German law, performs successfully firefighting the fire that broke out on the tow), or if both parties have their general places of business in Germany respectively, or if the salvage operation was finalised in German waters.
Sec. 588 HGB provides (non-mandatory) statute law regarding general average proceedings. The rules under German law are very similar to the York-Antwerp-Rules (“YAR”). German law, therefore, acknowledges the agreement of the parties to general average proceedings (for example, in a charter party or in a bill of lading) that YAR or a different regime applies.
(iv) Wreck removalGermany has ratified the 2007 International Convention on the Removal of Wrecks (“Wreck Removal Convention”). The Wreck Removal Convention applies if a vessel is sunken or stranded in the exclusive economic zone of Germany. Under the Wreck Removal Convention, the registered owner of a sunken or stranded vessel is liable for the costs of localisation and the removal of wreck and cargo.
A wreck removal in the territorial water of Germany (which includes the coastal sea and inland waterways) is subject to the
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionGermany has ratified the 1910 Collision Convention (“Collision Convention”). The provisions of the Collision Convention determine the liability in a collision case, provided that vessels of at least two different Member States of the Collision Convention are involved in the collision. The Collision Convention does not apply if a warship or a vessel of the non-Member State is involved, provided the reciprocity with this state has not been agreed. According to Article 12 (2) Collision Convention, this does not apply if all parties involved and the court seized with the case are situated in the same country.
If the Collision Convention does not apply, sec. 570 German Commercial Code (Handelsgesetzbuch (“HGB”)) provides that the owner of the vessel having caused the collision is liable for the damages to the persons and goods on board the other vessel.
Both the Collision Convention and sec. 570 HGB require that the shipowner or his crew have acted negligently or intention-ally in order to be liable. As per sec. 477 (2) HGB, a demise char-terer replaces the shipowner as the party being potentially liable.
(ii) PollutionGermany has ratified the 1969 International Convention on Civil Liability for Oil Pollution Damages (“CLC”). As per the CLC, the owner of an oil tanker is liable for any damages caused by oil having been released from its oil tanker or flown out for whatever reason. Liability does not provide the owner of the oil tanker, or respectively his crew, having acted negligently or intention-ally. The owner of the oil tanker is entitled to limit its liability with respect to the size of the oil tank in question. Further, Germany has ratified the 1992 International Convention on the Establishment of an International Fund for Compensation of Oil Pollution Damages as amended in 2003 (“FUND”).
Germany has ratified the 2001 International Convention on Civil Liability for Bunker Oil Damages (“BUNKER”). It applies if bunker oil has been released from a vessel or flown out unintentionally. The registered owner of the vessel, the bare-boat charterer and the manager of the vessel are jointly liable. BUNKER does not provide for a limitation of liability.
Germany has ratified the 1962 Convention on the Liability of Operators of Nuclear Ships as well as the 1960 Convention
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The maritime authorities (Seeämter) and the Bundesstelle für Seeunfalluntersuchung are entitled to investigate the casualty, to hear witnesses, to appoint surveyors and to collect documenta-tion being required for the investigations.
A public prosecutor and/or the local police are entitled to use, in principle, all tools of criminal investigations to the extent they are permitted under German law, i.e. phone tapping if permitted by the local criminal court, confiscation of pieces of evidence, etc. Evidence collected in the course of the investigations of a public prosecutor and/or the local police can also be used in the course of the investigations of the maritime authorities and the Bundesstelle für Seeunfalluntersuchung.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Germany has ratified the 1924 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (“Hague Rules”). However, the 1968 Protocol to Amend the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (“Hague-Visby Rules”) has not been ratified. The content of the Hague-Visby Rules is widely incorporated into the HGB. Cargo claims are therefore subject to the stipulations of the HGB and additionally the Hague Rules.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
In principle, the shipper, as the contractual partner of the carrier, can assert cargo claims. In addition, the consignee may assert claims under the contract of carriage (sec. 494 (1) HGB).
If a bill of lading has been issued, claims can only be made by the legitimate holder of the bill of lading (sec. 519 HGB). A party shall be deemed to be the legitimate holder of a bill of lading if he is in the possession of a bill of lading which meets any one of the following criteria: ■ itismadeout“toBearer”;■ itismadeout“toOrder”andidentifiestheholderasthe
consignee or does so by means of an unbroken chain of endorsements; or
■ itismadeoutinthenameoftheholder.Cargo claims must be raised against the carrier. If the carriage
is carried out by a third party, a claim may also be made against the third party acting as the performing carrier in accordance with sec. 509 HGB. This also applies if a bill of lading has been issued (sec. 522 (3) HGB).
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The shipper shall compensate the carrier for any damage, cost or expenses caused by the lack, inaccuracy or incomplete-ness of the required documents or the failure to disclose the goods’ nature (sec. 488 (1) HGB). If the incorrect or incom-plete information has been provided by a third party, the carrier may also demand compensation from said third party in the
German Federal Waterway Act. Again, the owner of a sunken vessel is liable for the cost of the removal of the wreck and its cargo (see sec. 30 (12) German Federal Waterway Act).
(v) Limitation of liabilityGermany has ratified the 1976 Convention on the Limitation of Liability for Maritime Claims as well as the Protocol of 1995 (“LLMC”). The shipowner, charterer, manager, operator, captain, crew, salvor, and underwriter involved are entitled as per Article 1 LLMC to limit their liability. As per Article 4 LLMC, the claimant has the possibility to break the limited liability by providing sufficient evidence that the other party acted with intent or gross negligence. German courts accept gross negli-gence in this regard if the person having caused the incident grossly breached due diligence in this regard and disregarded all the precautions a diligent person in his position with his knowl-edge of the circumstances would have taken into consideration.
(vi) The limitation fundA limitation fund must be established as per Article 11 LLMC by the party seeking a limitation of its liability. It is a requirement to establish a limitation fund in Germany that legal proceed-ings are pending in Germany with respect to the incident. The amount to be paid into the limitation fund is to be calculated as per Articles 6–8 LLMC, while it should be noted that the limi-tation amounts have increased from time to time since 1976. The latest increase of the limitation amount came into force in Germany on 8 June 2015 after the legal committee of the International Maritime Organization (“IMO”) released a corre-sponding decision on 19 April 2012. The main principle for the calculation of the limitation fund, the space content of the vessel, remained unchanged.
1.2 Which authority investigates maritime casualties in your jurisdiction?
On 16 June 2002, the German statute law on the Investigation of Maritime Security (“SUG”) has been introduced. This statute law was amended on 1 December 2011 when the EU Directive 2009/18 was implemented into German law. Today, the SUG is in force with its latest amendments dated 19 October 2013. The SUG provides for two different official investigations with respect to a maritime incident. First, as per IMO requirements, an official investigation of a maritime incident is carried out by the competent maritime authority (Seeamt) with the focus to investigate and clarify the reasons for the maritime incident with no regard to questions of liabilities. The official report to be released by the competent maritime authority is – from the legal point of view – to be regarded as an expert survey report.
Second, the Federal Authority for the Investigation of a Maritime Incident (Bundesstelle für Seeunfalluntersuchung) is the body which investigates the question of liability for a maritime incident. If a human error caused the maritime incident, the Bundesstelle für Seeunfalluntersuchung is competent to retract any licence, respec-tively to prohibit that the person who caused the maritime inci-dent sails on a vessel as captain, officer or helmsman. It is the aim of the investigation to improve the safety of marine traffic and, therefore, recommendations can be made in order to prevent maritime incidents of a similar kind in the future.
In case of personal injury or damage to property in the course of a maritime incident, the local public prosecutor and the local police are entitled and, in some cases, obliged to conduct crim-inal investigations.
have taken place, respectively. Sec. 606 HGB also provides that claims become time-barred after two years.
However, it must be taken into account that according to Article 16 (3) of the Athens Convention 2002, certain maximum time limits apply to judicial enforcement. Hence, sec. 550 HGB states that a passenger claim shall expire unless it is made in court proceedings after a period of three years; either from the date on which the claimant becomes aware of the damage or five years from the date of disembarkation, whichever is later.
4 Arrest and Security
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?
Germany has ratified the 1952 Brussels Arrest Convention (“Arrest Convention”). The arrest of a vessel provides that the party seeking to obtain security for a maritime claim makes it credible to the court: (1) that it has indeed a maritime claim in the meaning of the arrest convention against the shipowner; and (2) that the vessel to be arrested is owned by the shipowner. As per sec. 917 (2) German Civil Procedure Code (Zivilprozessordnung (“ZPO”)), it is not necessary to make it credible that without the arrest the enforcement of the maritime claim will be impeded or made impossible. Sufficient evidence as to the maritime claim to be secured and as to the identity of the shipowner can be provided by documentary evidence or by formal testimonies of witnesses. Under German law, maritime claims can be secured by obtaining an arrest order from the competent local court regardless of a security by a maritime lien.
Generally, it is possible under German law to arrest a sister vessel provided it is owned by the same shipowner.
Usually, the enforcement of an arrest order is dependent on the claimant to post security. Such security is either a cash deposit to be made in the court or a bank guarantee of a first-class bank with its general place of business in the EU. Once an arrest order is granted, the court will not serve the arrest order on the ship-owner ex officio. The claimant seeking security needs to instruct the local bailiff to carry out service of the arrest order on the shipowner or the captain of the vessel to be arrested.
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?
It is possible for a bunker supplier to arrest a vessel with respect to its claim for payment of the purchase price for bunkers supplied to the vessel. As per Article 1 (1) k Arrest Convention, the claim for payment of the purchase price for bunker supplies is a maritime claim in the meaning of the Arrest Convention. In order to arrest the vessel, the bunker supplier needs to demon-strate and make credible that his contractual partner regarding the supply of bunker is the registered owner.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
An arrest of a vessel for claims arising out of a contract of sale regarding the vessel is rarely possible. The purchase price in this regard does not qualify to be a maritime claim in the meaning of Article 1 (1) Arrest Convention. Article 2 Arrest Convention permits an arrest of a seagoing vessel only for maritime claims in the meaning of the Arrest Convention. However, an arrest is
event of a fault or neglect of the third party (sec. 488 (2) HGB). Where a bill of lading is issued, the carrier can raise claims against the shipper for damages caused by the inaccuracy or incompleteness of any information in the bill of lading in respect to the goods’ quantity, number, weight or leading marks, or the failure to disclose the dangerous nature of the goods in accord-ance with sec. 488 (3) HGB.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
According to sec. 605 HGB, claims arising from the contract of carriage by sea and from the bill of lading are subject to a limita-tion period of one year from the date of the delivery of the goods or the date when the goods should have been delivered, respec-tively. This time limit also applies to competing non-contractual claims. The aforementioned time-bar can only be shortened by an individual agreement (sec. 609 (1) HGB).
It is possible to suspend the statute of limitations by holding the carrier liable (sec. 608 (1) HGB). The suspension ends at the moment when the carrier refuses to fulfil the claim.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The relevant key provisions derive from the 1974 Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (“Athens Convention”) as amended by the Protocol of 2002 as well as EU Regulations No. 392/2009 and No. 1177/2010. The European legislator incorporated essential parts of the Athens Convention 2002 into EU Regulation No. 392/2009, which is directly applicable.
The provisions of the German Commercial Code on contracts for the carriage of passengers, in particular sec. 536–552 HGB, apply if the scope of directly applicable measures of the European Union, in particular EU Regulation No. 392/2009 or directly applicable international conventions, are not opened.
3.2 What are the international conventions and national laws relevant to passenger claims?
Germany has not ratified the Athens Convention. However, by virtue of EU Regulation 392/2009, the Athens Convention applies as amended by the Protocol of 2002. In addition, EU Regulation No. 392/2009 on the liability of carriers of passen-gers by sea in the event of accidents and EU Regulation No. 1177/2010 concerning the rights of passengers when travelling by sea and inland waterway apply.
The scope of application of sec. 536–552 HGB is reduced by the precedence of EU Regulation No. 392/2009. The provi-sions of the HGB apply to international carriage by sea if there is no reference to an EU Member State, but the application of German Law has been agreed.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Any action for damages shall be time-barred after a period of two years in accordance with Article 16 EU Regulation No. 392/2009. The two-year time-bar begins on the day of the disembarkation or the date when the disembarkation should
negligence. If an arrest order has been issued, the defendant has the legal remedy to formally object. The court will then have the option either to arrange for an oral hearing, or to order the arrest order not to be enforced until a final decision is made. Should the arrest turn out to be wrongful, the defendant (ship-owner) needs to recover his damages/losses in separate substan-tive court proceedings against the claimant.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
If a maritime claim needs to be enforced or defended, it is appro-priate to collect all useful evidence from the client in due course which, inter alia, may include taking testimonies of crew members, collecting documentary evidence etc. There is no straightforward legal remedy to collect evidence in the possession of the oppo-nent. German civil procedure law allows for the possibility to make an application to the competent court to safeguard evidence, either by appointing a court surveyor in order to provide the court and the parties with an expert report or to interdict one party to destroy or remove evidence, for example by demolishing a wreck.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
German law does not acknowledge the principle of disclosure and, therefore, there are no disclosure obligations under German civil procedure law. Only under specific circumstances is the oppo-nent obliged, as per a corresponding court order, to present to the court any documents in his possession (see secs 421–425 ZPO).
5.3 How is the electronic discovery and preservation of evidence dealt with?
There is no disclosure or discovery process in the German jurisdiction.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims are generally heard by chambers for commer-cial matters at the competent civil court. Litigation proceedings are generally initiated by the filing of a lawsuit. In the event of imminent “forum shopping”, the filing of a lawsuit is the rele-vant point in time to secure a place of jurisdiction in Germany.
The duration of proceedings depends mainly on the complexity of the case and the conduct of the proceedings by the parties. Due to their proximity to the relevant seaports, the courts in Hamburg and Bremen in particular are frequently entrusted with maritime claims.
possible if the seller of a vessel reserved ownership of the vessel, unless the purchase price is fully paid. In such a scenario when the purchase price is not fully paid, the question of ownership of the vessel constitutes a maritime claim as per Article 1 (1) o Arrest Convention and can be secured by an arrest order of the competent court.
4.4 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 options are available?
The creditor of a maritime claim being secured by a maritime lien can arrest a vessel even if the registered shipowner is not the creditor but, for example, the buyer of the vessel. Such a mari-time claim being secured by a maritime lien can be enforced against any party having possession of the vessel.
With respect to a maritime claim not being secured by a mari-time lien, generally only the registered shipowner or the demise charterer being regarded as the shipowner as per sec. 477 (2) HGB is the party being obliged to provide security.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
In an arrest order, a German court will permit a cash deposit or a bank guarantee provided by a first-class bank with its general place of business within the EU as appropriate security. A letter of undertaking (“LOU”) of the P&I Club is not sufficient secu-rity in this regard. However, a LOU is often accepted by the claimant as sufficient security provided the wording of the LOU is standard and provided the P&I Club, having issued the LOU in question, has a decent reputation.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
German courts are not obliged to order the claimant to provide security when issuing an arrest order. It is up to the discre-tion of the court if any such security is required but, usually, the court will ask the claimant to provide appropriate security to safeguard a potential claim of the defendant for damages should the arrest order be wrongful.
4.7 How are maritime assets preserved during a period of arrest?
The claimant enforces an arrest order of the court by instructing the local bailiff to serve the arrest order on either the shipowner or the captain of the vessel to be arrested. Once service has been effected, the local bailiff takes possession of and must preserve the vessel during the arrest.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
A wrongful arrest leads to strict liability of the claimant for all damages caused to the defendant as per sec. 945 ZPO. An arrest is wrongful if the prerequisites of an arrest order are not fulfilled. Liability of the claimant is established even if he acted without
matters (“Brussels Ia-Regulation”) applies for the entire European Union and provides that a judgment given in a Member State shall be recognised and enforceable in any other Member State of the EU without any declaration of enforcea-bility being required (see also sec. 794 (1) no. 9 ZPO).
The European Union signed a treaty with Iceland, Switzerland, Norway and Denmark (“2007 Lugano Convention”) with almost congruent content to the Brussels Ia-Regulation.
The 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters has not entered into force. If the Convention enters into force, litigation will become more important compared to arbi-tration, which is more practicable due to the globally recognised 1958 UN Convention of the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) (see ques-tion 7.2).
The Code of Civil Procedure also permits the recognition of foreign judgments outside of state treaties. However, it is particularly necessary that reciprocity is guaranteed; a judgment from a third country can only have a legal effect in Germany if the third country also recognises German judgments.
If a judgment of a court of a third country is irreconcilable with German public policy, the judgment will be excluded from recognition and enforcement regardless of its legal effect.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Germany is a contracting party to the New York Convention. The provisions of the New York Convention will not affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral awards entered into by the respective contracting states (sec. 1061 (2) ZPO).
If the New York Convention is not applicable, the arbitral award will be recognised and enforced in accordance with the stipula-tions of the German Civil Procedure Code (secs 1025– 1066 ZPO).
If an arbitral award is contrary to the domestic German public policy, the award will neither be recognised nor declared enforce-able (Federal Supreme Court of Germany (Bundesgerichtshof ), decision of 30 October 2008–III ZB 17/08).
8 Updates and Developments
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.
Since 2013, the Code of Civil Procedure has provided that hear-ings can also be conducted by video conference (sec. 128a ZPO). However, this was hardly ever used. Due to the COVID-19 pandemic, digitalisation has finally advanced in the German legal system, so that civil courts now frequently hold oral hear-ings by video conference as well.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The Rules of the German Maritime Arbitration Association (“GMAA”) are the most recognised rules for maritime arbitra-tion in Germany.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?The GMAA provides for Mediation Rules. Also, according to German civil procedure law (sec. 278a ZPO), the civil court may refer the parties for mediation proceedings to a judge designated for this purpose. Compared to other jurisdictions, ADR and mediation are, however, not commonly used in respect to mari-time claims in Germany.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The advantage of arbitration is generally one of time, as the arbi-tral award is made in one instance and is regularly not appeal-able. In addition, arbitration proceedings – unlike civil proceed-ings – are not public; therefore any disputes and the outcome of arbitral proceedings are not made public. In complex cases, the expertise of professionals in the maritime sector acting as arbi-trators is often beneficial.
Some civil courts, such as the Hamburg Regional Court in particular, have long experience with maritime litigation. Since the costs of litigation in Germany are comparatively low, there is therefore, the possibility of obtaining a reliable and inexpensive decision in civil proceedings.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
It must be noted that neither German civil procedural law nor the rules of German arbitration bodies provide for the process of disclosure. Hence, a party is generally not required to disclose detrimental evidence.
There is a statutory right to reimburse the legal costs, according to which the unsuccessful party must bear the costs of the successful party.
Compared to many jurisdictions, the costs for legal proceed-ings in Germany are rather low, therefore litigation as well as arbi-tration in Germany is still economical even for lower amounts in dispute. In this context, it is worth noting that the GMAA can also be chosen as the competent forum when English law applies. Needless to say, the proceedings can take place in English.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
EU Regulation No. 1215/2021 on jurisdiction and the recog-nition and enforcement of judgments in civil and commercial
107REMÉ Rechtsanwälte Partnerschaft mbB
Shipping Law 2021
Jobst von Werder was admitted to the Hamburg Bar in 1997 and became partner of REMÉ in 1998. He is a fully qualified lawyer specialised in maritime and shipping law, insurance law, transport law and general economic law. Jobst represents clients not only regularly in High courts and Appeal courts in Germany, but also before arbitration tribunals (GMAA, ICC, DIS, Warenverein etc.). Among his major clients are interna-tional insurance companies (mainly marine and property insurance, transport insurance, technical insurance), German car manufacturers and trading houses. Jobst is a very experienced litigator and a passionate advisor.
Dr. Martin Reußner was admitted to the Bar in 2015 and has been working with REMÉ since 2016. He became partner in 2020 and is Bar certi-fied as a specialist for maritime and transport law. Martin advises on matters relating to maritime and shipping law, transport law, insurance law, as well as international trade law. His practice ranges from contentious maritime law matters and trade disputes to representing insurers in coverage disputes. Martin represents clients in all courts throughout Germany as well as before arbitration tribunals. In addition, he advises clients on out-of-court matters and drafting contracts in the maritime and logistics sector. Martin is regularly contracted by internationally operating freight forwarders and insurers as well as insurance brokers. He acts for interna-tional claims adjusters in cases involving Germany.
REMÉ is one of the leading German law firms in maritime, transport and insurance law and has been recommended by Chambers and Partners, The Legal 500 and JUVE for several years. The main focus of the legal services is on the comprehensive representation of interests, including disputes arising from cargo claims, charter parties, bill of lading, statutory and contractual pledges, all kinds of accidents, especially collisions as well as oil pollution, general average, limitation funds etc. before state courts and arbitration tribunals. The firm maintains long-standing and first-class contact with well-known large-scale shippers, underwriters, shipping companies, ship brokers and freight forwarders.REMÉ is also active in the public sector and in various foreign countries and international organisations, including ship safety and port state control.
REMÉ has, among other things, represented the first dispute (motor tanker “SAIGA”) before the International Maritime Court in Hamburg.
(iv) Wreck removalThe Gibraltar Merchant Shipping Act, in particular Parts VIII and VIIIA, implements the Nairobi International Convention on the Removal of Wrecks as set out at Schedule 6 thereto. Where applicable, regard must also be had to the Gibraltar Merchant Shipping (Insurance for Maritime Claims) Regulations 2012.
(v) Limitation of liabilityThe International Convention on the Limitation of Liability for Maritime Claims 1976 (as amended by the Protocol of 1996 (but not IMO Resolution Leg. 5(99))) has force of law in Gibraltar by virtue of the Gibraltar Merchant Shipping (Safety, etc.) Act 1993 and the Maritime Administrative Instruction (General) 2014. Regard should also be had to the Gibraltar Merchant Shipping (Insurance for Maritime Claims) Regulations 2012.
(vi) The limitation fundConstitution of the limitation fund is given force by the Gibraltar Merchant Shipping (Safety, etc.) Act 1993 and, as in the United Kingdom, the Civil Procedure Rules will govern the procedure for establishing limitation.
1.2 Which authority investigates maritime casualties in your jurisdiction?
A Government appointed Marine Accident Investigation Compliance Officer (“MAICO”) (and such deputies as may be appointed) ensures that safety investigations in matters relating to marine casualties and incidents are carried out in accordance with the Gibraltar Merchant Shipping (Accident Reporting and Investigation) Regulations 2012, the IMO Code and any other relevant international obligation. The MAICO has the power to appoint inspectors to assist with the discharge of any of her/his duties or obligations.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
Further to ref. 6 of the Gibraltar Merchant Shipping (Accident Reporting and Investigation) Regulations 2012, the MAICO and any inspectors appointed have the power to:a) have free access to any relevant area or casualty site as well as
to any ship, wreck or structure including cargo, equipment or debris;
b) ensure immediate listing of evidence and controlled search for and removal of wreckage, debris and other components or substances for examination or analysis;
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe United Kingdom is a party to the 1972 Convention on the International Regulations for Preventing Collisions at Sea and has declared acceptance in respect of Gibraltar. It is implemented by provisions in the Merchant Shipping Act and the Merchant Shipping (Distress Signals and Prevention of Collisions at Sea) Regulations 2017.
(ii) PollutionGibraltar is a party to the International Convention for the Prevention of Pollution from Ships 1973 by virtue of ratification by the United Kingdom and the enactment into local law by the Gibraltar Merchant Shipping (Safety, etc.) Act and the Merchant Shipping Act. The Gibraltar Merchant Shipping (Prevention of Pollution from Ships) Regulations 2009 are made under the former and the latter provides, inter alia, for the implementa-tion of The Merchant Shipping (Prevention of Oil Pollution) Regulations 1983 (S.I 1983 No. 1398) of the United Kingdom into local law as amended or replaced.
By virtue of the extension to Gibraltar of the United Kingdom’s acceptance of the Convention for Civil Liability for Bunker Oil Pollution Damage 2001, this convention has force of law in Gibraltar, as implemented by the Gibraltar Merchant Shipping (Safety, etc.) Act and the Merchant Shipping (Oil Pollution) Regulations 1999. The same regulations implement into Gibraltar law the International Fund for Compensation for Oil Pollution Damage 1992 as well as IMO Resolution Leg. 1/82 and IMO Resolution Leg. 2/82.
(iii) Salvage/general averageThe provisions of the International Convention on Salvage 1989, as set out in Part 1 of Schedule 5 to the Gibraltar Merchant Shipping Act, have force of law in Gibraltar. Key provisions on salvage are also contained in the Gibraltar Insurance (Marine) Act. The Prize Salvage Act 1944 also applies in Gibraltar, having been extended by an Order in Council.
As to general average, this is subject to the Gibraltar Insurance (Marine) Act and the common law.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
A shipper shall be deemed to have guaranteed to the carrier the accuracy, at the time of shipment, of the marks, number, quan-tity and weight as furnished by him, and the shipper shall indem-nify the carrier against all loss, damages and expenses arising or resulting from inaccuracies of such particulars.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Claims must be brought against the carrier within one year of the delivery of the cargo or, in cases where the goods are never delivered, within one year of the date when they should have been delivered.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The Gibraltar Merchant Shipping (Passengers’ Rights) Regulations 2015 were made pursuant to section 118 of the Gibraltar Merchant Shipping (Safety, etc) Act 1993. These had the effect of implementing Regulation (EU) 1177/2010 (concerning the rights of passengers when travelling by sea and inland waterways) which amended Regulation (EC) No. 2006/2004 (on the cooperation between national authorities responsible for the enforcement of consumer protection laws).
Further to section 6 of the European Union (Withdrawal) Act 2019 (“EUWA”), primary legislation passed by the Gibraltar Parliament, direct EU legislation (including EU regulations) operative immediately prior to the withdrawal from the EU, form part of the domestic law on and after 31 December 2020. The EUWA gave the ministers powers to prevent, remedy and/ or mitigate any failure of EU law to operate effectively, or any other deficiency in retained EU law, through regulations.
In exercise of the powers conferred on the Minister for the Port and Shipping, the Gibraltar Merchant Shipping (Passenger’s Rights) (Amendment) (EU Exit) Regulations 2020 were passed, making amendments to the legislation in the field of maritime passengers’ rights and amending the legislation relating to tick-eting, liability for accidents, compensation for delay and cancel-lations and assistance for people with reduced mobility. These Regulations also amended (EC) No. 392/2009 of the European Parliament and the Council of 23 April 2009 on the liability of carriers of passengers in the event of accident and, further, revoked Council Decisions 2012/22/EU and 2012/23/EU.
By virtue of the extension to Gibraltar of the United Kingdom’s acceptance of the Athens Convention, the International Convention and Amendments relating to the Carriage of Passengers and their Luggage by Sea 1974, had force of law in Gibraltar pursuant to section 119 of the Merchant Shipping (Safety, etc) Act 1993.
On 17 April 2014, an Administrative Instruction under section 95(1) of the Merchant Shipping (Safety, etc.) Act 1993 was issued, declaring that the Protocol of 2002 to the Athens Convention was to come into force in Gibraltar on 23 April 2014. On 8 May 2014, the Foreign and Commonwealth Office confirmed to the IMO depositary that the 2002 Protocol was extended to Gibraltar. The Athens Convention regulates the liability of carriers and their insurers for passenger and luggage
c) require examination or analysis of the items referred to in paragraph b), and have free access to the results of such examinations or analysis;
d) have free access to copy and have use of any relevant infor-mation and recorded data, including data from the voyage data recorder pertaining to a ship, voyage, cargo, crew or any other person, object, condition or circumstance;
e) have free access to the results of examinations of the bodies of victims, or of tests made on samples taken from the bodies of victims;
f ) require and have free access to the results of examinations of, or tests made on samples taken from, people involved in the operation of a ship or any other relevant person;
g) interview witnesses in the absence of any person whose interests could be considered as hampering the safety investigation;
h) obtain survey records and relevant information held by the flag State, the owners, classification societies or any other relevant party, whenever those parties or their representa-tives are established in Gibraltar; and
i) call for the assistance of the relevant parties, including flag-State and port-State surveyors, coastguard officers, vessel traffic service operators, search and rescue teams, pilots or other port or maritime personnel.
These Regulations apply to accidents that:a) involve Gibraltar ships;b) occur within British Gibraltar Territorial Waters; or c) involve other substantial interests of Gibraltar.
The Regulations do not apply to incidents involving only:a) ships of war, troop ships and others owned/operated by
a Member State of the EU and used only on government non-commercial service;
b) ships not propelled by mechanical means, wooden ships of primitive build, pleasure vessels and pleasure craft not engaged in trade (unless they are or will be crewed and carrying more than 12 passengers for commercial purposes);
c) fishing vessels under 15 metres; or d) fixed offshore drilling units.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The Carriage of Goods by Sea Act brings into Gibraltar law the International Convention for the Unification of Certain Rules of Law relating to bills of lading signed in Brussels on 25 August 1924, as amended by the Protocol signed in Brussels on the 23 February 1968 and as further amended by the Protocol signed in Brussels on 21 December 1979. The Act also provides that the Hague Rules (as amended by the Brussels Protocols 1968 and 1979) shall have force of law.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Under the Hague Rules, as applicable in Gibraltar, the carrier is not liable unless the cargo claimant proves that the carrier is in breach of specified duties, in which case the carrier can rely on specified rights of protection.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
It is possible to seek the arrest of a vessel for any claim to the possession or ownership of a ship or any share therein (section 20(2)(a) SCA) or for a claim in respect of the construction (or repair) of a ship (section 20(2)(n)).
It is not possible to arrest a vessel for general disputes under a sale and purchase contract unless they fall within one of the other grounds listed under section 20 of the SCA.
4.4 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 options are available?
Cargo can be arrested in principle.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Security is acceptable in a variety of forms including by way of cash deposits paid into court or at the direction of the court, a bank guarantee or a Letter of Indemnity.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Counter security is not required. Arresting parties are required, however, to deposit funds on account of expenses of arrest in the sum of £20,000 per vessel.
4.7 How are maritime assets preserved during a period of arrest?
On arrest, vessels are transferred to the custody of the Admiralty Marshal. He will ensure that the ship has sufficient bunkers and the crew are provided with supplies as required. During arrest, ships are often anchored at sea and, very occasionally, brought into the Port area and berthed.
The arresting party is responsible for keeping the Admiralty Marshal in funds or reimbursing him for all costs incurred.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Where a ship has been improperly arrested, owners may only recover loss where the arresting party is guilty of mala fides or crassa negligentia. If a ship is arrested under a mistake of law or fact, but bona fide, the court will not punish the arresting party.
The test is as per Dr Lushington in The “Evangelismos” (1858) 12 Moo PC 352, thus whether “is there or is there not, reason to say, that the action was so unwarrantably brought with so little colour, or so little foundation, that it rather implies malice onthepartofthe[Claimant],orthatgrossnegligencewhichisequivalent to it?”
In terms of remedies, there is no provision in the CPR which makes provision for an owner to claim damages, though damages will be awarded where the arresting party had no honest belief
claims. The 2002 Protocol introduced, inter alia, compulsory insurance where vessels are licensed to carry more than 12 passengers and registered in a state party and raised liability limits significantly. Under the Protocol, if there is a death or personal injury to passengers that is caused by a “shipping inci-dent”, then liability is strict (thus the requirement for insurance to cover that strict liability). If the death or personal injury is not caused by a “shipping incident”, then the claimant must still prove that the carrier was at fault or negligent.
3.2 What are the international conventions and national laws relevant to passenger claims?
Please refer to the answer to question 3.1.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Pursuant to Regulation 9(3) of the Gibraltar Merchant Shipping (Passengers’ Rights) Regulations 2015, the Supreme Court cannot consider claims unless proceedings are instituted before the end of the period of six months when the infringement complained of occurred, unless, in all the circumstances of the case, it is considered just and equitable to do so (Regulation 9(5)).
Further to Article 16 of the Athens Convention, claims for injury or death or claims for luggage following a ship-related incident must be brought within two years of the date of disem-barkation from the vessel.
4 Arrest and Security
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?
The Convention relating to the Arrest of Seagoing Ships 1952 applies in Gibraltar by virtue of the acceptance by the United Kingdom. However, vessel arrest is governed by the relevant provisions of the Senior Courts Act 1981 (“SCA”), which are extended to Gibraltar by the Admiralty Jurisdiction (Gibraltar) Order 1987. This governs the jurisdiction and powers of the Supreme Court of Gibraltar in Admiralty Law matters. Practice and procedure follow the English Civil Procedure Rules.
Vessels may be arrested in order to procure security for a claim as long as the maritime claim which the claimant seeks to bring is a claim in rem pursuant to section 20 of the SCA. The arrest process is straightforward and certain set documents must be filed in order to request that the warrant of arrest is issued and served on a vessel.
As in the United Kingdom, a search of the caution book must be undertaken before the arrest is sought in case a caution against arrest, where the cautioner provides an undertaking to provide the security sought by the claimant to avoid arrest, has been filed.
Once a vessel is arrested, a party can obtain the release of the vessel by provision of security as set out below.
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?
It is possible for a bunker supplier to seek the arrest of a vessel for failure to make payment (section 20(2)(m) SCA) as long as there is a contractual relationship between the parties.
communications such as text messages, webmail, social media and voicemail, audio or visual recordings. It further extends to information that is stored on servers and backup systems and electronic information that has been “deleted”, as well as meta-data, and other embedded data.
A party’s obligation is to conduct a reasonable search for docu-ments that are, or have been, in its control. What constitutes a reasonable search will depend on the facts of each case and the court will apply certain factors when assessing the reasonable-ness of a search. These include: a) The number of documents. b) The nature and complexity of the proceedings. c) Ease and expense of retrieval of any particular document. d) Significance of any document likely to be located during
the search. Although otherwise disclosable, certain documents may be
kept from the other party on the grounds of privilege. The main categories of documents that are privileged are: a) Confidential communications passing between a party and
its legal advisers, in which the party is seeking or obtaining legal advice. It applies to transactional advice as well as advice regarding contentious matters. These documents are subject to legal advice privilege.
b) Certain confidential communications made when litiga-tion is likely or has begun, passing between a party and its legal advisers, a party and third parties (for example, potential witnesses) and, in certain circumstances, the legal advisers and third parties, where the main purpose of the communication is to seek or obtain evidence for use in the litigation, or to provide advice on the litigation. These documents are subject to litigation privilege.
c) Correspondence and other communications generated as part of a genuine attempt to settle an existing dispute. These documents are subject to “without prejudice” privilege.
5.3 How is the electronic discovery and preservation of evidence dealt with?
As with non-electronic disclosure, the parties are required to take steps to preserve electronic documents where litigation is contemplated. The rules on electronic disclosures are as set out in Part 31, Practice Direction 31A and Practice Direction 31B, as supplemented by case law.
Parties will usually exchange Electronic Documents Questionnaires which highlight the information and issues for the parties. These facilitate the identification of keywords for searches and allows the parties to better identify the scope and extent of electronic disclosure proposed by each side.
When considering the ease and expense of retrieval of elec-tronic documents, specific points to consider include: a) The accessibility of electronic documents on computer
systems, servers, back up systems and other electronic devices or media.
b) The location of relevant documents, data, computer systems, servers, back up systems and other electronic devices or media that may contain such documents.
c) The likelihood of locating relevant data. d) The cost of recovering, disclosing and providing inspec-
tion of any relevant electronic documents. e) The likelihood that electronic documents will be materially
altered in the course of recovery, disclosure or inspection. Depending on the circumstances, it may be reasonable to search
for electronic documents by means of agreed keyword searches. When determining the extent of the search for docu-
ments that is required in each case, the underlying principle is
in their entitlement to arrest the vessel or acted without serious regard as to whether there were adequate grounds for the arrest. An owner may also be awarded special or indemnity costs in defending such a claim.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Subject to certain exceptions, under section 15 of the Gibraltar Supreme Court Act, practice and procedure in Gibraltar follows English practice and procedure (with necessary modifica-tions). This means that the Civil Procedure Rules, which apply in England and Wales, apply in Gibraltar. These provide for pre-action disclosure, non-party disclosure and specific disclo-sure of evidence.
In respect of pre-action disclosure, to obtain such an order, a party will have to show:a) that the documents would be covered by the opponent’s
standard disclosure obligations if proceedings had started; and
b) that pre-action disclosure is desirable in order to: i) dispose fairly of the anticipated proceedings; ii) assist the dispute to be resolved without proceedings;
oriii) save costs.
Subject to certain requirements, the Supreme Court also has the power to order interim orders on an inter partes or ex parte basis including orders for preservation, freezing assets and search orders.
The Supreme Court will not allow the arrest of a vessel for the purpose of obtaining evidence.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
These are as set out in the Civil Procedures Rules, Part 31. The parties to an action are required to collect, review and list docu-ments that are relevant to the issues, whether they support or undermine their case. The list should include documents that not only exist, but have existed.
The disclosure obligation in each case will depend on a number of factors, including the procedural “track” to which the case is allocated and whether electronic documents will have to be disclosed. Generally, the parties are ordered to give standard disclosure, but there are alternative methods of disclosure avail-able to the court including disclosure on an issue-by-issue basis.
In multitrack cases, there are more onerous requirements on the parties in their preparation for disclosure. Each party must file and serve a disclosure report, which: a) briefly describes matters such as the documents that exist
that are (or may be) relevant to the matters in issue and where, and with whom, the documents are (or may be) located;
b) describes how any electronic documents are stored; andc) estimates the broad range of costs that could be involved.
The meaning of “document” is very wide and includes any record containing information. It may take any form, including, but not limited to, paper or electronic, may be held on a computer or on portable devices such as memory sticks or mobile phones or within databases, and includes email and other electronic
Cases on appeal from the Court of Appeal for Gibraltar are heard by the Privy Council.
A legally qualified Registrar of the Supreme Court also holds the office of Admiralty Marshal and the admiralty jurisdiction of the Supreme Court of Gibraltar is well known internationally. It deals with a considerable volume of work and is straightfor-ward and comprehensive.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Because of the similarities with the system in England and Wales, Gibraltar can also provide clients with like benefits. Legal proceedings are conducted in English and because of the general application of English common law (it being highly persuasive as opposed to the common law of Gibraltar which is binding), clients can expect certainty and predictability. A further addi-tional benefit is that legal fees in Gibraltar are low when compared to London or comparative offshore jurisdictions.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
EU Member StatesThe position in relation to international conventions remained unaltered by Gibraltar’s departure from the EU where the UK is a member of such conventions in its own right and the relevant conventions have been extended to Gibraltar.
At present there is no reciprocal EU framework providing for ongoing civil judicial cooperation between Gibraltar and EU Member States. Notwithstanding this, as above the EUWA has had the effect of converting EU law applicable to Gibraltar at the moment of exit, into Gibraltar law. The Act also created powers to enable corrections to be made to the laws that would otherwise no longer operate appropriately on Gibraltar’s depar-ture from the EU.
At present Gibraltar will, unilaterally and voluntarily, continue to apply EU law in respect of civil and commercial judicial cooperation. However, EU Member States do not, post-Brexit, consider Gibraltar to be covered by EU rules and will instead apply their own domestic rules covering non-EU Member States. Therefore, by way of example, the process of registering and enforcing a judgment order obtained in Gibraltar in an EU Member State may be more complex than it was under the relevant EU legal frameworks. If assistance is sought in the countries to which these EU rules apply, that assistance may need to be sought pursuant to the national legislation applicable in the countries concerned or pursuant to alternative interna-tional conventions.
Gibraltar will therefore, pursuant to domestic law, continue to apply, inter alia, the Recast Regulation and the Enforcement Order Regulation. Gibraltar will also continue to apply the EU/Denmark 2005 Agreement and the Lugano Convention.
Gibraltar will continue to apply existing international agree-ments which were applicable to Gibraltar pre-Brexit, such as the Hague Conventions.
The Government of Gibraltar has made and continues to make the necessary corrections as permitted by the EUWA to ensure the continued operability of these frameworks. However, as above, Gibraltar will apply these measures unilaterally and not on the basis of reciprocity.
proportionality. The court will be looking to manage the disclo-sure exercise so as to facilitate a just outcome, but with an eye to balancing the sums in issue with the cost of litigating.
In accordance with CPR Part 61, in respect of collision claims, parties are required to disclose electronic track data that is or has been in its control within 21 days of the filing of an acknowl-edgment of service and to allow inspection of the same within seven days of a request.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims are dealt with by the Admiralty Jurisdiction of the Supreme Court of Gibraltar. As set out below, the Civil Procedure Rules which apply in England and Wales are followed in Gibraltar and these will thus apply. As further set out below, the Supreme Court has an equivalent jurisdiction to that of the High Court of England and Wales and thus has identical wide discretionary case management powers.
Where vessels have been arrested, the Supreme Court Registry will do their best to list matters expediently and in uncontested Admiralty Claims, vessels can be arrested and sold by judicial sale within a matter of weeks.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Unfortunately there are none.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Unfortunately there are none.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Gibraltar is a common law jurisdiction and the common law and rules of equity of England and Wales apply so far as they are applicable to the circumstances of Gibraltar (section 2 English Law Application Act).
Subject to certain exceptions, under section 15 of the Supreme Court Act, practice and procedure in Gibraltar follows English practice and procedure (with necessary modifications). This means that the Civil Procedure Rules which apply in England and Wales apply in Gibraltar.
The judicial system is based entirely on the English system, save for minor modifications that are required because of Gibraltar’s uniqueness. The Gibraltar Supreme Court has an equivalent jurisdiction to that of the High Court of England and Wales. Pursuant to section 12 of the Supreme Court Act, the Supreme Court possesses and exercises all the jurisdiction, powers and authorities which are from time to time vested in and capable of being exercised by the High Court. Our judiciary is well regarded and respected and, like their English counter-parts, independent and impartial.
The Court of Appeal for Gibraltar is not resident but holds two sessions every year. The Justices of Appeal are, in the main, drawn from the English Court of Appeal.
enforcement under those conventions and not contrary to public policy. A decision to grant or deny enforcement is subject to appeal in the same way as any other court decision.
Section 24 of the Arbitration Act applies the same limitation period to an arbitral award as to an ordinary court order, thus enforcement proceedings must be brought within six years in accordance with section 4 of the Limitation Act.
The Arbitration Act does not set out the procedure for commencing enforcement proceedings. However, as above, CPR, including Part 62, applies to enforcement of arbitral awards under the Geneva and New York Conventions, with some exceptions.
If the award falls within the Geneva Convention, further evidence must be produced in support including, inter alia, the orig-inal award or a copy of it, duly authenticated in a manner required by the law of the country in which it was made and evidence proving that the award has become final. If the award falls under the New York Convention, further evidence must also be provided in support including, inter alia, a duly authenticated original award or a duly certified copy of the award, the original arbitration agree-ment or a duly certified copy of it and certified translations.
8 Updates and Developments
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.
In February 2021 the Gibraltar Government announced amend-ments to the Gibraltar Merchant Shipping (Pleasure Yacht) Regulations 1997 and the Gibraltar Merchant Shipping (Ship Registration) Regulations 1997 which expanded the definition of qualified persons for yacht and ship ownership to now include citizens from Commonwealth countries and from a further 20 countries (including the Marshall Islands, Liberia, Panama and Madeira). The regulations were deemed to have come into oper-ation on 1 January 2021. The legislation retained the eligibility of nationals of EEA states to be considered qualified persons.
Separately, Gibraltar has retained Rome I and Rome II rules on applicable law in contractual and non-contractual matters to ensure that businesses and individuals will generally be able to continue to use the same rules as were in place pre-Brexit to determine which law would apply in cross-border disputes.
Matters Involving Other UK JurisdictionsPrior to Brexit, it was not always the case that EU rules applied as between, for example, Gibraltar and England & Wales. In rela-tion to specific EU instruments legislation in place, Gibraltar did at times provide for the application of EU rules as between Gibraltar and the UK. For example, further to section 39(1) of the Civil Jurisdiction and Judgments Act, Gibraltar and the United Kingdom were to be treated as if each were separate Member States for the Recast Regulation (1215/2012). Brexit has not changed these rules.
Other JurisdictionsJudgments from certain countries can be registered under the Judgments (Reciprocal Enforcement) Act 1935. Under the common law, judgments (for example, from the United States) can be enforced by commencing fresh proceedings in Gibraltar, with the foreign judgment being sued upon as a debt. Only judg-ments that are final and conclusive, and are not for taxes, a fine or other penalty, can be enforceable at common law. The Gibraltar court will not enforce a judgment at common law if the foreign court did not have jurisdiction to determine the matter according to Gibraltar law, or if it would be contrary to public policy.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The Arbitration Act consolidates the law relating to arbitra-tion and gives effect to certain international conventions. Both the New York and Geneva Conventions on the Execution of Foreign Arbitral Awards 1927 apply.
The Arbitration Act does not specify the types of foreign awards enforceable in Gibraltar. Foreign awards under the Geneva or New York Conventions must therefore be awards capable of
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Shipping Law 2021
Gibraltar
Anne Rose heads the Ince shipping practice in Gibraltar. Prior to joining the firm she played a crucial role in the development of the shipping practice at a leading local law firm where she was appointed partner in 2017. Anne is passionate about her practice and her ability, motiva-tion and attitude. Anne’s background is in civil and commercial litigation and Admiralty law. She has a wealth of experience acting for and advising financial institutions, the local Port Authority and Maritime Administration, P&I clubs, owners (of commercial vessels and yachts), crew and shipyards.
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The Ince Group is a dynamic international legal and professional services business with offices in nine countries across Europe, Asia and the Middle East. With over 900 people, including over 100 partners worldwide, The Ince Group delivers legal advice, strategic guidance and business solutions to clients ranging from the world’s oldest and biggest businesses operating across numerous industries to ultra-high-net-worth individuals. Through its entrepreneurial culture and “one firm” approach, the business offers its clients over 150 years of experience, insight and relationships. The Group is driven by a unique team of passionate people whose broad expertise and deep sector specialisms provide their clients with solutions to all their complex legal and strategic needs.
In addition, Article 2(2) provides that the relevant authorities are required to request the shipowner to remove the wreck within three months and inform them that failure to do so will entitle the relevant authority to remove the wreck at the shipowner’s expense.
Importantly, wreck insurance is mandatory for shipowners under Article 7.
(v) Limitation of liabilityGreece has ratified the 1976 Limitation of Liability Convention (LLMC) and the 1996 Protocol, as well as the amendments that entered into force in 2015.
Greece is also party to the pollution conventions referred to under question 1.1 (ii), some of which provide for limitation of liability.
Finally, while the substantive provisions of the GPMLC in rela-tion to limitation have been superseded, they retain limited appli-cability to cases not covered by the international conventions.
(vi) The limitation fundThe establishment of a limitation fund is optional under the LLMC provisions. There are no specific provisions regulating the establishment of the limitation fund under the LLMC. The courts apply the procedural provisions of the GPMLC by analogy in order to cover this legislative gap.
The establishment of a limitation fund is mandatory in cases of limitation under the 1992 CLC. Presidential Decree 666/1982 regulates the establishment of the relevant limitation fund.
The limitation fund is set up through an application to the court or other competent authority by the persons entitled to do so.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The port authority of the district where the casualty took place is tasked with the preliminary investigation of the accident at the first degree. The Minister of Maritime Affairs and Insular Policy has the discretion, however, to order an additional preliminary investigation.
Following a preliminary investigation, the report is forwarded to the Investigative Boards for Maritime Casualties (IBMCs), a branch of the Ministry Maritime Affairs and Insular Policy. The competent IBMC investigates the casualty further and produces another report, which may be used in subsequent civil and crim-inal proceedings. However, the findings of the report do not bind the court.
Finally, accidents in the maritime transport sector are also investigated by the Hellenic Bureau for Marine Casualties Investigation (HBMCI). HBMCI is an independent body,
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionGreece has ratified the 1910 Brussels Collision Convention, which applies concurrently with the Greek Private Maritime Law Code (GPMLC). Greece has also ratified the COLREGS. Articles 235–245 of the GPMLC also apply to collisions.
Claims resulting from direct collisions may be secured by a mari-time lien under certain conditions. Finally, limitation of liability may be available depending on the type of damages claimed.
(ii) PollutionGreece has ratified the following international conventions in relation to pollution:■ the1992ConventiononCivilLiability forOilPollution
Damage (CLC), which replaced the previous Convention;■ the1992IOPCFundConvention;■ the2003SupplementaryFundProtocol;■ the 2001 International Convention on Civil Liability for
Presidential Decree 55/1998 relating to the protection of the Marine Environment, as well as the general provisions of the Greek Civil Code regulating tortious liability, also apply.
(iii) Salvage/general averageArticles 246–256 of the GPMLC apply to salvage, together with the provisions of the 1989 International Convention on Salvage, which Greece has ratified.
General average is regulated by Articles 219–234 of the GPMLC, which mirror the provisions of the York-Antwerp Rules 1950.
(iv) Wreck removalGreece has not ratified the Nairobi International Convention on the Removal of Wrecks 2007 and as such wreck removals are wholly governed by national law.
Article 2(1) of Law No. 2881/2001 provides that the shipowner is responsible for the removal of wrecks, which cause danger or any navigational hazard or obstruct the seaway for other vessels, at their own expense.
after the expiration of the one year time bar if brought within the time allowed by the lex fori.
The time bar is protected only when a claim is properly brought before a competent court, or arbitration proceedings commenced pursuant to an arbitration clause in the contract of carriage.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Greece has ratified the 1974 Athens Convention relating to the Carriage of Passengers and their Luggage by Sea as well as the 2002 Protocol, which set out the framework for maritime passenger claims.
Article 2 provides that the Convention applies to international carriage if:■ theshipisflyingtheflagoforisregisteredinaStateParty
to this Convention;■ thecontractofcarriagehasbeenmadeinaStatePartyto
this Convention; or ■ the place of departure or destination, according to the
contract of carriage, is in a State Party to this Convention.Article 3 provides that the carrier is liable for any personal
injury/death or loss/damage to luggage – if the same occurred during the period of carriage and as a result of fault or neglect of the carrier or his servants or agents.
Most notably, Article 13 provides that the carrier, his agents or servants will not be able to limit their liability if the damage caused was a result of an act or omission done with the intent to cause such damage, or recklessly and with knowledge that such damage would occur.
3.2 What are the international conventions and national laws relevant to passenger claims?
As per question 3.1 above, Greece has ratified the 1974 Athens Convention and its successor 2002 Protocol. In addition, the EU Regulation (EC) 392/2009 (Regulation) on the liability of carriers of passengers by sea in the event of accidents, also expands the scope of the Athens Convention and the 2002 Protocol to domestic maritime carriage.
The Greek Civil Code, Consumer Protection Law and the GPMLC may also be applicable in cases where the 1974 Athens Convention and the Regulation do not apply.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Article 16.1 of the 1974 Athens Convention, provides that any claim will be time barred after two years, while Article 16.2 provides that the limitation period is calculated as follows: ■ inthecaseofpersonalinjury,fromthedateofdisembarka-
tion of the passengers; ■ in the case of death occurring during carriage, from the
date when the passenger should have disembarked, and in the case of personal injury occurring during carriage and resulting in the death of the passenger after disembarkation, from the date of death, provided that this period does not exceed three years from the date of disembarkation; or
■ inthecaseoflossordamagetotheluggage,fromthedateof disembarkation or from the date when disembarkation should have taken place, whichever is later.
which was established under the provisions of Law 4033/2011. This law transposes EU Directive 2009/18/EC establishing the fundamental principles governing the investigation of accidents in the maritime transport sector.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The port authorities and IBMCs may exercise any of the inves-tigative powers set out in the Greek Criminal Procedure Code.
The investigations undertaken by HBMCI are independent of any criminal or other administrative investigations which aim to apportion blame or determine liability for the casualty. HBMCI’s sole focus is the cause of, or factors that contributed to, the marine accident – with the aim of exploring measures to prevent a similar event in the future.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Greece has ratified the 1924 Hague Convention and the 1986 Visby Protocol (Hague-Visby Rules). If a claim falls outside the scope of the Hague-Visby Rules, the GPMLC applies. Its provisions are similar to the Hague-Visby Rules. Greece has not ratified the Hamburg or Rotterdam Rules.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The key principles are:■ therightofthecarriertolimititsliabilityundertheHague-
Visby Rules, GPMLC and/or the LLMC; ■ thereversaloftheburdenofproofundertheHague-Visby
Rules and the GPMLC; and■ themandatoryapplicationoftheHague-VisbyRules.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Under the Hague-Visby Rules, the shipper guarantees the accu-racy of the weight and quantity of the cargo, as well as its marks and number. Under the GPMLC, liability of the shipper can only be established if any mis-declaration was made knowingly.
The carrier may bring a claim in contract or tort against the carrier for damages caused by mis-declaration. The same prin-ciple applies for carriage of dangerous goods without the carri-er’s knowledge. The right of the carrier to bring a claim does not limit its liability towards third parties for damages caused by the shipper’s mis-declaration. The carrier may only bring a claim for indemnity against the shipper.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The time bar for cargo claims is one year under the Hague-Visby Rules, and can be extended by mutual agreement. The time starts to count from the date of actual delivery or the date on which delivery of the cargo should have taken place. A claim for indemnity against a third person may be brought, however, even
4.4 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 options are available?
The procedure described in question 4.1 under the CCP will also apply to arrest proceedings of other assets such as cargo or bank accounts.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Article 163 of the CCP provides that security is in the form of cash payable to the National Bails and Loans Fund. The deposit slip has to be submitted to the secretary of the Court that ordered the security, within the period set out in Article 162 of the CCP.
Article 164 of the CCP provides that the court has the power to allow the following alternative forms of security at the applica-tion of the debtor: ■ abankguaranteefromareputablebank;or■ amortgageregistrationoverpropertyinGreece.
The parties are free to agree the provision of a P&I letter of undertaking in exchange for the voluntary withdrawal of the arrest proceedings.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
The court has the power to request a party to provide a bank guarantee by way of counter security. However, in practice, such requests are rarely granted.
4.7 How are maritime assets preserved during a period of arrest?
Presidential Decree No 280/2000 mandates that the arresting party may place a guard on board the seized vessel, at their own expense, for the entire period of arrest.
In the case of cargo, this will have to be warehoused at the expense of the claimant.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
In accordance with Article 703 of the CCP, a party, against whom security was wrongfully requested (including wrongful arrest), will be entitled to damages if:■ the Court has issued a final judgment dismissing the
arresting party’s claim; and ■ the arresting party knew, or by gross negligence ignored,
that it did not have a valid claim. In practice, however, applications for wrongful arrest are rarely
allowed due to the high burden of proof imposed on the applicant.
4 Arrest and Security
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?
The Greek legal system provides for two types of seizure of assets of a debtor: ■ provisionalseizure,seekingtosecureaclaim;and■ executoryseizure,beingoneoftheinitialstepsinenforce-
ment proceedings, which ultimately leads to the public auction of the asset.
Under Greek law, there are two different regimes applicable: ■ the 1952 International Convention for theUnification of
Certain Rules relating to the Arrest of Sea–going Ships (1952 Arrest Convention), which was implemented in Greece by Legislative Decree 4570/1966; and
■ theGreekCodeofCivilProcedure(CCP). Article 1 of the 1952 Arrest Convention sets out an exhaustive
list of maritime claims that give rise to a right of arrest for vessels that bear the flag of a contracting State and are arrested in the jurisdiction of a contracting State.
If the 1952 Arrest Convention is not applicable, then the CCP applies, which provides that arrest is available for all types of claims, whether in contract or tort.
The procedure in relation to arrest is governed by the CCP. The party seeking to arrest the ship must file an arrest petition with the competent court, with a hearing set 15 to 30 days after the arrest petition is filed. At the hearing, the parties must file submissions together with supporting evidence and may also call witnesses.
In the interim, the arresting party can also apply for an interim order, prohibiting the ship from sailing or effecting any change in its legal status. If the interim order is granted, it is valid until the hearing date and can be further extended until the date of the hearing of the arrest application.
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?
Under Greek law, a bunker supplier can arrest a vessel if they can prove that the shipowner was contractually bound, whether directly or indirectly (pursuant to principles of agency). This contractual obligation does not cover circumstances where a charterer ordered bunkers for a chartered vessel, in which case the charterer will ordinarily be liable for the bunkers.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
The right to arrest a vessel for claims arising out of contracts for sale and purchase depends on which of the two regimes under question 4.1 is applicable.
If the 1952 Arrest Convention is applicable, then arrest is not available for maritime claims listed under Article 1. As such, a right to arrest for claims arising out of contracts for sale and purchase will not be available.
If, however, the CCP applies, then a vessel may be arrested for claims arising out of contracts for sale and purchase, since such right is available for all types of claims under the CCP.
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Article 51 of Law 2172/1993 establishes a special maritime division, the Shipping Division of the Piraeus Court of First Instance or the Court of Appeal of Piraeus. The maritime divi-sion of the Court of Piraeus has exclusive jurisdiction in the Attica (i.e. Athens and Piraeus) region and concurrent jurisdic-tion all over Greece. Therefore, even if a shipping case is not linked to Athens or Piraeus, the claimant has the option of filing a claim with the maritime division of Piraeus Court.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?In Greece, there are two specialist arbitral bodies which deal with maritime disputes.
The first is the Piraeus Association for Maritime Arbitration (PAMA). PAMA is a private non-profit associ-ation. Arbitrations are conducted in accordance with Law 2735/1999 adopting UNCITRAL’s Model Law for International Commercial Arbitration and under the Rules for Maritime Arbitration adopted by PAMA. An award issued by PAMA is a final, binding and enforceable award pursuant to the provisions of the CCP. An award issued by PAMA is unappealable.
The second body is the Hellenic Chamber of Shipping (HCS). HCS is a legal entity – incorporated under Greek public law in 1936 – and based in Piraeus. The arbitrators are appointed from a list of arbitrators provided by HCS.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Law 4640/2019 on Mediation in Civil and Commercial Disputes was enacted in Greece, which transposed the provisions of Directive 2008/52/EC.
The aim of this Law was to increase the use of mediation. Importantly, Greek lawyers are under an obligation to inform their client in writing about the option of mediation.
There are mediation centres which operate through the major lawyers’ Bar Associations, including the Piraeus Bar Association. Mediation, however, is not yet widely used, but is gaining popu-larity as awareness increases.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
ADR, such as arbitration and mediation, are still not commonly used in Greece, although it is slowly gaining popularity, as aware-ness increases (see question 6.1.3 above). The advantage of using
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
In Greek proceedings, evidence is normally disclosed in the main proceedings, together with the parties’ submissions. However, Article 348 of the CCP provides that gathering and preserva-tion of evidence may be requested in a pre-action stage in the following circumstances: ■ mutualagreement;■ riskoflossordestructionoftheevidence;and/or■ anecessityfortheevidencetobeexaminedinitsimmediate
state.Articles 349–351 set out the procedure for applying to the
court for the evidence to be gathered or preserved in a pre-ac-tion stage. In brief, an application must be filed with the court competent to hear the main proceedings, or, if there is imminent risk, the application can be heard by any court that will hand down its judgment more quickly.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Under Greek law, there are no disclosure obligations on the parties in the form found in common law jurisdictions.
The claimant must file a claim with the court and thereafter, within a period of 100 days, the claimant will have to file its submissions along with all supporting evidence. Fifteen days after the submissions, the Respondent will serve its Defence and/or Counterclaim together with the documentation it intends to rely upon.
Under Article 450 of the CCP, a party may refuse to disclose documents, if such documents are deemed to be privileged, or confidential.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Greek courts are under an obligation to accept electronic docu-ments issued by public authorities pursuant to the provisions of Law 4727/2020.
Electronic documents issued by private persons may also be submitted in civil proceedings if they are electronically signed/ stamped. The court evaluates such documents under the general provisions of the CCP. However under Greek Civil Procedure there is no general duty for the preservation of electronic evidence.
As discussed under question 6.3, the Brussels 1 Recast Regulation provides for the automatic enforceability of judicial decisions between EU Member States.
In addition, Greece, as a member of the EU, is party to the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, which applies to judgments also originating from Switzerland, Norway and Iceland. At the time of publication, it had yet to be determined whether UK judgments will be brought within Lugano post-Brexit.
If none of the aforementioned treaties or the Brussels 1 Recast Regulation apply, Greek courts may recognise and enforce foreign judgments under the general provisions set out in Articles 323 and 905 of the CCP.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Greece has ratified the 1958 Convention. The 1958 Convention applies, provided that: ■ thedisputeisoneofacommercialnature;and■ thearbitralawardhasbeenissuedinastatewhichhasrati-
fied the 1958 Convention.If the arbitral award does not fall within the scope of applica-
tion of the 1958 Convention, the recognition and enforcement of the foreign arbitral award is regulated by the CCP. Article 906 sets out the requirements and the procedure pursuant to which a foreign arbitral award may be recognised and enforced in Greece.
8 Updates and Developments
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.
A committee for the revision of the GPMLC has been formed. The changes are expected to be significant and are aimed at modernising the GPMLC. By way of context, this will be the first major revision of the GPMLC in 63 years.
ADR in Greece, however, is that confidentiality is maintained and disputes are often resolved faster and more cost effectively as a result. Greece is also a contracting state to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the 1958 Convention) (see question 7.2).
Nevertheless, litigation still remains the default option for dispute resolution. The fact that a specialised court exists dealing solely with maritime claims (see question 6.1.1), is often considered an important advantage of using the national courts over ADR. This is slowly expected to change as more Greek-qualified maritime lawyers train as arbitrators and mediators.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Litigation in Greece is slower and more procedurally complex than ADR. First instance decisions are enforceable in very limited circumstances. There is a wide right of appeal which tends to delay the process further and also tends to result in further legal costs being incurred.
Despite the above, two notable advantages of the Greek court system are as follows:■ theexistenceofaspecialistcourtdealingsolelywithmari-
time claims; and■ the automatic enforceability of Greek court decisions in
other EU jurisdictions by virtue of the Regulation 1215/2012 (Brussels 1 Recast Regulation).
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Greece has ratified several treaties for the recognition and enforcement of foreign judgments (e.g. treaty between China and Greece). However, Greece has reserved its right to deny the recognition and enforcement of foreign judgments if such recog-nition and/or enforcement would violate and/or prejudice the country’s sovereignty, security or public order.
120 Greece
Shipping Law 2021
Maria Moisidou is a commercial shipping lawyer and partner based in Piraeus. She heads the litigation/dispute resolution team at Hill Dickinson Piraeus and has 25 years’ experience dealing with marine insurance, sale contracts and transport of commodities, carriage of goods by sea, cargo claims, charterparty and MoA disputes. Maria is qualified in both Greece and England with extensive litigation experience in both jurisdic-tions having handled a considerable number of court cases, arbitrations and mediations in respect of a wide variety of disputes. In 2021, Maria was named a Leading Individual within The Legal 500 Piraeus Shipping Litigation rankings and a Notable Practitioner by Chambers and Partners.
Hill Dickinson International2 Defteras MerarchiasPiraeus 18535Greece
Alexander Freeman is a commercial shipping lawyer and legal director based in Piraeus with a practice that covers most aspects of shipping law including disputes arising from charterparties, cargo claims, carriage of goods by sea and MOAs for the sale and purchase of vessels. He acts for owners, charterers and P&I clubs with clients based in Greece, Europe, the United States and Latin America. Alex is also experienced in advising in relation to cross border insolvency proceedings as well as security measures taken against assets. With a strong interest in alter-native dispute resolution, Alex has successfully represented clients in several mediations in the UK and Greece. Alex regularly presents at inter-national conferences and is a frequently published author of articles which have featured in leading shipping and transport related publications.
Hill Dickinson International2 Defteras Merarchias Piraeus 18535Greece
Hill Dickinson’s office in Piraeus was first established in 1994 to support the firm’s longstanding relationships with Greek ship owners, insurers and charterers operating in the Greek market. Regularly ranked as a top tier office within the Greek market by the major guides such as The Legal 500, today the office provides a full spectrum of English law legal services to marine and energy sectors, advising on all forms of shipping litigation and dispute resolution, ship finance and corpo-rate transactional matters – within Greece and globally.Clients include ship owners, operators and charterers, maritime insurers, underwriters and P&I clubs, banks, private equity firms and other finan-cial institutions, brokers, commodities traders, port operators and major oil companies.
Oil Pollution Damage (Bunker Pollution Convention) 2001, which is given effect by the Bunker Oil Pollution (Liability and Compensation) Ordinance (Cap. 605).
Apart from imposing or fixing strict liability on shipowners for oil pollution, these conventions deal with, among other things, compensation for oil pollution damage and compulsory insurance to be taken by shipowners.
(iii) Salvage/general averageHong Kong applies the International Convention on Salvage (Salvage Convention) 1989, which is given the force of law by s. 9(1), Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (Cap. 508). It is important to note that the provisions of the Salvage Convention can be excluded by contract between the owners and salvors (Article 6, Salvage Convention). To date, the most widely used international salvage agreement remains the Lloyd’s Open Form.
No international convention is applicable in Hong Kong in respect of general average. Apart from the common law prin-ciples on general average, s. 66, Marine Insurance Ordinance (Cap. 329) contains provisions on contributions and recovery of general average expenditure or sacrifice from interested parties and insurers, respectively.
In practice, the assessment and adjustment of general average is subject to the York-Antwerp Rules, which are incorporated, expressly or by reference, into charterparties or bills of lading.
(iv) Wreck removalAlthough the Nairobi Wreck Removal Convention (WRC) 2007 came into force in China on 11 February 2017, China’s ratification of the WRC does not apply to Hong Kong.
Locally s. 21, Shipping and Port Control Ordinance (Cap. 313) grants extensive powers to the Director of Marine, Hong Kong Marine Department to direct that an owner, master or any other interested person do such things as the Director thinks fit for the removal, movement, raising or destruction of the wreck. Failure to comply with the Director’s orders is a criminal offence.
Shipowners are unable to limit their liability for the removal of a wreck in Hong Kong, unless the Chief Executive in Hong Kong agrees to allow such a limitation fund to be set up (see s. 15, Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap. 434)).
(v) Limitation of liabilityHong Kong applies: (a) the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea (Athens Convention) 1974 together with the 1976 Protocol for Passenger
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe rules governing liability and the division of damage or loss for a collision are set out in ss 2 and 3 of the Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (Cap. 508), giving effect to the 1910 Collision Convention. Liability for loss or damage to property is in proportion to each vessel’s degree of fault, while liability for loss of life or personal injury is joint and several with owners of any other vessels at fault.
Blame for a collision is ascertained by reference to the Collision Regulations (COLREGs) 1972. The COLREGs contain a detailed set of navigational rules to be obeyed by ships for avoiding and/or reducing the risk of collisions with other ships. The domestic legislation giving the COLREGs force of law in Hong Kong is the Merchant Shipping (Safety) (Signals of Distress and Prevention of Collisions) Regulations (Cap. 369N).
(ii) PollutionThe prevention and control of pollution from ships (including oil, sewage and garbage) is regulated in Hong Kong under the Merchant Shipping (Prevention and Control of Pollution) Ordinance (Cap. 413).
In the event of a casualty, or where the Director of Marine is of the view that there is or will be grave and imminent pollution on a large-scale in Hong Kong waters, the Director has powers under s. 6, Merchant Shipping (Prevention and Control of Pollution) Ordinance (Cap. 413) to give directions with respect to the ship and its cargo, and to take action of any kind whatsoever to prevent and control this pollution.
As for liability, compensation and compulsory insurance for damage caused by the discharge or escape of bunker oil, these are regulated by: (a) the International Convention on Civil Liability for Oil Pollution Damage (CLC) 1992 and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (Fund Convention) 1992, excluding the 2003 Supplementary Fund Protocol, which is given effect in Hong Kong by the Merchant Shipping (Liability and Compensation for Oil Pollution) Ordinance (Cap. 414); and (b) International Convention on Civil Liability for Bunker
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Hong Kong applies the Hague-Visby Rules together with its 1979 Protocol. These provisions are given the force of law by s. 3(1), Carriage of Goods by Sea Ordinance.
The Bills of Lading and Analogous Shipping Documents Ordinance (Cap. 440) are also relevant when dealing with marine cargo claims.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The Hague-Visby Rules set out the minimum obligations of the carrier and define the maximum immunities to which the carrier is entitled.
Under the Hague-Visby Rules, the carrier has two main obli-gations: (a) a duty before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy – properly man, equip and supply the ship – and to ensure that its holds and all other parts of the ship in which goods are carried are fit and safe for the reception, carriage and preservation (Article III rule 1, Hague-Visby Rules); and (b) to properly and carefully load, handle, stow, carry, keep, care for and discharge the goods deliv-ered (Article III rule 2, Hague-Visby Rules).
In return, the carrier is granted immunity from liability where the loss is not caused by want of due diligence, or where the loss is a result of those events set out in Article IV rule 2, Hague-Visby Rules, such as fire, Act of God, Act of War, etc.
Where the carrier is held to be liable, he is nonetheless entitled to limit his liability under Article IV rule 5, Hague-Visby Rules, depending on the type of goods in question and the packaging. There is also the possibility of limitation under the provisions of the LLMC 1976.
Limitation can be broken if it is proved that the damage resulted from an act or omission of the carrier, which was either done with intent or with reckless knowledge that damage would result.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Under Article III rule 5, Hague Visby Rules, the shipper is “deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity and weight, as furnished by him, and the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars”.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Notice of loss or damage must be given by the claimant within three days of the cargo being delivered.
All cargo claims must be brought against the carrier within one year from the date of delivery, or from the date when the
and Luggage Claims; and (b) the Limitation of Liability for Maritime Claims (LLMC) 1976 together with the 1996 Protocol for Maritime Claims.
Both international conventions on limitation of liability are given the force of law in Hong Kong through the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap. 434).
(vi) The limitation fundLimitation funds are constituted in Hong Kong under Article 11 of the LLMC 1976. Constitution of limitation funds fall within the Admiralty jurisdiction of the Hong Kong Court of First Instance, as provided by s. 12A(1), High Court Ordinance (Cap. 4).
The procedure on constitution of limitation funds is governed by Order 75 rules 37–43, Rules of High Court.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Marine Accident Investigation Section (MAIS) of the Marine Department is primarily responsible for the investiga-tion of all marine casualties in Hong Kong.
When a casualty is considered to be of public importance, the Chief Executive in Hong Kong may appoint a Commission of Inquiry to conduct these investigations under s. 2, Commissions of Inquiry Ordinance (Cap. 86). An example of this was the tragic collision between the catamaran, “Sea Smooth”, and the passenger vessel, “Lamma IV”, on 1 October 2012 off the north-west coast of Lamma Island, which led to the loss of more than 39 lives.
The investigations by the MAIS or the terms of reference for the Commission of Inquiry are usually limited to investigating the cause(s) of the casualty with an aim of improving marine safety, and not for the purpose of determining civil or criminal liability or apportionment of blame.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
For the MAIS, their powers of investigation include: boarding the vessel and inspecting and examining her; obtaining reports or statements from the master and/or crew of the vessel; making all such examination and inquiry as is necessary; and requiring the production of any register, certificate or other documents of the vessel.
When responding to a marine casualty, the Director of Marine also has extensive powers under ss 16, 16A and 21, Shipping and Port Control Ordinance (Cap. 313) to give any directions as he/she in his/her discretion deems fit, including, but not limited to, directions on removing, securing, raising and destruction of a vessel; or, in an appropriate case, to seize the vessel (and employing, as necessary, pilots, tugs and equipment to remove, secure, raise or destruct the vessel).
As for the Commission of Inquiry, the Commission’s powers of investigation are fairly wide (see s. 4, Commissions of Inquiry Ordinance (Cap. 86)), including requiring the production and inspection of documents, issuing warrant of arrests, examina-tion of witnesses, and receiving and considering the documents and evidence produced before it.
123Tang & Co. (in association with Helmsman LLC, Singapore)
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?
A bunker supplier may only arrest the vessel to whom bunkers were supplied, if he can show that the beneficial owner or demise charterer of that vessel is personally liable on the claim (see the requirements under s. 12B(4), High Court Ordinance). This often requires a direct contractual relationship between the bunker supplier and the owner or demise charterer of the vessel.
Thus, if bunkers were supplied to the vessel through a series/chain of contracts (paper contracts), as is common in the bunkering industry, then the physical bunker supplier himself may not be able to demonstrate that the owner or demise char-terer of the vessel were personally liable to him, and hence will not be entitled to seek the arrest of the vessel.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
No. Claims arising out of contracts for the sale and purchase of a ship generally do not fall within the Arrest Convention 1952, or the Admiralty jurisdiction of the High Court Ordinance (Cap. 4). This was determined by the Court of First Instance in Hong Kong in Birnam Ltd v. The Owners of the Ship or Vessel Hong Ming[2011]HKCFI 577.
4.4 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 options are available?
For maritime lien claims – damage done to a ship, salvage, wages of master and crew and bottomry – and for those claims falling within s. 12A, B, C and R, High Court Ordinance (Cap. 4), a claimant may continue to effect an arrest of the vessel for secu-rity, even if there has been a change in the vessel’s ownership.
For other maritime claims, a shipowner can exercise a lien over cargo in respect of freight due, provided he retains possession of the cargo.
A shipowner can also exercise a lien in respect of outstanding sub-hire or sub-freight, provided there is an express lien clause in the charterparty.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Acceptable types of security include: cash payment into Court; letter(s) of guarantee or undertaking issued by reputable banks or P&I Clubs; or a bail bond in the form set out at Form No. 11, Appendix B, Rules of Court issued by reputable banks or corporations.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
No. The Hong Kong Court will not usually order the provision of counter security, nor will it require a cross-undertaking to be given in respect of potential damages for wrongful arrest.
The Court will only require an undertaking from the claim-ant’s solicitors to pay the bailiff’s cost and expenses for the arrest and preservation of the vessel.
cargo should have been delivered (Article III rule 6, Hague-Visby Rules), unless the carrier agrees otherwise.
If the Hague-Visby Rules do not apply, then the default six-year time bar for contract and tort claims would apply.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
By s. 3, Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap. 434), Hong Kong has given the 1974 Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea the force of law in Hong Kong.
The key provision on liability for maritime passenger claims is in Article 3, Athens Convention 1974.
3.2 What are the international conventions and national laws relevant to passenger claims?
These include the Athens Convention 1974, and the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap. 434).
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
All claims must be brought within two years from the date of the death or personal injury to a passenger, or from the date of loss of or damage to luggage, as per Article 16 rules 1 and 2, Athens Convention 1974.
4 Arrest and Security
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?
Hong Kong is a party to the International Convention on the Unification of Certain Rules Relating to the Arrest of Sea-going Ships (Arrest Convention) 1952. A claimant wishing to obtain security for a maritime claim may invoke the Admiralty in rem jurisdiction of the Court of First Instance and apply for an arrest of the offending ship or her sister-ship as security.
The type of claims for which the Court’s Admiralty in rem jurisdiction may be invoked is set out in s. 12A, High Court Ordinance (Cap. 4), and the requirements for exercise of the Court’s Admiralty in rem jurisdiction is set out in s. 12B, High Court Ordinance (Cap. 4).
Attention is drawn to a distinction between what are true in rem claims and statutory lien claims (see s. 12B(2)–(4), High Court Ordinance (Cap. 4)) affecting the issue of what vessel the claimant may be entitled to arrest as security. Sister-ship arrests are permitted in Hong Kong, but not associated-ship arrests.
The procedural requirement(s) for obtaining an arrest warrant is set out in Order 75, Rules of High Court, which includes: filing an affidavit leading to a warrant of arrest; undertaking searches in the caveat book to determine if there are any existing caveats against arrest; and the provision of solicitors’ undertaking to the bailiff in respect of his expenses.
If proceedings have already been commenced in Hong Kong, and preservation of evidence or disclosure is required by any party to the proceedings (including preservation of evidence as against a non-party – see s. 42(2), High Court Ordinance), an application may be made to the Court in accordance with the applicable Court rules.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Generally, a party to a Hong Kong Court proceeding will be required to disclose all documents that are in his possession, custody or power relating to the matters or issues in question (see Order 24 rule 1, Rules of Court). The Hong Kong Court will generally not grant a request for specific disclosure, if disclo-sure of the documents is not necessary for a fair disposal of the matter or for saving costs (see Order 24 rule 8, Rules of Court).
The disclosure obligations of parties to maritime disputes are generally the same as all other commercial disputes.
5.3 How is the electronic discovery and preservation of evidence dealt with?
On 1 September 2014, a Pilot Scheme for Discovery and Provision of Electronically Stored Documents for Commercial List Cases (Practice Direction SL1.2) came into effect.
This Practice Direction applies to all actions commenced in, or transferred into, the Commercial List on or after 1 September 2014 where either: (a) the claim or counterclaim exceeds HK$8 million and there are at least 10,000 documents to be researched for the purposes of discovery; (b) the parties agree to be governed by the Practice Direction; or (c) the Court directs the parties to follow the Practice Direction.
The Practice Direction can also apply to cases that are not on the Commercial List (i.e. claims on the Admiralty List) on the application of a party or by the direction of the Court.
For general principles governing electronic discovery, scope of discovery and privilege, see Practice Direction SL1.2/3. Briefly, the scope of discovery will be limited to those docu-ments that are directly relevant to an issue in the proceedings, i.e. those that are likely to be relied on by any party, or which support or adversely affect any party’s case. The cost of discov-ering electronic documents must also be proportionate to the amount claimed in the proceedings. “Background” or “train of inquiry” documents need not be disclosed, until after expert and factual witness evidence have been exchanged.
For the principles governing preservation of electronic docu-ments, see Practice Direction SL1.2/4. Briefly, a party’s solici-tors must notify their clients of the need to preserve discoverable documents, as soon as litigation is contemplated. The docu-ments to be preserved include those documents which might otherwise be deleted in accordance with a document retention policy, or otherwise deleted in the ordinary course of business. Native electronic documents must also be preserved even if the same electronic documents are disclosed in another format.
4.7 How are maritime assets preserved during a period of arrest?
During the period of arrest, the bailiff is responsible for the custody and care of the vessel.
The bailiff will apply to the Court for an omnibus order, as it will enable him/her to: (a) appoint an agent (in the absence of an owner’s agent) to supply minimum water, victuals, bunkers and other necessary spares to the vessel and her crew; (b) move the vessel, if required, for any reasons of safety; (c) take out port risk insurance, as necessary; and (d) discharge cargo on board, if required.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
To satisfy the threshold of wrongful arrest, an arrest must be mali-cious (mala fides) or so grossly negligent as to imply malice (crassa negli-gentia), as per the Privy Council statement in “The Evangelismos”, and as further elaborated on by Bokhary J in the Hong Kong Court of Appeal in “The Maule” [1995]2HKC769.Thistestisnoteasytosatisfy, and the Hong Kong Courts are generally slow to make a finding of gross negligence or malice. See also Birnam Ltd v. The Owners of the ship or vessel “Hong Ming” [2011]5HKLRD139, and Cosmotrade Exports S.A. v. The Owners and/or Demise Charterers of the Ship or Vessel “Jimrise” [2012]HKEC79.
The remedy for wrongful arrest of vessel is damages.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Hong Kong is a party to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, the provisions of which have been implemented domestically by s. 75, Evidence Ordinance (Cap. 8).
Under ss 75 and 76 of the Evidence Ordinance (Cap. 8), the Court of First Instance in Hong Kong has the power to order the preservation of any evidence that is to be obtained in Hong Kong (including but not limited to the examination of witnesses), whenever a Foreign Court or tribunal requests it and where the evidence relates to civil proceedings which have either been insti-tuted or are contemplated in a Foreign Court or tribunal. An application to the Court of First Instance for the preservation of such evidence can be made under Order 70, Rules of Court.
Pre-action disclosure is also available against a potential defendant or a non-party who has in his/her possession, custody or power, any documents that are directly relevant to an issue arising or likely to arise out of the claim in question (see ss 41 and 42(1), High Court Ordinance). Applications for pre-action disclosure can be made under Order 24 rule 7A, Rules of Court, subject to fulfilment of the requirements set out in Zhang Shouen v. Standard Chartered Bank (Hong Kong) Ltd [2015]HKEC2170.
125Tang & Co. (in association with Helmsman LLC, Singapore)
and New Zealand. With the implementation of the Civil Justice Reforms in 2009, the Hong Kong Courts are empowered to take a proactive role in managing cases and ensuring that disputes are heard in a timely manner.
As with the United Kingdom, the Hong Kong legal system is highly regarded for its ease of use, predictability and certainty of outcomes, and the professionalism, skill, knowledge and impar-tiality of its judges, arbitrators and mediators.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Hong Kong continues to be an important gateway for foreign companies doing business in the PRC, not least because its systems are familiar to the international community, it is geographically close to Mainland China, and it has a robust legal framework. At the same time, Hong Kong’s systems, institu-tions and legislation also facilitate the conduct of business in Mainland China.
For example, Hong Kong has China-appointed attesting officers to facilitate the attestation of documents for use in Mainland China, without the signatory having to enter Mainland China.
In addition, Hong Kong and the PRC had, in 2019, signed the Arrangement on Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong SAR to allow a mutual recog-nition of Court judgments between Hong Kong and China; as such, disputes do not have to be relitigated for enforcement in either jurisdiction. This means greater certainty and expediency for litigating parties in either Hong Kong or Mainland China.
This arrangement is of benefit particularly to investors in China’s Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Hong Kong has a statutory regime for the recognition and enforcement of foreign judgments based on reciprocity under the Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap. 319). A final and conclusive judgment obtained from a Superior Court of the following 15 countries can be registered and enforced in Hong Kong as a Hong Kong judgment – Australia, Austria, Belgium, Bermuda, Brunei, France, Germany, India, Israel, Italy, Malaysia, New Zealand, Singapore, Sri Lanka, and The Netherlands.
In addition, Mainland Chinese judgments can now be regis-tered and given effect as a Court of First Instance judgment in Hong Kong under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597).
Foreign judgments not covered under any of these statutory regimes may still be enforced in Hong Kong by way of common law through the commencement of a writ action.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Hong Kong is not itself a contracting party to the 1958 New York Convention, but the PRC, that entered the New York Convention on 22 January 1987, extended the application of
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims are dealt with by the Court of First Instance, whose jurisdiction is conferred by s. 12A(1), High Court Ordinance (Cap. 4). Although Hong Kong does not have a Specialist Maritime Court, the Court of First Instance maintains a specialist list for maritime disputes. Matters appearing on this Admiralty list are dealt with by a specialist judge who is both familiar with and experienced in maritime claims.
The Court procedures for maritime claims are similar to those for other civil claims. However, for claims arising out of a collision between ships, there are a special set rules, which substitute normal pleadings for preliminary acts under Order 75 rule 18, Rules of Court.
In terms of timescales for maritime claims, this usually depends on the complexity of the matter and the number of witnesses. Maritime claims in Hong Kong are dealt with expe-ditiously, as the judge in charge of the Admiralty List takes a proactive approach in the case management of these claims, in accordance with the Civil Justice Reforms.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?So far, maritime arbitration is more often than not conducted under the auspices of the: Hong Kong International Arbitration Centre (HKIAC); China Economic and Trade Arbitration Commission, Hong Kong Arbitration Center (CIETAC HK); China Maritime Arbitration Commission (CMAC); or by way of ad hoc arbitration.
In March 2019, the Hong Kong Maritime Arbitration Group (HKMAG), originally a division under the HKIAC, was formed as an independent organisation to deal specifically with mari-time disputes. The HKMAG comprises arbitrators who have specialist knowledge and experience in the maritime industry. It is therefore expected that the HKMAG will have an increasingly important role to play in maritime arbitration in Hong Kong.
Arbitration conducted under the HKMAG is subject to the HKMAG Terms (2017) or the HKMAG Small Claims Procedure (2017) (where the total claims and counterclaims do not exceed US$100,000), the procedures of which are substan-tially similar to the LMMA Terms (2017) and the LMAA Small Claims Procedure, respectively.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?The HKMAG maintains and publishes a list of HKIAC accred-ited mediators with maritime experience.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Hong Kong is a special administrative region of the People’s Republic of China (PRC), which adopts the English common law system.
Hong Kong has an independent and impartial judiciary in place with visiting judges from England & Wales, Canada, Australia
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.
There continues to be a keen push towards digitalisation and automation within the shipping industry, particularly in light of COVID-19. Singapore has been taking a firm lead in digitalisa-tion by creating one-stop platforms for vessel-related transactions, immigration, supply chain, logistics and port health clearance forms. Singapore is also spearheading an initiative, TradeTrust, that aims to digitalise trade documents, including bills of lading, reducing business costs and reducing fraud in the industry.
On vessel automation, we witnessed the launch of the world’s first zero-emission, autonomous container feeder, M/V “Yara Birkeland”, in November 2020. Automated ships are no longer an aspiration, but a reality.
Meanwhile the maritime industry continues to work towards its goal of zero carbon emissions. This agenda has been pushed to the forefront by world leaders, environmental groups and even Courts. On 27 May 2021, the Netherlands Court ordered Shell to reduce its CO2 emissions by 45% by 2030 compared to 2019 levels.
Other developments that may be of interest to ship opera-tors is the shipping tax incentive programmes that were imple-mented by Hong Kong and Singapore to attract tonnage.
the Convention to Hong Kong in 1987. Arbitral awards from Convention countries (excluding awards made in the PRC) are therefore enforceable in Hong Kong under s. 87, Arbitration Ordinance (Cap. 609).
Arbitral awards made in Mainland China (excluding Hong Kong, Macao and Taiwan), are enforceable in Hong Kong pursuant to s. 92, Arbitration Ordinance, which gives effect to the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region.
Arbitral awards made in Macao are enforceable in Hong Kong pursuant to s. 98A, Arbitration Ordinance, which gives effect to Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Hong Kong Special Administrative Region and the Macao Special Administrative Region.
Awards made in or outside Hong Kong that are not Convention awards, Mainland awards or Macao awards, remain enforceable in Hong Kong pursuant to s. 84, Arbitration Ordinance, but such enforcement requires the leave of Court.
127Tang & Co. (in association with Helmsman LLC, Singapore)
Shipping Law 2021
Tang Chong Jun is qualified to practise law in both Hong Kong and Singapore. He has successfully represented clients in several multi-million-dollar GAFTA arbitrations and was also involved in various landmark decisions in Hong Kong, including “Apellis” (2018) Lloyds Law Reports Plus 11 and “Alas” (2015) 1 Lloyds Law Reports 211.Chong Jun is recommended for his shipping expertise in Expert Guides 2019, and also cited in The Legal 500; he is a Member of the Hong Kong Institute of Arbitrators and is regularly invited to speak at shipping and maritime law conferences.
Tang & Co. (in association with Helmsman LLC, Singapore)Room 4209, Tower One, Lippo Centre, 89 QueenswayAdmiraltyHong Kong
Helmsman LLC is an international law firm that specialises in shipping and commodities work, with offices in Hong Kong (operating as Tang & Co.) and Singapore. The firm was founded by two shipping and trade special-ists, Mr. Ian Teo and Mr. Tang Chong Jun.The firm’s lawyers share a common objective and belief in handling all client relationships with care and integrity, and draws upon the experi-ence of its award-winning lawyers and networks to help clients navigate common pitfalls in business.The association between Helmsman LLC and Tang & Co. allows Helmsman LLC to embark on a significant expansion of its business in the areas of shipping and commodities trading beyond the Southeast Asian region.
Merchant Shipping (Prevention of Pollution by Sewage from Ships) Rules, 2010; and (vii) Merchant Shipping (Prevention of Pollution by Harmful Substances Carried By Sea in Packaged Form) Rules, 2010.
The MSA provides that:1. the provisions for civil liability for oil pollution are appli-
cable to Indian ships (irrespective of location) and foreign ships when in territorial waters of India/any marine areas adjacent thereto over which India has exclusive jurisdic-tion for control of marine pollution;
2. the owner shall be liable for any pollution damage caused by escape/discharge of oil from the ship, unless proved that the same was, inter alia, caused by war, an exceptional, inevitable natural phenomenon, act or omission of another person with intent to cause damage; and
3. a shipowner may limit his liability as per CLC 1992, provided that the incident causing pollution damage has not been caused by an act or omission committed/made with the intent to cause such damage, or recklessly with the knowledge that such damage would probably result. A shipowner may constitute a limitation fund by application to the relevant High Court.
(iii) Salvage/general average1. Salvage India is a party to the International Convention on Salvage,
1989. Part XIII of the MSA and the Merchant Shipping (Wrecks and Salvage) Rules, 1974 (amended in 1975) deal with salvage.
Subject to any salvage agreement, the owner of the concerned vessel, cargo, equipment or wreck shall pay a reasonable amount to the salvor for (i) salvaging life on board any vessel in Indian territorial waters or on board any Indian registered vessel elsewhere, (ii) assisting a vessel/saving cargo/equip-ment of a vessel that is wrecked/stranded/distressed at any place on/near the coasts of India, or (iii) services for saving the wreck. Salvage payable for preservation of life shall be paid in priority amongst all other salvage claims.
2. General average There is no legislation that deals with general average; the
same is determined by contractual terms.
(iv) Wreck removalPart XIII of the MSA deals with wreck removal. Other rele-vant pieces of legislation are the Merchant Shipping (Wrecks and Salvage) Rules, 1974 (amended in 1975) and the Indian Ports Act, 1908. India has acceded the Nairobi International Convention Removal of Wrecks, 2007.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionPart X of the Merchant Shipping Act, 1958 (“MSA”) governs collisions. The Merchant Shipping (Prevention of Collisions at Sea) Regulations, 1975 adopt the Convention on the International Regulations for Preventing Collisions at Sea, 1972 and its Annexures.
The key provisions for collision are:1. Damages due to fault of two or more vessels shall be appor-
tioned based on the degree of each ship’s fault. The owners of the concerned ships shall be jointly and severally liable for loss of life/personal injury suffered on board a ship.
2. The Masters of each concerned ship must render assistance to save lives and the ships from any danger caused by the collision.
3. After a collision, the Master shall (i) immediately enter details of the same in the official log, signed by him and the Mate/one of the crew, and (ii) within 24 hours send the Central Government an accident or damage report.
4. If the owner/agent of any Indian ship apprehends that the ship has been lost, he must notify the Central Government along with the vessel’s details.
(ii) PollutionParts XB, XC and XIA of the MSA govern civil liability for oil pollution damage, contribution to the International Oil Pollution Compensation Fund and prevention and containment of pollu-tion of the sea by oil. India has acceded to the International Convention on Civil Liability for Oil Pollution Damage, 1992 (“CLC 1992”) and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992.
Other relevant pieces of legislation include: (i) Merchant Shipping (Civil Liability for Oil Pollution Damage) Rules, 2008; (ii) Merchant Shipping (International Fund for Compensation for Oil Pollution Damage) Rules, 2008; (iii) Merchant Shipping (Prevention of Pollution by Garbage from Ships) Rules, 2009; (iv) Merchant Shipping (Prevention of Pollution by Oil from Ships) Rules, 2010; (v) Merchant Shipping (Control of Pollution by Noxious Liquid Substances in Bulk) Rules, 2010; (vi)
appointed by the Central Government. The officer is to conduct a preliminary inquiry into the matter and provide a written report to the Government, and may make an application to the relevant Court for a formal investigation. The Central Government may otherwise, through the Court, initiate an inquiry into charges of misconduct/incompetency of the Master, Mate, etc.
At the instance of the Central Government, the concerned Court will conduct a formal investigation or inquiry.
■ Key powers of the Court:1. Inquire into charges of misconduct/incompetency of
the Master, Mate, etc.2. Summon the concerned individual to appear and make
a defence.3. Compel attendance and examination of witnesses.4. Appoint assessors conversant with either maritime or
mercantile affairs.5. Issue a warrant to arrest a witness.6. Cause a person who has committed an offence in India
to be arrested, or hold him to bail to take his trial before a proper Court.
7. Remove the Master of any ship and appoint a new one.
■ KeypowersoftheCentralGovernment:1. Cancel or suspend the certificate of any Master, Mate,
etc. granted by it in cases prescribed under Section 377 of the MSA.
2. Revoke or modify any order of cancellation or suspen-sion made by itself/by a Court in India.
3. Grant, without examination, a new certificate of the same or lower grade in case of any certificate cancelled or suspended by itself or by the Court.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The Carriage of Goods by Sea Act, 1925 (“COGSA”) primarily deals with cargo claims. The Hague Rules, 1924 have been incorporated in the Schedule to COGSA. COGSA also includes certain provisions of the Hague Visby Rules, in particular the SDR Protocol.
Certain other relevant pieces of legislation include the Bill of Lading Act, 1856, the Major Port Authorities Act, 2021, the Multimodal Transportation of Goods Act, 1993, the MSA, the Admiralty ( Jurisdiction and Settlement of Maritime Claims) Act, 2017 (“Admiralty Act”), the Marine Insurance Act, 1963, and the Sale of Goods Act, 1930.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
COGSA is applicable to cargo claims: (i) arising under a bill of lading or similar document of title; (ii) for carriage of any prop-erty including live animals, containers, pallets, similar article of transport/packaging supplied by the consignor, whether carried on or under deck; and (iii) for outward carriage, i.e., cargo carried from a port in India to any port inside or outside of India.
The bill of lading is considered prima facie evidence of the contents furnished by the Shipper (i.e., leading marks necessary for identification, number of packages/pieces, weight) and for the apparent order and condition of the goods. However, proof
The key provisions are:1. The Central Government may appoint a receiver to take
possession of the wreck and to perform certain duties. The receiver is empowered to, inter alia, investigate the wreck, publish notification of the wreck and sell any wreck under his custody.
2. The finder of the wreck must, as soon as practicable, notify the receiver of the same. In case the finder of the wreck is not the owner, he must deliver the same to the receiver.
3. The owner of the wreck or any part thereof shall be under an obligation to pay to the receiver: salvage charges; any other expenditure properly incurred by the receiver for the recovery, preservation or safety of the wreck; and fees of the receiver. The receiver may withhold delivery of the whole or part of the wreck or its sale proceeds until the owner settles the aforesaid dues in full.
(v) Limitation of liabilityPart XA of the MSA adopts the Convention on Limitation of Liability for Maritime Claims, 1976 (as amended from time to time) with certain exceptions. India has ratified the 1996 Protocol (without amendments to the MSA). It has been judi-cially upheld that the 1996 Protocol is part of the MSA and is in force in India (The Yuri Arshenevsky, (2016) 946 LMLN 2). Other relevant pieces of legislation are the Merchant Shipping (Limitation of Liability for Maritime Claims) Rules, 2015 and the Merchant Shipping (Limitation of Liability for Maritime Claims) Amendment Rules, 2017.
The following persons may limit their liability for claims prescribed in the MSA:1. Shipowner, charterer, manager, operator of the vessel,
Master, crew members and other servants.2. Salvor.3. Any person for whose default/neglect the owner or the
salvor is responsible.4. Insurer of liability for claims.
In case the Convention is not applicable, the aforesaid persons may limit liability as per the Rules stated above. The right to limit liability is absolute as it is not qualified by any exception in the MSA.
(vi) The limitation fundWhere legal proceedings are instituted in respect of any prescribed claims (under Part XA of the MSA) against any persons entitled to limit liability, such person may apply to the concerned High Court for constituting a limitation fund within the limits of the 1996 Protocol. The High Court will determine the amount of the owner’s liability and a direct deposit of such amount with the Court, or a guarantee/bank guarantee for the said amount as acceptable by the Court.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Director General of Shipping, Mercantile Marine Department and any other officer or body as appointed or constituted by the Central Government for the investigation of maritime casualties.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
Part XII of the MSA deals with investigations and enquiries. In case of a shipping casualty as prescribed by the MSA, the
Master of the ship is to immediately notify the concerned officer
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
There is no specific period of limitation. Therefore, the limita-tion period would be three years from the date the right to sue accrued as per the Limitation Act, 1963.
4 Arrest and Security
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 Claimant may seek arrest of a vessel for securing statutory mari-time claims and liens. The Admiralty Act regulates the arrest of vessels.
In order to arrest a vessel, the Claimant would have to file an Admiralty Suit before the concerned High Court, while the vessel is present in the territorial waters over which the Court exercises jurisdiction. Generally, and in absence of a valid caveat against arrest, a Claimant can move ex parte to arrest the vessel. Depending upon the rules of the Court, the Claimant may be required to furnish an undertaking to compensate the Opponent for damages suffered in case the arrest is determined to be wrongful. The High Courts of Bombay and Gujarat have such a requirement.
The Admiralty Act provides an action in rem against: (i) the offending vessel against which the maritime claim arose, provided that she is under the ownership/demise charter of the person liable for the claim at the time the claim arose and when the arrest is effected; or (ii) any other vessel (in lieu of the offending vessel) provided that, when the arrest is effected, she is under the owner-ship/demise charter of the person liable for the claim, who was also the owner/demise charter of the offending vessel at the time the claim arose. For grant of an order of arrest, the Claimant will have to establish a reasonably arguable best case, i.e. a triable case.
The vessel is arrested under the Warrant of Arrest issued by the concerned Court, which is served by the Bailiff/Sheriff on the vessel, in the presence of the Master.
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?
Yes, the Admiralty Act recognises bunker claims as a maritime claim.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Yes, the Admiralty Act recognises any dispute arising out of a contract of sale of a vessel as a maritime claim.
4.4 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 options are available?
The Admiralty Act provides an action in rem only for the under-lying in personam liability of the owner/demise charterer of the
to the contrary is not admissible when the bill of lading has been transferred to a third party acting in good faith.
The Carrier’s right to package limitation is not absolute; the same is not available if it is proved that the damage resulted from the Carrier’s deliberate default (i.e. an act or omission on the part of the Carrier carried out with an intent to cause damage, or reck-lessly and with the knowledge that damage would probably occur).
Where the value of the goods has been knowingly misstated by the Shipper so as to cause entry in the bill of lading, the liability of the Carrier shall not exceed the value so stated. This declara-tion is only prima facie evidence and is not binding/conclusive on the Carrier.
A Claimant may also institute an action in rem for a cargo claim under the Admiralty Act.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Article III (5) of COGSA provides that the Shipper is deemed to have guaranteed the accuracy of the shipment details (i.e. identification marks, quantity/number of packages and weight) furnished to the Carrier at the time of shipment. The Shipper is liable to indemnify the Carrier for any loss/damage/expenses arising out of or resulting from such inaccuracies.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
COGSA provides a one-year time limit (from the date of delivery of the goods or the date on which the goods should have been delivered), which can be extended by agreement between parties after the cause of action has arisen. Such action can also be brought within three months from the lapse of the one-year period, if allowed by the Court. In cases of claims arising out of cargo carried into India, the limitation period would be three years from the date of accrual of the cause of action.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Part VIII of the MSA deals with maritime passenger claims, refund of passage money/deposits and compensation for delay in sailing.
The Admiralty Act recognises a claim arising out of an agree-ment relating to the carriage of passengers on board a vessel, whether contained in a charterparty or otherwise, as a maritime claim.
3.2 What are the international conventions and national laws relevant to passenger claims?
The MSA and the Admiralty Act deal with passenger claims.Part VIII of the MSA adopts the Special Trade Passenger
Ships Agreement, 1971 and the Protocol on Space Requirements for Special Trade Passenger Ships, 1973.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
An arrest can be held wrongful if the same has been obtained: a. without jurisdiction; orb. in violation of the provisions of the Admiralty Act (i.e., the
claim is not a statutory maritime claim/lien, the arrest fails to meet the statutory ownership test, etc.).
A vessel owner may claim damages on account of wrongful arrest of the vessel. As per the provisions of the Admiralty Act, a Court may, as a condition for obtaining or maintaining an arrest, call upon a Claimant to furnish an unconditional undertaking to pay damages or furnish security, as may be determined by the Court, for any loss or damage which may be incurred by an owner as a result of the wrongful arrest. Few Courts (i.e. Bombay High Court, Gujarat High Court) require such an undertaking as a matter of course for granting an order of arrest. Upon the arrest being held wrongful by the Court, the owner may invoke the aforesaid undertaking and claim damages for wrongful arrest from the Claimant. Owners are obliged to take all reasonable steps to mitigate their loss on account of the arrest.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Any party to the Suit may apply to the Court for detention, preservation or inspection of any property that is the subject matter of such Suit/as to which any question may arise therein, or authorise any person for the aforesaid purposes to enter into any land/building in the possession of any other party to such Suit, or, for any of the purposes aforesaid, authorise any samples to be taken/any observation to be made or experiment to be tried, which may seem necessary or expedient for the purpose of obtaining full information or evidence.
Any party to the Suit may apply to the Court seeking discovery of documents (relevant to any matter therein) that it believes to be in possession/power of any party to the Suit. The Court may order such discovery provided the same is necessary for disposing of the Suit/saving costs.
There are three stages of witness examination: examina-tion-in-chief by way of Affidavit; cross-examination; and re-ex-amination, if permitted by the Court.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The Claimant, at the time of filing the plaint, is required to produce and file all documents in its possession/power and in support of the claim. A similar requirement is placed on the Defendant when filing its defence and counter claim.
offending vessel (i.e. the vessel in respect of which the maritime claim arose). Therefore, a Claimant cannot seek security for a maritime claim from a party other than the owner or demise charterer.
Security may be sought by a party (other than owner/demise charterer), in case of in rem enforcement of a statutory maritime lien. The Admiralty Act provides an action in rem for a claim against the owner, demise charterer, manager or operator of the vessel, provided the claim is secured by a statutory maritime lien.
The Major Port Authorities Act, 2021 provides that a shipowner may request the port (at which the cargo is to be discharged) to exercise a lien over the cargo for outstanding freight and other charges.
In case of arbitrations (domestic or international) taking place in India, a party may apply to the concerned Court for interim measures such as securing the amount in dispute/preservation or sale of goods which forms the subject matter of the arbitration/interim injunction/appointment of receiver, etc. A party may apply for such interim measures prior to the commencement of or during the arbitration proceedings, and before enforcement of the award. However, a party applying for interim relief prior to commencement of arbitration is obliged to commence proceed-ings within 90 days from the date such relief is granted.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Security in the form of a cash deposit or bank guarantee of a nationalised bank is accepted. A P&I Club letter of undertaking is acceptable only upon the Claimant’s consent.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
There is no requirement for counter security when arrest is granted.
The Court may, at its discretion, as a condition for the arrest or its continuation, direct the Claimant to furnish an uncondi-tional undertaking to pay such sums of money as damages/secu-rity as determined by the Court, for any loss or damage which may be incurred by the Opponent as a result of such arrest and for which the Claimant may be found liable. The Claimant may, at any time, apply to the Court for reduction/modification/cancellation of the security.
4.7 How are maritime assets preserved during a period of arrest?
The shipowner is obliged to maintain the vessel. In case the shipowner fails to maintain or abandons the vessel, the Court may order the sale of the vessel. In the interim and upon the Claimant’s request, the Court may permit the Claimant to main-tain the vessel. The maintenance costs incurred by the Claimant with the permission of the Court will constitute a first charge on the sale proceeds of the vessel and must be paid first.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Pros:1. The procedure for arrest of vessels is straightforward and
a Claimant has to satisfy a fairly simple test for the same. 2. Most Admiralty Suits would be tried before Commercial
Courts with a time-bound mechanism for conduct of proceedings. Similarly, arbitration proceedings in India are statutorily required to be completed within a prescribed period.
3. In case of Commercial Suits, there is a statutory require-ment of pre-action mediation, unless parties need to seek urgent interim relief.
4. The test for challenging enforcement of foreign arbitral awards is quite narrow and followed strictly by the Courts.
Cons:1. The Claimant for arrest of the ship would need to apply to
the concerned High Court within whose jurisdiction the vessel is present. The benefit of the erstwhile pan India jurisdiction exercised by the High Courts of Bombay, Madras and Kolkata is not available.
2. The computation of Court fees is variable whereas in some jurisdictions it is fixed, and in some it is ad valorem.
3. For immediate release of the vessel, a Claimant would be required to deposit security in Court.
4. Interim orders passed by an arbitral tribunal in foreign seated arbitrations would be not be enforceable in India.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
A foreign judgment needs to be conclusive for enforcement in India. A judgment is considered conclusive unless:1. it is not pronounced by a Court with competent jurisdiction;2. it has not been given on the merits of the case;3. it appears on the face of the proceedings that it is based
on an incorrect view of international law or a refusal to recognise Indian law in such cases where Indian law is applicable;
4. the proceedings in which the foreign judgment was obtained are against natural justice;
5. it has been obtained by fraud; or6. it sustains a claim based on a breach of a law in India.
■ Foreign judgment passed by courts in reciprocating territories:1. The Code of Civil Procedure, 1908 (“CPC”) provides
for enforcement of a foreign decree passed by the Superior Courts of reciprocating territories notified by the Central Government.
2. For enforcement, one must file before the relevant District Court (within the limitation period prescribed by the Limitation Act, 1963) a certified copy of the judgment and a certificate from the Superior Court stating the extent to which the same has been satisfied.
3. Upon the Court being satisfied that the foreign decree is conclusive, the same will be deemed to be a decree of the said Court and can be executed.
The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“Commercial Courts Act”) permits institution of Commercial Suits, for prescribed commercial disputes (such as disputes arising out of carriage of goods, issues relating to admiralty and maritime law, etc.) valued at a minimum of Rs. 3 Lakhs (i.e. approx. USD 4,000). In such Suits, there is a requirement of absolute disclosure at the time of filing the plaint or written statement, i.e. disclosure of all docu-ments in a party’s possession, control or custody relating to any matter in question in the proceedings, whether in support of the claim or adverse. A document not disclosed cannot be relied upon without leave of the Court.
5.3 How is the electronic discovery and preservation of evidence dealt with?
There are no specific provisions for electronic discovery and pres-ervation in the Code of Civil Procedure, 1908. However, notable amendments have been made by the Information Technology Act, 2000 to the Evidence Act, 1872 for electronic evidence.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The High Courts of Calcutta, Bombay, Madras, Karnataka, Gujarat, Orissa, Kerala, State of Telangana and the State of Andhra Pradesh.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The Indian Council of Arbitration and International and Domestic Arbitration Centre India deal with maritime disputes with specialised rules for maritime arbitrations.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?ASSOCHAM International Council of Alternate Dispute Resolution.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
A wide variety of commercial disputes will be tried before the Commercial Courts, owing to the array of disputes covered under the Commercial Courts Act along with a moderate valu-ation threshold for instituting such Suits. The proceedings before such Courts are conducted in a time-bound manner with transparency, by virtue of statutory provisions.
The arbitration institutions have a panel of arbitrators consisting of commercial persons and retired judges, as well as prescribed rules for conducting time-bound arbitrations for resolution of diverse commercial disputes. The institutions prescribe a capped fee for arbitrators.
Once the Court holds the foreign award to be enforceable, it is deemed to be a decree of that Court and the same can be executed by filing an Execution Petition before the concerned Court.
A party seeking execution of a foreign award in India may directly file an Execution Petition. However, the Court shall first ensure that the foreign award is enforceable. (Fuerst Day Lawson v. Jindal Exports Limited (2006) 5 SCC 356.)
8 Updates and Developments
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.
The Supreme Court in the landmark case of PASL Wind Solutions Private Ltd. v. GE Power Conversion India Private Ltd has held that two Indian parties can elect a foreign seat of arbitration. Such an award would be considered as foreign and the Court had jurisdiction to grant interim measures with respect to the award. The Court was dealing with the issue of enforcement of an award arising of Zurich seated arbitration between Indian parties. The Court dismissed the submissions that allowing Indian parties to choose a foreign seat would be violative of public policy in India. In doing so, the Court held that for “public policy” under Section 23 of the Contract Act to be triggered, explicit harm to the public has to be proved. The Court considered freedom to contract against the likelihood of clear and undeniable harm to the public. The Court clarified that such an award would be enforceable only in a High Court (as per Section 10(1) of the Commercial Courts Act, 2015) and not in a district court (as per Sections 10(2) and 10(3) of the Commercial Courts Act, 2015).
■ Foreign judgment passed by courts in non-recipro-cating territories:
One must file a Suit in an Indian Court of the compe-tent jurisdiction, seeking a judgment/decree based on the foreign judgment or on the underlying cause of action, or both. The limitation period for the same is three years as per the Limitation Act, 1963.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Part II of the Arbitration and Conciliation Act, 1996 (“A&C Act”) governs recognition and enforcement of a foreign arbitral award.
For enforcement, one must file an Enforcement Application in a High Court of competent jurisdiction along with the following documents: (i) the original award or copy thereof, duly authenti-cated as required by the originating country; (ii) the original or certified copy of the arbitration agreement; and (iii) the evidence necessary to prove that the award is a foreign award.
The enforcement proceedings may be challenged on the following grounds:1. The award has not been made pursuant to the submission to
arbitration or is ultra vires the submission to arbitration.2. The subject matter of the award is incapable of settlement
by arbitration under Indian law.3. Constitution of the arbitral tribunal is ultra vires the submis-
sion to arbitration or the law governing the arbitration procedure.
4. The award has not yet become final in the country where it has been rendered.
5. Enforcement of the award is contrary to the public policy or law of India.
6. The award is annulled in the country where it was rendered.7. The party against whom the award is sought to be used
was not given notice of the arbitration proceedings in time to enable him to present his case, or he was not properly represented due to legal incapacity.
8. The award does not deal with the differences contem-plated by the arbitration agreement, or contains decisions on matters beyond the scope thereof.
134 India
Shipping Law 2021
Shivkumar Iyer has over a decade’s experience in maritime litigation and arbitrations (domestic and international). His prowess extends to all facets of maritime law. He routinely represents shipowners, P&I clubs, container lines, charterers and traders across various Courts in India and before Tribunals. He has extensive experience in maritime transactional matters as well as dry and wet shipping, sale-purchase of goods/ships, cargo claims and marine insurance claims.
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1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionWith regard to liability in a collision, the Indonesian Commercial Code (“ICC”) provides that:a. If the collision is caused by force majeure, or if there are
doubts as to the cause of the collision, the damages shall be borne by those who have suffered them.
b. If the collision is caused by the fault of one of the colliding vessels, liability to remedy the damages shall be borne by the vessel entrepreneur ( pengusaha kapal ) whose vessel committed the fault. Wirjono Prodjodikoro, an Indonesian legal scholar, stated that a collision caused by a defect (unseaworthiness) of the vessel shall also be consid-ered as the fault of the vessel.
c. If the collision is caused by the fault of two or more vessels, the liability of each vessel entrepreneur ( pengu-saha kapal ) is in proportion to the degree of their vessel’s respective faults. Prodjodikoro stated that the test of fault is the impact of the fault on the damage suffered, irrespec-tive of the intention (culpa) of the vessel.
d. If a vessel being towed collides due to the fault of the towing vessel, the owners of both the towed and the towing vessel shall be jointly and severally responsible for the damage.
Upon declaring independence in 1945, Indonesia decided that the articles of the ICC would continue to be followed unless they were contrary to the Indonesian Constitution.
Under Law No. 17 of 2008 regarding Shipping, as amended by Law No. 11 of 2020 regarding Job Creation (“Shipping Law”), unless it can be proven otherwise, the master of the vessel shall be held liable in a vessel accident.
As to collisions, Indonesia has ratified the 1972 International Regulations for Preventing Collisions at Sea, by way of Presidential Decree No. 50 of 1979, but has not ratified the Convention for the Unification of Certain Rules of Law with respect to Collisions Between Vessels.
(ii) PollutionIndonesia has ratified the following treaties:a. The United Nations Convention on the Law of the Sea of
1982 (“UNCLOS”), by way of Law No. 17 of 1985.b. The International Convention for the Prevention of
Pollution from Ships of 1973, as modified by the Protocol of 1978 relating thereto and by the Protocol of 1997 (“MARPOL”), by way of Presidential Decree No. 46 of 1986 and Presidential Regulation No. 29 of 2012.
c. The International Convention on Civil Liability for Oil Pollution Damage of 1969 and its amendment of 1992 (“CLC”), by way of Presidential Decree No. 52 of 1999.
Indonesia has not ratified the International Oil Pollution Compensation (“IOPC”) Fund Convention of 1992 and the Supplementary Fund Protocol of 2003.
Under the Shipping Law, all crew members in a vessel are obliged to prevent and mitigate environmental pollution from their vessel. In addition, vessel owners or operators are obliged to procure an insurance policy for their pollution liability. Failure to comply may result in imprisonment and/or fines for vessel owners or operators.
(iii) Salvage/general averageWe are not aware of any salvage conventions that have been rati-fied by Indonesia.
The Shipping Law was further implemented by Minister of Transportation (“MOT”) Regulation No. PM 71 of 2013, as lastly amended by MOT Regulation No. PM 38 of 2018 regarding Salvage and Underwater Works (“MOT Reg 71/2013, as amended”). This regulation defines salvage as the provi-sion of aid to a vessel and/or its cargo that has suffered a vessel accident or perils of the sea, including removing the shipwreck or underwater obstacle or other objects. MOT Reg 71/2013, as amended, Government Regulation No. 5 of 2021 regarding Administration of Risk-Based Business Licensing (“GR 5/2021”), and Government Regulation No. 31 of 2021 regarding Administration of the Shipping Sector (“GR 31/2021”) provides that a salvage operation may only be conducted by a business entity that is specifically engaging in the salvage business, fulfils the technical requirements under MOT Reg 71/2013, as amended and holds a Commercial and Operational Licence issued by the Online Single Submission (“OSS”) system under the name of Salvage and Underwater Works Business Approval (Persetujuan Perusahaan Salvage dan Pekerjaan Bawah Air).
gather preliminary evidence to confirm the occurrence of a vessel accident. The official conducting the preliminary investigation is authorised to obtain information from the ship captain, crew, ship owner/operator, ship pilot, seaport or special terminal operating and maintaining pilotage, or other related parties.
b. Subsequent investigation by the Shipping Court. The Shipping Court will establish a five-member Expert Panel containing two nautical experts (one technical expert, one shipping engineering scholar) and one legal scholar. The Shipping Court may examine evidence (letters, written documents, or images) as well as testimony from the defendant/parties, witnesses, or experts. The Shipping Court is authorised to issue a decision and impose admin-istrative sanctions in the form of written warning or revo-cation of seafarer expertise certificate.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
There are no applicable international conventions relevant to marine cargo claims because Indonesia has not ratified the Hague/Hague-Visby/Hamburg/Rotterdam Rules.
Marine cargo claims are regulated by the ICC, which provides that a carrier is liable to provide compensation 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.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
In practice, either the shipper, the consigner, the lawful holder of the bill of lading, the cargo owner or the cargo insurer (by subrogation) is entitled to bring cargo claims against the carrier for loss or damages arising from the carrier’s alleged default.
Article 513 of the ICC provides that if the bill of lading states that the “content/nature/amount/weight/size is unknown”, or a similar clause to this effect, the carrier will not be responsible for any cargo claim, unless the carrier should have known the condi-tion and type of the cargo or the cargo was quantified before the carrier.
Unless otherwise agreed by the parties, the ICC provides a one-year limit to bring legal claims related to: (i) the payment to be made by the consignee; (ii) the carriage of passengers and luggage against the carrier; and (iii) compensation for cargo damages.
Aside from the ICC, an injured party is also entitled to submit a civil claim on the basis of an unlawful act (similar to tort) under the Indonesian Civil Code. Like the ICC, the Indonesian Civil Code was promulgated in the 19th century and has not been amended since Indonesia’s independence.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The carrier shall be entitled to receive compensation for damages caused by incorrect or incomplete information related to the nature of the cargo unless the carrier knew or should have known the nature prior to the voyage.
(iv) Wreck removalIndonesia has not ratified the Nairobi International Convention on the Removal of Wrecks of 2007.
The Shipping Law, as implemented by MOT Reg 71/2013, as amended, obliges a vessel owner to remove its shipwreck and/or cargo that are disturbing navigational safety and security within 180 days after such vessel and/or cargo sank.
MOT Reg 71/2013 as amended, also requires vessel owners to insure their vessels with wreck removal insurance or protection and indemnity insurance from an insurance company recog-nised by the Government of Indonesia. This requirement is waived for war vessels, state vessels used for governmental duty, and motor vessels with a gross tonnage of less than 35 tonnes.
(v) Limitation of liabilityIndonesia has not ratified the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships of 1957 or the International Convention on the Limitation of the Liability for Maritime Claims of 1976, including their Amendment Protocols.
Based on the original text of Article 474 of the ICC, the liability of a vessel owner due to vessel collision or cargo claims is limited to 50 gulden (the currency used by the Netherlands during the East Indies occupation) per cubic metre of the net tonnage of a vessel. A mechanically moved vessel shall have the tonnage of the machinery added to the gross tonnage to deter-mine the net tonnage for vessel collision liability. However, the tonnage of such machinery shall be deducted from the gross tonnage to determine net tonnage for cargo claims liability. The ICC uses 50 gulden because the ICC was enacted during the Dutch occupation of Indonesia and it has not been amended since Indonesia’s independence in 1945.
(vi) The limitation fundIndonesian law does not specifically regulate the form or amount of a limitation fund. In practice, a shipper may request the vessel owner to provide a cash deposit to be used as a limitation fund.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Shipping Law provides that any preliminary investigation with respect to vessel accidents shall be conducted by the rele-vant port authority. The port authority may forward the result of its investigation to the Shipping Court (Mahkamah Pelayaran) to be examined further.
Presidential Regulation No. 2 of 2012 regarding the National Transportation Safety Committee (Komite Nasional Keselamatan Transportasi or “KNKT”) established the KNKT to conduct investigations related to vessel accidents for the purpose of preventing similar accidents in the future.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
According to Government Regulation No. 9 of 2019 regarding Vessel Accident Investigation (“GR 9/2019”), the following investigations shall be conducted in relation to vessel accidents:a. Preliminary investigation by the relevant port authority or
a government official appointed by the MOT (i.e. vessel safety investigator, seaworthiness and marine security investigator, or civil investigator in the shipping sector) to
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?
Yes. The elucidation of Article 223 of the Shipping Law provides that costs related to bunkering activities are one of the legitimate bases for a maritime claim.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
As discussed above, the Shipping Law provides that a vessel may be arrested by the harbourmaster at the relevant port, based on a written court order that is issued if the vessel is involved in a criminal or civil case. Claims arising from the sale and purchase of a ship constitute a civil case. Thus, the plaintiff in such a case may ask the court to issue an arrest warrant to the harbourmaster.
4.4 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 options are available?
Article 316 of the ICC provides that several receivables over a vessel are given priority right, namely (in order of priority):1. Cost of seizure and auction.2. Receivables of the vessel master and the crew arising from
an employment agreement during their tenure in that vessel.
3. Salvage reward, pilotage cost, signal cost and port cost, and other shipping costs.
4. Collision claims.Further, Article 316 of the ICC provides that the general
priority rights provided under Article 1139 of the Indonesian Civil Code (including but not limited to court fees, rent and reparation fees of a rented object, and salvage costs) do not apply to vessels.
Under the Shipping Law, a party may exercise a maritime lien (referred to as “prioritised maritime receivables”) upon claims to receivables for which a vessel acts as a security. Upon such claim against receivables secured by the vessel, the payment of mari-time receivables must be prioritised.
The Shipping Law provides that maritime receivables include:a. Payment of wages, costs, and other payments to the master
and crew of the vessel.b. Payment for death or medical expenses for bodily injuries
related to the operation of the vessel.c. Payment for the salvage of the vessel.d. Payment of port fees or other shipping routes and pilotage
costs.e. Losses arising out of physical loss or damage caused by the
operation of the vessel aside from loss or damage to the cargo, container, and baggage.
Article 66 of the Shipping Law provides that payment of mari-time receivables shall be prioritised over payment of pledges, mortgage, and registered receivables. This is consistent with Article 1134 of the Indonesian Civil Code, which provides that certain rights may be prioritised over pledge or mortgage if it is expressly regulated by law. If there are no prioritised receivables or maritime liens, then a party may file a civil claim with the rele-vant district court.
Indonesia has also ratified the International Convention on Maritime Liens of 1993, by way of Presidential Regulation No. 44 of 2005.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Article 741 of the ICC provides a time limit of one year for the submission of maritime cargo claims. The one-year limit is calcu-lated after either (i) the completion of the voyage, or (ii) if the vessel failed to arrive at the place where the cargo was supposed to be delivered one year after the commencement of the voyage.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Indonesia has not ratified the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea of 1974.
Article 522 of the ICC regulates that the carrier is responsible for passenger safety starting from when the passenger embarks on the vessel until when they disembark. The carrier is obliged to compensate for losses caused by injuries suffered by passen-gers related to the voyage unless the injury was caused by the passengers themselves. Should the injury result in death, the carrier is responsible for compensating the spouse, children, and parents of 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.
3.2 What are the international conventions and national laws relevant to passenger claims?
Please see our response above in question 3.1.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Article 741 of the ICC provides a time limit of one year for the submission of passenger claims. The one-year limit is calculated after either (i) the completion of the voyage, or (ii) if the vessel failed to arrive at the place where the passenger was supposed to disembark one year after the commencement of the voyage.
4 Arrest and Security
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?
The Shipping Law provides that a vessel may be arrested by the harbourmaster at the relevant port where the vessel is currently located (berthing or otherwise), based on a written court order that is issued if the vessel is involved in a criminal or civil case. The Shipping Law further provides that a court order for a vessel arrest in a civil case relating to maritime claims may be issued without initiating civil court proceedings. Further provi-sions on the procedures for vessel arrest at Indonesian ports are supposed to be provided by an MOT regulation. However, as of the date that this was written, such regulation has not been issued.
i. Loss and damage to a ship and cargo due to an accident at sea (general average).
j. Towage costs.k. Pilotage costs.l. Costs of goods, equipment, ship supplies, fuel oil or bunker,
ship tools including containers provided for service purposes and ship supplies for the operation, upkeep, rescue or main-tenance of the ship.
m. Costs of construction, reconstruction or reconditioning, repair, alteration or completing ship supplies.
n. Fees for port, canal, dock, harbour, shipping lane, and/or other levies.
o. Salaries and other payables for a ship’s captain, officers, crew members and others employed on board a ship, including repatriation and social insurance costs for their interests.
p. Financing or disbursements incurred for the interest of the ship on behalf of the ship’s owner.
q. Insurance premium (including “mutual insurance call”) for the ship payable by the ship’s owner or charterer without the ship’s crew or bare boat (demise charterer).
r. Commission, fees, broke or agency fees payable relating to the ship on behalf of the ship’s owner without the ship’s crew (demise charterer).
s. Costs of a dispute related to the ownership status of the ship.t. Costs of a dispute between co-owners of a ship related to the
operation and revenue or mining products of the ship.u. Mortgage fee on a ship or other encumbrance of a similar
nature on the ship.v. Costs of a dispute caused by a ship sale agreement.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Indonesian law does not specifically regulate procedures for investigations and evidence-gathering for maritime claims.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Indonesia does not recognise general disclosure obligations (i.e. the discovery rule) in a court proceeding as a means to obtain evidence. Each party to a dispute has the burden to produce evidence to support their claims.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Article 5(1) of Law No. 11 of 2008, as amended by Law No. 19 of 2016 regarding Electronic Information and Transactions (“EIT Law”), provides that electronic information and/or documents and/or a printed copy thereof are valid legal evidence. However, the EIT Law and its implementing regulation do not provide a specific method on how to preserve or deal with such evidence.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
There is no mandatory type of security under Indonesian law. However, in practice, a bank guarantee or corporate guarantee is more commonly used than a P&I letter of undertaking.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Indonesia does not recognise counter security (i.e., the act of putting up a certain sum of money as security in exchange for vessel arrest). If a ship arrest is granted, the only way to revoke the arrest is by a court order, which will only be granted if the underlying claim is resolved.
4.7 How are maritime assets preserved during a period of arrest?
Indonesian law does not have a specific regulation on vessel arrest and as such there are no detailed guidelines regarding the preservation of maritime assets during a period of arrest. As such, the current way to preserve the value of a maritime asset is to resolve the maritime claim so that the arrest can be revoked.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
As discussed above in question 4.7, Indonesia does not have an implementing regulation on vessel arrest. Thus, there is no express regulation to test a wrongful vessel arrest or to provide remedies in the event for such vessel arrest. The Shipping Law only provides that a vessel may be arrested by the harbourmaster at the relevant port based on a written court order that is issued if the vessel is involved in a criminal or civil case (including but not limited to maritime claims). As such, we may conclude that a vessel arrest is wrongful if it does not fulfil the above criteria. For completeness, the Shipping Law provides that maritime claims may arise from:a. Loss or damage due to the operation of a ship.b. Loss of life or fatal injury that occurs on land or in the
water or sea due to the operation of a ship.c. Damage to the environment, ship, or cargo due to salvage
operation activities or an agreement on salvage.d. Damage or threat of damage to the environment, coast-
line, or other interests caused by a ship, including costs needed to take measures to prevent damage to the envi-ronment, ship, or cargo, as well as for the recovery of the environment as a result of the damage caused.
e. Costs or expenses relating to lifting, removal, or repair, or relating to the ship, including costs of rescue of the ship and ship’s crew.
f. Costs for the use or operation or rental of a ship as set forth in a charter party or otherwise.
g. Transportation costs for cargo or passengers on board a ship, as set forth in a charter party or otherwise.
h. Loss or damage to cargo including trunks/suitcases trans-ported on board a ship.
manner that does not put parties in a hostile/adversarial situa-tion. As such, this method is preferable if the parties intend to continue their business activity together after the resolution of the dispute. Please be advised that aside from mediation, which involves a third-party mediator, the parties can also negotiate bilaterally between themselves to reach an amicable settlement. If mediation fails, the parties will have to settle their dispute in accordance with the provisions of the dispute settlement clause in the relevant agreement.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
With regard to ship arrest, as we stated above, currently there are no specific guidelines for ship arrest under Indonesian law. Indonesia is a signatory to the International Convention on the Arrest of Ships of 1999 (“Ship Arrest Convention”), although Indonesia has not ratified the Ship Arrest Convention. Under Law No. 24 of 1999 regarding International Treaties (“Treaties Law”), ratification of an international convention must be done through the issuance of a law (undang-undang) or presiden-tial decree (keputusan presiden), as 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 should have been rati-fied by way of a presidential decree. Although the Ship Arrest Convention has been signed by the Government of 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.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Indonesian law does not recognise foreign court judgments as enforceable in Indonesia. The parties must submit a new claim in an Indonesian court to enforce a judgment awarded by a foreign court. The foreign court judgment may be submitted as evidence in the new claim in the Indonesian court.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Indonesia has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (“New York Convention”), by way of Presidential Decree No. 34 of 1981.
Pursuant to Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution (“Arbitration Law”), a foreign arbitral award is recognised and enforceable in Indonesia if:a. The award is given by an arbitrator or tribunal in a state
that is, along with Indonesia, a party to a bilateral or multi-lateral treaty that recognises foreign arbitral awards.
b. The award is limited to what is considered to fall within the scope of commercial law in Indonesia.
c. The award does not contravene public order.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims are already regulated in Indonesia under the Shipping Law. However, under the elucidation of Article 223 of the Shipping Law, maritime claims are conducted in accordance with the provisions on vessel arrest. According to Article 222 of the Shipping Law, requests for vessel arrests are submitted to the local district court (Pengadilan Negeri). As discussed above in question 4, Indonesia has not enacted an implementing regu-lation on the procedure for vessel arrest in Indonesia. Thus, there is no typical procedure or timescale applicable to mari-time claims.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Indonesia does not have a specialist arbitral body dealing with maritime disputes. As such, maritime disputes may be referred to the Indonesian National Arbitration Center (Badan Arbitrase Nasional Indonesia or “BANI”), which was established under Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Indonesia does not have a specialist alternative dispute resolu-tion body dealing with maritime mediation. As such, maritime mediation is conducted according to the procedure agreed by the parties. In Indonesia, there is also a National Mediation Center (Pusat Mediasi National ) that may be used by disputing parties to conduct mediation. Lastly, an Indonesian court will require disputing parties to conduct a court-facilitated mediation as part of the court proceeding, in accordance with the provisions of Supreme Court Regulation No. 1 of 2008 regarding Mediation Procedure in Court.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
National courts are “advantageous” because they do not require a pre-existing arbitration agreement, which means national courts can always be referred to for solving maritime disputes. Under the Shipping Law, the Shipping Court has jurisdiction to examine cases related to vessel accidents and to enforce the professional, ethical and competence codes of a shipmaster or crew. Other maritime disputes shall fall within the jurisdiction of district courts. Please be advised that court proceedings in Indonesia may take some time to conclude (including appeals and cassations).
Arbitral institutions have been gaining popularity among business actors as an alternative to dispute resolution because the parties can ensure the expertise of the arbitral tribunal examining the case. Further, due to the relative efficiency of arbitral institutions in resolving disputes, arbitration usually takes less time to complete.
Alternative dispute resolution in the form of mediation, while not binding, provides a means to resolve disputes in a
e. Safe Manning Certificate (Sertifikat Pengawakan Kapal ), only for manned vessels.
f. Document of Compliance (Dokumen Penyesuaian Manajemen Keselamatan), only for manned cargo vessels with a gross tonnage equal to or larger than 500 tonnes.
g. Safety Management Certificate (Sertifikat Manajemen Keselamatan), only for manned cargo vessels with a gross tonnage equal to or larger than 500 tonnes.
The above certificates are issued by the MOT based on the provisions of MOT Regulation No. PM 45 of 2012 regarding Vessel Safety Management, MOT Regulation No. PM 8 of 2013 regarding Vessel Measurement, MOT Regulation No. PM 70 of 2013, as amended by MOT Regulation No. 140 of 2016 regarding the Education, Training, Certification, and Duties of Seafarers, MOT Regulation No. 39 of 2016 regarding Vessel Load Line and Loading, and MOT Reg 39/2017. Initially, these certificates were issued separately by the MOT (or agencies/directorates under the auspice of the MOT). However, under the Annex of MOT Reg 89/2018, the issuance of the above certificates/docu-ments has been integrated into the OSS system. Currently, these certificates/documents are considered Commercial/Operational Licences issued by the OSS system.
(iv) Pollution Prevention CertificatePursuant to the Shipping Law, any vessel operating in Indonesian waters must meet certain pollution prevention and control stand-ards, evidenced by a National Pollution Prevention Certificate (Sertifikat Nasional Pencegahan Pencemaran), which will be issued based on the provisions of MOT Regulation No. PM 29 of 2014 regarding the Prevention of Maritime Environmental Pollution. Vessels that operate in international waters from time to time will be required to obtain additional certifications, namely:a. International Oil Pollution Prevention Certificate
(Sertifikat Internasional Pencegahan Pencemaran Oleh Minyak).b. International Air Pollution Prevention Certificate
(Sertifikat Internasional Pencegahan Pencemaran Oleh Udara).c. International Sewage Pollution Prevention Certificate
(Sertifikat Internasional Pencegahan Pencemaran Oleh Kotoran).Under the Annex of MOT Reg 89/2018, the above certifi-
cates/documents are considered Commercial/Operational Licences issued by the OSS system.
(v) Vessel classificationIndonesian-flagged vessels must also undergo classification pursuant to MOT Regulation No. PM 7 of 2013, as amended by MOT Regulation No. PM 61 of 2014 regarding Classification Obligation for Indonesian-Flagged Vessels (“MOT Reg 7/2013, as amended”). This classification is done either by PT Biro Klasifikasi Indonesia (Persero), a state-owned enter-prise, or another foreign classification agency recognised by the Government of Indonesia under MOT Reg 7/2013, as amended. The classification agency will issue a Classification Certificate (Sertifikat Klasifikasi) for the vessel. As stated above, foreignclas-sification is acceptable provided that the classification agency: (i) is recognised in Indonesia; (ii) is a member of the International Association of Classification Societies (“IACS”); (iii) has a branch office in Indonesia that is registered with the relevant Indonesian authority; and (iv) has an Indonesian national as a surveyor in each branch office in Indonesia.
(vi) Ship Radio Station CertificateUnder Law No. 36 of 1999 regarding Telecommunications, as amended by Law No. 11 of 2020 regarding Job Creation and Minister of Communication and Informatics Regulation No. 9
d. The award has received an execution order from the Central Jakarta District Court.
e. The award involves the Republic of Indonesia as one of the parties in dispute, the award may only be enforced after receiving an execution order from the Indonesian Supreme Court.
8 Updates and Developments
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.
(i) Electronically integrated business licenceTo engage in the sea transportation business, a company must obtain a Sea Transportation Company Business Licence (Surat Izin Usaha Perusahaan Angkutan Laut or “SIUPAL”). Under GR 5/2021 and GR 31/2021, a SIUPAL is considered as a Business Licence, and will be issued by the OSS system on behalf of the MOT.
The MOT has issued MOT Regulation No. 89 of 2018 regarding the Norms, Standards, Procedures, and Criteria of the Electronically Integrated Business Licensing System in the Sea Transportation Sector (“MOT Reg 89/2018”) to align sea transportation licensing procedures with the OSS system. Under the OSS, any new licence application made through the OSS system will be followed by the issuance of a “temporary” licence. This means that a Business Licence will automatically be generated by the OSS system and delivered to the applicant once an application is completed by filling in the requisite infor-mation. The Business Licence will clearly state that it will only become effective once the required commitments are met by the applicant. Therefore, a business may only begin its operations once the commitments under its Business Licence are fulfilled.
(ii) Vessel registrationThe Shipping Law states that an Indonesian vessel’s legal status can only be valid if the vessel has already been registered in a jurisdiction. To implement the provisions of the ICC and the Shipping Law, the government enacted MOT Regulation No. PM 39 of 2017 regarding the Registration and Nationality of Vessels (“MOT Reg 39/2017”). MOT Reg 39/2017 states that vessel registration includes the registration of: (i) ownership right; (ii) granting of mortgage; and (iii) other proprietary rights, such as by way of bareboat charter and leasing. Vessel registra-tion can be done with a vessel registrar, a government official appointed by the Director General of Sea Transportation.
It should be noted that according to the ICC, as further regu-lated in the Shipping Law and MOT Reg 39/2017, a vessel may only be registered if it has a gross tonnage of at least seven tonnes, is owned by an Indonesian citizen or a legal entity estab-lished under Indonesian law, or is owned by an Indonesian joint-venture company in which at least 51% of the shares are owned by an Indonesian citizen.
(iii) General vessel certificationPursuant to the Shipping Law, a company owning a vessel must fulfil certain standard requirements, evidenced by the issuance of the following certificates:a. Vessel Nationality Certificate (Surat Tanda Kebangsaan
Kapal ). b. Tonnage Certificate (Surat Ukur).c. Safety Certificate (Sertifikat Keselamatan).d. Load Line Certificate (Sertifikat Garis Muat).
Indonesia by the holder of a SIUPAL after meeting the require-ments provided in MOT Reg 2/2021. The cabotage exemp-tion is granted in the form of an MOT decree containing the Foreign Vessel Utilization Approval (Persetujuan Penggunaan Kapal Asing or “PPKA”), which can only be issued to SIUPAL holders. Under the Annex of MOT Reg 89/2018, a PPKA is considered a Commercial/Operational Licence issued by the OSS system.
Annex I of MOT Reg 2/2021 provides a list of activities that foreign-flagged vessels can conduct in Indonesian waters. These activities include:a. oil and gas survey;b. drilling;c. offshore construction;d. offshore operational support;e. dredging; f. salvage and underwater work;g. floating power plant; andh. port construction.
of 2018 regarding Provisions and Procedures on the Operation and Licensing of the Radio Frequency Spectrum, a vessel utilising the radio frequency spectrum must obtain a Ship Radio Station Certificate.
(vii) Cabotage principleThe Shipping Law requires that domestic sea transportation be carried out by an Indonesian shipping company using an Indonesian-flagged vessel and Indonesian crew. These provi-sions are broadly interpreted to cover most vessels, including different types of vessels operating in Indonesian waters that are not engaged in domestic sea transportation. However, pursuant to MOT Regulation No. PM 2 of 2021 regarding Procedures and Requirements for the Granting of Foreign Vessel Utilization Approval for Activities Other than Domestic Carriage of Passengers and/or Goods (“MOT Reg 2/2021”), specific types of foreign-flagged vessels operating in Indonesian waters for specific types of activities may be exempted from cabotage rules. Such foreign-flagged vessels may be operated in
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Indonesia
Dyah Soewito is a founding partner of SSEK Legal Consultants and the head of the firm’s award-winning shipping practice. She specialises in shipping and maritime law, foreign investment, and corporate and commercial law. Dyah assists multinational and joint-venture shipping and offshore drilling companies with all aspects of their operations in Indonesia. Her recent projects include advising a global provider of floating production services to the oil and gas industry on an $870 million lease deal. She has assisted a European multinational in navigating foreign ownership restrictions under Indonesia’s shipping law, represented a leading European contractor on a possible joint venture with an Indonesian shipping entity, and advised an Australian dredging marine company on the importation and reflagging of dredgers.Dyah has been recognised by Chambers and Partners, Asialaw and IFLR1000 as a leading practitioner in Indonesia for shipping law, real estate, and corporate law and mergers and acquisitions.
Stephen I. Warokka is a partner at SSEK Legal Consultants. Stephen is involved in a wide range of projects, including shipping and maritime law, general corporate law, mergers and acquisitions, foreign capital investment law, immigration law and negotiations with various govern-ment officials related to commercial transactions. Stephen’s more recent experience includes: representing various foreign shipping compa-nies in the acquisition and sale of vessels; advising a foreign shipping company on the shipping agency business in Indonesia; advising and representing an Indonesian shipping company in connection with a facility agreement with syndicated lenders; and advising shipping companies on foreign ownership restrictions and Indonesian cabotage laws.In 2015, Stephen was seconded to the Tokyo offices of Mori Hamada & Matsumoto, where he advised on Indonesian laws and regulations for Japanese companies doing business in the country.
SSEK Legal Consultants was formed in 1992 and today is one of the largest and most highly regarded law firms in Indonesia. SSEK combines the local knowledge and expertise of its nearly 30 years of practice with the global outlook of its award-winning lawyers to offer multinationals and domestic companies innovative and timely solutions to their real-world problems. SSEK’s experienced lawyers are able to advise clients on the most complex transactions across all industries and practice areas, helping them realise their business and investment goals.SSEK has been described as a “high-calibre and sophisticated” firm that gives “thorough and effective advice” (Chambers Asia-Pacific). SSEK combines an unsurpassed insight into Indonesian corporate law with a global outlook to help clients minimise risk and maximise their business and investment goals.
SSEK is a full-service Indonesian law firm and enjoys a particularly strong international reputation in shipping and maritime law, banking and finance, employment law, foreign investment, mergers and acquisitions, mining, power, projects and natural resources, and real estate and construction.
www.ssek.com
Revaldi N. Wirabuana is an associate at SSEK Legal Consultants. Revaldi has been involved in a variety of projects, including those related to shipping and maritime law, general corporate law, mergers and acquisitions, foreign capital investment, construction and real estate, banking and finance, and oil and gas law. His more recent experience includes advising a foreign oil and gas company on the legal aspect of oil and gas trading in Indonesia, representing a foreign construction company in establishing a representative office in Indonesia, assisting a major hospi-tality and leisure group in the acquisition of a luxury resort in Bali, and advising a foreign company on the acquisition of a large entertainment company in Indonesia.
(vi) The limitation fundFollowing the orders of the above-mentioned Act, the owners can apply to the Maritime Court to establish a Limitation Fund. If the Court is satisfied with the owner’s application, it will order the establishment of the Limitation Fund and will give orders as to the owner’s deposit and the publishing of notices to creditors. Creditor’s claims or participation claims are to be filed by a local creditor within 30 days. In the case of a foreign creditor, claims must be filed within 60 days.
1.2 Which authority investigates maritime casualties in your jurisdiction?
As a member of the International Maritime Organisation (IMO) since 1952, Israel conducts its Port State Control Inspections through the Ports and Shipping Authority. Besides regular safety controls, the Authority conducts investigations in matters of grounding and pollution.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
Following Chapter 12 of the Ports Regulations (Safety of Navigations), 1982, the Manager of Authority is authorised to conduct investigations in relation to any marine accident that took place in the Israeli marine territories. The investigation authorities include the examination of witnesses, collecting documents and evidence, and examination of the place where the event took place. The investigation will be concluded in a report detailing the sequence of events leading to the accident, the investigators’ observations and conclusions in relation to the circumstances and causes of the accident, and recommendations for amending the deficiencies which were observed in relation to the accident. The purpose of the investigations is to learn the circumstances that caused the accident in order to learn the rele-vant lessons and avoid future accidents.
Under folio no. 67484-03-19, we represented the cargo interests of the cargo carried in M/V Diana, which was grounded offshore of Haifa Bay on 19th January 2018, and applied to receive the documents and evidence collected by the Authority when inves-tigating this marine accident, for the purpose of the arbitration proceedings taking place in London against the owners. In its judgment handed on 10th June 2020, the Haifa District Court, the Honourable Judge Mr. Ron Sokol, held that although being foreign entities, the cargo interests are entitled under the Israeli Freedom of Information Act 1998, to receive the RCC commu-nications that took place between the vessel and the RCC prior
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe International Regulations for Preventing Collisions at Sea, 1972 are adopted into the Israeli Law under domestic Ports Regulations (Preventing Collisions at Sea), 1977.
(ii) PollutionIsrael is a signatory party to the Convention for the Protection of the Mediterranean Sea Against Pollution, 1978 and re-af-firmed its updated version as the Convention for the Protection of the Marine Environment and the Coastal Region of the Mediterranean, 1995. In addition, Israel joined MARPOL in 1983 and has re-affirmed Annexes 1, 2, 3 and 5.
(iii) Salvage/general averageThere is no specific Israeli Law relating to salvage or general average. However, the Israeli Law, either by clause 42 (5) of the Shipping Act (Vessels) 1960, or clause 9 of the Admiralty Courts Act 1861 (which also governs the Israeli Admiralty Court’s authority). In addition, the English Marine Insurance Act 1906 is also part of the Israeli Law and the Israeli Courts will consider customary law or foreign judgments when dealing in such matters.
(iv) Wreck removalThe law relating to a distressed vessel, wrecks and lost merchan-dise is governed by the Salvage Fee and Lost Merchandise Order of 1926. Under this Order, whoever finds lost merchandise or discovers any wreck must inform the receiver of wrecks at the Authority for Shipping and Ports of the Ministry of Transportation who will publish a notice about the finding of the same and serve a copy of the notice to Lloyd’s agent in Israel or to Lloyd’s offices in London. If the merchandise or the wreck is not claimed within six months, it will be sold by the Receiver of the Wreck and the balance from the sale after deducting the salvage fee and expenses will be applied by the Minister of Treasury as part of the national income.
(v) Limitation of liabilityIsrael adopted the International Convention Relating to the Limitation of Liability of Owners of Sea-going Ships, Brussels 10th
October 1957 and its amending Protocol, Brussels 1979, as part of the Shipping Act (Limitation of Liability of Sea-going Ships), 1965.
during the 12-month period in a foreign jurisdiction. Recently, in its decision handed in folio no. 7195-18, the Supreme Court has overturned the judgments of the two lower instances and held that the phase “suit is brought” is narrowed to a suit filed by an entity who has the right to sue. Therefore, a suit which, if filed within the 12-month period but without any right of standing on behalf of the claimant, will not “break” the time-bar period and, in such case, a claim which will be filed later by a different entity could not rely on the claim which was filed previously without a title to sue and, if filed 12 months after the delivery date, it would be considered as being time-barred. 3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Israel is not a party to the Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea, 1974. Therefore, passenger claims will be governed by general Contract and Tort Law and the general law relating to law and jurisdiction clauses.
3.2 What are the international conventions and national laws relevant to passenger claims?
See question 3.1 above. Passenger claims will be filed and handled under regular civil procedure but might be subject to law and jurisdiction clauses in the carrier’s terms and conditions.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
See questions 3.1 and 3.2 above. If accepting and enforcing the foreign law and jurisdiction clause would mean that the passen-ger’s claim would be time-barred in the referred jurisdiction, the Court would have the discretion not to enforce the (contractual) law and jurisdiction clause on the grounds of enforcement causing injustice (following clause 3 (4) of the Contract’s Act (Remedies due for Brach of the Contract), 1973). Therefore, in practice, it seems probable that the ordinary civil law time limit of seven years will operate when claims are filed by Israeli passengers.
4 Arrest and Security
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?
The Israeli Maritime Law is established by two sets of rules; in fact, the Israeli Maritime Law is a legacy of the British Mandate over Palestine-Israel which took place formally between December 1917 and May 1948. By a King’s-Order-in-Council dated 2nd February 1937, the Supreme Court of Jerusalem was constituted as a Maritime Court under the Colonial Courts Admiralty Act, 1890. On the date when the Colonial Courts Admiralty Act was enacted, the relevant acts of Admiralty which were in force were the Admiralty Acts of 1840 and 1861. These continue to apply to the Israeli Haifa Maritime Court’s (being a division of the Haifa District Court) jurisdiction up to this present date. The other rule which governs the Haifa Maritime Court authority is the Israeli Shipping (Sea-going Vessels) Act, 1960 Chapters IV and V, which relate to maritime liens and mortgages, respectively, and
to the grounding which was annexed to the Authorities Report. As the Application was narrowed to these documents at this stage, the Court’s findings leave a path to apply for additional documents and information (including the whole report which was provided with blank parts) following a future arbitral award in this regard and the Israeli Arbitration Act.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The Israeli Law adopts the Hague-Visby Rules as part of the Ordinance for the Carriage of Goods by Sea, as amended on 21st January 1992.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
According to the Ordinance for the Carriage of Goods by Sea, as amended on 21st January 1992, the Hague-Visby Rules will apply to any Bill of Lading (B/L) which governs the sea carriage of cargo: from any Israeli port; from a port of a country which is a party to either the Hague or Hague-Visby Rules; or when the B/L incorporates the Hague-Visby Rules or is governed by the laws of a country that applies the Rules. Accordingly, the claimant should file its claim within one year after the date of discharging the cargo or of the date it should have been discharged (Article III 6); the claim is subject to owner’s limi-tation of liability to either 666.67 SDR per package or unit or to 2 SDR per 1kg of the cargo lost or damaged, according to the highest of the two (Article VI (5)(a)). The damage caused to the cargo should be a result of the owner’s failure to exercise due diligence at the beginning of the voyage to make the vessel sea-worthy and properly manned and equipped (Article III (1)(a)–(c)/Article IV (1)) or due to perils of the sea or any other cause not arising without actual fault or privity of the carrier or without the fault or neglect of the agents or servants of the owner (Article IV (2) (a)–(q)).
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Following the Hague-Visby Rules (Article III (5)) and general principles of Contract and Torts Law, a shipper’s failure to provide the accurate marks, numbers, quantity and weight of the cargo will impose on the shipper the liability to compensate the owners for any damages and expenses which will occur as a result of such an inaccuracy. Under the Israeli Law of Torts, “damage” is also defined as any inconvenience, and although the claimant has to prove its damages, the Courts are authorised to award payment of compensation also by Court estimations.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Under the Supreme Court’s judgment in folio no. 6260/97 “Polska”, it was held that the wording “unless suit is brought within one year…” of Article III 6 of the Hague-Visby Rules is wide enough to contain a suit which was filed in foreign jurisdiction. Accordingly, a claim filed in Israel 12 months after the delivery date of the goods will not be time-barred if a claim was filed
that the claimant was not a party to the supply agreement and that the owners had paid the contractual supplier and by effecting this payment the maritime lien was lifted, although the contractual supplier did not pay its subcontractor, the physical supplier.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Under clause 8 of the Admiralty Court Act, the Maritime Court has jurisdiction to decide all questions arising between co-owners and others, touching on ownership, possession, and the earning of any ship registered at any port in England or Wales (now Israel), and may direct the said ship to be sold. However, in practice, this authority has not been tested, and it seems that in any case the above authorities will apply to domestic vessels registered in Israel, rather than applying to any vessels that call at an Israeli port.
4.4 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 options are available?
When the vessel is arrested by the Maritime Court, the arrest order states the amount that has to be deposited or secured within the Court in order to have the vessel released. If no such deposit takes place and no notice of appearance against the claim is filed within seven days of service of the claim in rem and arrest order, the Court may order the judicial sale of the arrested vessel. However, the depositing of the security and countering of the claim is not limited to the owners and any party with an interest can appear before the Court and counter the claim.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
A P&I letter of undertaking can be accepted as a security, provided that the club itself is a respected/reputed club which will be able to pay the secured amount. An Israeli bank’s guar-antee will be accepted; however, it is likely that a guarantee from a foreign bank will be rejected. The security should almost be equal to a deposit within the Court, and if a foreign bank is involved, the claimant will be requested to have his foreign bank reach the required arrangements with an Israeli bank so that the latter will issue the bank guarantee and deposit it with the Court.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
No. Usually no counter security is required. The Haifa Maritime Court has continuously held that usually there is no justification to put procedural thresholds before creditors seeking enforce-ment of their maritime liens and only in exceptional occasions will a counter security be demanded for the arrest. Such occa-sions could be, for example, where the validity of the documents constituting the lien is doubted, or when the documents and the supply of necessaries are not questioned but the existence of owner’s liability of the debt and, as a result the existence of maritime lien for necessaries, is questioned. Also, the nature and ranking of the lien would be considered. In the matter of folio no. 22358-02-14 “Captain Hurry”, a deposit of US$12,500 was required as counter security for an arrest securing a claim of US$315,763 for bunkers delivery, which was ultimately denied.
adopt the continental maritime lien regime of the International Convention for the Unification of Certain Rules of Law Relating to Maritime Liens and Mortgages, 1926 (Brussels Convention 1926). These two sets of rules continue to apply to date and they can provide a claimant with a variety of maritime liens which might arise either from the Admiralty Act of 1840, Admiralty Act of 1861, or the Shipping Law (Sea-going Vessels), 1960 clause 40–41 (1)–(8). The list of recognised maritime liens include, inter alia, the following: (1) the costs of the Court’s auction sale of an arrested vessel; (2) port dues of all kinds and other payments for such port services as much as these payments are due either to the state, to another state or authority, or have been paid to them by a third party; (3) the cost of the preserva-tion of an arrested vessel (from the date of its entry to the port and until its sale by the Court); (4) wages; (5) salvage; (6) compen-sations for death or injuries of passengers; (7) compensations for damages caused as a result of a collision at sea or any other naviga-tion accident, or for damages done by a vessel to port facilities and indemnities for loss or damage to cargo or to passengers’ baggage; and (8) payments due for the supply of necessaries. However, in the matter of M/V Ellen Hudig (2004), the Maritime Court denied a maritime lien for “indemnities for loss or damage to baggage”, reasoning that: the alleged damage of additional expenses and freight payments related to the discharge of claimants’ cargo from an arrested vessel; its completing the voyage by a different vessel as a result of the vessel’s arrest by the crew claiming unpaid damages and losses; and the owner’s subsequent appearance before a Belgian Court under bankruptcy proceedings, do not fall under the owner’s personal liability. Ever since, the Ellen Hudig matter has been cited by the Haifa Maritime Court as authority establishing the need to show owner’s liability in order to have the Court recognise a maritime lien. Accordingly, in the matter of M/V Nissos Rodos (2016), it was held that the local agent who paid the port dues for the 17 calls of the vessel at Haifa Port, which called at Haifa Port under an agreement between the owners and another party acting as an operator, is not entitled to the mari-time lien for “port dues of any kind…been paid by a third party”, reasoning that the agent had no agreement with the owners and that there was no personal liability on behalf of the owner to pay the agent where the commercial relations were between the owners and the operator and between the operator and the agent, and not between the owners and the agent, directly. On the other hand, in the matter of M/V Captain Hurry (2016), although in this case there was a dismissal of a suppliers’ claim due to a lack of owner’s liability, the Haifa Maritime Court mentioned that the maritime liens differ from each other and that, for example, the maritime lien for salvage exists even if the owners are not liable for the circumstances that led the vessel to distress. Therefore, a path to diversity in relation to the requirement of owner’s liability might exist.
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?
The Maritime Court will recognise a maritime lien for neces-saries such as bunkers, provided that the claimant is the contrac-tual supplier who contracted in the supply agreement either with the owners directly or its agent or a management company acting on behalf of the owner. However, if the actual supplier is not a party to a supply agreement concluded with the owner or anyone acting on behalf of the owner, the actual supply of the neces-saries might be found not to be sufficient and the claim will probably be denied. In the matter of M/V Emmanuel Tomasus (2014), the physical suppliers’ claim was denied, the reason being
thereto, before either the judge or the registrar. Also, according to Article 171 of the Israeli Civil Procedure Regulations, 1984, the Court can order an immediate testimony hearing of a witness who is about to exit Israel, or on other grounds, if there is a reasonable justification in the view of the Court to order this. Under Article 387 (a) of the Israeli Civil Procedure Regulations, 1984, the Court is authorised to nominate a temporary receiver to search, photo-copy, copy and take possession of assets located at the Respondent’s premises (interpreted to mean places under the Respondent’s control) if there is prima facie evidence that the Respondent or any person on his behalf is about to remove the assets or destroy them in a manner which will harm the legal process. Accordingly, in the case of M/V Diana (2018), the Maritime Court ordered for the immediate visit and examination of the vessel being subject to a cargo interest claim for indemnities due for damage caused to cargo after the vessel could not maintain its position and drifted ashore and grounded. The Court also ordered the Chief Engineer to provide an immediate answer to a questionnaire or else appear immediately in Court to be examined following which, after the provision of a P&I letter of undertaking, the vessel was released from the arrest and towed to a repair yard in Turkey.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The disclosure should be of any document and information where it is reasonable to presume that they include information which allows a party, either directly or non-directly, to promote the matter which is subject to the claim. Accordingly, the disclosure is of greater significance than admissibility, and a document can be subject to disclosure even if it is inadmissible as evidence at Court.
5.3 How is the electronic discovery and preservation of evidence dealt with?
There is no specific procedure for electronic discovery. The discovery of electronic correspondence or documents will be examined in view of the above-mentioned general rule as mentioned in question 5.2 above. However, the Court is author-ised as an immediate temporary relief to nominate a temporary liquidator with an authority to enter premises and either preserve and obtain assets, including documents, or to have a copy of these.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The Haifa Maritime Court situated at the Haifa District Court has received under the Maritime Court Act of 1952, the Supreme Court’s authorities to act as a Maritime Court. As the Haifa Maritime Court is the Israeli Maritime Court, it governs the whole Israeli jurisdiction.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There are no specialised maritime arbitral bodies. As mentioned above, maritime matters are all filed before the Haifa Maritime
4.7 How are maritime assets preserved during a period of arrest?
If a “notice of appearance” is filed within seven days after the arrest, the vessel will not go under auction and its assets will continue to be under its owner’s liability. If no such notice is filed, a liquidator will be nominated by the Court who can also be authorised for a relatively quick judicial sale of the vessel. Costs for preservation of the vessel from the date of its entry to its latest port (and until its sale) – even if the entry took place before the arrest itself – are recognised marine lien, top-ranked at third position after costs of selling of the vessel and port dues, and before the crew’s and master’s wages.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The Israeli law recognises as a general rule, the entitlement of the defendant to recover from the claimant the damages and losses caused as a result of a temporary relief order issued by the Court to secure a claim (such as attachment orders), following an appli-cation filed by the claimant, and under circumstances where eventually the claim was denied or the claimant has withdrawn its claim (Supreme Court’s judgments in civil appeal 732/80 Arens v. Bait-El, civil appeal 2399/19). However, a matter of a wrongful (ship) arrest has not yet been decided, by the Haifa Maritime Court. Considering the unique nature of a ship arrest, when applying the above-mentioned general rule, most likely that the Haifa Maritime Court will refer to the traditional “Evangelismos Test” (1858) as a customary/indicative law. In the Singapore Court of Appeal judg-ment in the matter of Vasily Golovnin (2008) SGCA 39, it was held that considering the arrest of the vessel provides security for the maritime claim which cannot be defeated by the insolvency and that in today’s modern world there is no difficulty of furnishing, for example, a letter of undertaking from a P&I club to secure the release of the vessel, although being enunciated more than 150 years ago and despite the conceptual difficulties and the criti-cism, the Evangelismos test, should be maintained. However, the Singapore Court of Appeal held that the focus should be on the second part of the test and it would be an objective inquiry of the circumstances and the evidence available at the time of the arrest that will determine if the action and the arrest were so unwarrant-ably brought, or brought with so little colour, or so little founda-tion, as to imply that they were brought with malice or gross negli-gence. This means, that probably, if a vessel owner will be able to prove that the claim and arrest were brought with so little founda-tion, he will be able to claim damages occurred as a result of the arrest, from the claimant. However, due to the fact that usually no security is required from the claimant when applying for the arrest, an owner’s claim for wrongful arrest will not be secured.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
The Maritime Court is authorised under Article 96 of the Admiralty Regulations to order that any witness who cannot conveniently attend the trial shall be examined previously
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Israel has joined the New York Convention on the Recognition and Enforcement of Arbitral Awards. Under the Regulations for the Performing of the New York Convention (Foreign Arbitration), 1978, the District Courts are authorised to enforce a foreign arbi-tral award, provided that the Applicant will present the Court with a verified copy of the award and of the arbitration agreement. In addition, under Article 5 and Article 6 of the Arbitration Act, 1968, the District Court will order a stay of proceedings where the matter in dispute is subject to an arbitration agreement (or arbitration clause in the contract) and if the arbitration is subject to any international convention that was joined by Israel, the proceedings will be stayed according to the rules relating to stay of proceedings which appear in the convention.
8 Updates and Developments
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.
In the matters of M/V Estelle (2014), M/V Marianne (2016) and M/V Zaytouna-Oliva (2019), the Haifa Maritime Court held that that it is authorised to act as a Prize Court and to order the confiscation of vessels attempting to breach the naval blockade imposed on Gaza.
In the matter of M/V Huriye Ana (2017), the Maritime Court held that Israeli Law has no authority to order a sister-ship arrest as no such authority can be found either in the Admiralty Acts of 1840 and 1861 or in the Shipping (Sea-going Vessels) Act, 1960.
Under folio no. 59972-07-19 (2019), the Haifa Maritime Court held that it is authorised to order attachments to secure a foreign arbitration (London) in relation to unpaid hire, following the Israeli Arbitration Act and with no need to enquire if English Arbitration Law does or does not allow attaching the defend-ant’s assets to secure an arbitration award.
In the matter of M/V CHRYSOPIGI (2019), the Haifa Maritime Court held that marine insurance is not subject to the Israeli Insurance Act and that, therefore, a foreign marine insurer has recognised subrogation rights which provide him withstanding to file a claim in the Israeli Courts, although it is not an “insurer” as defined under the Israeli Insurance Act. This decision was affirmed by the Supreme Court in appeal no. 8518/19.
In the matter of M/V Diana (2020) as detailed above, the Haifa District Court has held that foreign cargo interests have a right under the Israeli Freedom of Information Act to receive documents collected by the Authority conducting the investiga-tion of the reasons for the grounding of the vessel at Haifa Bay, and ordered that the Authority will provide the RCC communi-cations between the vessel and the Authority.
In the matter of M/V BADAR (2020), the Haifa Maritime Court held that a vessel registered under a foreign registration cannot be registered under the Israeli registration unless prop-erly removed from its former registration, even if a writ owner-ship award was issued by an Authority. At this stage, as an
Court. Cargo claims are usually handled before Civil Court judges at the Haifa and Tel Aviv Magistrate Courts. Matters can be referred to mediation or arbitration subject to the parties’ consent or under an arbitration agreement.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There is no special body. See question 6.1.2 above.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Due to the fact that maritime matters and cargo claims are usually referred to experienced judges, the Courts are very professional and efficient in either deciding the cases or refer-ring the parties to mediation or promoting a settlement, as appropriate. The Haifa Maritime Court is very quick in issuing Arrest Orders or Attachments and all of the above-mentioned Courts have what is called a “tolerant judicial temper”.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
From our experience, the Haifa Maritime Court will provide remedies to claimants or owners, even if registered and domi-ciled in countries that do not have formal diplomatic relations with Israel. We were able to arrest vessels and enforce maritime liens in favour of a bunker supplier located in Dubai and, in another matter, to protect the owner’s interests in a tanker regis-tered in the Libyan registry.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Under the Enforcement of Foreign Judgments Act, an Israeli Court is authorised to enforce a foreign judgment provided that the judgment was handled by an authorised Court, it is not appealable, and its contents are not contradictory to public policy (Article 3 (1)–(4)). If the Courts handing the foreign judgment do not, under their domestic law, enforce Israeli judgments, then the foreign judgment will be enforced by an Israeli Court, only if so requested by the Attorney General (Article 4 (a)–(b)). In addition, under Article 13, the Minister of Justice is authorised to enact regulations relating to the enforcement of judgments according to specific enforcing and recognition agreements between the State of Israel and foreign countries. For example, the Treaty between Israel and Germany, 1997 (which came into force in January 1981) and the Convention between the governments of Israel and of the United Kingdom, for the reciprocal recognition and enforce-ment of judgments in civil matters, signed in London in 1970. In the case of M/V Captain Hurry (2016), the Maritime Court recog-nised a German declaratory judgment, declaring that the owners were not liable for any payment for the bunkers claimed by the claimant, and as a result the claim was dismissed.
The Treaty of Peace, Diplomatic Relations and Full Normalisation Between the United Arab Emirates and the State of Israel, followed by normalisation agreements with Bahrain, strengthens the strategic location of Israel and the Israeli ports and an increase in the volume of trade and transport between Israel and the Gulf States is expected. The Haifa Maritime Court exercised its authority in favour of either a bunker supplier located in Dubai (arresting the M/V Huseyn Javid for unpaid bunkers) or Owners of a vessel registered in the Libyan regis-tration (disputing the validity of Israeli registration of the M/V BADR. Persian Gulf and other Middle East claimants and inter-ests can find the Haifa Maritime Court and other Israeli courts a favourable jurisdiction.
immediate relief, the Court ordered an attachment on the Israeli registration of the vessel and thereafter scheduled the matter for filing Affidavits and for hearings.
In the matter of Vapi Kredi Banaski vs M/V Hurriye Ana (2020), the Haifa Maritime Court denied a bank’s claim to enforce a mortgage which was registered in the vessel’s registration. The Court held that the validity of the loan agreement was not proven and that no information was provided in relation to the payment schedule agreed with the debtor and what the exact amount of debt that remained was. The mere fact that a mort-gage is registered in the vessel’s registration is not enough to have it enforced.
149Harris & Co. Maritime Law Office
Shipping Law 2021
Yoav Harris graduated in 1999 summa cum laude from the law faculty of University of Haifa. He specialises in Maritime Law and Commercial Law, including Litigation. Adv. Yoav Harris contributes articles to the Israeli monthly magazine The Cargo and the international quarterly Arbitration Watch, and is the co-author of the Israeli chapters of the annual Ship Arrest In Practice guide of Shiparrested.com and the Shipping Global Practice Guide for Chambers and Partners. Additional articles of Adv. Yoav Harris relating to International Law and Maritime Law were published in The Marker magazine. (http://www.themarker.com/labels/law/1.4525538) and issue 15 of Shiparrested.com (http://shiparrested.com/wpontent/uploads/2016/10/TheArrestNews15-1.pdf). His articles were also cited both by the Maritime Court (Claim in rem 26861-08-13) and the Supreme Court (Civil Appeal 7307/14) when deciding on the matter of M/V Estelle.
Harris & Co. Maritime Law Office16 Pal-Yam St. Shaarei Mishpat Bldg. 5thfloorHaifa 3309523 Israel
John Harris is a founding partner with more than 45 years of experience. He is consistently highly recommended with a “top tier” rating for shipping and maritime law (transportation) in Israel by the leading international legal rating institutions. He is a co-author with Adv. Yoav Harris of the Israeli chapter in Shiparrested.com’s Ship Arrest in Practice, and in Chambers and Partners’ Shipping Global Practice Guide for Israel. John Harris is regularly invited to participate at international shipping law seminars and conferences and has been shortlisted by Lloyds List as the leading maritime lawyer for the Middle East and Indian subcontinent.
Harris & Co. Maritime Law Office16 Pal-Yam St. Shaarei Mishpat Bldg. 5thfloorHaifa 3309523 Israel
Adv. John Harris established the legal firm of Harris & Co. in 1977. The firm is dedicated to the practice of Maritime and Admiralty Law. The firm regu-larly receives “top tier” ratings from Chambers and Partners, The Legal 500, Dun & Bradstreet and BdiCoface. The firm regularly receives instructions from the foremost shipping and maritime law departments of international law firms and keeps abreast of English and other jurisdictions’ maritime law judgments and publications. According to the latest Chambers and Partners ranking, the firm “has significant litigious capabilities”. In the non-litigation aspect of the practice, the firm provides legal advice relating to the various contracts of carriage and attends to matters relating to the sale and purchase of ships and the financing of ship purchases.
also included in the items of damages the purely economic loss of profit unconnected to any physical damage.
Italy has further ratified the 2001 Bunker Oil Convention, but not the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 (1996 HNS Convention).
(iii) Salvage/general averageItaly has ratified the 1989 London Convention on Salvage.
The Italian Code of Navigation provides a series of rules specifically aimed at the discipline of salvage and inspired by the 1910 Brussels Convention. Such provisions, however, although technically never repealed, were rendered almost inap-plicable following the ratification by Italy of the 1989 London Convention, in view of the wide-ranging scope of application set under article 2 of such Convention.
As a consequence, the rules of the Italian Code of Navigation will only remain applicable to salvage services rendered by an Italian vessel to another vessel equally flying the Italian flag. Among such rules, it is worth mentioning the provision of the Code of Navigation (article 496) according to which the crew-members of the salving vessel are entitled to receive two-thirds of the salvage reward.
Although there are no specialised Courts in Italy having specific jurisdiction on salvage matters, Italian jurisprudence has still given rise to an impressive amount of reported deci-sions, dealing with several questions but particularly the issue of assessment of the salvage reward in accordance with the criteria indicated in articles 13 and 14 of the Convention.
The conventional regime, founded on the principle of “no cure, no pay”, has been constantly upheld by the Italian Courts.
(iv) Wreck removalThe Nairobi Wreck Removal Convention, which was adopted in 2007 and entered into force in 2015, has not been ratified by Italy as yet, therefore the matter is still regulated by a specific article of the Italian Code of Navigation (article 73) according to which wide discretion is given to the Port Authorities to issue orders for the removal of a wreck whenever the wreck may cause danger or an obstacle to navigation.
The order of removal is to be addressed to the registered owner of the wreck with a deadline for compliance and if the owner of the wreck does not comply in time, the Authority will proceed ex officio by seeking recovery of the expenses from the enforced sale of the wreck and from the ship-owner. Detailed agreements are normally stipulated between the competent Port Authority, on the one side, and the ship-owner and its Protection and Indemnity (P&I) Club, on the other, to ensure that the removal operations are carried out safely and by protecting the environment.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionIn case of collision, the matter of compensation for damages will be governed by the Brussels Convention dated 23 September 1910, provided that all vessels concerned belong to contracting states. Otherwise, the matter will be regulated by the Italian Code of Navigation, which contains a number of rules that are partially different from those of the Convention.
Both under the Convention and under national law, liability can be established in tort and is founded on negligence. When the collision is caused by the fault of two or more vessels, each vessel responds to the percentage of the fault committed and, according to the Code of Navigation, also in relation to the seri-ousness of the consequences. Each vessel would instead bear its own losses in cases where the collision is accidental, caused by force majeure or if the cause of the collision is left in doubt.
Once a collision occurs, the local Port Authority will imme-diately start an investigation to collect evidence on the casualty. The final report of such investigation will be made available to the Judicial Authority.
If a ship-owner applies for the arrest of the other vessel in order to obtain security for his claim for damages, the Italian Court shall retain jurisdiction to determine the case upon its merits (pursuant to article 7.1 (d) of the 1952 Arrest Convention) even if there are no links with the Italian territory.
(ii) PollutionThe most important pieces of national legislation concerning the protection of the environment are the following Acts of Parliament: n. 979 of 31.12.1982; n. 220 of 28.02.1992; and n. 349 of 08.07.1986. These establish the notion of protection of the environment and set measures to be implemented by both the administrative bodies and the private parties involved.
As far as oil pollution potentially deriving from cargo is concerned, Italy has ratified the Civil Liability Convention 1969 (CLC) and the 1992 Protocol. Italy is also a contracting party to the 1971 Convention establishing the International Oil Pollution Compensation Fund, as well as the 1992 and 2003 Protocols thereto.
It is noteworthy, in respect of the interpretation of the CLC, that following the sinking of the Haven, the Tribunal of Genoa
the vessel, crewmembers, insurers and injured persons, can be represented before the competent maritime authority. It is note-worthy that facts ascertained during the formal investigation will be considered as admitted in the relevant civil merits proceed-ings, unless there is evidence to the contrary.
In case of deaths or serious personal injuries, the prosecutor will require a criminal investigation to be carried out.
The scope of marine investigations under the umbrella of Directive 2009/18/EC is different: investigations are carried out for the purpose of improving maritime safety and the prevention of pollution with the aim of reducing future risks of casualties. They are not intended to determine liability or apportion blame.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The Italian legal system is based on the so-called “double track” regime since, on the one hand, Italy has ratified the Hague-Visby Rules and, on the other hand, Italy enacted in 1942 the Code of Navigation on the basis of the Hague Rules, but without later enacting the modifications introduced by the Visby Rules.
On the other hand, Italy is a contracting party neither to the Hamburg Rules nor to the Rotterdam Rules.
The Code of Navigation is still in force, and it contains a number of articles (421–424) dealing with the carrier’s liability for damages to cargo, which broadly, but not completely, mirror the provisions contained in articles IV, V and VI of the Hague Rules.
Since the Hague-Visby Rules are lex specialis, their application prevails on the application of the Code of Navigation, which is, consequently, applicable only to cases which do not fall within the ambit of application of the Hague-Visby Rules, pursuant to article X of the same.
The Italian Code of Navigation also applies to any carriage performed by Italian vessels between Italian ports.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The carrier’s liability regime is grounded on the so-called fault-based liability system. If the claimant proves that damage or loss occurred while the cargo was under the custody of the carrier, the latter is presumed to be at fault. As a result, the burden of disproving this presumption rests on the carrier, and in order to have its liability excluded, the carrier shall provide proper evidence that the loss or damage to the goods was caused by one of the excepted perils provided by article IV of the Hague-Visby Rules.
The carrier has the right to limit its liability in accordance with the provision of article IV para. 5 of the Hague-Visby Rules. According to Italian case law, the carrier is deprived of the right to invoke limitation only if there is evidence of his recklessness or wilful misconduct.
In case the Italian domestic law applies, article 423 of the Code of Navigation 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 declared by the shipper prior to loading. Notwithstanding the low value of the limitation foreseen by the Italian Code of Navigation, the Constitutional Court, by Decision No. 199/2005, upheld the validity of the limit, but clarified that the same was not applicable in the case of wilful misconduct or gross negligence of the carrier.
(v) Limitation of liabilityThe Italian traditional regime of limitation of liability was based in the past on a specific article of the Italian Code of Navigation (article 275) according to which the ship-owner could limit his liability (in connection with the obligations arising from a voyage) to an amount equal to the aggregate of the value of the vessel, the amount of the freight and of the other earnings of the voyage. For the purpose of determining the value of the vessel, article 276 specified that such sum should be determined in an amount between one-fifth and two-fifths of the insured value of the vessel, depending on the vessel’s actual value at the end of the voyage.
Such discipline has recently been dismantled by an Act of Italian Parliament dated 28 June 2012 n. 111, according to which the rule contained in the above-mentioned articles of the Code applies only to vessels having a gross tonnage below 300 tons.
Furthermore, the above Act n. 111/2012, which was adopted in order to comply with the European Directive 2009/20/EU on the insurance of ship-owners for maritime claims, has in practice introduced into the Italian legal system the limitations of ship-owners’ liability as foreseen by the Convention on Limitation of Liability for Maritime Claims (LLMC Convention), which Italy has not yet ratified.
The result of the above is an extremely dissatisfactory legal system, giving rise to numerous discrepancies between the regime of insurance of claims adopted with Act n. 111/2012 and the LLMC regime incorporated therein, but not ratified by the Italian Government as yet.
(vi) The limitation fundA further negative consequence which derives from the failure of the Italian Government to adopt the LLMC Convention is the legal uncertainty in connection with the procedure for the establishment of the limitation fund, which is still governed by a few articles of the Italian Code of Navigation (articles 620–642) which by now must be considered obsolete.
1.2 Which authority investigates maritime casualties in your jurisdiction?
Under Italian law, the maritime authority for administrative and criminal investigation on marine casualties is the Italian Coast Guard.
Italy has transposed and implemented the contents of Directive 2009/18/EC establishing the fundamental principles governing the investigation of accidents in the maritime transport sector through act n. 165 of 2011. By doing so, the maritime casualty investigation body has been appointed under the authority of the Italian Ministry of Transport: the General Directorate for Railway and the Maritime Accident Investigation.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
Administrative investigation on maritime casualties is regulated under articles 578–584 of the Code of Navigation. The Code foresees two types of maritime investigation: a summary inves-tigation, aimed at determining the causes and liabilities arising out of the accident; and a more extended investigation – the so-called formal investigation – which is carried out only in case of major casualties. During the formal investigation, the parties involved, such as the ship-owner, the registered owner of
It is important to note that consumer rules on internal jurisdiction might come into play in case of passengers’ claims.
3.2 What are the international conventions and national laws relevant to passenger claims?
Italy has not ratified the 1974 Athens Convention. However, its regime, as amended by its 2002 Protocol, entered into the Italian legal system through the PL Regulation. As known, contrary to the Athens Convention, the EC Regulation is also applicable to carriages within a single Member State, if effected on board class A and B ships (as defined under article 4 of Directive 98/18/EC). Since 1 January 2019, the EC Regulation is applicable to Italian domestic carriages effected on board of both class A and B ships. In practice, the Italian regime of the Code of Navigation is now applicable only to inner land transports and to sea trans-ports effected by vessels which can navigate within five miles from the coastal line.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Under the PL Regulation, any action for damages arising out of death or personal injury, or for the loss of or damage to luggage, shall be time-barred after two years. As foreseen in the PL Regulation, such a time limit can be interrupted or suspended (if so prescribes the law of the Court seized of the case) but not beyond a period of five years from the date of disembarkation or from the date when disembarkation should have taken place, whichever is later; or, if earlier, a period of three years beginning with the date when the claimant knew or ought reasonably to have known of the injury, loss or damage caused by the incident.
According to article 418 of the Italian Code of Navigation, the limitation period is shorter than that established in the PL Regulation: only six months; or one year in cases where the carriage started or finished outside the Mediterranean Sea or outside Europe.
4 Arrest and Security
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?
Italy has ratified the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships, signed in Brussels on 10 May 1952. Conversely, Italy is not a party to the 1999 Arrest Convention signed in Geneva. Security over a debtor’s assets can also be obtained in accordance with the general rules established by the Italian Code of Civil Procedure.
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 Italian case law, the Brussels Convention will also be held applicable to ships flying the flag of non-contracting states, in case the arrest is sought for a mari-time claim included in the list.
If Italian Courts have no jurisdiction over the merits of the case, the arrest can be filed before the Court having territorial jurisdiction to enforce the arrest measure, i.e. the place where the vessel is located. Therefore, Italian Courts acquire jurisdiction to arrest a ship when the ship enters the territorial area of the port.
A power of attorney is required in order to file an applica-tion for arrest.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The shipper is obliged to provide a complete and accurate description of the cargo to the carrier both as per article III para. 5 of the Hague-Visby Rules and as per article 457 of the Code of Navigation.
Thus, at the time of loading of the cargo on board, the shipper should provide accurate indications of marks, quality, quantity, numbers and weight of the goods.
Should the shipper fail to do so, he will be liable against the carrier for the damages and losses due to such misinformation.
In case of goods of an inflammable, explosive or dangerous nature, loaded without the consent of the carrier, the carrier may, at any time before discharge, land, destroy or render innoc-uous the cargo without providing compensation to the shipper, who will be held liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Any cargo claims against the carrier pursuant to contracts of carriage of goods subject to the Hague-Visby Rules is time-barred within one year after the delivery of goods or the date on which they should have been delivered. Such time limit can be avoided by the cargo interest by starting legal proceedings. However, the parties can extend such time limit by agreement.
If, on the contrary, the domestic law applies, a cargo claim is time-barred after six months, but, in the event that either the port of loading or the port of discharge is located outside Europe or outside the Mediterranean countries, the limitation period will be one year.
The limitation periods provided by the Code of Navigation cannot be extended or shortened by agreement, but they can be interrupted by the claimant by serving a written claim to the carrier with a request of payment.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Since January 2019, key provisions for resolving maritime passenger claims are set out in the Regulation (EC) No. 392/2009 of the European Parliament and of the Council of 23 April 2009 on the liability of carriers of passengers by sea in the event of acci-dents (the PL Regulation), by which the regime of the 1974 Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea has been given effect (see question 3.2). The regime set out in the Italian Code of Navigation now has a very limited scope of application.
Key provisions of the PL Regulation are: definition of luggage, which also includes vehicles; the regime of a carrier’s strict liability for claims of death and personal injuries caused in case of shipping incidents of up to the value of 250,000 special units, unless caused by war or by third parties; limits of liability; compulsory insurance; and advance payment in case of death and personal injuries.
Regarding the residual regime set out in the Code of Navigation, it is worth noting that the limits of liability are very reduced and that the definition of luggage does not include vehicles that are deemed to entail a separate transport of goods.
verify whether legal requirements set out in the Italian Code of Navigation are met by claimants.
The lien can indeed be exercised by the owner of the vessel to secure its claim for freight and demurrages arising from a contract of carriage. The Court application must be filed within 15 days from discharge of cargo and, in any case, before the delivery of the goods to third parties.
According to article 437 of the Italian Code of Navigation, it is possible to exercise the lien and to obtain permission to discharge the cargo at the same time, under control of justice (but arrangements will have to be made in advance with the local agents to identify the shore installations where cargo can be stored under lien).
The arrest of bunkers can be obtained (as security for a claim against a time charterer of a vessel) by triggering the general procedure for arrest of moveable goods, set out in the Italian Code of Civil 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 the merits will be impaired by the financial condi-tions of the debtor ( periculum in mora).
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
As per article 684 of the Italian Code of Civil Procedure, the ship-owner may obtain the release of the vessel from the arrest, by placing an adequate guarantee in substitution of the goods under arrest. It has been held that an adequate guarantee is constituted by the deposit of a sum equivalent to the credit sought plus expenses in a bank account opened in the name of the Court or by a bank guarantee. Italian Judges do not accept P&I Clubs’ letters of undertaking (LOUs) as adequate guar-antee, unless there is an agreement between the parties.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
The decision whether to order the provision of counter secu-rity is in the discretion of the Judge granting the arrest. There is no standard procedure and the Judge is free to order counter security both at the time when the arrest is granted and at a later stage. The purpose of counter security is to provide security for the damages which may derive from the arrest, in the event that the same is later found to be unlawful.
4.7 How are maritime assets preserved during a period of arrest?
Apart from the general rules for the preservation of arrested or attached assets that are contained in the Code of Civil Procedure, a specific rule is contained in the Code of Navigation according to which the Judge in charge of the arrest is entitled to authorise the arrested vessel to effect on one or more voyages under control of justice, subject to adequate insurance being stipulated. In such a case, the freight and other earnings will be collected by the vessel’s custodian appointed by the Court. The above authorisation can only be granted with the previous consent of the mortgagees.
Although the Italian Code of Civil Procedure indicates that Judges have discretion to order the claimant to deposit counter-security, this is normally not required.
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 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 the arrest. As a result of such hearing, the arrest of the ship can be confirmed or revoked. If the arrest is confirmed, the claimant will have to start proceed-ings on the merits within 60 days.
An appeal against the order of confirmation of arrest or against the order of revocation of arrest can be filed within 15 days.
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?
Legal issues arise when the bunker supplier does not have a credit against the vessel’s owner but against other vessel operators, such as a demise charterer or a time charterer. In such a case, it will be necessary to examine the construction made by Italian Courts of article 3.4 of the Brussels Convention. There is a conflict under Italian law as to whether a claimant can arrest a ship for a credit not against the owner of the vessel, irrespective of the nature of such claim, i.e. whether such credit is supported by a maritime lien or not. Recent Italian case law has adopted a wider approach, allowing claimants to arrest the particular ship for a credit not against the owner of the vessel, but against the time charterer, even if not supported by a maritime lien. However, the case law is not set in stone and the contrary opinion is favoured by part of the Italian jurisprudence and eminent doctrine.
In any case, the physical bunker supplier will have to establish a contractual relationship with at least one of the vessel’s opera-tors in order to try to successfully plead its right to arrest the ship.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
As already indicated in the answer to question 4.1, Italy has not rati-fied the 1999 Geneva Convention, which now expressly includes, within the list of maritime claims, disputes arising out of a contract of sale of ships. On the contrary, under the regime of the 1952 Brussels Convention, the claims arising out of a contract of sale and purchase are not included in the list of maritime claims set out in article 1 of the said Convention. According to a precedent of the Tribunal of Ravenna, it has been held that claims arising from a breach of a contract for the sale and purchase of a vessel are not maritime claims under article 1 of the 1952 Brussels Convention. Therefore under Italian law, it is not possible to arrest a vessel for claims arising from the contracts of sale and purchase of a ship.
4.4 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 options are available?
A maritime lien can be exercised by the vessel owner over cargo only with the permission of the local Court, which will
board non-EU vessels, arguing that, after departure of the vessel, it will be difficult, or even impossible, to hear the crewmembers as witnesses in Italy.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The Italian legal system does not include the Anglo-Saxon concept of general and wide discovery of documents. The Italian civil process is indeed based on the principle that evidence admitted is only that gathered by the parties before the Judge and “fishing” discovery requests are not admitted.
Therefore, in principle, the parties to maritime disputes have no disclosure obligations, having just the burden of providing evidence of their factual allegations in support of their claims and to their defences.
As an exception to the above rule, the Italian procedural law allows the parties to request the Judge to order (to the other party or to a third party) the production of a specific and properly identified document, which proves to be material to the requesting party’s case. The requesting party should also demonstrate that the document to be produced exists.
5.3 How is the electronic discovery and preservation of evidence dealt with?
As a result of the full implementation of the rules in the matter of electronic civil proceedings, nowadays pleadings and docu-ments can only be submitted in Court electronically, so that they are all stored and preserved in the electronic file held by the Court. However, the Italian legal system has not yet imple-mented specific rules concerning the concept of electronic disclosure, nor the preservation of electronic evidence.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims are regulated by standard civil procedure and are dealt with by ordinary civil Courts. However few Courts (especially those situated in cities with an old shipping tradi-tion) normally have specialised sections of Judges who are expe-rienced in maritime law.
A typical and special procedure applicable to maritime claims (but still handled by common civil Courts) can be found in the so-called “cause marittime” (maritime claims). These are Court cases dealing with claims deriving from maritime casualties, such as claims for damages arising out of collisions, damages to vessels in performing anchorage and berthing operations or other ports’ manoeuvres, damages arising out of the use of loading or unloading mechanisms and from the handling of goods in port and claims for salvage compensation or remuner-ations. Apart from special rules for establishing the competent local Court, the main characteristic is the compulsory presence of a nautical expert appointed by the Court.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
There are no specific remedies in the event of a wrongful arrest of a vessel. However, general remedies will apply.
Indeed, article 96 of the Code of Civil Procedure sets out the regime of liability for abuse of civil proceedings. Such regime is twofold: ■ underparagraph1ofarticle96,thesuccessfulpartymay
claim against the losing party damages on top of legal costs, if it can be established that the losing party (in bringing or defending the particular legal proceedings) acted with bad faith or with gross negligence; and
■ further,thesecondparagraphofarticle96setsoutaspecificregime applicable in case of enforcement of arrest orders: if the claim under which the arrest has been granted is found to be non-existent, the defendant may obtain compensation for damages if it can be established that the claimant acted negligently. Here, the test is less stringent as bad faith or gross negligence of the claimant are not required, but a mere negli-gent behaviour. However, the rejection of the arrest or the dismissal of the merits proceedings are not sufficient to trigger the right to seek damages, as the claim under which the arrest was ordered has to be found as totally non-existing.
As to damages’ assessment in case of wrongful arrest, it is worth noting a decision of the Court of Appeal of Genoa whereby damages were assessed as arithmetical average of (i) notional earnings that the owner could have obtained from the employment of the vessel on a time charter basis, (ii) notional earnings that the owner could have obtained from the employ-ment of the vessel on a voyage charter basis, and (iii) demurrages that could have been earned over the period whereby the vessel remained under arrest.
Finally, it has to be noted that a third paragraph was intro-duced in 2009 to article 96 of the Code of Civil Procedure, intro-ducing a punitive damage system which can be triggered ex officio by the Judge, who can order the losing party to pay a sum that will be equitably assessed by the same Judge as sanction for an abuse of civil proceedings.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Preservation of physical evidence is achieved in Italy through the so-called accertamento tecnico preventivo. Pursuant to article 696 of the Italian Code of Civil Procedure, in case of urgency, one party has the right to apply to the President of the competent Court to have a surveyor appointed in order to ascertain the physical state, quality and condition of goods. The Court might require the expert to provide technical evaluations as to the causes and damages. The Italian Code of Civil Procedure also contemplates pre-examination of witnesses. One party, who has grounded reasons to consider that one or more witnesses would not be available to render their deposition during the future Court proceedings, might ask the Court to grant permis-sion to hear such witnesses. The rule is normally triggered in case of extreme and poor health conditions of witnesses, but it can be also triggered in case of non-EU crewmembers on
On the other hand, as far as extra-European judgments are concerned, the Italian Private International Law Act of 1995 provides for automatic recognition of judgments which comply with some material requirements (aimed at ensuring that the “adversarial principle” and the principles of fundamental rights of defence and of public policy are observed). For enforcement purposes, as well as in case of any dispute about recognition, a special procedure must be commenced before the competent Court of Appeal.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Italy has ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NY Convention). At the same time, the Italian Code of Civil Procedure provides autonomous procedural rules which are subsidiary to the system of the 1958 NY Convention, and apply if a foreign arbitration award has been rendered in a non-contracting State of the Convention.
Under both systems, in order to obtain the recognition or the enforcement in Italy of a foreign arbitration award, a special procedure must be commenced before the competent Court of Appeal by the interested party. In case of opposition, a new phase of the proceedings is opened and the burden of proving that the requirements for recognition or enforcement are not met lies with the opposing party.
In respect of recognition of foreign arbitral awards, it is worth noting that Italian Courts have taken a strict interpretation approach on the requirement of the agreement in writing to arbi-trate, as prescribed in the NY Convention. Thereby creating issues as to the recognition of maritime arbitral awards when the agree-ment to arbitrate is not effectively signed or agreed by one party. In order to circumvent the above issue, and if the award was issued in England, it was sometimes advisable to turn the arbitral award into an English judgment, so that only the judgment could be enforced in Italy by taking advantage of EU Regulation No. 1215/2012. Presently, after the United Kingdom’s exit from the EU and considering that (at the time of writing) the EU is opposing the application of the United Kingdom to join the 2007 Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (which reflects the previous regime of Council Regulation (EC) No. 44/2001), such remedy is no longer available for maritime practitioners.
8 Updates and Developments
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.
The second wave of the outbreak of the COVID-19 pandemic has hit the Italian shipping industry. The most affected segment of the industry remains the cruise industry, which (at the time of writing) is partially operating again, but still with restrictions.
In the hope that the pandemic will soon become a memory, the recovery and resilience plan approved by the Italian govern-ment sets out specific objectives for intermodal transport and integrated logistic. Indeed, the project comprises a series of interventions on maritime transport: to increase the Italian harbour system competitiveness in a sustainable manner through the development of an intermodal infrastructure, inte-grated big-picture planning and a focus on last-mile ports’ connections; to improve ports’ environmental sustainability and
Other special procedural rules can be found in the proceed-ings concerning adjustments of general average and in the proce-dure for establishing the ship-owner limitation fund.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Whenever maritime disputes are submitted to arbitration in Italy, local arbitrators are frequently chosen among scholars or experienced maritime lawyers. Reference to arbitral bodies (like the Chamber of Maritime Arbitration held by the Genoa Chamber of Commerce in conjunction with the Milan Chamber of Commerce) is less frequent.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Mediation does not entail any special rules as to its conduct and it is not compulsory with regard to maritime claims, except for claims in the matter of marine insurance.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Italy is a maritime country with a long-established maritime law tradition.
The Italian Association of Maritime Law was established in 1899 and is one of the oldest Maritime Law Associations members of the CMI.
Practitioners, scholars, lawyers and Judges have been quali-fying through universities such as Genoa, Naples and Trieste, all of which have a profound maritime orientation.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Because of the long-lasting maritime law tradition, the Italian Courts have quite significant case law to rely upon in the mari-time field, thereby creating a degree of certainty when industry players approach a Court for maritime matters, especially before those Courts situated in historical maritime cities.
Trial length is by far the main disadvantage when analysing the health of the overall Italian judicial civil system. However, in recent years, Italian Governments have tried to overcome this issue by establishing reforms aimed at reducing trial time. Among these, it is noteworthy that Italian proceedings are now managed via an entirely electronic system.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Italy is part of the “European judicial area”, which is based on the principle of free circulation of judgments and is pres-ently governed by Regulation (EU) No. 1215/2012 (so-called “Brussels I bis”), which provides for a mechanism of the auto-matic recognition and immediate enforcement of judgments in Europe (without any special procedure or declaration of enforceability of the Italian Courts being required).
In this European system, the recognition or the enforcement of a judgment is refused only upon application of the interested party, who must prove that the judgment does not meet the requirements indicated in the same Regulation No. 1215/2012.
To this purpose, it should be noted that, recently, the European Commission has approved the prolongation, until the end of 2023, of the measures for maritime transport under Italy’s International Registry on the basis that Italian authori-ties have committed to extend the benefits of the International Ship Registry to all eligible ships that fly an EEA flag, in order to prevent any potential discrimination between ship-ping companies and registries of different EEA States and to preserve the rules on freedom of establishment in the internal market. According to the press release issued by the EU Commission on 11 June 2020, Italy will have to comply with the above commitments within seven months from the adoption of the Commission decision. At the time of writing, the Italian Government has not yet enacted the necessary amendments to the International Registry.
Finally, notwithstanding the effort of Italian maritime scholars and of the Italian Association of Maritime Law (AIDIM), Italy has not yet ratified the LLMC adopted in 1976 and its Protocol of 1996.
energy efficiency; to digitalise the national supply chain and air traffic; and to reduce polluting emissions in freight handling.
In the meantime, old issues are still igniting the debate in the Italian shipping industry. Italian owners are calling on the Government to ease regulations and administrative procedures concerning vessels’ registration in Italy; crew enrolment, radio certificates, inspections, registration procedures, the deletion of vessels from the Italian Ship Registry, as well as the proce-dure for recording ship mortgages, are all issues that need to be reformed according to the Italian Ship-Owners Association.
Furthermore, the Italian Government has not yet implemented the necessary amendments to the system of benefits available to vessels registered in the Italian International Ship Registry, as required by the EU Pilot Procedure (EU Pilot 7060/14/TAXU), established by the EU Commission against Italy, which ques-tioned whether fiscal benefits available under the tonnage tax regime should not be limited to owners of Italian vessels regis-tered under the International Registry. However, such legisla-tion has not yet been fully implemented: indeed, the amended legislation is yet to be subject to a ministerial decree for the implementation of the practicalities of the reform.
157Dardani Studio Legale
Shipping Law 2021
Marco Manzone assists clients in transactions in the sale and purchase of ships, shipbuilding contracts, and ship finance. He also advocates for clients in charterparty disputes, and in precautionary measures such as the arrest of ships or liens on cargo. He also handles cargo claims mainly on behalf of ship-owners.Marco is particularly keen on the law of international trade and he assists clients in commodity disputes (including international arbitrations) and non-litigation matters.He was admitted to the Italian Bar in 2006 and he is a member of the Genoa Bar. Having completed the qualified lawyer transfer test, in 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.
Dardani Studio LegaleSalita di Santa Caterina 10/8AGenoa 16123Italy
Lawrence Dardani is an Avvocato at the Italian Bar and a Barrister at the Bar of England and Wales.His practice covers all areas of shipping law, both dry and wet, Italian and English law-related matters and disputes, comparative law and international private law issues. He appears as an advocate and counsels in charterparty disputes, issues related to the carriage of goods by sea, the liability of classification societies, as well as shipbuilding contracts, ship sale and purchase, and ship finance.Lawrence has been a partner at Dardani Studio Legale since 2014. He speaks Italian, English and Spanish.
Dardani Studio LegaleSalita di Santa Caterina 10/8AGenoa 16123Italy
Based in Genoa and Milan, Dardani Studio Legale is an international boutique law firm that gathers a team of advocates specialised in mari-time 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.
■ Theownerofatankercarryingcrudeoilorthelikeisresponsible for compensation for tanker oil pollution damage (main clause of Article 3, paragraph 1 of the Act on Liability for Oil Pollution Damage).
■ The owner of a tanker or general ship inwhich thebunker oil pertaining to general ship oil pollution damage was loaded is jointly and severally responsible for compensation of that damage (Article 39, para-graph 1 of that Act).
■ In 1983, Japan joined the International Convention forthe Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978 (MARPOL). That convention is intended to prevent ocean pollution due to ship move-ments or accidents, and the Japanese law based on the convention is the Act on Prevention of Marine Pollution and Maritime Disaster.
(iii) Salvage/general average(a) Salvage
■ Japan is a party to the 1910 Convention for theUnification of Certain Rules of Law respecting Assistance and Salvage at Sea, but not the 1989 International Convention on Salvage.
■ TheJapaneseCommercialCodeprovidesforsalvage.In the past, salvage under the Commercial Code has been generally regarded as not including contract salvage, but the amendment to the Commercial Code enforced on April 1, 2019 expressly provides for contract salvage in addition to salvage by chance (Article 794 of the Commercial Code).
■ UndertheCommercialCode,wherethewholeorpartof a ship or the shipped goods are involved in a marine accident, a person who has salvaged the same may claim a reasonable salvage charge corresponding to the consequence of the salvage, even if the salvage is not conducted under contract (Article 792, paragraph 1 of the Commercial Code).
(b) General average■ TheamendedCommercialCodeofJapan(enforcedon
April 1, 2019) provides for general average in accord-ance with the York Antwerp Rules of 1994.
(iv) Wreck removal■ Japan did not initially join the Nairobi International
Convention on the Removal of Wrecks of 2007 (Nairobi Convention), but the Diet approved the ratification of that convention in 2019. As of October 10, 2020, the Nairobi Convention has come into force.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) Collision■ Japanhas ratified theConvention for theUnificationof
Certain Rules of Law with respect to Collisions between Vessels of 1910, and that treaty applies uniformly to any collision between a Japanese vessel and a vessel of another contracting state.
■ However,thattreatydoesnotapplytoacollisionbetweenJapanese vessels, or a collision between a Japanese vessel and a vessel of a non-contracting state. Collisions between Japanese vessels are provided for by the Commercial Code, which was amended in 2018 for consistency with the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels (Articles 788 through 791 of the Commercial Code).
■ In order to prevent damage due to vessel collisions, theInternational Regulations for Preventing Collisions at Sea (Colregs) were established in 1972, and signed by Japan in 1977; Japan has fully amended its Act on Preventing Collision at Sea in accordance with the Colregs. The Maritime Traffic Safety Act and the Act on Preventing Collision at Sea are special laws that take precedence over the Act on Preventing Collision at Sea.
(ii) Pollution■ The International Convention on Civil Liability forOil
Pollution Damage (CLC1969) was established in 1969, and later replaced by the 1992 Protocol (CLC1992). Japan is a party to both CLC conventions. In 1975, Japan enacted the Act on Liability for Oil Pollution Damage, which was amended in 2004.
■ Japandidnot initially join theBunkersConvention,butthe Diet approved the ratification of that convention in 2019. As of October 1, 2020, the Bunkers Convention has come into force.
■ In connection with the ratification the BunkersConvention, the Act on Liability for Oil Pollution Damage was amended in May 2019, with the amended Act to enter into force on October 1, 2020.
■ The provisions of the amendedAct onLiability forOilPollution Damage regarding liability for oil pollution damage can be summarised as follows:
to prevent accidents and reduce damage. It operates under the Act for Establishment of the Transport Safety Board.
■ The Transport Safety Board conducts investigationsto ascertain the causes of maritime accidents and the causes of damage associated with maritime accidents (Article 5 of the Transport Safety Board Act). Therefore, the Transport Safety Board is able to demand reports from the owner of a vessel and other persons associ-ated with a maritime accident, conduct on-site inspec-tions of documents with respect to an accident at the offices of the owner of a vessel or another location as it considers necessary, question persons associated with an accident, and request that persons associated with an accident appear before the Board for questioning, among other powers (Article 18(2)(iii), (iv) and (v) of the Transport Safety Board Act).
(iii) Marine Accident Tribunals■ The Marine Accident Tribunal (Central) in Tokyo
handles “major marine accidents”. There are regional Marine Accident Tribunals in Hakodate, Sendai, Yokohama, Kobe, Hiroshima, Kitakyushu (Moji), and Nagasaki, and a branch of the Moji tribunal in Naha; each handles marine accidents (excluding major marine accidents) in its jurisdictional district. Governed by the Act on Marine Accident Inquiry.
■ TheMarineAccidentTribunalswilltakedisciplinaryaction against a marine technician, a small craft oper-ator, or a pilot who causes a marine accident intention-ally or negligently in the course of duties.
■ Amarineaccidentisdefinedasanydamagetoavesselor to facilities other than vessels in relation to the oper-ation of a vessel, death or injury of a person caused in relation to the structure, facilities, or operation of a vessel, or impairment of safety or operation of a vessel (Article 2 of the Act on Marine Accident Inquiry).
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
■ Articles737through770of theCommercialCodeapplyto domestic cargo (cargo for which the port of lading and port of unlading are both in Japan).
■ International cargo (cargo for which the port of ladingor the port of unlading is outside Japan) is subject to the Act on International Carriage of Goods by Sea; however, much of the Act on International Carriage of Goods by Sea consists of provisions of the Commercial Code applied mutatis mutandis, and so the provisions are largely the same as for domestic cargo, with the exception of the provi-sions on negligent navigation exemptions and limitation of carrier liability.
■ TheActon InternationalCarriageofGoodsbySeahasthe same content as the Hague-Visby Rules. Under the Hague-Visby Rules, the period of carrier liability is from loading until unloading. In contrast, under the Act on International Carriage of Goods by Sea, the period of carrier liability is from acceptance of the cargo to delivery. However, for consistency with the Hague-Visby Rules, the
■ In connection with that decision, the amended Act onLiability for Oil Pollution Damage of May 2019 (enforced on October 1, 2020) includes provisions reflecting the Nairobi Convention.
(v) Limitation of liability■ Japan has ratified the Convention on Limitation of
Liability for Maritime Claims of 1957 (LLMC), and is a party to both the 1976 LLMC and the amended protocol of 1996. Japan enacted the Act on Limitation of Shipowner Liability in 1975.
(vi) The limitation fund■ Pleaserefertoquestion1.1(v).
1.2 Which authority investigates maritime casualties in your jurisdiction?
Japan Transport Safety Board: See question 1.3 (ii).
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
(i) Japan Coast Guard■ TheJapanCoastGuardisanadministrativeagencyof
Japan, an independent organ and policing agency under the Ministry of Land, Infrastructure, Transport and Tourism whose objectives are the protection of human life and property, the prevention of legal violations, and the investigation and suppression of incidents at sea. It operates under the Japan Coast Guard Act.
■ By law, the Japan Coast Guard is able to order aship’s master to submit documents, stop a vessel and conduct onboard inspections, and question any person it considers knowledgeable with respect to necessary matters (Article 17 of the Japan Coast Guard Act).
■ If a coast guardofficerbelieves that a crime is aboutto be committed at sea, or if a natural disaster, marine accident, damage to a structure, explosion of hazardous materials or other dangerous situation arises, and there is a danger of death, injury or material damage to prop-erty requiring urgent action, that coast guard officer may cause a vessel to start moving, stop a vessel, prevent a vessel from leaving port, change a vessel’s course, cause a vessel to move to a specified location, order crew and passengers to disembark, prohibit crew and passen-gers from disembarking, or take other coercive meas-ures (Article 18 of the Japan Coast Guard Act).
■ Acoastguardofficermaycarryaweaponinthecourseofexecuting his or her duties, the use of which is governed mutatis mutandis by the Police Duties Execution Act.
(ii) Japan Transport Safety Board■ An independent organ of the Ministry of Land,
Infrastructure, Transport and Tourism of Japan. Its objectives are: the investigation of the causes of air accidents, rail accidents, maritime accidents, and major incidents; requesting that the Minister of Land, Infrastructure, Transport and Tourism or persons associated with the incident take necessary measures based on the result of that investigation; and working
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
In principle, the consignor has an obligation to provide correct information to the carrier. If the consignor makes an untrue representation, the carrier’s liability is as follows:■ Ifthetypeandvalueofthecargoarenotifiedtothecarrier
and are noted on the bill of lading (if any is issued), the carrier is not liable for compensation if the consignor deliberately and significantly overstates the value of the cargo, unless the carrier acts in bad faith.
■ Conversely,iftheconsignordeliberatelyandsignificantlyunderstates the value of the cargo, that amount will be the deemed value of the cargo for the purpose of calculating damage, unless the carrier acts in bad faith.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The carrier’s liability will expire under the statute of limita-tions if no claim is filed with a court within one year after the delivery of the cargo (or the intended date of delivery in the case of total loss); however, the length of the statute of limitations may be extended by agreement only after damage to the cargo has arisen.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
■ Acarrier is liable fordeath, injuryorotherdamage toapassenger unless it can prove it was without negligence. There is no limit on the amount of damages, and any special provisions exempting or limiting the liability of the carrier are void.
■ Acarrierislikewiseliablefordamagetoconsignedluggageunless it can prove it was without negligence. As with cargo, the amount of damages for luggage is standardised,
Act on International Carriage of Goods by Sea does not prohibit special provisions on the period from loading until unloading. Therefore, the Hague-Visby Rules and the Act on International Carriage of Goods by Sea are substantively the same (see figure above).
2.2 What are the key principles applicable to cargo claims brought against the carrier?
■ The carrier is liable for any cargo loss or damage fromacceptance to delivery, any cause of cargo loss or damage that arises during that period, and any damage that arises due to a delay in delivery of cargo, unless the carrier can prove that it did not fail in its duty of care. In the case of an international vessel, the carrier may be exempted from liability if it proves that the damage is of a kind that ordi-narily may occur due to the perils of the sea.
■ Ifabillofladinghasbeenissued,thelegitimateholderofthe bill of lading may claim damages against the carrier. If no bill of lading has been issued, the consignor may claim damages against the carrier, but if all of the cargo is lost after arrival at the port of unlading or in the course of carriage, the consignee may claim damages against the carrier. If the consignee has requested delivery of the cargo, or if the consignee claims damages against the carrier, the consignor becomes unable to claim damages against the carrier.
■ The amount of damages for loss or damage of cargo isstandardised and determined by the market price of the cargo at the place and time of delivery. However, the carrier is liable for ordinary damages and special damages in the case of willful misconduct or gross negligence.
■ The carrier is not required to compensate for the loss,damage or delay of high-value cargo unless the consignor notifies the carrier of the type and value of the cargo upon consignment; however, the carrier is liable if it knew the value of the cargo or in the case of willful misconduct or gross negligence.
■ Special provisions that disadvantage the consignor withrespect to the carrier’s liability for damage are void.
Acceptance
Special exemptionsallowed
Special exemptionsallowed
Loading Unloading
Scope of application of the Convention
Scope of carier liability under the Act on International Carriage of Goods by Sea
Damage to passenger Carrier must prove no negligence
Damage to luggage
Damage to consigned luggage
Same as above
Damage to passenger-held luggage
Passenger must prove carrier’s negligence
and the special provisions regarding high-value cargo apply.
■ Conversely,acarrierisliablefordamagetoluggagecarriedby a passenger if the passenger can prove that the carrier was negligent. The special provisions on high-value cargo do not apply to luggage carried by a passenger, but the other provisions regarding cargo do apply mutatis mutandis.
3.2 What are the international conventions and national laws relevant to passenger claims?
Japan has not ratified and is not a signatory of the Athens Convention of 2002, so domestic law applies to passenger transportation.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Under domestic law, there is no provision regarding the statute of limitations for passenger damage claims, and they are treated the same as ordinary claims, for which the statute of limitations is five years from when the claimant becomes aware that it is able to exercise the claim.
4 Arrest and Security
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?
(i) Attachment of a vesselA vessel may be attached pursuant to a final and conclusive judg-ment or a maritime lien. In practice, a maritime lien is more common, as explained below.
What is a maritime lien?■ Theholderofamaritimelienhasastatutorylienonavessel
and its equipment.■ Securedclaimsofmaritimeliensareasfollows(Article842
of the Commercial Code):(1) right of claim for damages due to death or injury arising
in direct connection with the operation of a vessel;(2) claim to a share of salvage charges or general average to
be borne by a ship;(3) claim that can be collected under the National Tax
Collection Act or by the same procedure as that for collecting national tax arising from a vessel’s entry to port, use of port and harbour, or otherwise in connec-tion with its voyage, or in connection with pilotage or towage;
(4) claim in connection with costs necessary to continue a voyage; and
(5) claim of a master or other mariner arising under an employment contract.
Validity and order of priority of maritime liens:■ The order of priority amongmaritime liens is the order
of (1) through (5) above; however, salvage charges under (2) take precedence over other claims already in existence at the time the salvage claim arises (Article 843(1) of the Commercial Code and proviso).
■ Orderofprioritywithrespecttootherstatutoryliens: If a maritime lien conflicts with another statutory lien,
the maritime lien takes precedence (Article 844 of the Commercial Code).
■ Orderofprioritywithrespecttootherrights: If a maritime lien conflicts with a mortgage on a vessel, the
mortgage takes precedence (Article 848 of the Commercial Code).
■ Handlingonsaleofthevessel: If the owner of a vessel assigns that vessel to another
person, the assignee must, after registration of the change of ownership, give public notice to any person with a mari-time lien to notify the assignee of that claim within a set period (one month) (Article 845(1) of the Commercial Code). If the holder of a maritime lien does not notify the new owner within that period, the maritime lien will lapse (Article 845(2) of the Commercial Code).
■ Lapseofmaritimelien: A maritime lien will lapse upon the passage of one year
after it arises (Article 846 of the Commercial Code).Enforcement of maritime lien:
■ OrdertoDelivertheCertificateoftheVessel’sNationality,etc. Prior to the Filing of a Petition for Execution against a Vessel (Article 115 of the Civil Execution Act):
If it is likely that the execution against that vessel will become extremely difficult unless the necessary docu-ments (certificate of the vessel’s nationality, etc.) are confis-cated prior to the filing of a petition for execution against a vessel, the district court having jurisdiction over the loca-tion of the vessel’s registry may, upon petition, order the obligor to deliver the certificate of the vessel’s nationality, etc. to a court execution officer.
■ Methodofexecutionagainstavessel: Compulsory execution against a vessel of not less than
twenty tons gross is carried out by the method of a compul-sory auction (Article 112 of the Civil Execution Act). In order to commence a compulsory auction procedure, the execution court must issue a commencement order for a compulsory auction, and order a court execution officer to confiscate the vessel’s certificate of nationality, etc. and to submit them to the execution court (Article 114 of the Civil Execution Act).
(ii) Provisional attachment of a vessel■ Theprovisionalattachmentofavesselisexecutedbyway
of registration of the provisional attachment or by way of the court execution officer being ordered to confiscate the vessel’s certificate of nationality, etc. and to submit them to the court executing the provisional remedy; these methods may be used jointly (Article 48 of the Civil Provisional Remedies Act).
■ The provisional attachment of a registered vessel ofJapanese nationality (not less than 20 tonnes gross) may be executed by registration of the provisional attachment. The provisional attachment of a foreign vessel must be
4.7 How are maritime assets preserved during a period of arrest?
■ Attachmentofavessel: In cases where an execution court finds that there is a
necessity in terms of business or there are other reason-able grounds, if there is the consent of the respective obli-gees and the highest purchase offeror or the purchaser and the next-highest purchase offeror, the execution court may permit navigation of the vessel even after attachment on petition by the obligor (Article 118 of the Civil Execution Act).
■ Provisionalattachmentofavessel: In cases where an execution court finds that there is a
necessity in terms of business or there are other reasonable grounds, if there is the consent of the respective obligees, the execution court may permit navigation of the vessel on petition by the obligor.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
■ Attachmentofavessel: In the case of compulsory execution where the legal
requirements are not met, under the Civil Execution Act of Japan, an action to oppose the grant of the certifi-cate of execution, an action to oppose execution, a third-party action against compulsory execution, and an appeal against the disposition of execution may be filed.
In the case of compulsory execution in breach of the procedural rules for compulsory execution, under the Civil Execution Act of Japan, an appeal against the disposition of execution and an objection to the disposition of execu-tion may be filed.
■ Provisionalattachmentofavessel: In the case of unlawful or illegitimate enforcement, under
the Civil Provisional Remedies Act of Japan, an objection to the provisional remedy and an appeal against the provi-sional remedy may be filed.
■ Apersonwho incursdamagedue tounlawfulor illegit-imate attachment or provisional attachment can seek damages in tort under the Civil Code.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
■ A person intending to file an action may give advancenotice in writing to the person who will be the defendant prior to filing, and request that that person respond to matters necessary for assertions and evidence.
■ Beforeorafterfilinganaction,iftherearecircumstancesmaking evidence difficult to use if that evidence is not examined in advance, the parties may file a petition for preservation of evidence and examine witnesses, repro-duce documents, take photographs, etc.
executed by confiscation of the certificate of nationality, etc., because a foreign vessel has no registration in Japan.
■ Noattachmentorprovisionalattachmentmaybeexecutedagainst a vessel while at sea (excluding while at anchor) (Article 689 of the Commercial Code).
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?
Under Japanese law, a bunker claim constitutes a “claim in connection with costs necessary to continue a voyage”, and a maritime lien may be exercised through that claim, making it possible to attach the vessel (Article 842(iv) of the Commercial Code).
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Under Japanese law, a claim in connection with the purchase and sale of a vessel is not subject to maritime lien. The seller must bring a principal action after filing a petition for provi-sional attachment to attach the vessel.
4.4 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 options are available?
The subject of a maritime lien is “the vessel and its equipment” (main text of Article 842 of the Commercial Code, etc.), and a maritime lien cannot be exercised against cargo, etc.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
If a vessel is attached, the usual practice is for the owner of the vessel to submit a guarantee issued by the Japan P&I Club in a substance satisfactory to the attaching creditor, and request that the attachment be withdrawn.
The following legal steps may be taken against attachment:■ Filinganobjectiontoattachmentofavessel:
■ Inthecaseofinvalidexecution(objectionundersubstan-tive law) it is possible to file action to oppose a grant of a certificate of execution, an action to oppose execution, a third-party action against execution, or an appeal against execution.
■ In the case of unlawful execution (objection underbreach of procedural rules) it is possible to file an appeal against execution or an objection to execution.
■ Anobjectiontoprovisionalremedyoranappealpertainingto provisional remedy can be filed in objection to provi-sional attachment of a vessel.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
■ Inthecaseofattachmentduetotheexerciseofamaritimelien, collateral is not required.
■ Inthecaseofprovisionalattachmentofavessel,legallythecourt will determine whether collateral is required, but in practice collateral is required.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
■ In litigation, a professional judge conducts the trial andmakes a ruling, but in arbitration, an arbitrator selected by the parties determines the arbitral award.
■ Court trials are inprincipalopen to thepublic,whereasarbitration is not, so arbitration maintains confidentiality.
■ In the case of litigation, documents inEnglishmust betranslated into Japanese, but no such requirement exists for arbitration.
■ Onlycertainfeesmustbepaidforlitigation,andtheoper-ational costs are covered by taxes, but in the case of arbi-tration the arbitrator’s compensation and court costs must be borne by the parties.
■ In litigation, attorney fees are in principal paid by eachparty, but in arbitration it is possible for attorney fees to be borne by the other party.
■ A court ruling is either not enforceable outside Japan,or will require complicated procedures for enforcement, whereas an arbitral award can be enforced overseas.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Please see question 6.2.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
A final, conclusive and unsatisfied judgment issued by a compe-tent foreign court would be enforced in Japan in an action brought in the court having jurisdiction over the head office of the defendant without re-examination of the merits adjudicated in such judgment, if all of the following conditions are satisfied:(i) the foreign judgment concerned is duly obtained and is
final and conclusive;(ii) the jurisdiction of the foreign court is recognised in light
of Japanese law;(iii) service of process, accompanied by an appropriate
Japanese translation, has been duly effected in light of Japanese law other than by public notice or the defendant has appeared in the relevant proceedings without receiving service thereof; and
(iv) the foreign judgment is not contrary to public policy or good morals doctrine in Japan, and judgments of Japanese courts receive reciprocal treatment in the courts of the foreign jurisdiction concerned.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Japan is a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). For enforcement of an arbitration award here, a party must apply to a competent court for a recognition order. A certified true copy of the arbitration award must be submitted, together with its Japanese translation.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
■ InJapan, there isnodiscoverysystemlike intheUnitedStates of America requiring parties to make broad disclo-sure of evidence.
■ However,inlitigation,thepresidingjudgecanurgeapartyto provide evidence; therefore, a party may request the presiding judge to urge the other party to submit evidence, and if the presiding judge accepts, the other party will be requested to submit evidence.
■ Furthermore,inlitigation,apartymaypetitionthecourtto order the holder of documents to submit those docu-ments. The holder of documents is obligated to submit documents if: (i) it holds a document cited in litigation; (ii) the petitioner is able to make a request to the holder of documents to receive or view the documents; or (iii) the documents were prepared for the benefit of the petitioner.
■ However,thedocumentholderisnotobligatedtosubmitdocuments containing confidential information in connec-tion with a public officer’s duties, documents containing information obtained in the course of duties of an attor-ney-at-law that should remain confidential, documents exclusively for the use of the holder, and the like.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Japan does not have such a system.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?■ TherearenospecialisedmaritimecourtsinJapan.Maritime
claims are handled by an ordinary civil judge.■ Litigation begins with the plaintiff’s submission of a
complaint, and the proceedings at first instance take approx-imately one to two years. The losing party may appeal to a higher court within two weeks, with higher court proceed-ings taking approximately one to two years at each level.
■ Itiscommonforajudgetorecommendsettlementduringthe course of litigation.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?■ TheJapanShippingExchange is theonlybodyproviding
maritime arbitration in Japan.■ Thetimerequiredforanarbitralawarddependsonthecase.■ Anarbitralawardmaynotbeappealedincourt,andhasthe
same effect as a court ruling.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?■ Aswitharbitration,providedbytheJapanShippingExchange.■ However,conciliationhasalmostneverbeenusedinpractice.
(vi) the composition of the arbitral tribunal or the arbitra-tion procedure is in violation of the laws and regulations of the country to which the place of arbitration belongs (if the parties have reached an agreement on the matters concerning the provisions unrelated to public order in said laws and regulations, said agreement);
(vii) according to the laws and regulations of the country to which the place of arbitration belongs (if the laws and regulations applied to the arbitration procedure are laws and regulations of a country other than the country to which the place of arbitration belongs, said other country), the arbitral award is not final and binding, or the arbitral award has been set aside or its effect has been suspended by a judicial body of that country;
(viii) the petition filed in the arbitration procedure is concerned with a dispute which may not be subject to an arbitration agreement pursuant to the provisions of Japanese laws and regulations; or
(ix) the content of the arbitration award is contrary to public policy or the good morals doctrine of Japan.
8 Updates and Developments
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.
In May 2019, the Diet approved the ratification of the Nairobi Convention and the Bunkers Convention and as of October 1, 2020, these conventions have come into force in Japan.
An arbitral award, irrespective of the country in which it was made, would be recognised as binding and would be enforceable in Japan in an action brought against the defendant in a court of competent jurisdiction without re-examination of the merits decided upon in such award, unless any of the following circum-stances exist: (i) the arbitration agreement (i.e., an agreement in writing
under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship concerning a subject matter capable of settlement by arbi-tration) is not valid due to the limited capacity of a party;
(ii) the arbitration agreement is not valid on grounds other than the limited capacity of a party pursuant to the laws and regulations designated by the agreement of the parties as those which should be applied to the arbitration agree-ment (if said designation has not been made, the laws and regulations of the country to which the place of arbitration belongs);
(iii) the party did not receive the notice required under the laws and regulations of the country to which the place of arbi-tration belongs (if the parties have reached an agreement on the matters concerning the provisions unrelated to public order in such laws and regulations, said agreement) in the procedure of appointing arbitrators or in the arbitra-tion procedure;
(iv) the party was unable to defend itself in the arbitration procedure;
(v) the arbitral award contains a decision on matters beyond the scope of the arbitration agreement or of a petition in the arbitration procedure;
165Mori Hamada & Matsumoto
Shipping Law 2021
Hiroshi Oyama is a partner at Mori Hamada & Matsumoto and a representative partner in the Takamatsu office of Mori Hamada & Matsumoto. His specialties are in the areas of maritime law, tax, M&A transactions and wealth management for ship owners and he has engaged in numerous matters related to tax planning and tax disputes. He was seconded as Review Officer (International Examination) to the Japanese National Tax Agency (2016–2018). He speaks Japanese and English.
Mori Hamada & MatsumotoNissei Takamatsu Building 1-1-5Bancho, Takamatsu-shiKagawa 760-0017Japan
Fumiko Hama is counsel at Mori Hamada & Matsumoto. She has a wide range of experience in the fields of company restructuring and rehabilitation of businesses including ship owners and shipbuilding companies. She also supports clients with a variety of corporate matters, such as dispute, corporate governance, labour law. She speaks Japanese and English.
Mori Hamada & MatsumotoMarunouchi Park Building2-6-1 Marunouchi, Chiyoda-kuTokyo 100-8222Japan
Mori Hamada & Matsumoto is a full-service international law firm based in Tokyo with offices in Bangkok, Beijing, Shanghai, Singapore and Yangon, and with a desk in Indonesia. The firm has over 620 attorneys and a support staff of approximately 530 people, including legal assistants, translators and secretaries. The firm is one of the largest law firms in Japan and is particularly well-known in the areas of mergers and acqui-sitions, finance, litigation, insolvency, telecommunications, broadcasting and intellectual property, as well as domestic litigation, bankruptcy, restruc-turing and multi-jurisdictional litigation and arbitration. The firm regularly advises on some of the largest and most prominent cross-border trans-actions, representing both Japanese and foreign clients. In particular, the firm has extensive practice in, exposure to and expertise on maritime and
aviation law, including related areas, and provides legal advice and other legal services regarding the corporate, regulatory, financing, tax and trans-actional requirements of clients in these areas.
c. The Compensation for Oil Pollution Damage Guarantee Act
This Act can be the applicable regulation for the liability of shipowners which contributed to oil pollution.
d. Other International Conventions■ theInternationalConventiononCivilLiabilityforOil
Pollution Damage 1969 and its 1992 Protocol (“1992 Civil Liabilities Convention”);
■ the International Convention on the Establishmentof an International Fund for Compensation for Oil Pollution Damage 1971 and its 1992 and 2003 Protocols; and
■ the International Convention on Civil Liability forBunker Oil Pollution Damage 2001.
(iii) Salvage/general averageArticles 882–895 of the KCC provide the basic regula-tions on salvage, which generally reflect the provisions in the International Convention on Salvage 1989 even though Korea is not a party to the Convention.
Articles 865–875 of the KCC provide the basic regulations on general average, which generally reflect the provisions in the York-Antwerp Rules of General Average 1950.
(iv) Wreck removalThe Act on the Arrival, Departure, etc. of Ships imposes obli-gations on the owners or occupants of any objects which may cause a hindrance to vessels’ navigation to remove such object or to bear the costs and expenses for its removal.
The Public Waters Management and Reclamation Act and the MSA include the relevant obligations for safe navigation of vessels on the vessels or owners.
(v) Limitation of liabilitya. General/Global Limitation The KCA stipulates provisions on general/global limitation
of liability of shipowners (articles 769–776). While Korea is not a contracting party to the Convention on Limitation of Liability for Maritime Claims (“LLMC”) 1976 or its 1996 Protocol, the KCC has adopted the basic principles and main provisions of the LLMC. The level of the shipowners’ global limitation generally matches the 1976 LLMC levels – only the global limitation level for damages for a passenger’s death and personal injury correspond to the 1996 Protocol level. According to the International Private Law (the Conflicts of Laws rule), the governing law of global limita-tion is that of the vessel’s flag state and, therefore, anyone seeking to limit their liability shall look at the relevant provi-sions of the law of the vessel’s flag state.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) Collisiona. The Korean Commercial Code (“KCC”) The KCC provides basic regulations on the collision of
vessels (from article 876 to 881, Chapter 3, Part 5). Those provisions are applicable to “collisions between sea-going vessels or collisions between sea-going vessels and vessels of inland water navigation” (article 876). According to the KCC, there are four kinds of collisions: (i) collision due to force majeure (article 877); (ii) collision due to the fault of one party (article 878); (iii) collision due to the fault of both parties (article 879); and (iv) collision due to the fault of the pilot (article 880).
b. The Korean Civil Law (“KCL”) The relevant parties can claim against the opposing party
based on the general tort principle under the KCL. Article 750 of the KCL can be the general basis for the victims to claim damages based on the tort liability and thus can be used as the applicable provisions for the collision case.
c. The Marine Safety Act (“MSA”) The MSA regulates the obligations of the vessels in navi-
gating within the Korean territorial water. The contents of the provisions are similar with the Convention on the International Regulations for Preventing Collisions at Sea 1972 (“COLREG, 1972”).
d. The COLREG, 1972 As for the international conventions relating to the collision
of vessels, the COLREG, 1972 is currently in effect in Korea.e. Korean Seafarers’ Act Article 12 of the Korean Seafarers’ Act imposes responsi-
bility on masters of the vessel involved in the collision to take all necessary measures to rescue human lives and the vessel.
(ii) Pollutiona. The Marine Environment Management Act (“MEMA”) The MEMA restricts the discharge of waste, oil, noxious
liquid substance and other pollutants from vessels.b. The KCL As in the collision case, the KCL can be generally appli-
cable for the tort liability of the vessel which caused pollu-tion of the sea.
wholly incorporated the Hague-Visby Rules, and partly incor-porated the Hamburg Rules. The KCC is a primary enactment applicable to cargo claims. As the KCC is enacted based on the Hague-Visby Rules, an existence and scope of a carrier’s liability on cargo claims under the KCC is almost the same as for the Hague-Visby Rules.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The basic principle of cargo claims under Korean law is that, unless the carrier proves that it had exercised full due dili-gence for the safe carriage of the cargo, it shall be liable for the damages to the cargo.
To succeed in a contractual cargo claim, a claimant (cargo interest) needs to prove: i) that it sustained loss/damage; and ii) that the loss/damage took place in the custody of the carrier. On the other hand, to defeat such a contractual cargo claim, the carrier must prove: i) that it exercised due diligence with respect to seaworthiness and care for cargo; or ii) that it was subject to at least one of the immunities listed article 798 of the KCC.
In a tort claim, it is a claimant who shall bear the burden of proof for intent or negligence over damage/loss to cargo. Thus, to succeed in a tort claim, the claimant needs to prove that the carrier failed to exercise due diligence with respect to seaworthi-ness and care for cargo.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The issues for the misdeclaration of cargo mainly relates to the carriage of the dangerous cargo. The shipper shall notify the accurate specification of the goods to a carrier and the details of the cargo shall be printed on the bill of lading. In particular, if the cargo are classified as dangerous cargo under the International Maritime Dangerous Goods Code (“IMDG Code”), the shipper shall inform the exact identifications to the carrier for the safe shipment and carriage. The carrier can claim damages in tort based on article 750 of the KCL if it succeeds in proving that it had suffered any kind of damages due to the misdeclaration of the cargo (such as by declaring dangerous cargo as general cargo) and that there is a causal link between the damages and the misdeclaration.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The KCC regulates that the claims and obligations of a carrier against a consignor or consignee shall be terminated, whatever the causes for the claims may be, if no judicial claim is made within one year of the delivery of the cargo by the carrier to the consignee. The time bar may be extended by an agreement between the parties.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The KCC is the key provisions for the matter of maritime passenger claims (article 817–826). The titles of the provi-sions are Meaning of Marine Passenger Transportation
The Act on the Procedure for Limiting the Liability of Shipowners, etc. has been enacted to set out the proce-dures for limiting liability.
b. Package Limitation Although Korea has not ratified the Hague-Visby Rules,
package limitation under the KCC is identical to that of the Hague-Visby Rules. Under the KCC, the carrier’s liability is limited to 666.67 special drawing rights (“SDRs”) per package/unit or 2 SDRs per kilogram, whichever is higher.
c. Oil Pollution The Compensation for Oil Pollution Damage Guarantee
Act limits the liability of the shipowners of the oil tanker which caused oil pollution, and the limitation amount is identical to that of the 1992 Civil Liabilities Convention. The Act also establishes a special procedure for the owners/insurers of the oil tanker to secure such a limita-tion on their liability.
(vi) The limitation fundThe Act on the Procedure for Limiting the Liability of Shipowners, etc. regulates the constitution of and distribution from the limi-tation fund. The Compensation for Oil Pollution Damage Guarantee Act regulates oil pollution caused by oil tankers.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Korean Coast Guard investigates the criminal aspects of an accident (personal injury or death, sinking of ship, pollution, breach of crew/vessel regulations, etc.) under the direction and supervision of the Public Prosecutor.
The Act on the Investigation of and Judging on Marine Accidents is the law regulating the Maritime Safety Tribunal (“MST”) and the investigators. The investigator from the MST also investigates the accident for the administrative sanctions on the crewmembers involved in the accident.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Coast Guard investigates the negligence of the involved crew-members for the criminal sanction (fine, imprisonment, compul-sory labour, etc.). After the completion of the Coast Guard inves-tigation, the Public Prosecutor will decide whether to indict or not. The Criminal Court will render judgment on the responsible crew.
The MST is a quasi-judicial administrative tribunal that investigates accidents within the territorial seas of Korea. The MST investigation is independent and separate from the Coast Guard’s investigation, with the purpose of finding the cause of the accident and imposing administrative sanction, if neces-sary, for the prevention of similar accidents in the future. After investigation, the MST determines the cause of the accident and the relative faults of the involved vessels, if requested, including the blame ratio between them.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Korea is not a party to any international convention concerning carriage of goods by sea, such as the Hague, Hague-Visby, Hamburg or Rotterdam Rules. However, the KCC has almost
of the vessel recognises a maritime lien for the unpaid bunker supply since the governing law for deciding the existence and the execution of the maritime lien shall be the law of the vessel’s flag state.
The bunker supplier may arrest the vessel by obtaining a prejudgment attachment order from the court if the unpaid bunker claim shall not be construed as a maritime lien under the law of the flag state and only if the debtor is the owner of the vessel as explained above.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
It may be possible to arrest a vessel in Korea for claims arising from contracts for the sale and purchase of a ship: (i) by way of prejudg-ment attachment order; and (ii) by way of court auction proceed-ings based on the maritime lien if such claims constitute/establish a maritime lien on the vessel under the law of the flag state.
4.4 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 options are available?
a. A carrier’s possessory lien in the KCC – a carrier is entitled not to deliver the cargo unless the freight, demurrage, inci-dental expenses, etc. are paid, and may apply for auction of the cargo in order to receive payment.
b. General possessory lien in the KCL – if the custodian or occupant of a cargo has any claim against the cargo-owner, the custodian or occupant may retain or refuse the delivery of the cargo until the cargo-owner pays the full amount of claim. He is also entitled to apply to the court for the auction of the cargo to be paid of his full claim.
c. Mercantile possessory lien in the KCC – if the custodian or occupant of a cargo has any claim against the cargo-owner through a commercial activity with the cargo-owner, the custodian or occupant may retain or refuse the delivery of the cargo until the full payment of the claim.
d. Lien over the cargo – if the bill of lading or the charter-party stipulates cargo lien clause, the carrier may exercise lien on the cargo until the full payment of the claim by the shipper/consignee or the charterer.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
When arresting a vessel by prejudgment attachment order (please note, security is not needed when arresting a vessel by maritime lien), the Korean court will generally require a deposit of counter security equal to 10–20% of the total claim amount, which can be provided in the form of a surety bond. The surety bond is purchasable from a local surety insurance company in Korea at a premium of 0.151% of the counter security amount, which is non-refundable.
On a separate note, the applicant may file a motion requesting permission from the court to accept a deposit guarantee bond issued by a guarantor instead of a cash deposit in the limitation of liability proceeding (article 13 of the Act on the Procedure for Limiting the Liability of Shipowners, etc.).
Contracts, Registered Passenger Tickets, Duty to Provide Meal and Accommodation, Duty to Transport Luggage for Free, Delay in Boarding Ship and Shipmaster’s Right of Departure, Cancellation of Contracts by Passengers, and Fares, Cancellation of Contracts on Legal Grounds, Duty to Dispose of Luggage of Dead Passengers, Legal Grounds for Termination, Provisions Applicable Mutatis Mutandis.
3.2 What are the international conventions and national laws relevant to passenger claims?
Korea is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, or its Protocols.
Under the KCC, the carrier is liable for the death or personal injury of passengers, unless the carrier is able to show that the carrier and its employees performed due care and were not negli-gent. To determine the quantum of damages, the court shall take into account the conditions of the victim and the victim’s family.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
There is no specific provision for the time limits in relation to passenger claims. Therefore, general principle under the Korean law shall be applied to these claims (five or 10 years for contractual claim and three or 10 years for tort claim).
4 Arrest and Security
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?
Under Korean law, theoretically there are two ways for the cred-itor to obtain security by arresting vessels in Korea: one is an arrest of ship for auction sale based on a maritime lien and the other is an arrest of ship for security of a personal claim by prejudgment attachment order.
Korea recognises special characteristics of ships and trade at sea and grants the right to an auction sale of the ship based on a maritime lien. Thus, if a claim of the claimant against the carrier constitutes a maritime lien under the laws of the ship’s registry, the creditor can arrest the ship for an auction sale in Korea.
The other type of arrest available in Korea is prejudgment attachment. Prejudgment attachment is a provisional court order issued in order to provide a security for a personal claim. A creditor who has a pecuniary claim against a debtor may apply for pre-judgment attachment of an asset owned by the debtor. It is not required that the creditor’s claim be of a maritime nature, or related to the vessel, insofar as the debtor is the owner of the vessel. The Korean court tends to be lenient in examining the submitted claim and evidence for a prejudgment attachment order particularly because prejudgment attachment is an ex parte procedure and counter security is required.
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?
There are two possibilities for the bunker supplier to arrest a vessel for a claim relating to bunker supply. The bunker supplier may arrest the vessel by application to the court for the court auction sale based on a maritime lien if the law of the flag state
carrying out of an examination of evidence even before filing a lawsuit or during the process of a lawsuit upon the application of the relevant parties.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
There is no specific procedure that corresponds to disclosure obligations in the common law system since the parties shall respectively bear the burden of proof to submit their arguments and supporting evidence. However, there exists similar proce-dure as for documentary evidence in the CPA, called “Court Order for Submission of Documents”. A party can file a motion for the disclosure of documents possessed by the opposing party, and the court may order the opposing party to produce docu-ments if the court finds such motion to be reasonable. If the opposing party fails to comply with the court’s order, the court may admit that the applicant’s allegation is proven to be true.
5.3 How is the electronic discovery and preservation of evidence dealt with?
The Act on the Use, etc. of Electronic Documents in Civil Litigations, etc. is the law regulating the use of electronic docu-ments. The purpose of this Act is to promote the informatisation of civil litigation and enhance swiftness and transparency thereof by prescribing principles and procedures concerning the use of electronic documents in civil litigation. Based on this Act, the elec-tronic documents can be similarly dealt with as paper documents.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?There is no specially established maritime court in Korea. Therefore, maritime disputes are handled by general civil or crim-inal courts. There is no court of maritime appeals in Korea, as there is no maritime court. However, there are exclusive benches handling maritime disputes within its jurisdiction in the Seoul High Court, Seoul Central District Court, Busan High Court and Busan District Court. The necessity for maritime courts has been an issue, and bills for establishing maritime court in Korea are pending in Korean National Assembly for approval.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The Korean Commercial Arbitration Board (“KCAB”) is the arbitration centre which mainly deals with general commercial matters, including maritime cases.
The Seoul Maritime Arbitrators Association (“SMAA”) is an ad hoc arbitration centre specially founded for maritime disputes.
The award of both KCAB and SMAA shall be regarded as the final and conclusive judgment of the national court.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?The court may refer the case to mediation proceedings before
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
It is standard procedure for the court to order the creditor to provide counter security in the region of 10–20% of the total claim amount in the prejudgment attachment order, which can usually be paid in the form of surety bonds; whereas, the counter security is not needed in the arrest for an auction sale.
4.7 How are maritime assets preserved during a period of arrest?
Both the court’s prejudgment attachment order and the commencement of the auction proceedings need to be executed with an associated maintenance and preservation order, by which the vessel will be physically detained at the port where it is located. The expenses incurred from the preservation and observation of the vessel shall be paid by the applicant on a timely basis and, under normal circumstances, the clients would be required to deposit about USD5,000–8,000 in advance at the time of filing the application for arrest.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Under Korean law, the test for wrongful arrest of a vessel is whether there is no negligence on the part of the arresting party. The test for negligence is to determine if one exercised due dili-gence. In other words, the arresting party should exercise due dili-gence in making sure that he arrests an asset of his debtor and not another party.
If it is determined as wrongful arrest, the sufferer can claim damages against the arresting party. When the owner files an action to seek compensation of damages arising from the wrong arrest of his ship, the arresting party’s negligence is presumed if the arresting party lost on the merits against the owners in respect of his claim against the debtor or if the Korean court cancelled the arrest order on the grounds that it was wrongful.
The presumption can be rebutted but it is very difficult. There has to be an extraordinary circumstance to rebut the presump-tion under Korean law. There are only few reported cases where such presumption was successfully rebutted. In all those cases, there was an extraordinary circumstance; for example, in one case, despite that the civil court ruled against the arresting party on the merits, it later turned out through the criminal investigation that there was error in the finding of critical facts by the civil court.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
The parties in the civil litigation can apply for the preservation of evidence procedure in accordance with the Civil Procedure Act (“CPA”). When it is expected that the examination or collec-tion of the relevant evidence at a later stage will become diffi-cult if the examination of evidence is not carried out in advance, the Korean court may permit the preservation of evidence or
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
According to article 217 of the CPA, a final and conclusive judgment by a foreign court shall be acknowledged to be effec-tive only upon the fulfilment of the following requirements: (i) that an international jurisdiction of such a foreign court is recognised as a matter of legal principle pursuant to the stat-utes or treaties of Korea; (ii) that a defeated defendant received a service of complaint or a document equivalent thereto and a notice of hearing date or an order, given a sufficient period of time to defend, pursuant to lawful procedure (excluding cases where service of process was done by public notice or a similar method) or that he responded to the lawsuit even in the absence of service of process; (iii) that such a judgment does not violate good morals and any other social order of the Republic of Korea; and (iv) that there exists reciprocity.
Regarding the enforcement of a foreign court’s judgment, article 26 of the Korean Civil Execution Act (“KCEA”) provides that “a judgment obtained in the courts of a foreign state can be enforced only when Korean court has made a declaration of its legality by means of an enforcement judgment”. Article 27 of KCEA provides that (i) an enforcement judgment shall be made without any examining of the foreign judgment as to whether it is right or wrong, and (ii) an enforcement judgment shall be dismissed: 1) when it has not been proved that the judgment of a foreign court has become final and conclusive; or 2) when the foreign judgment fails to fulfil the conditions under article 217 of the CPA.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Korea is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “1958 New York Convention”) and therefore an arbitral award obtained in a contracting state is enforceable in Korea in accordance with the 1958 New York Convention by obtaining an enforcement judg-ment from the Korean court. The claimant needs to submit the arbitral award and the arbitration agreement (the original or a certified copy) together with their respective translations.
If the arbitration award is rendered from a non-contracting state, the claimant shall file a separate lawsuit for the enforce-ment of the arbitral awards.
8 Updates and Developments
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.
Recently in the year of 2018, ad hoc arbitration centre called the “Seoul Maritime Arbitrators Association” (“SMAA”) was launched for the dispute resolution of maritime disputes. The list of arbitrators is formed by specialists such as maritime lawyers, law school professors majoring in maritime law. The parties can resolve disputes by the experts who have the full knowledge and deep understanding of the maritime cases at a reasonable cost. After the appointment of the arbitrator, the proceedings will be processed without the involvement of the SMAA.
filing a lawsuit or during the formal proceedings at the appli-cation by the parties or at its discretion. The presiding judge or a court-appointed mediator will summon the parties to try to settle the case by mediation. If a settlement is reached, the written record will be treated as the court’s final and conclusive written judgment. When a settlement is not reached, the judge or the mediator may issue a compulsory mediation decision with the possibility of both parties’ objection.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The judgment by the national courts can be reliable since it is rendered by the neutral expert, the judge. If the parties are not satisfied by the judgment, they can appeal to the appellate court and then to the Supreme Court. The judgment can be expectable since the rulings of the courts cannot get out of the general prin-ciple and the effective law.
The arbitration can be decided by a specialist arbitrator with full knowledge and experience in that field who can be selected by the parties. The finality of the award provides commercial certainty in respect of time and cost.
Mediation can be achieved by the voluntary cooperation of the relevant parties and can ascertain what the opponents really want.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Court proceedings in Korea, as a civil law country, are different from those in common law countries. Korean court proceed-ings do not have a pre-trial phase such as disclosure, discovery, or inspection. Instead, the court allows the parties to present evidence and inspect the opponents’ evidence as it hears the parties’ arguments by having court hearings from the beginning. Thus, at any time during the proceedings before the judgment is rendered, the parties can submit their argument and evidence. Generally, there are six to eight hearings held in one case and about a four-week interval between hearings; from the filing of a lawsuit to the rendering of a judgment, it generally takes about eight to 10 months. Still, for complex cases or due to the court’s own scheduling, the proceedings can last for more than a year.
If the plaintiff is based in a foreign jurisdiction, the defendant may request the court to order the plaintiff to deposit security for the defendant’s costs with the court. At the discretion of the court, security for the defendant’s costs can be provided either in cash or in a surety bond – or in both.
Korea has three levels of court: District Court (first instance court); High Court (second instance court); and Supreme Court. Proceedings at each level in general take about eight to 10 months to conclude, thus, if a case is brought up to the Supreme Court, it can take about two to three years for the parties to obtain the final and conclusive judgment. A defeated party has 14 days to file an appeal against the judgment by a lower court to a higher court without need of leave. The parties are allowed to submit new evidence or an argument at the level of second instance court and the second instance court may find facts differently from the first instance court; whereas, the Supreme Court hears legal issues only.
171Moon & Song
Shipping Law 2021
Kwang-Myeong Moon is the firm’s founding partner and has a remarkable track record in the area of shipping, insurance, international trade, cross-border insolvency, international litigation & arbitration, ship collision, oil pollution, a variety of cargo claim cases, dispute on charter party, etc. He has acted as legal advisor for the Korean government and the local government of Taean in the Hebei Oil Spill accident and has represented many P&I Clubs (North of England, Gard, Britannia, UK, Steamship Mutual, West of England, American, Standard, Japan P&I, Korea P&I) and shipowners (HMM, Hyundai Glovis, SK Shipping, KMTC, Pan Ocean, Namsung Shipping, etc.). He has cooperated with English law firms (Reed Smith, HFW, Ince & Co, Clyde & Co, etc.). He has been an arbitrator on the Korean Commercial Arbitration Board since 2018. He is the drafter of the arbitration rules of the Seoul Maritime Arbitrators Association established in 2018.
Hun Song is a partner in the law office Moon & Song. He specialises in shipping, insurance, international trade, cross-border insolvency including disputes arising from charterparties, bill of lading, cargo claims, crew injury, fire, explosion, collision and oil pollution. In the Hebei Spirit oil pollution case, the largest oil pollution case in Korean history, he acted for the major group of claimants living in the most affected areas. He has also acted for foreign shipowners in cross-border insolvency cases arising from Korean rehabilitation proceedings of Samsun Logix, Korea Line Corporation and Hanjin Shipping. He has acted for international shipowners and major Korean shipping companies (KMTC, HMM, Hyundai Glovis, Pan Ocean, Namsung Shipping, Vertex Shipping, etc.) and he also acted for international P&I Clubs (Korea P&I, North of England, Gard, Britannia, UK, Steamship Mutual, West of England, American, Standard, etc.). He is a Marine Proctor of Korean Maritime Safety Tribunal.
Moon & Song 2nd Floor, Naeja Bldg., 33Gyeonghuigung-gil, Jongno-guSeoul 03176Korea
Moon & Song, one of the leading shipping law firms (established in 2006), based in Seoul, has a team of three partners and four other qualified lawyers, and specialises in maritime law matters including shipping, admiralty, inter-national trade, insurance and aviation law. The firm is active in dry cases (including charter-party disputes, bill of lading disputes and cargo claims), wet cases (including ship collision, oil pollution, salvage, explosion and acci-dents within ports), ship arrest (including prejudgment attachment order and court auctions by maritime lien), ship-building and ship finance (including ship mortgage, providing escrow account and ship-delivery services), P&I Club defences, crew claims, and matters relating to aviation, multimodal transport, ports and logistics. Clients include major Korean shipping compa-nies, international ship-owners and the International Group of P&I Clubs.
Legislation 234.53). This Convention will also apply to vessels located within the territorial waters of Malta. Furthermore, article 339 of the Merchant Shipping Act makes the Minister responsible for shipping, including any person acting under his authority or power to remove any vessel that is sunk, stranded or abandoned on or near the coasts within the territorial jurisdic-tion of Malta, if it is the opinion of the Minister that the vessel is, or is likely to become, an obstruction or danger to navigation.
(v) Limitation of liabilityThe limitation of liability vis-à-vis maritime claims is regulated by the Maritime Claims Regulations, 2004 (Subsidiary Legislation 234.16) and these Regulations give effect to the Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the 1996 Protocol.
(vi) The limitation fundThe issue of a limitation fund is governed by the Merchant Shipping (Limitation of Liability for Maritime Claims) Regulations, 2003 which came into force on 1 March 2004. These Regulations make applicable to Malta the Convention on Limitation of Liability for Maritime Claims signed in London on 19 November 1976, as amended by the 1996 Protocol thereto, signed in London on 2 May 1996.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Marine Safety Investigation Unit is an independent Government investigation Unit set up in virtue of the Merchant Shipping (Accident and Incident Safety Investigation) Regulations 2011, which has the authority and mandate to inves-tigate marine accidents and incidents involving Maltese regis-tered ships wherever they may be, and foreign flagged ships navigating and trading within Maltese waters.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
This is regulated by Part VII of the Merchant Shipping Act, arti-cles 312 to 317, which deals with inquiries and investigations as to shipping casualties, covering both preliminary inquiries by such person as is appointed by the Minister of Shipping, as well as formal investigations as to shipping casualties under the authority of the Court of Magistrates.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe Convention on the International Regulations for Preventing Collisions at Sea, 1971 has been implemented in Maltese law through the Merchant Shipping (Prevention of Collisions) Regulations, 2003 (Subsidiary Legislation 234.20).
(ii) PollutionThe International Convention for Pollution from Ships, 1973 (MARPOL), as amended by the 1978 Protocol, is given force of law in Malta through the Merchant Shipping (Prevention of Pollution from Ships) Regulations, 2004 (Subsidiary Legislation 234.32). MARPOL Annex IV relating to the prevention of pollution by sewage and MARPOL Annex VI relating to the prevention of air pollution have both been implemented in Malta (Subsidiary Legislation 234.47 and Subsidiary Legislation 234.33) with effect from June 2011.
Malta has acceded to the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended by the 1992 Protocol, as well as the International Fund for Compensation for Oil Pollution Damage, 1971, as amended by the 1992 Protocol through the Enactment of the Oil Pollution (Liability and Compensation) Act, 1999, Chapter 412. The Bunkers Convention has been implemented in Maltese law by virtue of the Merchant Shipping (Liability for Bunker Oil Pollution Damage) Regulations, 2009 (Subsidiary Legislation 234.46).
(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), in particular articles 342 to 346, and also by the Commercial Code (Chapter 13 of the Laws of Malta).
General average is covered by the provisions in Title IV of the Commercial Code (Chapter 13 of the Laws of Malta).
(iv) Wreck removal Malta has acceded to the Nairobi International Convention on the Removal of Wrecks, 2007. The Nairobi Convention has been implemented in Maltese law by virtue of the Merchant Shipping (Wreck Removal Convention) Regulations (Subsidiary
of goods and the Carriage of Goods by Sea Act provides that the carrier and the ship shall be discharged from all liability in respect of the loss or damage, unless a suit is filed within one year after delivery of the goods or the date when the goods should have been delivered.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Malta is a party to the Athens Convention on the Carriage of Passengers and their Luggage by Sea, 1974 (Athens Convention). Maritime passenger claims are regulated by the Merchant Shipping (Limitation of Liability for Maritime Claims) Regulations, 2003, which provide a regime of limitation of liability for maritime claims and give effect to the Athens Convention.
3.2 What are the international conventions and national laws relevant to passenger claims?
The Athens Convention; the Merchant Shipping (Carriage of Passengers by Sea) Regulations give effect to the Athens Convention in Malta. Malta is also bound by Regulation (EC) No. 392 of 2009 on the liability of carriers of passengers in the event of loss of damage resulting from an accident, which entered into force on 31 December 2012. It incorporates certain provi-sions of the 1974 Athens Convention (as amended by the 2002 Protocol) relating to the carriage of passengers and their luggage by sea. Regulation (EU) No. 1177/2010 concerning the rights of passengers when travelling by sea and inland waterway became applicable on 18 December 2012 and is also enforceable in Malta.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Any action for damages arising out of the death of or personal injury to a passenger or for the loss of or damage to luggage shall be time-barred after a period of two years.
The limitation period shall apply as follows:(a) In the case of personal injury, from the date of disembar-
kation of the passenger.(b) In the case of death occurring during carriage, from the
date when the passenger should have disembarked, and in the case of personal injury during carriage and resulting in the death of the passenger after disembarkation, from the date of death, provided that this period shall not exceed three years from the date of disembarkation.
(c) In the case of loss of or damage to luggage, from the date of disembarkation or from the date when disembarkation should have taken place, whichever is the later.
4 Arrest and Security
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?
Malta is not a signatory to the 1952 and 1999 Arrest Conventions. Ships are arrested in Malta by a warrant of arrest issued on any one of the grounds listed in article 742B of the Code of Organisation and Civil Procedure giving rise to the in rem juris-diction of the Maltese Courts. These include all maritime
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
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 virtue of the Carriage of Goods by Sea Act, 1954. The Hague-Visby Rules are applied by Maltese Courts when dealing with a dispute relating to a bill of lading incorporating those Rules. Malta has not yet acceded to the Rotterdam Rules.
Malta is also a party to the Convention on the Contract for the International Carriage of Goods by Road, Geneva, 19 May 1956 (CMR Convention) which applies by virtue of the International Carriage of Goods by Road Act, 2006.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The carrier is seen as a depository for cargo during carriage and is therefore responsible for its safekeeping as a bonus paterfamilias. Needless to say, the carrier can use the applicable clauses of the bill of lading in his defence.
With respect to the “demise clause” in bills of lading, under Maltese law, there is no relevant provision recognising or rejecting such a clause and Malta does not embrace the doctrine of binding judicial precedent. The only Maltese case that we are aware of where the Court of Appeal considered, but did not apply the demise clause, was Advocate Dr. Philip Manduca Nomine v. Sun Maritime Limited, decided on 26 June 2009. The Court held that the teaching of the House of Lords in The Starsin (2003) was substantially compatible with the system of Maltese mercantile law.
The incorporation of charter party provisions into a bill of lading is valid and enforced by the Maltese Courts. However, just a reference to a charter party containing an arbitration clause is not enough for that arbitration clause to be enforced. The arbi-tration clause must be inserted in the bill of lading. In the case of a “quality or quantity unknown” clause, the carrier would be provided with a defence insofar as the quality or quantity of the goods is concerned. The time limit to sue the carrier under Maltese law is the one-year period in accordance with the Hague Rules.
It is possible to sue the carrier in tort, in the case of damages caused by the ship in non-contractual circumstances.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The carrier has an action against the shipper for damages suffered by the carrier due to the misdeclaration of cargo. This would be the case if the shipper does not declare to the carrier dangerous goods or goods subject to international sanctions.
The carriage of dangerous goods is covered in articles 284 to 291 of the Merchant Shipping Act.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The time limits are prescribed in the Civil Code, the Commercial Code and the Carriage of Goods by Sea Act 1954 (Chapter 140 of the Laws of Malta). In general, contractual claims are time-barred by the lapse of five years. The Commercial Code lays down a one-year prescriptive period in relation to the carriage
bareboat charterer of it, and/or (ii) any other ship of which, at the time when the action is brought, the Relevant Person is the owner or beneficial owner in respect of all the shares in it.
In these cases, therefore, sister ship and associated ship arrest is possible.
The requirement that the Relevant Person is the owner or beneficial owner of the ship or the bareboat charterer at the time when the action is brought does not apply in regard to those maritime claims secured by a special privilege in accordance with article 50 of the Merchant Shipping Act, which survive the voluntary sale of the vessel for up to one year from when such sale is recorded in the ship’s register.
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?
Yes, it is possible. A bunker supply is a maritime claim giving rise to in rem jurisdiction. It is privileged in the scenario envis-aged under article 50 (g) and (m) of the Merchant Shipping Act. Bunkers are privileged under article 50 (g) if they are supplied after the vessel’s last entry into port. They are privileged under article 50 (m) if they are supplied previously to the departure of the vessel on her last voyage.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Yes, it is possible. Article 742B (d) of the Code of Organization and Civil Procedure indicates “any claim arising out of the contract for the sale of the ship” as one of the heads of juris-diction in rem of the Maltese Courts. Needless to say, the vessel must be in Maltese territorial waters at the time of the arrest.
4.4 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 options are available?
The creditor of a cargo owner can request the Court to issue a warrant of seizure of the cargo in security of his claim.
Similarly, the ship owner can seek security for a claim for freight by the issuance of a warrant of seizure of the cargo.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
The Maltese Courts normally accept a deposit of funds in the Court registry or a bank guarantee as adequate security. However, most Maltese maritime lawyers usually advise their clients to accept a P&I letter of undertaking.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
It is not standard procedure for the Court to order the party obtaining the arrest to provide counter security. However, according to article 862 of the Code of Organisation and Civil Procedure, the Court may, when good cause is shown, upon the demand by application by a person whose ship or vessel is detained, by the master of the ship or vessel, or by any person being in charge thereof or by its agent, order the party issuing the warrant
claims recognised under the Convention. The law provides for a precautionary, as well as for an executive, warrant of arrest. Creditors seeking to arrest a ship in security of a claim that is not yet judicially acknowledged must have recourse to the precau-tionary warrant. Judgment creditors and other creditors being in possession of an enforceable executive title or of an Authentic Instrument pursuant to the provisions of Regulation (EC) No. 805/2004 (such as a Mortgagee) may immediately proceed to issue an executive warrant.
Ships may be arrested in Malta both in security of maritime “in rem” claims as mentioned above, whenever the ship concerned is physically present within the territorial jurisdiction of the Maltese Courts, as well as in security of “in personam” claims in those instances where the ship owner may be personally subject to the ordinary jurisdiction of the Maltese Courts. Ships may also be arrested in Malta pursuant to the provisions of article 35 of Regulation (EU) No. 1215/2012, dealing with provisional, including protective measures, in cases where the Courts of another Member State have jurisdiction to the substance of the matter. However, in all of these cases, the ship must always be arrested in virtue of the warrant of arrest, which remains the only way in which a ship may be arrested in Malta.
A total number of 25 maritime claims giving rise to in rem jurisdiction are provided for under paragraphs (a)–(y) of article 742B of the Code of Organisation and Civil Procedure. These closely follow the British Supreme Court Act, 1981 but also incorporate both the 1952 Arrest Convention and that of 1999, even though Malta is not yet a signatory to either. The basic head of claim may be summarised as follows:(a) claims to possession/ownership/title of a ship; (b) questions arising between co-owners; (c) claims in respect of mortgage/hypothec/charge on a ship; (d) claims arising out of a contract 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 injury caused by a ship; (h) claims for loss of or damage to goods caused by a ship; (i) claims arising out of agreement for carriage of goods/use
or hire of a ship; (j) claims for salvage; (k) claims for damage to the environment by a ship; (l) claims relating to wrecks;(m) claims for towage; (n) claims for pilotage; (o) claims for supplies/services rendered to a ship; (p) claims for construction/repair/conversion/equipping of a
ship; (q) claims for port/dock/harbour dues; (r) claims by crew for wages/repatriation; (s) claims for disbursements made; (t) 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 insurance premiums; and (y) claims for fees due to registrar/tonnage dues.
In cases concerning any one of the maritime claims listed in a), b) and c) above, an action in rem may only be brought against that ship in connection with which the claim arose.
In all other cases concerning the remaining maritime claims listed 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 arose, an owner or charterer of or in possession/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
5.3 How is the electronic discovery and preservation of evidence dealt with?
Evidence is given live or by affidavit. When given live, evidence is recorded, typed and printed. Hard copies are kept on the Court file. In recent years, the Courts have been accepting documentation and data that is stored on a CD.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The First Hall of the Civil Court, as a Court of first instance, and the Court of Appeal, take cognisance of maritime claims.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Arbitration panels appointed in accordance with the Arbitration Act (Chapter 387 of the Laws of Malta) deal with maritime disputes in Malta.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?The Mediation Centre provides a forum where mediation parties may refer, or be referred to, in order to resolve their civil or commercial dispute through the assistance of a mediator. It is, however, hardly used in maritime disputes.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The principal advantage emanates from the fact that the judges, arbitrators and mediators are highly qualified to deal with the dispute in a timely and impartial manner.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Ship arrest in Malta is a quick and efficient procedure with rela-tively inexpensive judicial costs. This, however, is to be followed by an action on the merits in relation to which the Court registry costs are worked out ad valorem by the registrar of Courts in accordance with an official tariff. Only judicial costs are recov-erable and interest on the claim amount is due at 8% per annum.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
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
to give, within a time fixed by the Court, sufficient security, in an amount not less than €11,600, for the payment of the penalty, damages and interest and, in default, to rescind the warrant.
4.7 How are maritime assets preserved during a period of arrest?
As a general rule, when a vessel is arrested in Malta, the assets of the vessel remain on board for the period of arrest. However, the Court may, in its discretion in exceptional cases, on the application of an interested party, order that particular assets of the vessel be put in possession of a consignatory for safe keeping until the dispute is resolved. This was the case regarding the works of art which were on board the M.Y Indian Empress which was sold by Court-approved sale in Malta.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The test for wrongful arrest is whether it is consequently ascer-tained by the Court that the request for the issuance of a warrant of arrest was based upon a demand maliciously made or unjustly obtained. This will be the case where the underlying claim on the grounds of which the warrant of arrest is issued is malicious, frivolous or vexatious. In such case, the Court may in its discre-tion, condemn the arresting party to pay a penalty of no less than €11,600 in favour of the person against whom the warrant of arrest is issued.
The remedies of the shipowner whose ship has been illegally arrested are twofold: he may request the Court first and fore-most to revoke the warrant of arrest and he may also institute proceedings for damages. These damages may include damages due to, for example, loss of time charter hire as well as damages suffered by the vessel as a result of the illegal arrest, such as extra bunkers consumed during the arrest, agency fees and port dues.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Evidence, whether testimonial or documentary, can be preserved through the intervention of the Courts in accordance with the relative provisions of the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta).
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The Code of Organisation and Civil Procedure does not contain general provisions with regard to the parties’ disclosure obliga-tions. In this scenario, the disclosure of facts and documentation is obtained through the examination and/or the cross-examina-tion of witnesses. The same situation applies to maritime disputes.
prohibiting any dealing with a Maltese-registered ship or any share therein for a specified time. Such an order would be entered in the vessel’s register by the Registrar of Shipping. Any claim (i) based on a right of ownership, (ii) secured by a mort-gage, (iii) secured by a registered encumbrance, (iv) secured by a privilege or lien over the ship arising by operation of Maltese law or the law applicable to the claim, or (v) based on any other claim that gives rise to a claim in rem against a vessel under Maltese law, would give the claimant the right to apply for this caveat on the ship’s register. Such an order only affects the register of the ship and does not affect the commercial operation of the vessel.
Following the European Commission’s investigation into Maltese tonnage tax initiated in 2012, the Commission, condi-tionally approved on 19 December 2017 under EU State Aid Rules, the said tonnage tax scheme for a period of 10 years, subject to certain amendments which at the time of writing have been put into effect by Malta.
Maltese shipping companies may apply to the Maltese author-ities for the vessels which they own or operate to be declared as tonnage tax ships, upon certain conditions being satisfied. The vessel in question must be involved in shipping activities, being principally the international carriage of cargo or passen-gers, and separate accounts have to be maintained by the ship-ping company in question to ring-fence activities exempt under the tonnage tax system, since only income deriving from the ownership and operation of its tonnage tax vessel in its carriage of cargo or passengers is exempt from income tax.
Whilst certain categories of vessels could never have qualified as tonnage tax ships, the new tonnage tax regulations specifi-cally exclude some, such as fishing vessels and non-propelled barges, and permit certain vessels, such as cable- and pipe-laying ships, as well as crane vessels and research vessels, to qualify as tonnage tax vessels, provided they are involved in the interna-tional carriage of goods or passengers and satisfy the criteria laid down in the new regulations. The new regulations also indicate the circumstances in which towage and dredging activities could qualify under the Maltese tonnage tax regime.
Bareboat income will qualify as tonnage tax in two scenarios, being (a) intragroup bareboat, or (b) short-term over-capacity limited to a maximum period of three years, provided in this latter case that the net tonnage operated by the group does not exceed 50% of the shipping group’s fleet.
jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) will apply. If the judg-ment is delivered by a Court that is not within an EU Member State, the ordinary procedural rules for the recognition and enforcement of foreign judgments found in article 826 of the Code of Organisation and Civil Procedure will apply.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Foreign arbitration awards are awards to which any of the following treaties, namely the Protocol on Arbitration Clauses, Geneva, 1923, the Convention on the Execution of Foreign Arbitral Awards, Geneva, 1927, and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958, are applicable and, upon their registration by the Malta Arbitration Centre, shall be enforced by the Courts of Malta in the same manner as if such awards were delivered in domestic arbi-tration. Such awards, therefore, when registered, are enforceable as an executive title, thereby allowing the award creditor to issue any executive acts against the award debtor, including an execu-tive warrant of arrest against a vessel and an application for judi-cial sale by auction in respect of an arrested vessel.
8 Updates and Developments
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.
Reference should be made to the statutory amendments intro-duced in 2006 and further fine-tuned in 2008 with regard to ship arrest. These amendments reformed the system regu-lating judicial sale by auction of ships, as well as introducing the concept of Court-approved sales for ships. Court-approved sales have proved to be very popular.
Mention should also be made of article 37 of the Merchant Shipping Act, by virtue of which any person claiming a right in or over a ship may apply for an order to the Maltese Court
177Dingli & Dingli
Shipping Law 2021
Dr. Tonio Grech■ 1979–1984: Read law at the University of Malta and graduated as a lawyer.■ 1984–1989: Practised as an advocate at the Attorney General’s Office dealing, inter alia, with transport matters as counsel to the
Ports Department and the Department of Civil Aviation. Attended international conferences on civil aviation and drafted laws to update civil aviation legislation in Malta. Drafted the Eurocontrol Act which 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 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 & Dingli18/2 South StreetValletta, VLT 1102Malta
Dr. Fleur Delia■ 1999–2005: Read law at the University of Malta and graduated as a lawyer.■ 2005: Joined Dingli & Dingli as an associate.■ 2012: Appointed as a senior associate.■ Member of the Chamber of Advocates and the Malta Maritime Law Association.
Dingli & Dingli18/2 South StreetValletta, VLT 1102Malta
Dingli & Dingli is a Maltese law firm established in 1982. 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, with 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 colli-sion between the Nuria Tapias and the Junior M in the Black Sea, which resulted in the limitation fund being set up in Malta.
the prospective gas reserves found offshore Mozambique, Decree 45/2006, of 30 November 2006 also details the activities that, due to their potential harm to the environment, fall within the oversight of the maritime authority, such as the loading, offloading and transfer of cargo, tank cleaning and discharge of water waste in the sea. The carrying out of such activities (except in the cases expressly provided for in the Decree 45/2006, of 30 November 2006) may entail the assessment of heavy fines.
Furthermore, the Regulation on Environmental Quality and Emission of Effluents (Decree 18/2004, of 2 June 2004, as amended by Decree 67/2010, of 31 December 2010) also estab-lishes environmental quality and effluent emission standards for the purpose of controlling and maintaining the acceptable levels of pollutant concentrations in environmental components.
Both of the above-mentioned statutes are complemented by the Conventions and Protocols signed by Mozambique, such as the:■ 1985 Convention for the Protection, Management and
Development of the Marine and Coastal Environment of the Eastern African Region, and Related Protocols;
■ 1973 International Convention for the Prevention ofPollution from Vessels (“MARPOL 73/78”) and Annexes I/II, III, IV and V;
■ 1990 International Convention on Oil PollutionPreparedness, Response and Cooperation (“OPRC 90”);
■ 1992ProtocoltoAmendthe1969InternationalConventionon Civil Liability for Oil Pollution Damage (“CLC 1969”); and
■ 1992 Protocol to Amend the International Conventionon the Establishment of an International Fund for Compensation for Oil Pollution Damage (“FUND”).
(iii) Salvage/general averageSalvage is governed by the 1910 Salvage Convention and, where applicable, the provisions of the 1888 Commercial Code (Article 676 et seq.).
General average is governed by the provisions of the 1888 Commercial Code (Article 634 et seq.).
(iv) Wreck removalMozambique is not a signatory of the Nairobi International Convention on the Removal of Wrecks, 2007. The removal of wrecks must therefore be dealt with in light of the domestic law, namely the Environmental Law and ancillary statutes and regulations.
(v) Limitation of liabilityMozambique is not a signatory of the Convention on Limitation of Liability for Maritime Claims. Conversely, both the 1924
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe following international conventions are enforceable in Mozambique: ■ 1910InternationalConventionfortheUnificationofCertain
Rules of Law Related to Collision Between Vessels; ■ 1952 International Convention for the Unification of
Certain Rules concerning Civil Jurisdiction in Matters of Collision;
■ 1952 International Convention for the Unification ofCertain Rules relating to Penal Jurisdiction in Matters of Collision or other Incidents of Navigation; and
The above conventions and regulations are supplemented, in some cases, by domestic statutes, notably on rules of traffic within port areas, inland navigation, among others.
(ii) PollutionThe Environmental Law (Law 20/97, of 1 October 1997), as amended by Law 16/2014, of 20 June 2014, sets out the general provisions pertaining to the protection of the environment and imposes an environmental impact assessment process (which is governed by the Regulations on the Environmental Impact Assessment Procedure, approved by Decree 54/2015, of 31 December 2015) on companies carrying out activities which may have a direct or indirect impact on the environment. In a nutshell, the Environmental Law sets forth the legal basis for a proper management of the environment, cumulatively with the development of the country. It applies to both private and public entities pursuing activities with a potential impact on the environment. Core principles such as the polluter pays prin-ciple, rational management and use of the environment and the importance of international co-operation are referred to and integrated in the Environmental Law.
In order to specifically protect marine life and limit pollu-tion resulting from illegal discharges by vessels or from land-based sources along the Mozambican coast, the Government enacted Decree 45/2006 of 30 November 2006 (as amended by Decree 97/2020 of 4 November 2020). It should be noted that this Decree prevents pollution arising from maritime activity, particularly from oil tankers and VLCC vessels. Considering
the Hague Rules and the 1888 Commercial Code (Article 538 et seq.) in the absence of detailed provisions set out in the rele-vant contract.
It is important to note that if the shipment (i.e. loading and place of destination) takes place between two countries party to the Hague Rule, these rules shall apply. However, if the country of destination of the goods is not a signatory to the Hague Rules, the applicable law would be determined by Mozambican courts in accordance with the lex rei sitae principle.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
As a general principle, any party to a contract of carriage who holds an interest over the cargo and can demonstrate that it has suffered losses or damages arising from the carrier’s actions and/or omissions is entitled to sue for losses or damages. Taking the above into consideration, the rights to sue under a contract of carriage therefore assist (1) the shipper, and (2) the rightful holder of the bill of lading. In this respect, it is noteworthy that when in the presence of a: (i) straight bill of lading, the right to bring a claim remains with the named consignee; (ii) order bill of lading, only the latest 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.
In addition to the above, rights under a contract of carriage may also be validly transferred to third parties either by way of assignment of contractual position or subrogation of rights (which is typically the case when insurers indemnify cargo inter-ests and then seek reimbursement from the carrier), as long as the relevant rules provided in the Civil Code are met.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
In light of Article 3.5 of the Hague Rules, the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies regarding the informa-tion (marks, number, quantity and weight) on the cargo to be transported.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The general time bar for claims arising out of contracts is 20 years, although there are certain cases in which this statutory limitation period is shorter. Still, the statute of limitation for cargo claims arising out of contracts ruled by the Hague Rules is one year, counting from the date of delivery of the goods or of the date when the goods should have been delivered.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
A 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 and damage caused by an action attributed to the carrier, regardless of its wilful misconduct.
International Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Vessels and the 1957 International Convention relating to the Limitation of the Liability of Owners of Seagoing Vessels apply.
(vi) The limitation fundThe limitation fund can be established in any way admitted in the law and is dependent on the filing of a proper application before the relevant court. The application must identify/list: ■ theoccurrenceanddamages;■ theamountofthelimitationfund;■ howthefundwillbeestablished;■ theamountofthereserve;and■ theknowncreditorsandtheamountoftheirclaims.
The application must be filed along with the vessel’s docu-ments supporting the calculation of the amount of the fund (e.g., a tonnage certificate).
1.2 Which authority investigates maritime casualties in your jurisdiction?
The National Maritime Institute (“INAMAR”) is the govern-mental body in charge of investigating and responding to mari-time casualties. In performing its duties, the INAMAR is assisted by the local port authorities and captaincy with jurisdic-tion over the area in which the casualty took place. In the event of (eventual) environmental damage, environment authorities may also be called to act, notably the Ministry of Environment. Moreover, the National Institute of Hydrography and Navigation (“INAHINA”) has an ancillary role on maritime safety.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
Within the area of maritime safety, it is worth mentioning that INAMAR is specifically responsible for (a) exercising control over foreign vessels when they are in Mozambican waters, (b) applying and implementing safety standards for national and foreign vessels engaged in maritime trade, (c) supervising pilotage in ports, (d) conducting enquiries on accidents, inci-dents and maritime infringement proceedings, and (e) licensing and supervising the exercise of towage and salvage activities within Mozambican waters.
In this respect, it is worth mentioning that, back in 2017, Mozambique ratified the International Code of Protection of Vessels and Port Facilities (“ISPS”), which foresees responsibil-ities to governments, shipping companies, shipboard personnel, and port facility personnel to detect security threats and take preventative measures against security incidents affecting ships or port facilities used in international trade.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The 1924 International Convention for the Unification of Certain Rules of Law relating to bills of lading, also known as the Hague Rules, applies. Under the Hague Rules, the carrier is liable vis-à-vis the consignee in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods. Contracts of carriage are therefore governed by the terms of
will form an integral part, within 30 days as of the arrest order. During the proceedings, the parties are free to settle by agree-ment and withdraw the claim. If the main claim should be filed with a foreign court, the judge dealing with the arrest applica-tion must set out the period within which the claimant must commence proceedings on the merits in the appropriate juris-diction. The defendant is entitled to post 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.
Recently, Mozambique approved the Movables Security Law (Law 19/2018, of 28 December 2018), which establishes a special regime regarding the perfection rules and enforcement regime of security interests over movable assets, including vessels. The main feature of this regime is the fact that the creditor may dispose of the movable asset given as security, without having to appeal to court or any other entity, provided that it is permitted to do so under the security agreement and complies with the procedure provided for in the 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?
A claim arising from a bunker supply may be considered a mari-time claim under Article 1.k of the 1952 Convention.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Claims arising from ship sale and purchase contracts do not qualify as “maritime claims” for the purposes of the 1952 Convention. As such, and as outlined under question 4.1 above, those willing to arrest a vessel for an unlisted maritime claim must make use of the provisions of the CPC (in order for meas-ures to be taken, a claimant must provide evidence of the like-lihood of its right and justified fear of irreparable damage or damage that is difficult to repair).
4.4 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 options are available?
Assets (e.g., bunkers) belonging to the arrestee may be subject to arrest, provided that it is possible to establish ownership in respect thereof. Additionally, the carrier is entitled to exercise a posses-sory lien over cargo. In this regard, please note that in accord-ance with Mozambican law, a lien is only enforceable by opera-tion of the law and not merely by contract. By way of illustration, Article 755 of the Civil Code provides that any debts resulting from shipping services entitle the carrier/creditor to retain goods in its possession until those debts are fully discharged.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Typically, cash deposits (at the court’s order) and bank guarantees are the most effective forms of security. Letters of undertaking (“LoUs”) are acceptable in very limited situations and their acceptance is always dependent on the other party’s agreement.
3.2 What are the international conventions and national laws relevant to passenger claims?
Mozambique is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea. Generally, the rules applicable to the carriage of passengers are set forth in the Commercial and Civil Codes and the Consumer Law, this is in addition to the individual terms of the contract of carriage.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
As mentioned above, the general time bar for claims arising out from commercial contracts is 20 years. Nevertheless, there are grounds to argue that claims for loss of life or personal injury (including for damages on property) arising out of shipping inci-dents impose strict liability to the carrier, being, in this case, the applicable limitation period of three years, counting from the moment that the claimant becomes aware of its rights.
It is worth noting that, in certain cases, the running of the statute of limitation period may be (i) suspended (in which case the period of suspension is not to be counted when assessing if the statute of limitation has expired), or (ii) interrupted (in which case the interruption renders the time already elapsed of no effect and a new statute of limitation will restart counting as from the interruption).
4 Arrest and Security
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?
The 1952 Convention for the Unification of Certain Rules Relating to the Arrest of Seagoing Vessels (“1952 Convention”) is applicable in Mozambique. Under the 1952 Convention, any person alleging that it holds a maritime claim is entitled to seek the arrest of a ship. A “maritime claim” is deemed to be a claim arising out of one or more of the situations named under Article 1.1 of the 1952 Convention.
Outside the scope of the 1952 Convention, i.e., for the purposes of obtaining security for an unlisted maritime claim (e.g., arrest for a ship sale claim, unpaid insurance premiums, protection and 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 must make use of the provisions of the Mozambican Code of Civil Procedure (“CPC”). In this case, and aside from the jurisdiction issue that needs to be properly assessed, in addi-tion to providing evidence on the likelihood of its right/credit, the claimant shall also produce evidence that there is a risk that the debtor/arrestor may remove or conceal the ship (security for the claim) or that the ship may depreciate in such a way that, at the time that the final judgment is handed down in the main proceed-ings, the ship is no longer available or has substantially decreased in value.
Before ordering the arrest, the arrestee is granted the oppor-tunity to oppose/challenge the arrest application. Please note, however, that if the arrest application is properly filed and duly documented, the court may order the detention of the vessel before summoning the arrestee or granting the arrestee the chance to oppose to the arrest application. The arrestee has 10 days to oppose to the arrest application/order.
With the arrest in place, the claimant is required to file the initial claim for the main proceedings, of which the injunction
the anticipatory production of evidence if there is a justifiable concern that the production of evidence at a later stage will be impossible or very difficult.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
As a general rule, it is up to the parties to establish the object of their claim/proceedings and the judge cannot go beyond the limits of the claim as put forward by the parties. In addition, parties have the burden of presenting the facts of their interest and producing evidence in respect thereof. The court will take into account the evidence produced/requested by the parties, but it is not limited to this. In fact, the court is also permitted to request and compel the parties to disclose all evidence deemed necessary to the discovery of the truth and/or to the best reso-lution of the dispute.
No specific procedure disclosure obligations are foreseen regarding maritime disputes.
5.3 How is the electronic discovery and preservation of evidence dealt with?
There is no specific provision regarding the electronic discovery in Mozambican civil law. However, the court shall consider all the evidence produced and it is common to consider that the electronic evidence has the same probative value of the documents.
As noted above, Mozambican civil law provides the possi-bility of the applicant requiring from the court a motion aiming at ensuring the preservation of documents whenever there is a serious risk of their loss, concealment or dissipation.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Mozambique has specialised courts in maritime and shipping matters, which are established in the most important cities of the country. These are independent courts exercising jurisdiction over all sorts of maritime contracts (from engineering, procure-ment and construction contracts for vessels to bareboat char-ters) and disputes. The general time bar for commercial matters is 20 years, although there are certain cases in which this stat-utory limitation period is shorter (e.g., general average-related claims are time-barred after one year and salvage claims are time-barred if legal proceedings do not commence within two years following the day on which the salvage operations are concluded or terminated).
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Mozambique does not have an arbitral institution specialised in maritime disputes. Thus, such matters are dealt with by the general arbitral bodies, governed by the Law on Arbitration,
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
There is no standard practice in this regard (this will ultimately depend on the assessment made by the judge in charge of the file and the specifics of the claim/parties).
4.7 How are maritime assets preserved during a period of arrest?
While the arrest is pending, a custodian appointed by the court is responsible for ensuring the preservation of the assets.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
According to Article 6, paragraph 1, of the 1952 Convention, all questions whether in any case the claimant is liable in damages for the arrest of a ship or for the costs of the bail or other secu-rity furnished to release or prevent the arrest of a ship, shall be determined by the law of the contracting state in whose jurisdic-tion the arrest was made or applied for. Article 7(1) of the 1952 Convention in turn establishes that the courts of the country in which the arrest was made shall have jurisdiction to deter-mine the case upon its merits if the domestic law of such state gives jurisdiction to such courts, as well as in the specific cases set out therein.
As mentioned in the answer to question 4.1, in order to obtain arrest of a vessel under the CPC, the claimant must provide the court with evidence of the likelihood of its right and justified fear of irreparable damage or damage that is difficult to repair.
In the event that the arrest is found to be inadmissible or unjus-tified or if it expires (e.g. because the main proceedings are not initiated after the arrest is granted), the claimant is liable for the damage caused to the defendant whenever it has not proceeded with reasonable prudence (as per Article 387 of the CPC and Article 621 of the Civil Code). The arrest may be considered wrongful, inter alia, whenever there is a conscious manipulation or omission of facts or imprudence or culpable error in the alle-gation of facts and in the submission of evidence considered in the decision of arrest taken by the court.
Accordingly, the owner of the vessel can request the payment of compensation by the claimant for any damages suffered as a result of a wrongful arrest, such compensation to be claimed in separate judicial proceedings.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Mozambican civil law provides the possibility of the applicant requiring from the court a motion aiming at ensuring the pres-ervation of documents or property whenever there is a serious risk of their loss, concealment or dissipation. This motion shall be duly grounded. Parties may also request the produc-tion of evidence within the control of the other party, or request
■ Itmustconstituteafinaldecision(notsubjecttoappeal)inthe country in which it was rendered.
■ The decision must have been rendered by the relevantcourt according to the Mozambican conflict of law rules.
■ There is no case pending before or decided by aMozambican court, except if it was the foreign court which prevented the jurisdiction of the Mozambican courts.
■ The defendant was served proper notice of the claimin accordance with the law of the country in which the judgment was rendered, except in cases where, under Mozambican law, there is no need to notify the defendant, or in cases where the judgment is passed against the defendant because there was no opposition.
■ Thejudgmentisnotcontrarytothepublicpolicyprinci-ples of the Mozambican state.
■ The decision rendered against theMozambican citizen/company does not conflict with Mozambique’s private law, in cases where this law could be applicable according to the Mozambican conflict of law rules.
After the application is filed, the court must serve notice of the same on the defendant. Once notice is served, the defendant may oppose the Exequatur if any of the above requirements are not met.
If the defendant opposes the Exequatur, the applicant may reply to the defendant’s arguments. Afterwards, the case follows various procedural steps until the decision is made on whether to grant the Exequatur. The losing party may still appeal against the court’s decision.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Considering that Mozambique has acceded to the 1958 New York Convention, Mozambican courts are to give effect prima facie to an arbitration agreement and award rendered in other signatory to the New York Convention. Where the arbitral award was not granted by another contracting state, to be enforceable it must have previously been reviewed and confirmed by Mozambique’s Supreme Court (see question 7.1).
8 Updates and Developments
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.
In recent years, Mozambique has enacted a number of impor-tant laws and regulations at the same time that it has ratified several key international treaties and conventions. The under-lying purpose was clear: follow and adopt the latest international trends in the industry and take advantage of the country’s loca-tion and impacts of the multimillion gas project in the North to increase levels of FDI; upgrade existing port and logistic infra-structures; and therefore boost the economy and contribute to the wellbeing and social development of its population.
As part of these ongoing efforts, in 2020 the Government approved (i) the Regulations on the Management and Planning of Coastal Zone and Beaches (Decree No. 97/2020, of 4 October 2020), (ii) new Regulations on the Licensing of Petroleum Facilities and Operations, which, among others, establishes tailored rules and procedures for the transportation of petroleum products by sea and river, and (iii) the Regulation of Electronic Sealing and Cargo Tracking in Transit (Ministerial
Conciliation and Mediation (“LACM”) The LACM governs both international and domestic commercial arbitration and recognises the New York and Washington conventions but applies the rules set out in the Mozambican Code of Civil Procedure for arbitration proceedings. The LACM does not diverge itself from the UNCITRAL Model Law on International Commercial Arbitration and follows the general standards and terms of UNCITRAL Model Law for the conduct of proceed-ings, tribunal composition and recognition of the award given.
Mozambique has also created the Centre for Arbitration, Conciliation and Mediation (“CAMC”) to oversee and promote arbitration, as well as other alternative dispute resolution mechanisms.
There is no specific time limit for the duration of arbitral proceedings, as the parties may agree in the mediation agree-ment on a deadline for the conclusion of the arbitral proceeding.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There is no alternative dispute resolution body specialised in maritime mediation.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The main advantage of resorting to arbitral institutions instead of national courts relates to the celerity of the proceeding. On the other hand, the cost of resorting to arbitral institutions is significantly higher by comparison to those of the judicial courts.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Despite the efforts of the Mozambican Government and the achievements reached in the past few decades, the country needs to continue developing its infrastructure and support the training and qualification of its citizens. Bureaucracy and a lack of qualified technicians continue to be some of the biggest chal-lenges to operating in the country. Despite the country’s high debt level, which has been a problem over the past few years, Mozambique’s economy is showing signs of recovery after the economic recession in 2016.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Articles 1094 and 1095 of the CPC set out that any judgment awarded by a foreign court is, as a rule, subject to review and confirmation by the Supreme Court in order to be valid and enforceable locally (i.e., to obtain the “Exequatur”).
The review and confirmation of foreign decisions under the CPC is mostly formal and should not involve a review of the merit/grounds of the judgment, but a simple re-examination of the relevant judgment and additional judicial procedure require-ments. The process must begin with the filing by the interested party of an application to that effect with the Supreme Court. In order for the foreign decision to be recognised by the Supreme Court, the following set of requirements must be met:■ Therearenodoubtsthatthejudgmentisauthenticandits
Islamic insurgency in Cabo Delgado, Northern Mozambique will certainly put at risk maritime security in the region and a halt on the increasing volumes of cargo imported and exported over the last years. Notably, if one takes into account that such increase was owed to the investment flows related to the development of the mega gas projects happening in Areas 1 and 2 of the Rovuma Basin, and that oil major Total, Operator of Area 1, has recently declared force majeure and suspended its $28bn LNG project due to the escalation of violence on the ground. Moreover, the trading constraints linked to the COVID-19 pandemic will certainly keep having a say on this (not all ports are operating in view of the administrative measures adopted by the Government, and those who are running business are working with some limita-tions and restrictions, with all it implies).
AcknowledgmentsThe authors would like to thank Filipe Rocha Vieira and Ivo Mahumane, managing associate and associate at VdA, respec-tively, for their assistance and valuable contribution in the preparation of this chapter.
Diploma No. 20/2021, of 3 March 2021), which establishes a harmonised, simplified process aimed at facilitating the move-ment and tracking of cargo and vehicles, knowing seal status at any given time, controlling price and ensuring transparency.
Still in this regard, it is worth mentioning that in 2020 the Government (i) submitted to the review of the private sector (Confederation of Economic Associations of Mozambique) a draft proposal for new Regulations on Cabotage, which will revise and set out new rules and requirements for the carrying-out of shipping cabotage activities in Mozambique, and (ii) opened to public consultation a draft of the long waited Marine Traffic Regulations, which are tailored to govern the maritime traffic scheme within Mozambican waters to ensure the safety of navi-gation, life and property, and to protect the environment. In addition, there are rumours that the Government is working on a new bill to consolidate and update the outdated Navy Merchant Laws and Regulations, and the recently announced revision of the Commercial Code is likely to bring changes to the sector as well (the backbone of the country’s shipping legal framework is still found in Volume III of the 1888 Commercial Code).
Regardless of the Government’s ongoing efforts to strengthen and develop the shipping & maritime sector, the fact is that the
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Mozambique
José Miguel Oliveira joined VdA in 2015. He is a Partner at VdA’s Oil & Gas practice. Before joining the firm, he worked for six years at Miranda Correia Amendoeira. In 2008, he was seconded to the Corporate and Commercial Law Department at Eversheds International LLP’s London office. From 2002 to 2008, he worked at Barrocas Sarmento Neves.Over the years, José has amassed extensive experience within the international shipping industry, particularly across African jurisdictions, where he has been particularly active in assisting all sorts of industry players, from owners, charterers, P&I Clubs, shipbrokers, ship managers, ship agents, freight forwarders, port operators and stevedores, to commodities traders on all types of wet and dry shipping matters. In addi-tion, he provides regular advice on regulatory matters to oil companies and service providers to the offshore oil & gas industry, notably in respect of the use and employment of rigs, FPSOs, support 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 under-standing of the local and neighbouring industries and the respective legal environments.
Kenny Laisse joined GDA Advogados in 2018 as an Associate. He focuses on litigation, corporate and natural resources at GDA Advogados. Before joining the company, he worked for one year at PROCONSULT.Kenny advises on many legal issues related to the shipping industry, including the bunkering sector and maritime litigation.
Vieira de Almeida (VdA) is a leading international law firm with more than 40 years of history, recognised for its innovative approach and impressive track record in corporate legal services. The excellence of its highly specialised legal services, covering several sectors and practice areas, enables VdA to overcome the increasingly complex challenges faced by its clients.VdA offers robust solutions grounded in consistent standards of excel-lence, ethics and professionalism. VdA’s recognition as a leader in the provision of legal services is shared with our clients and teams, and is attested by the most relevant professional organisations, legal publica-tions and universities. VdA has successively received the industry’s most prestigious international accolades and awards.Through the VdA Legal Partners network, clients have access to 12 juris-dictions, with a broad sectoral coverage in all Portuguese-speaking and several French-speaking African countries, as well as Timor-Leste.
Angola – Cabo Verde – Cameroon – Chad – Congo – Democratic Republic of the Congo – Equatorial Guinea – Gabon – Mozambique – Portugal – São Tomé and Príncipe – Timor-Leste.
■ theConventionrelatingtoInterventionontheHighSeasin cases of Threatened Oil Pollution Casualties, 1969;
■ the International Convention on Prevention of MarinePollution by Dumping of Wastes and Other Matters, 1972;
■ theInternationalConventiononOilPollutionPreparedness,Response and Cooperation, 1990;
■ the International Convention on Civil Liability for OilPollution Damage, 1992;
■ the Convention on Limitation of Liability forMaritimeClaims, 1976 and the 1996 Protocol thereto (“LLMC”);
■ theConventionontheEstablishmentofanInternationalFund for Compensation for Oil Pollution Damage, 1971 and its Protocol of 1992;
■ the Basel Convention on theControl of TransboundaryMovements of Wastes and their Disposal, 1989; and
■ anyinternationalagreementorconventionrelatingtotheprevention, reduction or control of pollution of the sea or other waters by matters from ships, and civil liability and compensation for pollution damage from ships to which Nigeria is a party.
Other Nigerian provisions in relation to pollution are as follows:■ the Environmental Impact Assessment Act, Cap E12,
and ■ thePreventionofOilPollutionRegulations,2012.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe principal law that governs collisions in Nigeria is the Merchant Shipping Act, 2007 (“MSA”).
Parts XVI and XXIV of the MSA specifically provide for collisions. Sections 338–344 of the MSA provide for liability in collision cases; more particularly, Section 345 of the MSA provides that the damages recoverable by the claimant under the MSA shall be restoration of the claimant to the same financial position as he would have been in had the collision not occurred. The MSA further states that the liability of a defendant in a colli-sion case is limited to the damages considered to be the direct and immediate consequence of the collision.
The major convention that regulates collisions is the Convention on the International Regulations for Preventing Collisions at Sea, 1972 (“COLREGS”). This convention seeks to regulate and prevent the collision of vessels and maintain disci-pline of marine traffic to prevent collisions on the high seas.
The International Convention for the Safety of Life at Sea, 1974 (“SOLAS”) as enshrined in Part XII of the MSA also regulates the adherence to safety at sea. Non-compliance with the provisions of this convention is treated as a criminal offence under the MSA.
Other legislation and/or rules within the legal framework, which particularly address the issue of collision and safety, include:■ the Admiralty Jurisdiction Act, Cap A5, Laws of the
Federation of Nigeria (“LFN”) 2004 (“AJA”);■ theAdmiraltyJurisdictionProcedureRules,2011(“AJPR”);■ theMerchantShipping(Collision)Rules,2010(modelled
after the COLREGS);■ the1988ProtocolrelatingtoSOLASandAnnexesItoV
thereto; and■ theSearchandRescueConvention,1979.
(ii) PollutionPart XXIII of the MSA, Section 335 in particular, provides for the application of the provisions of the following conventions for the regulation of pollution of ships: ■ the International Convention for the Prevention of
Pollution from Ships, 1973/1978 and its Annexes thereto;
The National Oil Spill Detection and Response Agency (“NOSDRA”) (Establishment) Act, 2006 ( “NOSDRA Act”) grants NOSDRA vast powers in relation to the surveillance and enforcement of all environmental legislation and the response, detection and clean-up, to the best practical extent of the impacted site, of oil spills in the Nigerian petroleum sector.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
Pursuant to the provision of Section 22 of the NIMASA Act, NIMASA is responsible for providing maritime safety and secu-rity and its powers include providing search and rescue services, carrying out air and coastal surveillance, and making enquiries as to shipwrecks or other casualties affecting ships, or as to charges of incompetence or misconduct on the part of seafarers in relation to such casualties.
Section 23 (5) (d) of the NIMASA Act also empowers the Agency to commence an investigation into any offence which it has reason to believe is being committed, is about to be committed, or has been committed with respect to offences committed under the Act.
Section 49 (1) of the NIMASA Act empowers the Director-General of NIMASA to set up a Marine Casualty Investigation Committee on any marine incident with a view to: (i) identi-fying the circumstances, reasons and consequences of a marine casualty; (ii) identifying the persons at fault in a marine casualty; and (iii) developing measures for the prevention of marine casu-alties on the basis of the experience gained in the course of investigation.
The NPA’s powers of investigation as provided in the Nigerian Ports Authority Act, Cap N126, LFN 2004 include, inter alia, the control of pollution arising from oil or any other substance from ships using the port limits or their approaches, protection of life and salvage of life and property for the prevention of fire within Nigeria and on vessels on the high seas.
The NOSDRA Act grants NOSDRA the powers in rela-tion to the surveillance and enforcement of all environmental legislation and the response, detection and clean-up, to the best practical extent of the impacted site, of oil spills in the Nigerian petroleum sector.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The international conventions relevant to marine cargo claims are:1. The Hague Rules, enacted into Nigerian law by the Carriage
of Goods by Sea Act, Cap C2, LFN 2004 (“COGSA”). 2. The Hamburg Rules, ratified and enacted into Nigerian
law by the United Nations Convention on Carriage of Goods by Sea (Ratification and Enforcement) Act, 2005 (“HRA”).
The national laws relevant to marine cargo claims are:1. COGSA.2. HRA.3. MSA.4. AJA.5. The Marine Insurance Act, Cap M2, LFN 2004.
(iii) Salvage/general averagePart XXVII of the MSA (Sections 386–404) provides for the salvage of vessels. This part provides for the remuneration of a salvor and protection of a salvor’s claim. ■ Sections2(3)(g)and(h)oftheAJA;■ Section8oftheCoastalandInlandShipping(Cabotage)
Act, Cap C51, LFN 2004 (“Cabotage Act”); and■ theMSA also (by virtue of Section 215) provides for the
application of the International Convention on Salvage, 1989.
(iv) Wreck removalThe MSA by virtue of Part XXVI (Sections 361–368) provides for the marking of wrecks and removal of wrecks.
Section 365 of the MSA places the responsibility for removal of any ship that becomes a wreck on her owners.
Section 362 of the MSA excludes ships which were, at the time of the incident or occurrence that caused them to become a wreck, warships, naval auxiliaries or Nigerian government ships used only on non-commercial, government service. Section 366 of the MSA empowers the receiver of wrecks to mark hazardous wrecks and to inform the ship owner of the wreck, and the ship owner is expected to remove such hazardous wrecks. Also, Section 22 (1) (n) of the NIMASA Act empowers the Agency to receive and remove wrecks.
Nigeria is a signatory to the Nairobi International Convention on the Removal of Wrecks, 2007 (the “Nairobi Convention”). However, the Nairobi Convention does not have the force of law in Nigeria, as it is yet to be ratified and enacted as legislation or a law of the National Assembly, as required by Section 12 of the Constitution of the Federal Republic of Nigeria, Cap C23, LFN 2004 (as amended) (the “Constitution”).
(v) Limitation of liabilityPart XXV of the MSA (Sections 352–360) provides extensively for limitation of liability of maritime claims. Section 353 of the MSA provides for the claims to which a limitation exists, while Section 354 excludes the claims to which a limitation shall apply under the Act.■ NigeriaissignatorytotheLLMCandhasdomesticatedit
into national law by virtue of the provisions of Section 335 (1) (f ) of the MSA.
■ Sections1(1)(d)and9oftheAJAempowertheFederalHigh Court (“FHC”) of Nigeria to entertain matters in relation to the limitation of a ship owner’s liability.
(vi) The limitation fundSection 358 of the MSA provides that once the limitation fund has been constituted, the same may be paid into court or secu-rity given.
Article 11 of the LLMC provides that “any person alleged to be liable may constitute a fund with the Court or other compe-tent authority in any State Party in which legal proceedings are instituted in respect of claims subject to limitation”. The fund so constituted is only available for the payment of claims in respect of which limitation of liability can be invoked.
1.2 Which authority investigates maritime casualties in your jurisdiction?
NIMASA and the Nigerian Ports Authority (“NPA”) are agen-cies responsible for investigating maritime casualties in Nigeria. Additionally, the NPA is also responsible for providing towage services, protection of life and salvage of life and property for the prevention of fire within Nigeria and on vessels on the high seas.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The Hamburg Rules and the Hague Rules are both in force in Nigeria. As such, the limitation period set by the applicable conventions (i.e. two years from the date the goods were deliv-ered or on the last day on which the goods should have been delivered in relation to the Hamburg Rules, and one year from the date of delivery of goods or the date when the goods should have been delivered in relation to the Hague Rules) would apply to the relevant claim.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Section 341 of the MSA states that any passenger who suffers loss of life or personal injury and is able to prove the same, may claim against the owners of the ships whose liability shall be joint and several. Section 358 imposes a limit of liability on ship owners in passenger claims which shall be an amount of 175,000 units of account multiplied by the number of passengers that the ship is authorised to carry according to the ship’s certificate. Claims for loss of life and personal injury in this Section refer to claims brought by or on behalf of any person carried in that ship:i. under a contract of passenger carriage; orii. who, with the consent of the carrier, is accompanying a
vehicle or live animals that are covered by a contract for the carriage of goods.
3.2 What are the international conventions and national laws relevant to passenger claims?
The Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974 (the “Athens Convention”), and its Protocol of 1990, are applicable in Nigeria pursuant to Section 15 of the MSA. Sections 340 and 341 of the MSA permit passen-gers to claim for loss of life or injury and nothing shall deprive any person who has claimed against the right of defence or the right to limit liability where it exists. Further, where the proportion of damages recovered by a passenger exceeds the proportion of fault of the ship (where two or more ships are involved), the ship from which the excess damages were recovered may recover the excess amount from the owners of other ships to the extent of their faults.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The provisions of the MSA require actions relating to passenger claims to be brought to court within two years of the date on which the loss or injury was caused.
4 Arrest and Security
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?
There is no international convention applicable to the arrest of ships in Nigeria. The AJA and AJPR govern the procedure
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The COGSA regulates the carriage of goods by sea in ships from any port in Nigeria to any other port whether in or outside Nigeria. The COGSA expressly provides that the Hague Rules apply in respect of outward carriage of goods from ports in Nigeria to ports outside Nigeria or to other ports within Nigeria.
The rules governing the contract of carriage executed by parties would determine the applicable key principles. It is important to note that the HRA did not repeal the COGSA. However, in the absence of an agreement between the parties, the Hamburg Rules automatically apply in relation to inward and outward carriage of goods in and from Nigeria. The carrier, shipper, consignee and endorsee of a bill of lading or other document evidencing the contract of carriage are entitled to sue for cargo claims.
Article 5 of the Hamburg Rules provides the extent of claims that may be brought against a carrier of goods. This includes liability for loss resulting from loss of or damage to the goods, as well as from delay in delivery unless the carrier proves that he, his servants or agents took all measures that could reasonably be required to avoid the occurrence.
Article III of the Hague Rules nullifies any covenant or agree-ment which seeks to limit the liability for loss or damage of goods by a carrier arising from negligence or failure to perform its duties and obligations as provided by the Rules.
Charter-party provisions can be incorporated into a bill of lading. There should be express incorporation of provisions, such as arbitration clauses, in order for such clauses to be enforceable and binding on third parties.
Non-contractual claims against the carrier are permitted as expressions of loss, provided that the loss is expressly proven.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
This may be done in relation to the misdeclaration of dangerous goods. By virtue of Section 322 (2) of the MSA, no shipper is allowed to ship dangerous goods without distinctly marking the goods as “dangerous”. Where the shipper fails to mark the nature of the goods shipped as “dangerous”, the shipper shall be liable to the carrier for loss resulting from the shipment of such goods. Furthermore, shippers will be in breach of an implied under-taking if they load dangerous cargo without notifying the carrier of the dangerous nature of the goods, unless the carrier knew or ought reasonably to have known of the danger posed by the goods. Under a time charter, these obligations fall on the charterer.
Article 13 of the Hamburg Rules provides that the shipper must inform the carrier of the dangerous character of the goods and, if necessary, of the precautions to be taken. Where the shipper fails to do so, the shipper is liable to the carrier and any actual carrier for the loss resulting from the shipment of such goods and the goods may, at any time, be unloaded and destroyed without payment of compensation. Article 17 of the Hamburg Rules also provides that a shipper is liable to indem-nify the carrier against the loss resulting from inaccuracies stated in his bill of lading.
Article IV of the Hague Rules also provides that neither the carrier of goods nor the ship shall be responsible in any event for loss or damage to goods if the nature or value of the goods has been knowingly misstated by the shipper in the bill of lading.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Yes, Section 2 (2) of the AJA makes it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship.
4.4 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 options are available?
The Admiralty Jurisdiction Act (1991) does not make any provi-sions for this. Thus, it is at the Court’s discretion vide question 4.1.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
The security due is at the discretion of the court. However, common practice is usually a deposit of the sum ordered by the court, Nigerian bank guarantee, Nigerian insurance company guarantee, or P&I letter of undertaking (from a member of the IGP&I).
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
No. However, Order 13 of the AJPR provides that the court may order security for costs, on the application of the arrested party, where the claim is in excess of 5 million Naira or its foreign currency equivalent (circa 11,000 US dollars) or where the plain-tiff has no assets in Nigeria.
4.7 How are maritime assets preserved during a period of arrest?
The AJPR provides for security to be supplied by the arrested party in the amount claimed or the value of the ship or prop-erty under arrest. In practice, after an order for arrest is granted, the court will order for physical security to be present upon the vessel to preserve the vessel during a period of arrest.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The test for wrongful arrest of a vessel is provided in Section 13 of the AJA. This section provides that the arresting party will be liable to the defendant for a wrongful arrest where: ■ the arrest was obtained unreasonably and without good
cause; or ■ thearrestingparty,unreasonablyandwithoutgoodcause,
demands excessive security in the proceeding, or fails to give a consent required for the release of a ship or other property.
A vessel owner who suffers financial or other loss because of a wrongful arrest may initiate an action against a plaintiff for wrongful arrest of his vessel and the court shall award costs, damages, demur-rage and expenses against the plaintiff where it is satisfied that the arrest was occasioned unreasonably and without good cause. See Order 11 (3b) of the AJPR.
for maritime claims in Nigeria. According to the AJA, a party seeking to obtain security for a maritime claim may institute an action in rem in the FHC, the court of competent jurisdiction, to arrest a ship bareboat chartered or owned by the debtor. The debtor may, upon arrest, provide security payment of cash into court, a Nigerian bank guarantee, Nigerian insurance company guarantee or P&I letter of undertaking (from a member of the International Group of P&I Clubs (“IGP&I”)).
Arrest of a ship is done by making an ex parte application at the FHC and it is heard by a judge in chambers. The applica-tion can be made three days before the ship is expected to arrive within the court’s jurisdiction. The arresting party must first ensure that a caveat against arrest is not in force on the ship by conducting a search in the caveat book before filing the applica-tion. Should the application be granted, a warrant is issued and valid for six months, but is renewable for another six months.
Section 2 of the AJA sets out “proprietary” and “general” maritime claims, and claims must fall under “maritime claims”. According to Section 2, “proprietary” maritime claims are claims related to ownership, possession and mortgage of ships, whilst the “general” claims cover other shipping claims such as damage done or received by a ship, personal injury, etc.
The test required for arrest proceedings is the principle of beneficial ownership which arises in relation to the mode of exercise of admiralty jurisdiction in the AJA.
The AJA entitles a claimant with a proprietary maritime claim to proceed with an action in rem against the ship in connection with which the claim arises. A claimant with a general maritime claim is, however, vested with only an in personam right.
Notwithstanding the foregoing, Section 5 of the AJA empowers a claimant to proceed in an action in rem against a person who ordinarily would have been liable in an action in personam (i.e. the “relevant person”) in respect of general mari-time claims where the claim arises in connection with a ship.
Section 5 (4) (a) and (b) of the AJA entitles a claimant to commence an action in rem against the offending ship or any other ship provided that the relevant person is the beneficial owner of that ship with respect to all the shares in it, the bare-boat charterer of the ship, or the alternative ship (often called “sister” ship) with respect to all the shares in it. Associated ships cannot be arrested in Nigeria.
A ship can also be arrested on the basis of a maritime lien or other charge on the ship. Section 5 (3) of the AJA defines mari-timeliensasalienfor“[s]alvage,damagedonebyaship,wagesof the master or a member of the crew of a ship or master’s disbursements”. Nigeria acceded to the Maritime Liens and Mortgages Convention, 1993 but is yet to “domesticate” the same in accordance with the Constitution.
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?
Yes. Section 2 (3) (k) of the AJA (claim in respect of goods, mate-rials or services (including stevedoring and lighterage services) supplied or to be supplied to a ship for its operation or mainte-nance) provides the bunker supplier with an in personam claim against the owner or bareboat charterer of the vessel (the “relevant person”). According to the provisions of Section 5 (4) of the AJA, the bunker supplier can proceed in rem against the vessel if the rele-vant person, at the time of the action is brought, is the beneficial owner of all of the shares in that vessel or its bareboat charterer.
a case must be accompanied by a certificate providing details of the device involved in the production of the document and the manner in which it was produced, as well as attesting to the following: 1. that the electronically generated evidence sought to be
tendered was produced by the computer during a period when it was in regular use;
2. that during that period of regular use, information of the kind contained in the document or statement was supplied to the computer;
3. that the computer which produced the electronically generated evidence was operating properly during that period of regular use; and
4. that the information contained in the electronically gener-ated evidence was supplied to the computer in the ordinary course of its normal use.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The Constitution grants the FHC exclusive jurisdiction over any admiralty matters, including shipping and carriage by sea, and this is reinforced by the provisions of the AJA which also stipulates the extent of the admiralty jurisdiction of the FHC. Appeals from the FHC lie first with the Court of Appeal and thereafter with the Supreme Court.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The Maritime Arbitrators Association of Nigeria is the primary body in Nigeria which deals especially with arbitration of mari-time disputes. It is a non-governmental body which comprises maritime practitioners and maritime lawyers who are experts in both arbitration and maritime law practice in Nigeria. Other arbi-tration bodies which deal with general commercial arbitration, including maritime arbitration, include the Chartered Institute of Arbitrators UK, Nigeria Branch, the Lagos Court of Arbitration and the Lagos Regional Centre for International Arbitration.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Nigeria does not have any speciality alternative dispute resolu-tion bodies which deal with maritime mediation. The Lagos Multi-Door Court House (“LMDC”) is available for the medi-ation of maritime disputes, and matters resolved by the LMDC are enforceable.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The principal advantage of using the national courts (particu-larly the FHC) is that it enables the claimant to procure pre-judgment security by an arrest by virtue, thereby speeding up the process of enforcing the judgment where the defendant fails to comply. Where a foreign arbitral award or judgment is obtained, the successful party must first apply to register the foreign judgment, through the procedure specified in ques-tion 7, before it is entitled to institute proceedings to enforce
Where there is proof that the arrest of the vessel was wrongful, the vessel owner may also, upon delivery of judgment in the substan-tive suit, make an oral application asking the court to award costs and damages against the plaintiff. See Order 11(4) of the AJPR.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Issues relating to evidence in maritime claims are governed by the Evidence Act 2011 (as amended) and the Federal High Court (Civil Procedure) Rules 2019 (the “FHC Rules”). With respect to obtaining access to evidence in maritime claims, the FHC Rules permit a party to issue a Notice to Produce to any other party in the suit, requiring the other party to produce any evidence which is believed to be in the party’s possession or control. The FHC Rules also entitle parties to use discovery and interrogatories in obtaining access to evidence. Additionally, Anton Piller orders can also be granted by the court to enable a party to search premises and seize evidence.
With respect to the examination of witnesses, the AJPR permits the filing of written depositions of all witnesses intended to give testimony at the trial within seven days of filing the writ of summons in relation to in rem actions. In relation to in personam actions, the witnesses’ written deposition must be filed along with the pleadings; however, in exceptional circum-stances, a party may apply to call additional witnesses at trial. The FHC Rules also empower the court to issue subpoenas to witnesses, mandating their attendance at court to give evidence. Nigerian law recognises two forms of subpoenas: subpoena ad testificandum, which requires the witness to provide oral testi-mony; and the duces tecum, which requires a party’s attendance for the production of documentary evidence.
With respect to preservation of evidence, the registrar is responsible for the safe custody of all documents or other phys-ical evidence tendered at trial.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The general disclosure obligations require the parties to disclose all issues and facts sought to be raised during the case in their plead-ings and precludes the parties from relying on any evidence in support of facts or issues not raised in their pleadings. The party’s pleadings, depositions of witnesses and copies of evidence to be relied on at trial must be frontloaded, i.e. filed along with origi-nating processes for the claimant (or post filing of the originating in rem processes within the timeline stated above) or, with respect to the defendant, along with its statement of defence/counter affi-davit. Parties are, however, entitled to amend their pleadings subject to the court’s approval. The parties are also required to file an affidavit of non-multiplicity of suits on the same subject.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Nigerian law does not have rules which specifically apply to the discovery or preservation of electronic evidence, beyond the requirement that any electronic evidence sought to be relied on in
The judgment creditor may apply for the case to be placed on the undefended list, an expedited procedure for cases where there is no reasonable defence to the claim, and the existence of the foreign judgment will be the judgment creditor’s basis for belief that there is no defence to the claim. A certified copy of the foreign judgment will be attached as an exhibit to the application.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The recognition and enforcement of arbitration awards is in part governed by Sections 51 and 54 Arbitration and Conciliation Act, Cap A13, LFN 2004 (“ACA”). Section 51 states that an arbitral award shall, irrespective of the country in which it is made, be recognised as binding and shall, upon the award cred-itor’s application in writing to the court and be enforced by the court. The party applying for the enforcement of the arbitral award shall supply:1. the duly authenticated original award or a duly certified
copy thereof;2. the original arbitration agreement or a duly certified copy
thereof; and3. where the award or arbitration agreement is not made in
the English language, a duly certified translation thereof into the English language.
Section 54 of the ACA also provides an avenue for the recog-nition of foreign arbitral awards. This Section domesticates the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 and provides for Nigeria’s recip-rocal obligation to recognise and enforce awards by other states who are signatories to the New York Convention.
Foreign arbitral awards may also be enforced under the provi-sions of the FJA, provided that the award has, in pursuance of the law in force in the place where it was made, become enforceable in the same manner as a judgment given by a court in that place.
An award can also be recognised by an Action upon the award. The Nigerian Supreme Court held in Topher Inc of New York v. Edokpolor [1965]ALLN.L.R307thataforeignawardcanbe enforced by suing upon the award even if there is no recip-rocal treatment in the country where the award was obtained.
Other systems of enforcing an award include:■ Enforcement under the New York Convention on
Recognition and Enforcement of Arbitral Award, 1958. ■ EnforcementundertheInternationalCentreforSettlement
of Investment Disputes (“ICSID”) Convention. ■ EnforcementunderOrder52Rules16and17oftheFHC
Rules which governs the recognition and enforcement of arbitral awards at the FHC.
8 Updates and Developments
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.
A current trend brought about by the COVID-19 pandemic is the gradual move towards e-filing and e-service of processes, and although the practice directions released by the FHC are stated to apply during the COVID-19 period, it is hoped that they will be implemented permanently. This also forms one of the reforms proposed by the Reform Committee recently inau-gurated by the Nigerian Maritime Law Association (Nigerian
the judgment. On the other hand, where arbitral proceedings are instituted in Nigeria, the successful party may subsequently proceed to execute the Nigerian judgment without the need to further register the judgment. In the case of arbitral institu-tions as discussed above, they provide the expertise and privacy required for the resolution of disputes.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
A notable pro in Nigeria is that Nigeria has, over the years, devel-oped a system for ship arrests which ensures that applications for ship arrests are dealt with promptly, provided that the precedent conditions are met. The Nigerian judicial system also entitles the successful party to recover costs from the losing party. Right of appeal is permitted with regard to final judgments. Leave to appeal must be applied for at the Court of Appeal in interlocutory judgments except as stated in Section 241 (1) of the Constitution.
A notable con is the procedural problems which litigants face in their efforts to have expeditious disposal of disputes, hence cases can last for many months in court before the final determination.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Parties are required to register a foreign judgment before they are entitled to enforce the judgment. There are two applicable statutory regimes dealing with the enforcement of foreign judg-ments in Nigeria: the Reciprocal Enforcement of Judgments Ordinance Cap 175 of the Laws of the Federation of Nigeria and Lagos, 1958 (the “Ordinance”); and the Foreign Judgment (Reciprocal Enforcement) Act, 2004 (the “FJA”). Alternatively, parties may bring an action under common law.
However, only the Ordinance is presently in force in Nigeria as the extant enabling law. The FJA is inchoate as the Nigerian Minister of Justice has not exercised its power, since its prom-ulgation to extend the application of the law with regard to registration and enforcement of foreign judgments of superior courts to any foreign country, including the United Kingdom, as required by the FJA.
The Ordinance applies to judgments of certain common-wealth countries including the United Kingdom, Ireland and Ghana. Under the Ordinance, in order for a foreign judgment to be enforceable in Nigeria, counsel must file a petition ex parte or on notice to a judge for leave to register the foreign judgment in Nigeria. The petition ex parte or on notice shall be supported by an affidavit of the facts which, inter alia, must state that, to the best of the information and belief of the deponent, the judgment cred-itor is entitled to enforce the judgment and the judgment does not fall within any of the cases precluded from registration. The peti-tion and the affidavit in support shall be accompanied by a written address, addressing all the legal issues involved in the matter.
If the court finds merit in the petition, it shall order that the foreign judgment be registered as a judgment of the Nigerian court, and the order will usually specify a time limit within which the judgment debtor can apply to set aside the order. This will usually be 14 days if the judgment debtor is within the terri-tory of the registering court, or longer if otherwise.
Under common law, the party seeking to enforce the foreign judgment in a maritime claim must institute fresh proceedings in the FHC, with the foreign judgment as the basis for the claim.
The following bills, which would positively affect the Nigerian maritime industry, are currently undergoing legisla-tive processes at the National Assembly: the Nigerian Maritime Zones Act (Repeal & Re-enactment) Bill, 2019; the Maritime Security Agency (Establishment) Bill, 2019; the National Inland Waterways Authority Amendment Bill; the Ports and Harbour Bill; the National Shipping Policy Act Amendment Bill; and the Nigerian Ports Authority Act Amendment Bill, 2019.
In addition to the foregoing, the Nigerian Court of Appeal recently held in the case of The Vessel MT Sam Purpose (Ex MT Tapti) & Anor v. Amarjeet Singh Bains & 6 Ors., Appeal No.: CA/LAG/CV/419/2020, that by the provisions of Section 254C (1) of the Constitution, the National Industrial Court of Nigeria (the “NICN”) is conferred with the jurisdiction to hear any case relating to the claim for wages of crew men on board a ship. This decision appears to have altered the import of Section 2 (3)(r) of the AJA which makes a claim for wages of crew men on board a ship for which the Federal High Court will have juris-diction. As such, a claim for wages of crew men on board a ship may no longer be said to be a maritime claim, and action relating to such a claim will have to lie at the NICN. It is note-worthy that this decision may be appealed, and the Supreme Court could take an opposing view; nonetheless, this remains the position at the time of writing.
Chapter of the Comité Maritime International (“CMI”)) for the reform of key Nigerian maritime procedural rules and substan-tive laws).
In 2019, the long-awaited Suppression of Piracy and Other Maritime Offences Act (the “Piracy Act”) was enacted. By so doing, relevant provisions of certain international conven-tions on safety, piracy and armed robbery at sea, etc. (such as the United Nations Convention on the Law of the Sea and Suppression of Unlawful Acts Against the Safety of Maritime Navigation, 1988 (and its Protocols)) that Nigeria had ratified but had yet to domesticate, were given effect under Nigerian law. Prosecution under the Piracy Act has also commenced.
In line with the synergy between NIMASA and the Nigerian Content Development and Monitoring Board (“NCDMB”), identified categories of vessels (tugboats, security patrol vessels and crew boats, among others) with high demand in the Nigerian offshore industry (and with a projected contract value of approx-imately 1.6 billion US dollars over the next four years) continue to be financed with the NCDMB local content fund. Similarly, the manpower framework for critical skills required in the mari-time industry, as developed by NIMASA, continues to gain ground, and would increase Nigerian maritime labour participa-tion in the maritime industry.
192 Nigeria
Shipping Law 2021
Adedoyin Afun continues to be recognised as one of the “bright stars” in relation to Nigerian Shipping law and has authored and presented articles/papers on his core practice areas in Nigerian and international publications and fora. He has advised extensively on issues in the Shipping and Oil services industry including the registration of ships, mortgages and other interests, maritime claims and casualties including litigation and arbitration. Over the last few years, The Legal 500 has listed him in their Shipping and Transport (covering the shipping, oil services and aviation industries) rankings for Nigeria. Sources say Adedoyin, who is “particularly adept at helping to navigate the complex-ities of the Nigerian maritime legal framework, demonstrating flexibility in light of changing requirements’” is known for complex ship and aircraft financing (The Legal 500 – 2018).
Ademide Peters is an excellent legal practitioner who seeks to deliver intelligent, effective and commercially sound solutions. He is well versed in commercial dispute resolution in both arbitration and litigation. He is a member of the team currently providing legal advisory services to one of the members of the American Steamship Owners Mutual Protection & Indemnity Association, Inc. in relation to a maritime dispute.
Bloomfield LP is a specialist commercial law firm that operates out of Lagos and other littoral Nigerian cities, including Port Harcourt and Warri. The firm offers comprehensive and exceptional legal solutions for those who expect more. The firm’s lawyers, more than 25 in number, include leading shipping experts (in contentious and non-contentious as well as dry and wet shipping matters) who continue to influence the industry and shipping jurisprudence in Nigeria. The clientele spans across owners, charterers, managers, shipyards, financiers, brokers, insurers (including P&I members of the IGP, as well as fixed-premium marine insurers), oil servicing companies, port and terminal operators/promoters, petroleum marketing and distribution companies and commodity trading houses. Bloomfield’s lawyers have contributed to, or authored, leading texts within
many key sectors, and are often called upon to attend Nigerian and interna-tional seminars/workshops and to serve as public and private-sector office-holders, advisers, and consultants.
International Salvage Convention. The rules apply in court proceedings regarding salvage.
Right to salvage presupposes an imminent risk of damage to the ship being salvaged or its cargo, and that the salvage opera-tion was successful (“no cure, no pay”), meaning the distressed ship must be free from the danger. Exceptions are made for oper-ations that succeed in limiting pollution, which may entitle the salvager to compensation for his expenses.
The owner can determine if salvage shall be performed and by whom. If no one has been assigned the task, whomever commences the salvage first obtains the right “first in time, first served”.
Salvage is calculated on a percentage from 0–100% based on the salvaged value. In its considerations, the court will evaluate the salvagers skills, effort, if lives were saved, pollution hindered, how prompt the operation was executed, and the risk involved in the operation.
General average is governed in the NMA Chapter 17 Sections 461–467, which shall be exercised in accordance with the York-Antwerp Rules (“YAR”) unless otherwise agreed by the parties. General average builds on the principles of “common safety” and “common benefit”. If an extraordinary sacrifice was made to prevent loss or damages to the ship or its cargo from a common danger, the expenses shall be apportioned to the interests involved on the basis of their value.
(iv) Wreck removalWreck removal is governed by the Harbours and Fairways Act of 2019 Section 17 and the Pollution Act (“NPA”) of 1981 Section 37. Norway has not ratified the Nairobi International Convention on the Removal of Wrecks.
The rules of the NPA are often used as a basis for removal of a wreck. Pursuant to Section 37, the authorities have a mandate to enforce wreck removal when the leftover entity has a disfig-uring effect or has harmful consequences for the environment.
Norwegian authorities may also order wreck removal in accordance with the Harbours and Fairways Act of 2019 Section 17, when the wreck constitutes a threat to the safety or conveni-ence of passing traffic or navigation in general.
Pursuant to NMA Sections 172a and 175a, the owner of the wreck has the right to limit his liability for claims relating to the removal of the vessel or its cargo, see “(v) Limitation of liability” below.
(v) Limitation of liabilityThe limitation of liability is governed by the NMA Chapter 9, which implements the 1924 Brussels Convention, the 1957 Brussels Convention, and the 1976 London Convention.
Pursuant to NMA Section 172, limitation of liability applies,
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe collision liability is governed by the Norwegian Maritime Act (“NMA”) Chapter 8 Sections 161–164. The provisions are based on the 1910 Brussels Collision Convention.
Pursuant to Chapter 8, liability for damages following a colli-sion is borne by the vessel whose fault caused the collision. If fault can be placed on two or more parties, the costs shall be apportioned between the parties in proportion to the faults committed on each side. In the event a collision has caused injury to persons and the fault is divided between the colliding parties, the parties are jointly and severally liable.
Collision liability can also occur where there is no physical contact between the ships; for example, when incorrect naviga-tion from one ship causes damage to another.
When determining who is at fault, the court will evaluate the actions taken by the parties prior to the collision and consider if they have been “responsible” when the actions are held up against what must be regarded as safe navigation in the waters. If there is no fault on either side, each ship carries its own costs.
(ii) PollutionPollution liability is governed by the NMA Chapter 10 Sections 183–209, which incorporates and builds on the 2001 International Convention on Civil Liability for Bunker Oil Pollution and 1992 International Convention on Civil Liability for Oil Pollution Damage.
The provisions establish a strict liability on owners for pollu-tion damages caused by bunker oil or pollution damages caused by other vessels and seagoing objects. Liability can, however, be exempted if it is proved that the accident was caused by a force majeure event, or by the act (or failure to act) from a third party with the scope of harming the ship.
Owners may also be exempted from liability if the accident causing the pollution was a foreseeable result of negligence from public authorities to secure navigational lights or navigational equipment.
(iii) Salvage/general averageRules concerning salvage and general average are found in the NMA Chapter 16 Sections 441–455, which incorporate the 1989
Rules for claims arising from international trade, and the 1978 Hamburg Rules for cabotage and intra-Nordic trade.
Cargo claims arising under a charterparty are governed by the NMA Chapter 14.
It must be noted that the freedom of contract allows for parties to deviate from the abovementioned Chapters. For domestic voyages in Norwegian waters and voyages between the Nordic countries, however, the freedom of contract is limited due to several mandatory provisions in the NMA.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Central provisions regarding cargo claims are found in the NMA Sections 275 and 276, pursuant to which the carrier is respon-sible for any damage or delay which occurs while the goods are in his possession. Unless otherwise agreed, the carrier’s liability also encompasses that of his sub-contractors.
Liability will not occur provided the damages or delay was not caused by personal fault or neglect from the carrier or anyone for whom he is responsible. The same applies for damages or delays caused by nautical errors, or while under pilotage or towing. Liability is also exempted for damages caused by an on-board fire, provided the fire was not a result of negligence by the carrier. Finally, the carrier will not be liable for damages to animals provided he acted with due care and the damage is a natural consequence of the animals’ traits.
Pursuant to NMA Section 280, the carrier can limit his liability to 667 SDRs for each package or unit of the goods, or to 2 SDRs for each kilogram of the gross weight of the goods lost, damaged or delayed. For domestic trade in Norwegian waters, the carri-er’s liability is limited to 17 SDR for each kilogram of the gross weight of the goods lost or damaged. The liability for delay shall not exceed the total freight according to the transport agreement.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Pursuant to NMA Section 301, the shipper has a strict liability towards the carrier for the accuracy of the information concerning goods included in the bill of lading at the request of the shipper.
If the shipper has undertaken to indemnify the carrier for losses as a result of a bill of lading being issued with incorrect information or without reservation, he is nevertheless not liable if this was done to mislead the acquirer of the bill of lading. The same applies for inaccurate information given in the bill of lading.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Pursuant to NMA Section 288, if the consignee fails to notify the carrier of loss of/or damage to the goods which the consignee had or should have discovered, the goods shall be considered delivered in such condition as described in the transport document. Written notice shall be given. However, written notice is not required for loss or damage determined by joint inspection of the goods.
If the loss or damage was not visible when the goods were deliv-ered, the consignee must notify the carrier within three days after delivery. For losses caused by delay, written notice must be given within 60 days after delivery.
regardless of the basis of the claim, for damages concerning loss of life, personal injury and damages to property, provided they occurred on board or in direct connection with the operation of the ship.
The right to limitation of liability applies for every incident occurred. If occurred damages can be traced back to one action (or negligence to act), it will be considered one action.
Section 175 quantifies the limitation of liability for damages to persons, crew, ship and goods. The maximum limitation amount differs depending on the basis of the claim, and the ship’s tonnage. For vessels with a tonnage of 300 or more, the right to limitation applies to claims in relation to the occurrences listed at Section 172a.
Liability for salvage and liability for general average cannot be limited. Limitation of liability will also be excluded for damages caused intentionally by the owner or by the owner’s representatives.
(vi) The limitation fundPursuant to NMA Sections 177 and 195, the court where the action is brought may decide that a limitation fund shall be estab-lished. The parties then transfer a set amount to the court. When created, all potential creditors are given a deadline for submitting their claims before the court. The fund will thereafter be distrib-uted among the claimants. Claims received after the deadline are not precluded and can be presented again when the pending case is settled.
1.2 Which authority investigates maritime casualties in your jurisdiction?
Investigations of maritime casualties under Norwegian jurisdiction are performed by the Norwegian Accident Investigation Board, the Norwegian Police and the Norwegian Maritime Authority.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Norwegian Coastal Administration, the Norwegian Police and the Norwegian Accident Investigation Board are all relevant institutions which could be involved in the event of the abovemen-tioned events. Whether the various authorities will be involved depends on the severity of the incident.
The Norwegian Accident Investigation Board conducts inves-tigations with the aim of improving naval security. An investi-gation will be conducted whenever a Norwegian passenger ship is involved in an accident, as well as accidents where lives have perished or where oil pollution has been caused. This applies to all vessels travelling in Norwegian waters.
An investigation can also be conducted on a foreign vessel sailing in international waters if the flag state consents, or if Norwegian law can be applied. In case of an oil spill or if there is a severe danger of pollution, the Norwegian State will initiate a state-led investigation.
If there is a sound suspicion that an accident was caused by criminal conduct, the Norwegian Police will conduct a separate investigation.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Marine cargo claims against the carrier are governed by the NMA Chapter 13. Chapter 13 incorporates the Hague-Visby
(c) salvage operations or any salvage agreement, including wreckage removal;
(d) any agreement relating to the use or hire of the vessel, whether contained in a charterparty or otherwise;
(e) any agreement relating to the carriage of goods or passen-gers on board the vessel, whether contained in a charter-party or otherwise;
(f) damage/loss of goods carried on board the vessel;(g) general average;(h) towage;(i) pilotage;(j) goods or materials rendered to the vessel for its operation,
management, preservation or maintenance;(k) construction, reconstruction, repair, converting or equip-
ping of the vessel;(l) wages and other sums due to the master and other members
of the vessel’s crew in respect of their employment on the vessel;
(m) disbursements incurred on behalf of the vessel or its owners;(n) any dispute as to ownership or possession of the vessel;(o) dispute between the co-owners of the vessel as to the
employment or earnings of the vessel; and(p) lien or mortgage.
If the claim is not secured by a mortgage or maritime lien, the claimant must provide a “genuine need for arrest”, cf. the Norwegian Civil Dispute Act (“CDA”) Section 33–2 (1). This entails proving upon the balance of probability that the debt-or’s conduct gives grounds to fear that enforcement of the claim would otherwise be evaded or considerably impeded or would have to take place outside Norway. Insolvency for the debtor is not necessarily a reason for arrest per se.
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?
The supplier can seek the arrest of a vessel for a claim relating to bunkers supplied by them, provided the debtor owns the vessel. If the bunker was supplied to a charterer (bareboat or time charterer), an arrest can only be obtained on the delivered supply. In either case, a “genuine need for arrest” must be proven, see question 4.1.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
A claim arising from the sale and purchase of a ship will constitute a “maritime claim”, thus arrest of the vessel can be effectuated provided the debtor is the registered owner of the vessel, and the claimant can prove a “genuine need for arrest”, see question 4.1.
4.4 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 options are available?
Claims towards persons or juridical entities that do not own the vessel can be secured with an arrest of goods supplied by the claimant to the vessel, or an arrest of other assets belonging to the debtor, i.e. bank accounts, provided these are located in Norway. Claims from the carrier towards a charterer or sub-charterer may give the carrier a right to sell the cargo as a self-help remedy.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The key provisions applicable to the solution of maritime passenger claims are found in the NMA Chapter 15 Sections 405–432. The provisions are based on the 1974 Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea, the EEA Agreement Appendix XIII no. 56x (Regulation (EC) no. 392/2009), the 2002 Athens Protocol and the EEA Agreement Appendix XIII no. 56y.
These rules are mandatory if the voyage starts or ends in Denmark, Norway, Finland or Sweden (intra-Nordic). However, the provisions will also apply to other voyages if Norwegian law can be applied in accordance with international law.
The provisions mirror liability concerning goods, and the carrier will be liable for injuries to passengers or loss of luggage if caused by a shipping incident. A shipping incident exists if the claim arises from a negligent act by the carrier or his crew. The claimant has the burden of proof when claiming indemni-fication, except where the claim arises from collision, stranding, explosion, capsizing or sinking.
The liability is limited to 400,000 SDR for injury or death to persons. For delays, the amount is limited to 4,150 SDR; while for loss or damage to luggage, the liability is limited to 1,800 SDR. For valuables delivered to the carrier for his tutelage, the amount is 6,750 SDR. Finally, the liability for damages to vehi-cles is limited to 10,000 SDR per vehicle.
3.2 What are the international conventions and national laws relevant to passenger claims?
See question 3.1 above. The 1974 Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea and its amendments are of particular relevance and apply as national law.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Any claim arising from death or injury to a passenger and loss or damage to luggage will be time-barred after two years. The time bar can be interrupted either by a statement issued by the carrier in which responsibility is undertaken, or by an agreement between the claimant and the carrier. The time bar can also be interrupted by submitting a writ of summons to the court.
4 Arrest and Security
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?
Security for a maritime claim can be obtained through an arrest, which can be obtained by submitting an arrest warrant to the court in the district the vessel is present, pursuant to NMA Chapter 4, which incorporates the 1952 Arrest Convention.
Arrest of a vessel can only be obtained to secure a “maritime claim”. An exhaustive list of maritime claims can be found in NMA Section 92, according to which maritime claims encompass:(a) loss or damage caused by the operation of the vessel;(b) loss of life or personal injury occurring, whether on land or
water, in direct connection with the operation of the vessel;
clarified. In this regard, the court may encourage the parties to obtain new evidence. The court may also obtain evidence on its own initiative.
In an ongoing dispute, evidence can be obtained through a judicial hearing of the parties and witnesses. If neither can be present, remote interrogation can be arranged.
Evidence can, by request, be secured prior to the commence-ment of the legal proceedings, provided the evidence is of signif-icance in a pending lawsuit and that there is an imminent risk that the evidence will be lost, considerably weakened, or there are other reasons as to why it is particularly important to obtain access to the evidence before legal proceedings are instigated. The request must be submitted to the court.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The processing of maritime claims before the court is regulated, like other claims, by the CDA part V, Chapters 21–28-A.
The CDA does not impose an active duty to disclose evidence prior to the commencement of legal proceedings. The parties shall, however, provide the court with a summary of the evidence they wish to present and what the evidence purports to establish.
A party can request the opposing party to disclose specific and identifiable evidence provided they are of importance for the ruling to be made. The request may also be referred to the court which will rule on the matter. The same applies for precluding evidence.
The parties are obliged to comply with the court ruling.
5.3 How is the electronic discovery and preservation of evidence dealt with?
There is no electronic system dedicated to the discovery and preservation of evidence. There is, however, an electronic data processing system (“Aktørportalen”) to which evidence and pleadings shall be submitted.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The Norwegian court system does not contain a court specialised in maritime claims. Maritime claims thus must be brought before the ordinary courts or conciliation board. The parties can also request a court-led mediation.
Pursuant to the CDA, legal actions arising out of maritime rela-tions may be brought before the court in the judicial district where the vessels port of registry is situated. If the disputed amount is at least NOK 125,000 and the parties have been assisted by lawyers, the case shall be submitted directly to the District Court. Otherwise, the conciliation board is the correct entity. The concil-iation board will, however, normally refrain from processing the case, and submit it directly to the District Court.
Legal actions regarding payment of money secured by an ongoing arrest may be taken at the place where the arrest took
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Pursuant to CDA Section 33–5, the debtor can avoid an arrest by providing security for the claimant’s claim. Means of secu-rity are exhaustively regulated by the Norwegian Enforcement Act Section 3–4, according to which a valid security is either a state-ment issued by a bank confirming that a fixed cash deposit has been placed under the authority of the Enforcement Officer, or a guarantee issued by a bank or other financial institution. The court will not allow other forms for security. Accordingly, Letters of Undertaking (“LOUs”) are not accepted as security.
The parties may nevertheless agree on other arrangements, after which they will withdraw the request for arrest or revoke an effec-tuated arrest.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Pursuant to the CDA Section 14–6, the court may demand the claimant to provide a counter security for potential tort caused by a wrongful arrest, or for port fees, cf. NMA Section 97. The amount will normally correspond to 14 days of port charges, but may vary depending on the case, i.e. whether the court considers the legal merits for the claim to be poorly founded.
4.7 How are maritime assets preserved during a period of arrest?
An arrest decision will be sent immediately to the Enforcement Officer, who then executes the decision by depriving the defendant from judicial and/or factual control of the prop-erty. An arrest of vessels will normally be effectuated through a sailing ban. An arrest lasts until the claim has been settled, security has been provided by the debtor, or a year has elapsed since the arrest was executed.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
A party who has suffered a wrongful arrest can claim indemni-fication for his losses by the claimant. A claim for indemnifi-cation can be submitted for the court, either in the oral hearing regarding the arrest, or in separate proceedings.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
The CDA awards the disputing parties freedom to present any evidence they see relevant for the case. The court can, however, deny the presentation of evidence of which it regards as irrelevant, or if presenting the evidence will incur costs disproportionate to what can be achieved by presenting the evidence in court.
The court shall endeavour to clarify disputed issues and ensure that the parties’ positions regarding factual and legal issues are
Apart from any liability for the opponent’s legal costs, proceed-ings before Norwegian courts are essentially inexpensive.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
CDA Section 19–16 dictates that claims which have been decided in a foreign state, by way of final and enforceable ruling passed by that state’s courts or administrative authorities or by way of arbitra-tion or in court settlement, shall be legally enforceable in Norway to the extent provided by statute or agreement with the state in ques-tion. The Lugano Convention applies as Norwegian national law.
Final and enforceable rulings on civil claims are enforceable in Norway if Norwegian jurisdiction has been agreed. Norwegian law will also apply if agreed by the disputing parties.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The Norwegian Arbitration Act (“NAA”) implements the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Pursuant to NAA Section 45, an arbi-tration award shall be recognised and enforceable regardless of the country in which the arbitration award was rendered.
Recognition and enforcement of an arbitration award presup-poses that a party makes the original award or a certified copy of it available. If the arbitration award is not drafted in Norwegian, Swedish, Danish or English, the party must also submit an author-ised translation to the court.
8 Updates and Developments
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.
An issue regarding jurisdiction was recently resolved by the Norwegian Supreme Court in its latest decision in the so-called “Stolt Commitment” case. The decision confirms that Norwegian courts have jurisdiction to try the underlying tort action between the owners, together with a direct action against the tortfeasor’s Norwegian liability (P&I) insurer.
place. The same applies if the vessel has been released from an arrest, or an arrest has been lifted by the provision of security.
If there is no requirement to submit the case before the concil-iation board, or when the conciliation board has finalised and submitted its verdict, the parties can submit their case before the District Court through a writ of summons. The District Court will then normally decide on a public hearing within eight to 12 months. When the hearings are concluded, a conclusion from the court is normally given within four to six weeks. The District Court’s decisions can be appealed and brought before the Court of Appeal, which in civil matters will have the full authority to decide on both legal and factual issues. After receiving an appeal, hearings will normally commence within two years. The Court of Appeal’s decision can be appealed to the Norwegian Supreme Court Appeal Committee, which decides whether the case should be admitted to the Supreme Court. The decision will be made considering the expected precedent value of the case.
A ruling from the Norwegian Supreme Court and the Supreme Court Appeal Committee cannot be appealed further.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Traditionally, ad hoc arbitration has been dominant in Norway. There are, however, several institutional arbitral bodies for which maritime claims can be submitted. In particular, the Oslo Chamber of Commerce, which covers all areas, is relevant.
Another body is the Nordic Offshore and Maritime Arbitration Association (“NOMA”), which was founded in 2017 and special-ises in disputes arising from shipping-, oil-, and gas-related activity.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?The Oslo Chamber of Commerce can mediate between disputing parties. Meditation is also conducted by the courts before the hearings.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The Norwegian National Courts consist of competent judges who have, at the minimum, five years of juridical education, and several years of legal practice. Although the judges are not necessarily specialised in issues arising from maritime law, the procedure prescribed in the CDA allows for the usage of expert witnesses, and for the judge to appoint expert co-judges if necessary.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Norway has a long tradition in shipping and maritime law, and houses several of the foremost legal experts within the field. Norwegian courts are competent and are present in the vicinity of the largest ports.
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Kristian Lindhartsen has a wide background in maritime law, with an emphasis on marine insurance disputes, including cover disputes and direct action matters.He also advises shipowners and charterers on operational issues, hereunder issues related to charterparties and other contracts of carriage, commercial agreements, collisions and other marine casualties.Kristian is an experienced litigator, and has experience of both ordinary court and arbitration proceedings, including arrest and other asset securing, as well as international jurisdiction issues.He also works with vessel-related transactions, particularly with sale/leaseback transactions of ships.
Kvale Advokatfirma DAHaakon VIIs gate 100161 Oslo Norway
Kvale is a leading commercial law firm that has provided assistance to Norwegian and international businesses since being founded in 1988. We are particularly renowned for assisting some of Norway’s largest compa-nies with their most important and complicated cases.Our professional expertise, experience and industry knowledge enable us to provide good solutions in cooperation with our clients.We assist Norwegian and international clients, including both large compa-nies and small businesses. We also provide assistance to government authorities and organisations.Our rapid growth is underpinned by a high level of professional quality and service. Our lawyers offer specialised assistance in all key disciplines of commercial law. Kvale is one of Norway’s leading firms within a number of these disciplines and we work every day to also develop the best lawyers for the future in our specialist fields.
Article 211. Persons who have taken part in assistance activ-ities despite an express and reasoned prohibition by the vessel assisted will not be entitled to any remuneration.
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 provided special services that cannot be considered as fulfilment of the towing contract.
Article 213. An indemnity will also be payable even when the assistance or salvage takes place between vessels having the same owner.
Article 214. The amount of the remuneration will be fixed by agreement between the parties and, in default of this, by the judge. The same procedure will apply as regards the proportion in which the remuneration is distributed among the salvors. The distribution between the owner, Master and other persons at the service of each one of the salvors’ vessels is governed by the nationality of the vessel.
Article 215. Any agreement for help and salvage concluded at the time and under the conditions of the danger present may, at the instance of one of the parties, be annulled or modified by the judge, if the latter rules that the conditions agreed upon are inequitable. In all cases, if it appears that the agreement of one of the parties is vitiated by fraud or deception, or if the remuner-ation is excessive on one side or the other, and disproportionate to the service rendered, the agreement may be annulled or modi-fied by the judge at the instance of the interested party.
Article 216. The remuneration will be fixed by the judge:1. According to the circumstances, taking as a basis the
success obtained, the efforts and expertise of those who have provided the assistance, the danger facing the vessel assisted, its passengers and crew, its cargo, salvors and the salvors’ vessel, the time spent, the expenses and damage incurred, the responsibilities and risks assumed by the salvors, the value of the equipment utilised by the latter; taking into account, if arising, the degree to which the vessel rendering assistance is suitable for salvage operations.
2. The value of the items salvaged.The same provisions apply to the distribution envisaged in
the above Article. The judge may reduce or cancel the remuner-ation if it emerges that the salvage or assistance became neces-sary through the culpable actions of the salvors, or that the latter have engaged in thefts or other fraudulent acts.
Article 217. No remuneration shall be payable for the rescue of persons, subject to the legal provisions of the vessel’s nation-ality for the case in question.
The salvors of human lives in the course of their intervention in the mishap giving rise to the salvage or assistance are entitled to an equitable share of the remuneration granted to the salvors of the vessel and of its cargo and accessories.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionPanama has adopted the Convention on the International Regulations for Preventing Collisions at Sea, 1972 (“COLREGS”), by means of Law 7 of 1973, as well as the Amendment of 1974 by means of Law 15 of 1975.
Law 55 of 2008 on Maritime Trade (“Law 55”) expressly provides Chapter I, “Collision of Vessels”.
(ii) PollutionPanama has adopted a number of conventions, such as: ■ MARPOL73,Protocolsof1978and1997.Law30of2003.■ 1969 Convention on Contamination of the Sea by
Hydrocarbons. Law 96 of 1998.■ Protocolof1992,providingfortheConstitutionofaFund
for Contamination of the Sea by Hydrocarbons. Law 91 of 1998.
■ ProtocolrelatedtoContaminationfromTerrestrialSources–within the Caribbean region, adopted in Aruba, and adopted by Law 26 of 2003.
■ Convention for the Cooperation for the SustainableDevelopment of Marine Zones of the Northeastern Pacific, made in Guatemala (2002) and adopted by Law 28 of 2003.
(iii) Salvage/general averageThere are two chapters within Law 55 covering these, as follows: “Chapter IISalvageArticle 209. The provision of assistance and salvage for vessels in peril, the effects on board, the freight and passengers, together with services of the same nature provided between sea ocean vessels navigating inland waters, remain subject to the provisions of this chapter, without distinction between the two types of service and without regard to the waters where the service is provided.
Article 210. Every act of assistance or salvage leading to a useful result will give rise to equitable remuneration. If the help provided leads to no such result, no remuneration is due.
In no case will the amount payable exceed the value of the objects salvaged.
assistance, funeral expenses and the amount of indemni-ties payable whenever the crewmembers are injured or die defending the vessel.
10. Assistance indemnity.11. Expenses resulting from the collection of moneys made
during the voyage to pay for general averages, as well as those incurred in the liquidation thereof. These expenses include the loss of goods sold during the voyage, prize and interest on bottomry bond and the insurance premium for the amounts employed, as well as the cost of the expert witness required to prepare the bill for such averages.
Article 225. Goods placed on deck and those with respect to which no Bill of Lading is issued and which are not listed in the Cargo Manifesto or Record, as well as rigging or instruments not recorded in the inventory, will not be included as general averages, except when the law allows this form of carriage.
Article 226. General averages may be allocated according to contribution, whenever the vessel or her cargo is salvaged in whole or in part. It is not necessary for the successful result to be brought instead of proceeding directly from the sacrifice, or produced as a result of independent circumstances.
Article 227. The total of general average contributory values consists of:1. The comprehensive net value at the time and place of
unloading of the things sacrificed, including any freight paid in advance.
2. The comprehensive net value at the same place and time of the things salvaged, including those specified in Article 223, including any freight paid in advance, as well as the amount of the damages caused by general salvage.
3. Any freight or ship fare remaining unpaid, from which there will be deducted any expenses that would have been avoided if the vessel and her cargo had been totally lost at the time when the general average was brought about.
Personal effects of the crew, passengers’ luggage, war ammu-nition and food and drink, to the extent that they are necessary for the voyage, do not contribute to general averages, without prejudice to which they will be reimbursed, as the case may be, by contribution.
Article 228. The total subject to general average contribu-tion consists of:1. The comprehensive net value at the time and place of
unloading of the things sacrificed, without deducting the freight. If the thing sacrificed is part of the vessel, the value will be fixed in the amount of the repairs, deducting, if applicable, the difference from new to old, or the proceeds from the sale of any old objects being replaced.
2. The difference between the comprehensive net worth of the damaged things at the same time and place and the value that they would have, had no damage been suffered.
3. Extraordinary expenses made according to Article 223.Article 229. Rules pertaining to general averages also apply
whenever the danger, caused directly by sacrifice or expense, shall result from the fault committed by the Master, the crew or any person interested in the cargo or by an inherent flaw of the vessel or the goods. The remedy that may be exercised by reason of the fault or inherent flaw is separate from the regulation of general averages.
Article 230. Successive general averages will be regulated and liquidated at the end of the voyage, as if they should consti-tute a single one.
Article 231. Regulations governing averages will be enforced at the port of destination.
Article 232. Averages will only be allocated and liquidated if the vessel and her cargo or either one is salvaged in all or in part.
Article 218. Action to claim payment of the remuneration is time-barred at two years, running from the date on which the salvage or assistance operations took place. Reasons for suspending or interrupting this time bar will be determined by the laws of the jurisdiction of the court dealing with the matter.
Article 219. Every vessel’s Master has an obligation to render assistance to any person found in danger of being lost at sea, even though he may be an enemy, providing he can do so without seri-ously endangering his vessel, crew or passengers. The owner of the vessel is not responsible in respect of controversies of the above provision.
Article 220. The provisions of this chapter do not apply to war vessels or those belonging to the State and used exclusively for public service.
Chapter IIIGeneral AverageArticle 221. General or common averages are governed by the laws of the country of registry of the vessel where they occurred.
Particular averages are governed by the laws applicable to the charter party of the goods suffering the same.
Article 222. In the absence of special conventions expressly contained in charter parties or Bills of Lading, averages will be paid according to the dispositions of this Law.
Article 223. Extraordinary expenses and sacrifices made voluntarily by the Master or by order thereof for the common good or salvation of the vessel and her cargo are construed to be general averages.
Article 224. General averages are the following:1. Damages resulting from the sacrifice of goods, masts,
engines, riggings and, in general, any object being part of the vessel or her cargo. These damages comprise not only the value of the things being sacrificed, but also any wear and tear suffered by the vessel and her cargo, provided that they are a direct and immediate consequence of sacri-ficing the things. They include damages caused to objects employed for use other than that which they were destined for, and likewise deriving from the excessive use thereof even when conforming to the use that they were destined for, such as forcing the sails or engines.
2. Damages caused by voluntary grounding to avoid the total loss or arrest of the vessel or cargo, and those resulting from setting the vessel afloat, as well as any expenses orig-inating therefrom.
3. Damages caused to the vessel and her goods not subject to fire damage during fire-fighting operations on board.
4. Damages caused to the vessel and her cargo in preventing the same from capsizing.
5. Sacrifices made in order to avoid collision.6. Expenses of extraordinary lightening and transshipping and,
in case of voluntary grounding or stranding or forced arrival, any expenses involving the cargo, the storage and reinstal-lation on board of the cargo, as well as damages that are an immediate and direct consequence of these occurrences.
7. Expenses of forced arrival pertaining to the vessel, including crew salaries and food during the same.
Arrival expenses are not to be included in the rule and account adjustment regardless of how long the cause that determined the same shall last.
8. Extraordinary laytime expenses at a port of call, whenever the proximity of an enemy shall prevent the vessel from sailing from it.
9. Damages and expenses caused in defending the vessel and her cargo against enemies and pirates, including medical
4. Salaries and food for the crew, whenever the vessel is detained or attached by legitimate order or force majeure, if the charter is contracted for a portion of the voyage.
5. Any necessary expenses of arriving at the port for repairs or provisioning.
6. The lowest value of the goods sold by the Master upon forced arrival to pay for food and salvage of the crew and incurred to cover any other necessity of the vessel.
7. Food and salaries of the crew while the vessel is in quarantine.8. Any damage suffered by the vessel or her cargo for the colli-
sion or fouling being accidental and inevitable.9. If the accident occurs due to fault or carelessness of the
Master, the latter will be responsible for all the damage caused.
10. Any damage suffered due to fault, carelessness or fraud of the Master or the crew, without prejudice to the owner’s right to the corresponding indemnity against the Master, vessel and freight.”
(iv) Wreck removalPanama has adopted the Nairobi International Convention on the Removal of Wrecks 2007, by means of Law 26 of 2015. Law 57 entitles the Merchant Marine Administration (“MMA”) to handle related matters and to formally evaluate and declare a vessel as a “shipwreck”.
(v) Limitation of liabilityThe limitations of liability are set out in Article 583 of Law 8 of 1982, which contains and constitutes the “Code of Maritime Procedure” in Panama (“Law 8”), the contents of which are set out under “Claims Subject to Limitation” below.
According to Article 576 of the Code of Maritime Procedure, the limitations are available to shipowners and salvors. Article 577 defines the “shipowner” as either a charterer, the manager, or the 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 to ascertain the limitations.
All relevant provisions of Law 8 are translated as follows:
“Title VIIIComplementary ProvisionsChapter ISubstantive Provisions Which Regulate Limitation of Liability of the Shipowner1st SectionPersons Entitled to Limit LiabilityArticle 576. Shipowners and salvors, as hereinafter defined, may limit their liability in accordance with the rules of this Title for claims set out in the 2nd Section of this chapter.
Article 577. The term owner shall mean the owner, charterer, manager and shipowner of an oceangoing vessel.
Article 578. Salvor shall mean any person rendering services in direct connection with aid or salvage operations. Salvage operations shall also include operations referred to in subsec-tions 4 and 6 of Article 583.
Article 579. If any claims set out in chapter II are made against any person for whose act, neglect or default the ship-owner or salvor are responsible, such person shall be entitled to avail himself of the limitation of liability provided for in this Title.
Article 580. In the present Law, the liability of a shipowner shall include liability in an action brought against the vessel herself.
Article 233. To make the expenses and undertake the rele-vant damages corresponding to the general average, a resolution will be issued by the Master, following consultation with the pilot and other officers of the vessel, and a hearing will be held with the parties interested in the cargo in attendance.
If they oppose the same and the Master and officers that make up the majority or the Master, breaking away from the majority, considers it necessary to adopt certain measures, these may be executed under his responsibility, without prejudice to the ship-pers’ right to exercise their own right against the Master before a competent judge, provided that they can prove that there was malice, inexperience or carelessness involved.
If the opinion of the parties in attendance on the vessel inter-ested in the cargo is not heard, they will not contribute to the general average, imputable in this respect to the Master, unless the urgency of the case was such that there was no time for prior consultation.
Article 234. The agreement adopted to incur the damages that constituted the general average must necessarily be recorded in the log book, stating the motives and reasons supporting the same, the votes to the contrary, and the basis for such dissi-dence, if any, and what irresistible and urgent causes the Master was answering to, if acting by himself.
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 the first opportunity. In the second case, by the Master and officers of the vessel.
The minutes, and then the agreement, will circumstantially state all the objects cast overboard and will refer to the imperfections caused to those kept on board. The Master will be under the obli-gation to deliver a copy of the minutes to the judicial maritime authority at the first port of arrival, within 24 hours following arrival, and to ratify the same later, under oath.
Article 235. The Master will direct the jettison and have the effects cast overboard in the following order:1. Those found on deck, beginning with those obstructing
the manoeuvres or damaging the vessel, giving preference if possible to the heaviest and least useful and valuable ones.
2. Those found under the upper deck, beginning always with the heaviest and least valuable ones, keeping only such quantity or number thereof as shall be absolutely essential.
Article 236. In order to be computed as general average and for the owners of the effects to be entitled to indemnity, it is necessary in regards to the cargo for the relevant Bill of Lading to prove their existence on board, and as to effects belonging to the vessel, these must also be checked against the inventory taken prior to departure.
Article 237. To lighten the vessel during a storm or to facili-tate her entry into port or a sheltered anchorage area, part of the cargo may be transshipped to launches or barges and, if lost, the owner of that part will be entitled to indemnity, as if the loss had originated by general average.
Article 238. As a general rule, simple or particular aver-ages are any expenses or damages caused to the vessel or her cargo which have not inured to the benefit or common use of all parties interested in the vessel and her cargo and, especially, the following:1. Damages suffered by the cargo from its loading to its
unloading due to accidents at sea or force majeure, and any expenses incurred to avoid and repair the same.
2. Damages and expenses incurred by the vessel in her hull, rigging, arms and gear for the same causes and motives, since she set sail at the port of departure until she moored and anchored at the destination.
4th SectionConduct Barring LimitationArticle 586. The person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or reck-lessly and with knowledge that such loss would probably result.
5th SectionRecommendationsArticle 586. When a person entitled to limitation of liability under the rules of the present Title has a claim against the claimant arising out of the same occurrence, their respective claims shall be set off against each other and the provisions of the present Title shall only apply to the balance, if any.
Chapter IILimitation of Liability1st SectionGeneral LimitsArticle 588. The limits of liability for claims, and those being different than those mentioned in the 2nd Section of this chapter, arising on any distinct occasion, shall be calculated as follows:1. In respect of claims for loss of life or personal injury: a)
333,000 units of account for a vessel with a tonnage not exceeding 500; and b) for a vessel with a tonnage not exceeding said limit (sic).The following amounts in addi-tion to those mentioned: for each ton from 501 to 3,000 tons, 500 units of account; for each ton from 3,001 to 30,000 tons, 333 units of account; for each ton from 30,001 to 70,000 tons, 250 units of account; and for each ton in excess of 70,000 tons, 167 units of account.
2. In respect of any other claims: a) 167,000 units of account for a vessel with a tonnage not exceeding 500 tons; and b) for a vessel with a tonnage in excess thereof. The following amount in addition to that mentioned in 1): for each ton from 501 to 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 of 70,000 tons, 83 units of account.
Article 589. Where the amount calculated in accordance with subsection 1) of Article 588 is insufficient to pay the claims mentioned therein in full, the amount calculated in accordance with paragraph 2) of said Article shall be available for payment of the unpaid balance of claims under paragraph 1), and such unpaid balance shall have the same priority as claims mentioned under paragraph 2).
Article 590. Without prejudice to what has been set forth in Article 589 on the right to claim for loss of life or personal injury, claims for damage to port installations, coves, waterways and aids to navigation shall have the priority the Law sets for claims under paragraph 2) of Article 588.
Article 591. The limits of liability for any salvor not oper-ating from any vessel, or for any salvor operating solely on the vessel to, or in respect of which he is rendering salvage services, shall be calculated according to a tonnage of 1,500 tons.
Article 592. For the purposes of the present chapter, the vessel’s tonnage shall be the gross tonnage calculated in accord-ance with the tonnage measurement rules contained in Annex 1 of the International Convention on Tonnage Measurement of Ships, 1969 approved by Law 6 of October 27, 1977.
2nd SectionLimit for Passenger ClaimsArticle 593. In respect of claims arising on any distinct occasion 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 581. Any insurer of liability for claims subject to limita-tion in accordance with the rules of the present law shall be enti-tled to the benefits of this Law to the same extent as the assured himself.
Article 582. The act of invoking limitation of liability shall not constitute an admission of liability.
2nd SectionClaims Subject to LimitationArticle 583. Subject to that set out in the 3rd and 4th Sections of this chapter, the following claims, whatever the basis of liability may be, shall be subject to limitation of liability:1. claims in respect of loss of life or personal injury or loss
of or damage to property (excluding damage to harbour works, docks, waterways, bridges, canals, aids to navi-gation and facilities of the Panama Canal), occurring on board or in direct connection with the operation of the vessel or with salvage operations, and consequential loss resulting therefrom;
2. claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
3. claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the vessel or salvage operations;
4. claims in respect of the raising, removal, destruction or the rendering harmless of a vessel which has sunk, wrecked, stranded or been abandoned, including anything that is or has been on board such vessel;
5. claims in respect of the removal, destruction or the rendering harmless of said cargo of the vessel; and
6. claims of a person, other than the person liable, in respect of measures taken in order to avoid or minimise loss for which the person liable may limit his liability in accord-ance with the provisions of the present Law, and further loss caused by such measures.
Article 584. The claims set out in Article 583 shall be subject to limitation of liability even if brought by way of recourse or for indemnity under a contract or otherwise. However, the claims set out under paragraphs 4, 5 and 6 of Article 583 shall not be subject to limitation of liability to the extent that they relate to remuneration under a contract with the person liable.
3rd SectionClaims Excepted from LimitationArticle 585. The rules of the present Title shall not apply to:1. claims for aid or salvage or contribution in general average;2. claims for oil pollution damage within the meaning of the
International Convention on Civil Liability for Oil Pollution Damage, dated November 29, 1969, or of any amendment or Protocol thereto which is in force;
3. claims subject to any international convention or any national legislation governing or prohibiting limitation of liability for nuclear damage;
4. claims against the owner of a nuclear vessel for nuclear damage; and
5. claims by servants of the shipowner or salvor whose duties are connected to the vessel or the aid or salvage operations, including claims of their heirs, dependants or other persons entitled to make such claims, if under the law governing the contract of service between the shipowner or salvor and such servants, the shipowner or salvor is not entitled to limit his liability in respect of such claims, or if he is by such law only permitted to limit his liability to an amount greater than that provided in 1st Section, chapter II of this Title.
Article 599. The fund may be constituted either by depositing the sum or by producing a guarantee which is acceptable and which the court or other competent authority considers to be adequate.
Article 600. The fund constituted by one of the persons mentioned in paragraphs 1, 2 and 3 of Article 596 or in Article 597, or by its insurer, shall be deemed constituted by all persons mentioned in said paragraphs or Articles.
2nd SectionDistribution of the FundArticle 601. Save for what is set forth in Articles 588, 589, 590, 593 and 594, the fund shall be distributed among the claim-ants in proportion to the amount of the claims which have been respectively admitted as being chargeable to the fund.
Article 602. If, before the fund is distributed, the person who is liable or his insurer has settled a claim which is chargeable to the fund, such person shall subrogate, to the totality of the amount he paid out, all the benefits the person to be compen-sated would enjoy according to the present title.
Article 603. The right of replacement stipulated in Article 606 may be exercised also by persons other than those mentioned therein in respect of any amounts paid by them as indemnity, but only insofar as the applicable national legislation allows such a subrogation.
Article 604. When the liable person or any other person proves 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 subrogation right as conferred in Articles 606 and 607 if the indemnity would have been paid before the fund was distributed, the court may order to provisionally reserve an amount sufficient so that said person may, at the relevant later date, enforce its claim to the fund.”
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Panama Maritime Authority (“PMA”) through the MMA.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
General provisions of Law 57 of 2008 on the Merchant Marine (“Law 57”) allow officials from the MMA to intervene and attend to all matters pertaining to these types of event:
“General ProvisionsArticle 114. The General Directorate of the Merchant Marine may execute and implement any measures and controls deemed necessary to ensure that vessels registered in Panama, regard-less of their location, or vessels of any nationality, navigating in waters subject to the jurisdiction of Panama, comply with all maritime safety regulations. In the exercise of this power, it shall be obligatory to provide any information required to comply with any maritime regulations and international conven-tions ratified by the Republic of Panama.
Any vessel carrying passengers in waters subject to the juris-diction of Panama or abroad, and carrying more than 12 passen-gers, shall secure an insurance policy for liability against acci-dents which shall cover loss of life and loss to property, as well as the risk of marine pollution. The minimum coverage and the decision as to whether the policy shall be submitted at the time that the vessel is registered shall be determined by the General Directorate of the Merchant Marine.
account multiplied by the number of passengers which the vessel is authorised to carry according to the vessel’s certificate, but not exceeding 25 million units of account.
Article 594. For the purposes of this Section, “claims for loss of life or personal injury to passengers of a vessel” shall mean any such claims brought by or on behalf of any person carried in that vessel, travelling:a) under a contract of passenger carriage; orb) who, with the consent of the carrier, is accompanying a
vehicle or live animals which are covered by a contract for the carriage of goods.
3rd SectionUnit of AccountArticle 595. The unit of account referred to in the 1st and 2nd Sections of this chapter is the “Special Drawing Right” as defined by the International Monetary Fund. The amounts mentioned in the 1st and 2nd Sections of this chapter shall be converted into the national currency of the State in which limi-tation is sought, according to the value of that currency at the date the limitation fund shall have been constituted, or payment is made, or security is given which under the law of that State is equivalent to such payment.
4th SectionClaims AccruedArticle 596. The limits of liability determined in accordance with the 1st Section of this chapter shall be applied to the aggre-gate of all claims which may arise on any distinct occasion:1. against the person or persons mentioned in the 2nd Section
of 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 from such vessel and the salvor or salvors who operate the same, and any person for whose act or neglect he or they are responsible; or
3. against the salvor or salvors who are not operating only on the vessel to which or in respect of which salvage is being given, and any person for whose act, neglect or default he or they are responsible.
Article 597. The limits of liability fixed in accordance with the provisions of the 2nd Section of this chapter shall apply to the aggregate of all claims subject thereto which may arise on any distinct occasion against the person or persons mentioned in Article 577 in respect of the vessel referred to in the 2nd Section of this chapter and any person for whose act, neglect or default he or they are responsible.”
(vi) The limitation fundThe “limitation fund” is likewise regulated in Law 8, as follows:
“Fund for Indemnities1st SectionConstitution of the FundArticle 598. Any person alleged to be liable may constitute a fund with the court or other competent authority in any State in which legal proceedings are instituted in respect of claims subject to limitation.
The fund shall be constituted in the sum of the amounts set out in the 1st and 2nd Sections of chapter II of Title VIII of this Law that are applicable to claims for which that person may be liable, together with interest thereon from the date of the occur-rence giving rise to 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 respect of which limitation of liability can be invoked.
The carrier will be responsible for any loss or damage to the goods caused by delays in delivery due to the fault or negligence of the carrier, except for those resulting from causes for which the carrier 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, 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 of the vessel, not pertaining to the obligations referred to in Article 54.
2. Fire, unless caused by fault or negligence of the carrier.3. War or armed conflicts.4. Acts of government or competent authorities, quarantine
restrictions or detention on account of judicial process.5. Strikes, labour detentions or restrictions.6. To save or attempt to save lives or property at sea.7. Acts of the shipper, owner of the goods or his agents.8. Defects involving or inherent to the goods.9. Inadequate packaging or insufficient or illegible markings.10. Latent defects of the vessel not revealed by due diligence.11. Any other cause arising without fault or negligence of the
carrier, his agent or employee.12. Acts of God or force majeure, dangers, accidents at sea or in
navigable waterways.13. In being released from responsibility pursuant to the dispo-
sitions of the above points, except for the causes of point 2 of this Article, the carrier will have the burden of proof.
Article 60. The carrier will not be responsible for loss or damage to live animals resulting from special risks inherent to their carriage. However, the carrier will be under the obligation to prove his compliance with any special shipper requirements with respect to the transportation of live animals and, under the circumstances of carriage by waterways, any loss or damage occurring due to special risks inherent to such carriage.
Article 61. If the carrier attempts to carry goods on deck, the carrier’s consent must be obtained and the customs of trade or applicable statutes or regulations must be complied with.
Without prejudice to the obligations of the carrier contained in this chapter, whenever the goods are shipped on deck according to the dispositions of the above paragraph, the carrier will not be responsible for any loss or damage caused by special risks inherent to such carriage.
If, in violation of the dispositions of the first paragraph of this Article, the carrier ships the goods on deck and the goods suffer loss or damage as a result of this, the carrier will be responsible.
Article 62. Whenever any loss, damage or delay in delivery occurs due to causes for which the carrier, employee or agent is entitled to exoneration, together with any other causes that do not contemplate such exoneration, the carrier shall only be responsible to the extent that such loss, damage or delay in delivery is attributed to causes for which the carrier is not enti-tled to exoneration from responsibility; however, the carrier will have the burden of proof with respect to loss, damage, or delay in delivery resulting from such other cause.
Article 63. The amount of indemnity for loss of goods will be calculated based on the value of the goods, while those due to damage to the goods will be calculated on the basis of the difference between the value of the goods before and after the damage or based on repair expenses.
The aggregate amount due shall be calculated based on the value of the goods at the place and time where they were unloaded according to the contract, or at the place and time where they should have been unloaded.
This Directorate may require similar financial cover for other types of ships operating in waters subject to the jurisdiction of Panama, or operating abroad, with the purpose of covering any damage provided for in international conventions, particularly in connection with pollution, damage suffered, and loss of life at sea.
In case of national vessels, and depending on the seriousness of the event, the MMA may delete the vessel ex officio.”
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Panama has not adopted the usual conventions on this subject matter; relevant provisions are contained in Law 55.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Law 55 provides as follows:
“Carrier’s ResponsibilityArticle 53. The carrier will be responsible for the goods carried in containers while remaining under his custody, as from the time of receipt to the time of delivery. The carrier will be respon-sible for non-containerised goods while under his custody, from the time of loading to the time of unloading. Unless otherwise provided in this Section, the carrier will be responsible for loss or damage to the cargo while under his custody.
The dispositions of the above Article will not prevent the carrier from entering into a contract pertaining to his responsi-bility in connection with non-containerised goods, prior to their loading on and following their unloading from the vessel.
Article 54. The carrier shall be under the obligation, prior to and at the start of the voyage, to take reasonable action to:1. Make the vessel seaworthy.2. Adequately man, equip and supply the vessel.3. Prepare and maintain in good condition any holds, cold
and refrigerated chambers, as well as any other areas of the vessel where goods are carried in order to make their recep-tion, transportation and conservation safe and satisfactory.
Article 55. Neither the carrier nor the vessel will be respon-sible for any losses or damages deriving or resulting from the vessel being unseaworthy, unless imputable to lack of due diligence on the part of the carrier to make the vessel seaworthy or to provide the vessel with the necessary crew, equipment and supplies, or to make the holds, cold and refrigerated chambers and other areas of the vessel where goods are carried adequate and safe for their reception, transportation and conservation. In the event of a loss or damage occurring due to an unseaworthy condition, the burden of proof in regards to such due diligence will be on the carrier or any other person claiming exoneration under this Article.
Article 56. The carrier will proceed properly and carefully to the loading, handling, stowing, carriage, custody, care and unloading of the goods carried.Article 57. The carrier will carry the goods to the unloading port in the agreed manner and by the usual or most geographi-cally direct route. Deviations for the purpose of saving lives or property in waterways or other reasonable detours will not be construed to be a deviation in accordance with the dispositions of the above Article.
Article 58. Delays in delivery will occur whenever the goods are not delivered at the designated unloading port and within a reasonable period, unless the parties agree to a specific term.
“Shipper’s ResponsibilitiesArticle 70. The shipper will have the goods properly packaged and ensure the accuracy of their description, brand, number of pack-ages or pieces, weight or quantity of goods at the time of loading, and indemnify the carrier against any loss resulting from poor packaging or inaccuracies in the above-mentioned information.
The carrier’s right to indemnity set forth in the above paragraph will not affect the carrier’s obligation under the contract for the carriage of goods vis-à-vis any person other than the shipper.”
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Generally, the applicable time bar would start to count after the date when the cargo is deemed as delivered.
For example, Articles 88 and 89 of Law 55 provide as follows: “Article 88. Except if, upon delivering the goods by the
carrier to the consignee, the latter gives notice of loss or damage in writing to the carrier, the delivery will be prima facie evidence that the goods were delivered to the consignee in accordance with the carriage documents and of the apparent good state and condition of the goods. Whenever the loss or damage to the goods is not apparent, the dispositions of the above paragraph will be applicable if the consignee has not given such notice in writing within seven days, counted as of the day following the delivery date of the goods or in the case of goods carried in containers, within 15 days, counted as of the day following the delivery date. No notice is required to be given in writing in connection with loss or damage if the state of the goods on the delivery date has been the subject of a joint inspection or assess-ment by the carrier and the consignee.
Article 89. The carrier will not be responsible if no notice is given by the consignee on the economic losses resulting from the delay in the delivery of the goods within 60 days, counted as of the day following the delivery date of the goods by the carrier to the consignee.”
The general time bar is provided for in numeral 3 Article of the Code of Commerce as follows:
“Article 1651. The time bar shall be of one year: 1. …2. …3. for claims arising from contracts for transportation by
land or sea, and from charter-parties. If the carriage is done within the territory of the Republic, the time bar shall be six months.”
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Carriage of Passengers is regulated under Articles 141 et seq. of Law 55, as follows:
“Chapter IVContract for the Carriage of Passengers by WaterwaysArticle 141. The contract for the carriage of passengers by sea shall conform to what is agreed upon by the parties, and, in the absence of such an agreement, the dispositions of this chapter.
Article 142. The passenger shall be deemed a shipper in regards to the luggage and other effects carried on board and the Master will not answer for anything that the passenger keeps under his immediate and personal custody, unless the damage shall in fact be caused by the Master or the crew.
The value of the goods is determined by stock exchange quote or, if not listed, according to regular market price or, in the absence of a stock exchange quote or regular market price, according to the regular value of goods of the same nature and quantity.
The carrier’s responsibility for loss or damage to the goods shall be limited to an amount equal to 666.67 units of account per package or other shipping unit or 2.0 units of account per kilogram of gross weight of the goods lost or damaged, which-ever is higher, except whenever the nature and value of the goods is declared by the shipper prior to loading and stated in the Bill of Lading, or whenever an amount larger than the liability limit stated in this statute is agreed to between the carrier and shipper.
Whenever a container, pallet or similar transportation device is used to consolidate the goods, the number of packages or other shipping units listed in the Bill of Lading as packaged in said transportation device shall be construed to be the number of packages or shipping units.
Whenever the transportation device does not belong to or has been provided by the carrier, the transportation device will be construed to be a package or shipping unit.
Article 64. Whenever the execution of the carriage or part thereof is entrusted upon an actual carrier, the carrier shall continue to be liable for the entire carriage according to the dispositions of this chapter. In connection with the carriage executed by an actual carrier, the carrier will be liable for any act or omission by the actual carrier and his employee or agent acting under the scope of his employment or agency.
Notwithstanding the dispositions of the above paragraph, whenever a contract for the carriage of goods by sea expressly states that a specific part of the carriage covered by the contract is to be executed by an actual carrier other than the carrier, the contract may provide that the carrier will not be liable for any loss, damage or delay in delivery arising from an occurrence taking place while the goods remain under the custody of the actual carrier during said part of the carriage.
Article 65. Dispositions contained in this chapter regarding the carrier’s responsibility are applicable to the actual carrier. If a claim is filed against an employee or agent of the actual carrier, the dispositions contained in the 2nd Section of this chapter will apply.
Article 66. A special agreement whereby the carrier assumes obligations or waives rights conferred in this chapter will be binding upon the actual carrier, provided that they are accepted by the latter in writing.
Dispositions of such special agreement are binding upon the carrier, whether or not the actual carrier gives his consent.
Article 67. Whenever the carrier and actual carrier are responsible, they will be jointly responsible.
Article 68. If claims for loss or damage are duly filed against the carrier, the actual carrier and his employees or agents, sepa-rately, the aggregate compensation amount shall not be greater than the limit established by law.
Article 69. The dispositions contained in Articles 64, 65, 66, 67 and 68 of this Law will not affect the rights between the carrier and the actual carrier.”
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Article 70 of Law 55 provides for the obligation of the shipper to properly describe the damage arising from reliance on such description that could revert on the liability of the carrier, and which could be claimed back by the carrier against the shipper.
Article 155. If a passenger dies during the trip, the Master is authorised to take, with respect to the corpse, any measures required by the circumstances, carefully storing any documents and effects found on board and belonging to the passenger.
The Master will also take care with the safekeeping of the documents and belongings of the crewmember who died on board, taking a detailed inventory thereof with the assistance of two witnesses.”
3.2 What are the international conventions and national laws relevant to passenger claims?
To my knowledge, Panama has not adopted any international conventions related to passenger claims, including the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea.
Articles 141 through 155 of Law 55 regulate the transportation of passengers within jurisdictional waters.
“Chapter IVContract for the Carriage of Passengers by WaterwaysArticle 141. The contract for the carriage of passengers by sea shall conform to what is agreed upon by the parties, in the absence of such an agreement, the dispositions of this chapter.
Article 142. The passenger shall be deemed a shipper in regards to the luggage and other effects carried on board and the Master will not answer for anything that the passenger keeps under his immediate and personal custody, unless the damage shall in fact be caused by the Master or the crew.
Article 143. If no ship fare is agreed upon and if either of the parties requests that a fare be fixed, the fare will be fixed summarily by the judge of the place where the contract is executed, with the advice of experts.
Article 144. A vessel chartered solely for the carriage of passengers shall carry them directly, regardless of the number involved, to their port of destination, making the stops announced in the charter contract or those of common usage.
Article 145. If the passenger is not on board at the scheduled hour or abandons the vessel without the Master’s permission, when she is ready to leave port, the Master may undertake the voyage and demand the ship fare in full.
Article 146. Tickets issued in the name of the passenger may not be transferred without consent by the Master or consignee.
Article 147. If the passenger dies before undertaking the voyage, his heirs will only be liable for half of the agreed fare and the Master will reimburse them for the relevant portion.
If food and lodging expenses were included in the agreed price, the judge, at his/her discretion and with the advice of experts, will determine the amount due in favour of the vessel on such account. If another passenger takes the place of the deceased, there will be no amount due.
Article 148. If the voyage is suspended before it starts for the Master’s 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 the suspension is due to an Act of God or force majeure or any other cause not related to the Master or ship-ping company, the passenger will only be entitled to reimburse-ment of the fare.
Article 149. If a trip is suspended after it has begun, passengers will only be liable to pay the fare pro rata to the distance covered and will not be entitled to the payment for damages if the inter-ruption is due to an Act of God or force majeure, but will be enti-tled to an indemnity if the interruption is due exclusively to the Master. If the interruption is due to breakdown of the vessel and the passenger is willing to wait for repairs to be made, there will
Article 143. If no ship fare is agreed upon and if either of the parties requests that a fare be fixed, the fare will be fixed summarily by the judge of the place where the contract is executed, with the advice of experts.
Article 144. A vessel chartered solely for the carriage of passengers shall carry them directly, regardless of the number involved, to their port of destination, making the stops announced in the charter contract or those of common usage.
Article 145. If the passenger is not on board at the sched-uled hour or abandons the vessel without the Master’s permis-sion, when she is ready to leave the port, the Master may under-take the voyage and demand the ship fare in full.
Article 146. Tickets issued in the name of the passenger may not be transferred without consent by the Master or consignee.
Article 147. If the passenger dies before undertaking the voyage, his heirs will only be liable for half of the agreed fare and the Master will reimburse them for the relevant portion.
If food and lodging expenses were included in the agreed price, the judge, at his/her discretion and with the advice of experts, will determine the amount due in favour of the vessel on such account.
If another passenger takes the place of the deceased, there will be no amount due.
Article 148. If the voyage is suspended before it starts for the Master’s 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 the suspension is due to an Act of God or force majeure or any other cause not related to the Master or ship-ping company, the passenger will only be entitled to reimburse-ment of the fare.
Article 149. If a trip is suspended after it has begun, passen-gers will only be liable to pay the fare pro rata to the distance covered and will not be entitled to the payment for damages if the interruption is due to an Act of God or force majeure, but will be entitled to an indemnity if the interruption is due exclusively to the Master. If the interruption is due to breakdown of the vessel and the passenger is willing to wait for repairs to be made, there will be no increase in the ship fare, but the passenger will be required to pay for his own food and lodging during the stay.
If the vessel’s departure is delayed, the passengers may remain on board and will be fed at the expense of the vessel, unless such delay is due to an Act of God or force majeure.
If the delay is in excess of 10 days, the passengers who file a claim 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 payment of damages.
Article 150. If the contract is revoked, before or after the trip starts, the Master may claim whatever was provided to the passengers, if such revocation was not his fault.
Article 151. In all matters pertaining to the preservation of order and policing on board, passengers will submit themselves without distinction to the dispositions of the Master.
Article 152. For the convenience of or to please the passen-gers on board, the Master may put in at a port or enter an area deviating the vessel from its course, or stop where it was sched-uled or required to stop for more time than is required for naviga-tion purposes.
Article 153. Unless otherwise agreed, the passengers’ suste-nance during the trip is included in the ship fare, but if passen-gers pay for their own food, the Master shall be under the obli-gation to provide the sustenance required at a reasonable price and at the regular rate, in case of need.
Article 154. To collect ship fare and sustenance expenses, the Master may withhold any personal effects belonging to the passenger and, if these are sold, will have preference over other creditors, as in the case of collection of freights.
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?
Law 8 provides for the arrest of vessels for the following purposes: “Article 166. The arrest decreed by the Maritime Courts shall have as its purpose:1. To prevent the proceedings from having illusory effects
and keep the defendant from disposing, transferring, diminishing, encumbering or dissipating assets susceptible to said measure.
2. To bring to the competence of Panamanian Maritime Courts to try causes of action arising outside the national territory, as a result of facts or acts related to navigation when the defendant is outside of the jurisdiction, and in causes of action arising within the national territory when the plaintiff opts to arrest an asset of the defendant for purposes of serving the same with notice of the complaint. In both cases, an arrest constituted in accordance with what is established in this subsection shall have the effect of giving personal notice of the complaint; however, the plaintiff would have to comply with the process provided for in the last paragraph of Article 403.
A defendant is considered outside Panamanian jurisdic-tion when its effective domicile for business is outside the Republic of Panama, even if the corporation is Panamanian or, if it is foreign, is registered in Panama, or has branch offices or affiliates in Panama, or the ship is registered in Panama.
3. To physically attach property susceptible to arrest in order to assert privileged maritime liens, maritime encumbrances or any other claim which, according to the Law appli-cable to the proceedings, allows addressing the complaint directly against these. Arrest shall have the effect of giving personal notice on the sued property.
The petition for arrest may be included in the complaint, or otherwise be sought after the proceedings have begun, including the rules on how to proceed, which are as follows:
Article 167. The petition for arrest may be formalised in the complaint or may be filed in a writ during the process, and it shall clearly state the information that the petitioner has with regard to the place, date and time the arrest may be carried out if same is directed against a vessel, its cargo, freight or bunker.
In the event of arrests ordered subsequently to the commence-ment of the proceedings or after the defendant has appeared in court, the practice and purpose of the arrest shall be analysed and dealt with as if it were filed with the lawsuit. In this case, and as long as the arrest is not executed, it shall be dealt with in a separate book, which will be added to the main file once the said formality concludes.
In no case shall the defects of form in the complaint impede the execution of the arrest, nor shall they constitute a cause for lifting the same, as long as it clearly and precisely states the nature of the plaintiff’s motion and the corresponding warranty, if it may be determined by the interested party.
Article 168. The petition for arrest must be presented by the plaintiff with guarantee security of one thousand balboas (B/.1,000.00) in order to respond to the damages that the arrest may cause. However, in cases of arrest as per point 1 of Article 166, the guarantee security shall be fixed by the judge, at his discretion, and shall not be less than 20% or more than 30% of the amount in the complaint.
be no increase in the ship fare, but the passenger will be required to pay for his own food and lodging during the stay. If the vessel’s departure is delayed, the passengers may remain on board and will be fed at the expense of the vessel, unless such delay is due to an Act of God or force majeure. If the delay is in excess of 10 days, the passengers who file claim will be reimbursed for the fare, and if the delay is due solely to the fault of the Master or shipping company, they will be able to claim for payment of damages.
Article 150. If the contract is revoked, before or after the trip starts, the Master may claim whatever was provided to the passengers, if such revocation was not his fault.
Article 151. In all matters pertaining to the preservation of order and policing on board, passengers will submit themselves without distinction to the dispositions of the Master.
Article 152. For the convenience of or to please the passen-gers on board, will not bind or authorised the Master to put in at a port or enter an area deviating the vessel from its course, or stop where it was scheduled or required to stop for more time than is required for navigation purposes.
Article 153. Unless otherwise agreed, the passengers’ suste-nance during the trip is included in the ship fare, but if passen-gers pay for their own food, the Master shall be under the obli-gation to provide the sustenance required at a reasonable price and at the regular rate, in case of need.
Article 154. To collect ship fare and sustenance expenses, the Master may withhold any personal effects belonging to the passenger and, if these are sold, will have preference over other creditors, as in the case of collection of freights.
Article 155. If a passenger dies during the trip, the Master is authorised to take, with respect to the corpse, any dispositions required by circumstances, carefully storing any documents and effects found on board and belonging to the passenger. The Master will also take care with the safekeeping of the documents and belongings of the crewmember who died on board, taking a detailed inventory thereof with the assistance of two witnesses.”
Article 14 of Law 57, in its relevant part, provides that: “All vessels carrying passengers in waters subject to the jurisdic-tion of Panama or abroad, and carrying more than 12 passen-gers, shall secure an insurance policy for liability against accidents which shall cover loss of life and loss to property, as well as the risk of marine pollution. The minimum coverage and the decision as to whether the policy shall be submitted at the time that the vessel is registered shall be determined by the General Directorate of the Merchant Marine.
This Directorate may require similar financial cover for other types of ships operating in waters subject to the jurisdiction of Panama, or operating abroad, with the purpose of covering any damage provided for in international conventions, particularly in connection with pollution, damage suffered, and loss of life at sea.”
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Any indemnities under a transportation contract would be subject to the general one-year/six-month time bar provision of Article 1651 of the Code of Commerce.
For extra-contractual liability, the time bar would be one year as provided for in Article 1706 of the Civil Code.
In each case we consider that the time bar shall start to count from the time that the damages were caused.
Article 172. In case of vessels, even those of Panamanian registry, and of other chattel property, the arrest shall be deemed accomplished when the order from the court has been received by the person in charge of the custody of the asset or responsible for its possession or delivery of the same.
When the arrest is to attach vessels of Panamanian registry, the marginal notation contemplated in point 4 of Article 170 shall proceed only when arrest has been accomplished with prior phys-ical attachment of such vessels.
Notwithstanding the above, at the request of an interested party, the court may issue a request to the Director of the Public Registry to insert a marginal notation made against the owner-ship title of the vessel as evidence that a complaint has been filed against it before the Maritime Court.
The notation referred to in the paragraph above shall be included in every certification that the Registry issues in respect of the vessel.
Article 173. In cases where the property being arrested is real estate 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 not impede the order of new arrests over the same property as long as the new arrests are grounded on maritime liens.”
Another option is to pursue an injunction against the vessel, commonly known as “flag arrest” and which is based on Article 206 of Law 8, to wit.
“Conservatory Measures or of General ProtectionArticle 206. In addition to regulated cases, a person with reason to believe that during the time prior to a judicial recog-nition of his right he shall suffer immediate or irreparable peril, may request from the judge the most appropriate conservatory or protective measure as to provisionally secure, depending on the circumstances, the results of a judgment on the merits. The petitioner shall file his motion accompanying the prelim-inary evidence and, furthermore, the corresponding security for damages, which in no case shall be less than 1000 balboas (B/.1,000.00) or more than 50,000 balboas (B/.50,000.00). In necessaries and qualify as a maritime lien over the vessel as per Article 24 of Law 55, ranking ninth in case of prohibitions to transfer or encumber vessels or other assets, the bond shall not be less than 10,000 balboas (B/.10,000.00).
The motion shall be processed and decided pursuant to the rules of this chapter on arrest.”
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?
From a Panamanian substantive law perspective, the bunkers supplied to a vessel would be considered necessaries and qualify as a maritime lien over the vessel as per Article 24 of Law 55, ranking ninth in order of priority.
It is also relevant to say that a Panamanian court would also allow the arrest based on the substantive laws that may be deemed appli-cable to the bunker supply contract, if under such laws the claim for bunker supply constitutes a maritime lien against the vessel, regardless of what the law of the registry of the vessel, albeit that it is expressly stated in Law 8 (Article 566 on conflict of law rules) that the laws that apply to determine the maritime liens against the vessel are those of the country where the vessel is registered.
Notwithstanding the guarantee security provided as per the above paragraph, the party requesting an arrest shall consign to the order of 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 prop-erty, as well as the required expenses for its execution and release.
In the event that the property arrested is a vessel, this advance shall always be 2500 balboas (B/.2,500.00). In the cases provided in subsections 2 and 3 of Article 166, and notwith-standing 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 legit-imacy of its right.
Article 169. The Marshal may request from the sequestrating party, at any time, additional sums of money in order to cover the expenses incurred in the conservation, maintenance and custody of the arrested property if he deems it necessary.
Article 170. The arrest shall proceed without hearing the defendant, once the Secretary of the Court acknowledges the sufficiency of the security, the security offered has been consti-tuted, and the expenses requested by the Marshal have been received, as follows: 1. The Marshal of the Court shall travel to the place where
the property is found and immediately give notice to the person in charge and having custody of the same about the order for arrest. In the event of arrest of cargo located in a port and not found on board a vessel, it shall be under-stood that the person in charge of its custody is the corre-sponding customs or port authority.
2. The Marshal shall affix the arrest order on the navigation bridge of the vessel for as long as it is effective when the vessel, its cargo or its bunker are subject to the arrest.
3. When the arrested property is cargo not found on board a vessel, the arrest order shall be affixed on that cargo inso-much as possible.
4. In the event that vessels or other assets registered in the Public Registry are arrested, the Secretary of the Court shall notify the registry’s official of the order to insert the corresponding marginal notation and to abstain from recording any transaction that had been verified or that is verified by the defendant after the arrest has been consti-tuted. Such transaction or the registration made after such moment, notwithstanding the prohibition, shall be null. The order of arrest must be signed by the judge or, in his absence, by the Secretary of the Court, witnessing the authenticity of said order issued by the judge.
The order of arrest shall be communicated by electronic means to transmit documents to the Administrator of the Port where the vessel has arrived or will arrive, when the arrest is not made in the domicile of the court, and the Administrator shall act as Marshal for this purpose until the Marshal takes custody of the arrested property.
Article 171. The Marshal of the Court may request the partici-pation of the National Police or the air or maritime service in order to ensure its performance in an orderly manner and effect the arrest, and shall be able to utilise all the means necessary in order to comply with and enforce his orders, including the assistance of administrative authorities and holders of concessions of public services. In no case may the latter deny access to the Marshal and those accompanying him to the State premises that are operating under concessions by administrators or private companies, public or joint enterprises.
The judge may, in the arrest, order the physical ruling on persons that impede the Marshal from executing the duties provided in this law, according to Article 617.
4. Take the necessary measures to protect and preserve the arrested property.
5. Keep a punctual and daily accounting of all amounts he receives and of the expenditures incurred.
6. Render to the Court a report of the measures he has under-taken once a week and whenever the court officially requests it or when requested by a party.
The above shall not impede that the judge, upon request from the marshal, orders the hiring of a third party as special receiver when they need special facilities for the custody/maintenance of the arrested property, in which case the fees and expenses of said third party shall be on the seizer, and this special receiver shall not relieve the marshal from its legal duties as receiver.
The expenses to preserve and take custody of the arrested property correspond exclusively to the expenditures that are strictly necessary to the adequate preservation of the prop-erty. In no case said expenditures imply the substitution of the defendant in his obligations as shipowner or proprietor, and the judge and the parties shall supervise with detail that no unnec-essary or superfluous expenses are made.”
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The situations whereby a wrongful arrest can be found by the Court as well as the procedure to rule on a motion for wrongful arrest are provided for in Articles 187 through 190 of Law 8. This includes the right to claim damages arising from the arrest as part of the same motion, for which it would be necessary to provide to the Court evidence of such damages.
“Article 187. Whoever, in fault, error, negligence or in bad faith arrests a property or properties not belonging to the defendant or in contravention of a prior and express agreement between the parties of not arrest, or whoever files for arrest for the execution of an extinguished or inexistent privileged or in rem maritime lien, shall be liable for the damages caused, as well as for the payment of the costs and expenses arising out of said action. The determi-nation of the liability of the plaintiff as well as the damages caused to the offended party shall fall under the jurisdiction of the Court that decreed the arrest which will render a decision pursuant to what is proven in the corresponding proceeding.
Article 188. When a property or properties are arrested in the circumstances referred to in the preceding article, the owner of the property or properties arrested or whoever has their admin-istration or custody may request the Maritime Court to order the arrester to appear, in the course of time, to justify that the arrest was appropriate when it was ordered.
Article 189. The party requesting the judicial recourse referred to in the preceding article must accompany his pleading with clear proof (prueba fehaciente) that the arrest is wrongful. For purposes of this disposition, clear proof means evidence which establishes that the arrest has been performed over property which is different from the one against which the suit was brought, or which are not property of the defendant, or on which the maritime lien or in rem right for which the arrest was requested is extinguished or inex-istent, or that the arrest was requested in contravention of a prior agreement between the parties not to arrest, as the case may be.
The motion shall be notified to the arrester, according to Article 406, after filing it before the court. In any event, the motion to challenge the arrest (apremio) must be filed before or simultane-ously with the release of the arrest, upon depositing the respective surety. The judge shall try on the merits of the challenge to the arrest even after the arrest is released.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Regarding the obligations of the owner of the vessel, the vessel would be considered an asset against which can be subject to arrest, as such, as security for the results of the proceedings; or, if the cause of action arises outside of Panama, to give the court jurisdiction over the subject matter. This can occur in a situa-tion where the owner of the vessel is selling the same vessel, or another vessel, or its property, or purchasing another vessel.
On the other hand, if the owner sells the vessel to a buyer, including the transfer of ownership title, but pending payment of the purchase price, pursuant to number 13 of Article 244 of Law 55, the seller would have a maritime claim against the vessel for the unpaid purchase price and, if applicable, interest thereof.
4.4 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 options are available?
The arrest of cargo is also possible. Additionally, the bunkers can be arrested to give the court jurisdiction over its owner; for instance, a bareboat or time charter.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
The party whose property is arrested may put up security by way of: cash (and purchase of a certificate of judicial deposit); insur-ance bond; bank guarantee; or certain negotiable instruments from the State.
It is also possible for the parties to negotiate other types of security, including P&I letters of undertaking.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Yes. In fact, the posting of the necessary counter security is required in order for the judge to order the arrest. See Article 168 of Law 8, supra.
4.7 How are maritime assets preserved during a period of arrest?
Law 8 provides that, generally, the Marshal shall take custody of the arrested assets and, in practice, the same is entrusted to coor-dinate any costs related to the deposit of the assets, port charges and related costs in coordination with the accounts department of the Court and with the supervision of the Secretary and the judge.
“Article 176. The Marshal of the court shall be in all cases the bailee of the property under arrest and, in addition to the general obligations of bailee, shall have the following special obligations:1. Care for the conservation of the property arrested.2. Inform when the balance of the custody and maintenance
of an arrest are less than 1000 balboas (B/.1,000.00) as stated in Article 168.
3. Attend to the repatriation of the officers and crewmembers who request for repatriation by a writ addressed to the judge presiding the trial, when the arrested property is a vessel.
or if the party against whom the testimony is being presented does not object, unless the said party has had the opportunity to perform a cross-examination.
The foregoing shall not be applicable to the procedure estab-lished in chapter V of Title V.
Article 208. The evidence must be assessed as a whole, in conformity with the rules of constructive criticism, without prej-udice to the formalities prescribed in the substantive law for the existence or validity of certain acts.
The judge shall reasonably disclose the elements establishing the evidence and the merits corresponding to them.
The judge may dismiss outright those methods of adducing evidence which are prohibited by law, notoriously dilatory or brought with the purpose of obstructing the progress of the proceeding, and may also dismiss the submission of irrelevant or ineffective evidence.”
Parties would be obligated to disclose information through the various discovery motion options provided in Law 8, which include on-site inspections, request for documents, written ques-tionnaires, and request for admission of facts or documents.
General rules are provided for in Articles 227 et seq. of Law 8, as follows:
“2nd SectionDiscovery General DispositionsArticle 227. Any of the parties may request the other to reveal information and produce documents by any of the following: sworn declarations through oral or written questions; written interrogatories addressed to the parties; inspection of docu-ments or other objects; permission to enter on land or other properties for the purpose of making visual inspections and for other purposes; physical and mental exams; or request for the admission of facts, things or documents.
Article 228. Unless the judge has set limitations, any party may request of the others to provide or show information, things or documents with respect to any business not subject to a professional secret; which is relevant as to the object of a lawsuit and is related to the claim or the defense of any party including the existence, description, nature, custody, condition and location of any books, documents or any other objects and the identification and location of persons that have knowledge of any matter subject to discovery. The term to furnish docu-ments shall be of 45 days following receipt of the petition, and not requiring intervention of the court or of any edict.
The judge is entitled to impose fines up to 1000 balboas (B/.1,000.00) to the party that fails to answer.
Article 229. The parties may obtain information with respect to the existence and the contents of any insurance contract under which any person dedicated to the insurance business may end up being liable, in whole or in part, in respect to the judgment to be rendered within the proceedings, or to indemnify or reim-burse payments made in order to comply with the judgment.
For the purposes of this article, an application for insurance shall not be considered as part of the insurance contract.
If more ample information or additional documentation is requested, the Court may order that it be produced through other means subject to restrictions with respect to the scope of the discovery and the dispositions relating to fees and disburse-ments which the Court considers appropriate under Article 237.
Article 230. Upon request by the party from whom the discovery is requested and for just cause, the Court may order the resolutions necessary to protect a party against grievances, humiliation or unjustified expenditures, or any other abuse including the following:
Article 190. The motion shall be admitted if accompanied by the evidence referred to in the preceding article, and shall be subject to the proceedings corresponding to motions and to the following special rules:1. Once the motion is admitted, notice thereof shall be
personally given to the arrester or his attorney requesting his appearance in Court within a stated term.
2. At the hearing, the judge shall assess the evidence filed by the parties at the beginning of the hearing according to Articles 207 to 226, and in case that he determines that the arrest was inappropriate the Court shall order the Marshal to lift the same. In case that there is a cautionary measure standing on a guarantee that substitutes the arrested prop-erty or to that which was originally to be arrested, the court shall immediately return it to the arrested party.
3. The party defeated in his cause of action shall be ordered to pay, at the discretion of the Court, the expenses which shall include the damages that his action has brought about.”
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Law 8 provides for a number of options, including pre-trial inspections, as well as discovery motions such as requests for the production of documents, disclosure of information, written interrogatories and on-site inspections. These were adapted from certain United States Federal Rules on Discovery.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Law 8 provides the general principles by way of evidence that can be produced or requested, of which we would refer to the following basic ones, to wit:
“Chapter VIIEvidence1st SectionGeneral PrinciplesArticle 207. Documents, confessions, sworn statements, deposi-tions of a party and of witnesses, judicial inspections, expert opin-ions, reports, indications, scientific means and any other rational means which aid the judge in rendering a judgment may be utilised as evidence, provided that they are not expressly prohibited by law, nor contrary to moral or public order.
Replicas, reproductions, photographs of objects, documents and places and drawings, as well as other methods of reproduction of sounds, images, etc., may be utilised as evidence.
In order to ascertain whether an act can or cannot be performed in a given manner, the reconstruction of the same may be allowed. If the judge deems it necessary, the act may be recorded in photo-graphic or electromagnetic form.
In cases where the evidence is to be submitted in this manner, the obtaining of x-rays, radioscopies and haematological and bacteriological analysis and the performance of any other scientific experiment may be requested or ordered.
Testimony taken down or given out of court shall not be admissible except if it has been so agreed by the interested parties
other party to satisfy the expenditures incurred to demonstrate this, including attorneys’ fees. The Court shall decree said reso-lution unless it establishes that:1. the request was objectionable pursuant to Articles 279, 280
or 281;2. the requested admission lacked importance in connection
with the proceeding; or3. that there existed justifiable not to make the admission.
Article 238. The Court before which the lawsuit is pending on motion by a party may issue whatever orders it deems fair in connection with the omissions established hereunder and request the party that failed to proceed to satisfy the expenses, including attorneys’ fees, resulting from the omission, unless the Court deems that said omission was justifiable or that other circumstances would not justify imposing costs:1. Failure to appear before the officer that will take his declara-
tion after notice has been duly given. 2. Failure to answer or object to the interrogatory submitted
pursuant to Article 273.3. Failure to respond to the request for inspection formulated
pursuant to Article 284.Article 239. The non-appearance of the summoned party,
his failure to respond or his evasive response shall establish a presumption of truth with respect to the facts susceptible of being admitted which involve admissible assertive questions contained in the written interrogatories, and the judge shall make a notation to that effect during the hearing.
The same presumption shall be deduced with respect to the facts in the complaint or its answer when, there being no written inter-rogatory, the summoned party does not appear. If the questions are not assertive or the fact does not allow evidence of admission, the non-appearance, the evasive response or the failure to respond shall be construed as a presumption against the summoned party.”
5.3 How is the electronic discovery and preservation of evidence dealt with?
Based on the general principles of discovery previously mentioned and also based on certain rules regarding the judicial inspec-tion contained in the Judicial Code, as supplementary to Law 8, the maritime judges have ordered, together with an official of the Court, access to computers with the presence of a person in charge in the premises where the inspection is to be carried out, including on board vessels so as to extract and obtain print-outs of information that may be electronically stored. The judi-cial officer would render a report containing an inventory of the items obtained and that would provide value as to the veracity of the items so obtained.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Pursuant to Law 8, maritime claims that, in the context of Article 19 thereof, are to be tried before the Maritime Courts of Panama and appeals would be taken to the Maritime Court of Appeals.
In case of recourses for protection of constitutional rights (amparo de garantías constitucionales), the Supreme Court of Panama would rule on the matter.
1. That the disclosure not be permitted.2. That the disclosure is permitted only on specified terms
and conditions, including time, date and place.3. That the disclosure is made only by means of disclosure
other than the one requested.4. That certain matters not be investigated or that the scope
of the discovery be limited to certain matters.5. That the disclosure is made only to the persons designated
by the Court.6. That once a sworn statement taken down out of Court is
sealed, in conformity with what is established in subsec-tion B of 2nd Section of chapter VI, Title III of this Law, it may only be opened by a ruling of the Court.
7. That commercial secrets and other investigations, disclo-sures, or commercial information of a confidential nature are not to be revealed.
8. That the parties simultaneously present to the Court certain documents or information in sealed envelopes to be opened only when the Court so orders. If the request is denied, in whole or in part, the Court may order any of the parties to provide or allow the disclosure under the terms and condi-tions it considers fair. What is established in Article 237 is applicable to the payment of the costs related to the request.
Article 231. Unless the Court, on motion of a party, estab-lishes otherwise, for the convenience of the parties or the witnesses and in the interest of justice, the means of disclosure may be requested in any order; and the fact that the disclosure motion of a party is being processed, whether in the form of a sworn statement or another form, should not delay the disclo-sure requested by the other party.
Article 232. The party which has answered the request for disclosure in an exhaustive manner is not obligated to add to his answer information subsequently obtained except:1. In connection with any question directed towards estab-
lishing the identity or whereabouts of persons that have knowledge of facts on which they are obligated to testify.
2. If he obtains information tending to show that:a. His answer was not correct when made.b. Even though his answer was correct when it was made,
it is no longer correct.c. If the obligation is imposed by the Court or by agree-
ment of the parties; or at any time prior to the hearing through new requests calling for additions to the previous answers.
Article 233. Any party may request the Court, after duly giving notice to the other parties and all persons which may be affected, to order a specific disclosure.
Article 234. If the deponent party omits answering a ques-tion formulated or presented pursuant to Article 265 and 273, or a corporation or other entity fails to designate the natural person which will represent it or if one of the parties fails to answer the request for investigation pursuant to Article 227, or fails to allow the inspection requested, the petitioner may request the Court to compel an answer, or a designation, the requested inspection to be made. In the event that the request is refused, in whole or in part, the Court may order the precautionary measures estab-lished in Article 230.
Article 235. An evasive or incomplete answer shall be consid-ered, for the purposes of this Law, as a refusal to answer.
Article 236. A refusal to comply with what has been ordered by the Court shall constitute contempt of court.
Article 237. If a party fails to admit the authenticity of a document or the veracity of any affirmation as required by Article 279 and if the party requesting the admissions shows thereafter that the document was authentic or the veracity of the affirmation, said party may request from the Court to order the
b. personal service of process is made on the defendant or on its agent appointed for such purpose within the jurisdiction of the court rendering judgment;
c. the judgment is not rendered in default;d. the performance of the obligation sought to be enforced is
lawful in the Republic of Panama; ande. the judgment is authenticated in the country of origin.
This is a validation process done through the Fourth Chamber of General Affairs of the Supreme Court of Panama and it is known as “exequatur”.
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 limitations to the enforcement thereof, in the sense that, subject to the granting of an exequatur by the Panama Supreme Court, the courts of Panama would recognise and enforce a foreign, definitive and final arbitral award, provided that:a. the parties subject to the arbitration proceedings were not
subject to some incapacity under the laws governing the applicable arbitration clause or under the laws of the place where the arbitration was held, and that such accord is not illegal under the laws of Panama or under the laws of the place where the arbitral award was granted;
b. the condemned party was duly notified of the appointment of arbiters or of the arbitration proceedings and had the opportunity to defend itself in the arbitration proceedings;
c. the foreign arbitral award referred to a matter that was within the scope of the arbitration clause and did not include decisions that exceeded the scope of the arbitration clause; and
d. the constitution of the foreign arbitration tribunal and the procedure followed comply with what the parties agreed upon in the arbitration clause or, in the absence of any provi-sion to that effect in an arbitration clause, with the laws of the place where the arbitration was held.
Furthermore, Panama has ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
8 Updates and Developments
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.
Other than the issues described above, there are no particular trends to highlight at the moment.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The Centre for Maritime Conciliation, Mediation and Arbitration (Centro de Conciliación Mediación y Arbitraje Marítimo de Panamá – “CECOMAP”) was created in February of 2007. Its regulations were adopted in August of 2011 and updated in August of 2013.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Apart from CECOMAP, there are no other bodies that have such a role in Panama.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Advantages include that filing of evidence in English is permitted, even if translation into Spanish would be required at later stages, which in practice may not be of major relevance, and that mari-time judges are required by law to have knowledge of the English language.
Many practitioners and arbitrators also commonly speak English. The availability of Maritime Courts 24/7 for certain urgent actions, including arrests and their release is another advantage, as well as the fact that Panama has been tradition-ally a country of services, which provides a cultural element in procuring flexible and more efficient means to accomplish results.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Some rules – in particular, conflict of law provisions contained in Law 8 – have been subject to the interpretation of the courts and practising laws, further confirmed by the Supreme Court, which in some instances end up contradicting the law as to the substan-tive law applicable to determining maritime liens and other issues.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
In general, and pursuant to Article 1419 of the Judicial Code, any final judgment obtained in the courts of a foreign jurisdic-tion should be recognised and enforced without retrial or re-ex-amination of the merits of the original action, provided that (i) in the jurisdiction of said courts, the same treatment is given to judgments by the courts of the Republic of Panama, and (ii) the following requirements have been duly satisfied:a. the judgment is based on a personal cause of action;
213Arias, Fábrega & Fábrega
Shipping Law 2021
Jorge Loaiza III joined ARIFA in 1990 and became a partner in 2014.From 2000 to 2005, he was the London office’s resident lawyer. He is the head of the firm’s Shipping and Transportation Group and an ARIFA Compliance Committee member.Jorge stands as one of the leading shipping lawyers in the country. He has handled and is currently attending to numerous standard admin-istrative tasks in the areas of registration and mortgage filing procedures. He has also assisted and represented clients in complex sale and purchase deals, inventive ship security models, drafting of maritime contracts, under-construction ship finance structuring, technical aspects and compliance under international maritime conventions, and innovative maritime litigation strategies. He was one of the main contributors to the newly adopted Law for Promotion of Maritime Project Financing. He has been involved in maritime litigation and has promoted the creation of judicial precedents on asset arrests and flag arrests of ships, administrative filings, and other unconventional procedures.
Arias, Fábrega & FábregaARIFA Building, 10th Floor, West BoulevardSanta Maria Business DistrictPanama CityRepublic of Panama
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 system, 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.
by the 1992 Protocol (London), as well as the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (FUND Convention), including the latest 2003 Protocol. Additionally, the International Convention on Civil Liability for Bunker Oil Pollution Damage (BUNKER, London 2001) operates in Poland. All these legal acts have been additionally incorporated into the Polish Maritime Code.
Various domestic laws also apply, such as the 1995 Statute on the Prevention of Pollution from Ships, which, for example, allows the authorities the possibility of imposing fines on ship-owners of up to 1 million SDR.
(iii) Salvage/general averageThe Polish Maritime Code contains a separate chapter on salvage, but in most cases, the provisions of the 1989 International Convention on Salvage are applied since Poland has been a contracting state to this Convention since 2006. The Code is generally in line with the Convention and contains only minor differences. Claims for salvage reward and the reimbursement of expenses are subject to a two-year limitation period from the date on which the salvage operation was finished.
There is also a separate chapter in the Code on the General Average, and the provisions therein are largely based on the York-Antwerp Rules (as drafted by the CMI). Where no contract was made regarding the adjustment of the general average, article 255 § 2 of the Code refers to “the rules commonly accepted in international trade”. This regulation is deemed to be a reference to the Rules. Under the Code, claims resulting from the general average are subject to a two-year time bar, which is interrupted when the notification of a claim is given to the general adjuster.
(iv) Wreck removalAt the time of writing of this current version of the guide, Poland is not yet a contracting state to the 2007 Nairobi International Convention on the Removal of Wrecks. The Polish Maritime Code, and other acts, give the Polish maritime authorities the power to, e.g., order a wreck removal at the expense of the owner or sell the wreck and use the proceeds to recover certain costs. The owner 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 date by which the wreck will be removed.
(v) Limitation of liabilityPoland is a party to the 1976 Convention on the Limitation of Liability for Maritime Claims (LLMC) as amended by the 1996 Protocol and the Resolution LEG.5(99) to that Protocol, adopted by IMO’s Legal Committee. The Convention has also been incorporated into the Polish Maritime Code, which
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionWhether or not Polish substantive law applies to a particular collision is primarily determined by Regulation (EC) No. 864/2007 on the law applicable to non-contractual obligations (in particular, article 4).
Poland is a contracting state to three important pieces of legislation regarding collisions: (1) the Convention for the Unification of Certain Rules of Law with Respect to Collisions Between Vessels (Brussels 1910); (2) the 1972 Convention on the International Regulations for Preventing Collisions at Sea (COLREGs); and (3) the Convention on Certain Rules Concerning Civil Jurisdiction in Matters of Collision (Brussels 1952).
The provisions of the 1910 Collision Convention have been largely incorporated into the Polish Maritime Code. A vessel’s liability for a collision is, both under the 1910 Convention and Polish Maritime Code, based on fault; however, the Maritime Code additionally provides specific examples of what should be regarded as the fault of the vessel. It is worth noting that colli-sions with objects such as wrecks, buoys or dolphins are gener-ally not regarded as collisions as far as the Maritime Code is concerned and are thus out of the scope of the application of the Code. In such cases, the Polish Civil Code usually applies, and the vessel’s liability will almost always be strict (no-fault liability).
(ii) PollutionIn terms of the liability for pollution damage, there are separate regulations that apply to (i) oil pollution, (ii) bunker pollution, and (iii) general pollution (other than from oil and bunkers).
Liability for general pollution is, in principle, governed by the Polish Maritime Code, which makes the vessel’s actual oper-ator (rather than the registered owner) liable for the pollution resulting from the carriage of goods, the operation of the vessel, or the dumping of waste and other matter at sea. This liability is strict and generally cannot be avoided except in exactly defined cases. The liability for pollution is wide and includes damage suffered and the loss of profits, as well as the obligation to reim-burse for various unavoidable costs related to the pollution.
Poland is also a contracting state to the International Convention on Civil Liability for Oil Pollution Damage (CLC) as amended
In addition, the Polish Maritime Code contains regula-tions regarding a carrier’s liability (hence, also including cargo claims), which are mainly based on the provisions of the HVR.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Cargo claims can usually be brought by the person entitled to receive the cargo. That person can either be the charterer, the person nominated by the charterer (where no bill of lading (B/L) has been issued) or the “legitimate holder” of a B/L. According to article 144 § 3 of the Polish Maritime Code, the legitimate holder of a B/L is:■ inthecaseofastraightB/L–theconsigneenamedinthe
of the B/L has been made out, or the endorsee; or ■ inthecaseofabearerB/L–thebeareroftheB/L.
Cargo claims are made against the carrier envisaged in the contract of carriage, or (more often) those named in the B/L. If the B/L does not indicate the carrier, article 136 § 2 of the Maritime Code provides the presumption that the ship’s oper-ator is the carrier. If it is proved that the B/L names the carrier inaccurately or falsely, the ship’s operator is responsible towards the consignee of the goods for any loss or damage resulting there-from, but the operator will have recourse, in this respect, against the carrier. The other rules set out in the Code are also generally in line with the HVR.
It is worth noting that when a B/L is issued for a particular carriage of goods, the carrier cannot limit or contract out of the liability as defined in the Code. If, however, a B/L has been issued for cargo shipped under a charterparty, then this restriction applies from the moment when the B/L was endorsed to the third party.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The carrier can hold the shipper liable for any loss or damage resulting from inaccuracies or errors in the documents concerning the cargo that are necessary in order to perform the carriage, as well as for any losses resulting from a delay in providing such documents (article 123 § 2 of the Code).
More importantly, the carrier can hold the shipper liable for any loss or damage caused through an inaccurate or false decla-ration regarding the nature or character of the cargo. The ship-per’s liability is strict. If such a misdeclaration was made by a third party, which delivers the cargo in its own name but in fulfilment of the shipper’s obligation to deliver the cargo, then this party can also be held liable by the carrier, but only if the misdeclaration resulted from that party’s fault.
Where the B/L was issued, the Polish Maritime Code (article 132 § 2) generally incorporates the provisions of article III rule 5 of the HVR, and hence the shipper is under the obligation to indemnify the carrier against all loss, damages and expenses arising or resulting from any inaccurate or false statements as to the quantity, volume, number, weight, or marks of the cargo.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The Maritime Code provides a general two-year time bar in rela-tion to claims under the contract of carriage. However, cargo
additionally regulates domestic matters; e.g., it prohibits the operation of Polish vessels that do not have a certificate of insur-ance confirming cover in respect of maritime claims. The Code also requires the Polish authorities to check (during a ship’s inspection) whether such certificate is on board a vessel calling at a port in Poland.
(vi) The limitation fundLimitation funds can be established in accordance with the provisions of the above-mentioned acts and the Polish Maritime Code. These funds comprise:■ afundcreatedinaccordancewiththeLLMC;■ afundbasedontheFUNDConvention;and■ an additional fund created on the basis of the 2003
Protocol to the FUND Convention.The Code provides for the exclusive jurisdiction of the
1.2 Which authority investigates maritime casualties in your jurisdiction?
Maritime accidents are primarily investigated by the Marine Accidents Investigation Commission (somewhat similar to the UK’s Marine Accident Investigation Branch (MAIB)). In parallel, the Polish Maritime Chambers also hold jurisdiction over maritime casualty cases. However, civil and commercial claims arising in connection with the maritime casualties have to be pursued in civil proceedings before the respective public courts (unless an arbitration clause has been effectively agreed).
Where loss of life, personal injury, or significant damage to the environment occurs, the investigative and prosecuting authorities can also become involved (in particular, the Police, Border Force, or Public Prosecutors).
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Marine Accidents Investigation Commission was created to fulfil the requirements of Directive 2009/18/EC concerning the principles governing the investigation of accidents in the mari-time transport sector. The Commission carries out investiga-tions regarding marine accidents and incidents on a “no-blame” basis, and has a very wide authority (including its access to evidence), but does not deal with the apportionment of liability.
Conversely, the Maritime Chamber often considers not only the cause of accidents, but the possible apportionment of blame as well. It acts as a quasi-judicial body and issues final deci-sions upon the completion of proceedings (which can include evidence provided by witnesses, and the examination of log books, voyage data recorder (VDR) records, etc.).
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Poland is a party to the Hague-Visby Rules (HVR) and has also ratified the 1979 Protocol (SDR). The 2008 UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (Rotterdam Rules) was signed by Poland in 2009, but has not yet been ratified.
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?
The security proceedings regarding all types of claims are gener-ally regulated by the Polish Civil Procedure Code (CPC), which offers a wide range of security measures comprising freezing injunctions (including bank accounts), and mortgages and pledges. In particular, if a debtor owns a vessel which has been entered into the Polish register of ships (also including a vessel under construc-tion), then they could be encumbered with a compulsory mort-gage, if the creditor holds an enforceable judgment against the owner. In most cases, however, where the vessel’s owner has no assets in Poland except for their ship that is currently in Polish waters, the arrest of the vessel is the most convenient solution.
Poland is a party to the 1952 International Convention Relating to the Arrest of Sea-Going Ships (Arrest Convention), but not to the later 1999 Convention. The Arrest Convention only applies to 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 that (i) the claim is likely to exist (but not yet necessarily proven beyond doubt), and (ii) it is probable that the claimant has a “legal interest” in obtaining the arrest order. The legal interest require-ment means, in practice, that the claimant has to convince the court that without the arrest their claim would be impossible, or at least very difficult to recover (e.g., the ship most likely consti-tutes the only significant asset of the debtor).
The practical annotation is that in order to have the applica-tion for the vessel arrest recognised promptly, any foreign docu-ments need to be translated in advance. Failure to do so can cause major delays in obtaining the arrest.
The arrest of a ship can be obtained in Poland even if the Polish courts do not have jurisdiction in the main proceedings. It should be noted, however, that the court in Poland will give the claimant no more than 14 days to commence legal proceedings (either in Poland or abroad), if they have not already been started.
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?
Such arrest of the vessel is generally possible, either under the 1952 Arrest Convention (e.g., based on article 1(1)(k) viz. a claim arising out of the supply of goods or materials for a ship’s oper-ation or maintenance), or under the general provisions of the CPC, which give the right to basically secure any kind of claim that can be pursued in court. The Arrest Convention facilitates the arrest, as it also provides for the right to arrest a vessel oper-ated by the demise charterer.
The physical supplier may have difficulty in proving his claim 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 deci-sion with regard to the arrest. Therefore, it is possible – on a
claims against a carrier based on a B/L are subject to a one-year time bar from the date of the delivery of the goods, or the date when the goods should have been delivered.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The key provisions applicable to passenger claims arise from the 1974 Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea (1974 Athens Convention), as well as two regulations at European level: Regulation (EC) No. 392/2009; and Regulation (EU) No. 1177/2010 (see question 3.2).
In the case of passenger claims at domestic level, the provi-sions of the Polish Maritime Code apply, in particular including its articles 172–187. Furthermore, the Polish Maritime Code regu-lates matters which are outside the scope of the international and European regulations (such as, for example, certain rights of carriers in relation to stowaways).
In addition, the Polish Act on Inland Navigation provides (in article 9a) a further procedure for the assertion of passenger rights in the event of failure to receive a reply to a complaint made under article 24 of Regulation (EU) No. 1177/2010 or when the passenger contests a decision on a complaint submitted under this procedure.
3.2 What are the international conventions and national laws relevant to passenger claims?
Poland is a party to the 1974 Athens Convention, as amended by the 1976 Protocol. Poland has not ratified the 2002 Protocol; however, it is bound by its provisions via Regulation (EU) No. 392/2009 (see below).
At the European level, the following key regulations operate concerning the rights and obligations relating to passengers:■ Regulation (EC) No. 392/2009 of the European
Parliament and of the Council of 23 April 2009 on the liability of carriers of passengers by sea in the event of accidents. It should be noted that since Regulation (EC) No. 392/2009 implements the text of the 2002 Athens Protocol directly into the European Union Member States from 31 December 2012, the Protocol’s provisions apply to the extent envisaged by the Regulation.
■ Regulation(EU)No.1177/2010oftheEuropeanParliamentand of the Council of 24 November 2010 concerning the rights of passengers when travelling by sea and inland waterways, and amending Regulation (EC) No. 2006/2004.
At the domestic level, and to the extent that these matters are not regulated by Regulation (EU) No. 1177/2010, the provisions of the Polish Maritime Code apply primarily.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The Polish Maritime Code provides a two-year time bar for claims not covered by the Athens Convention or the Regulation No. 392/2009, such as, for instance, passengers’ claims resulting from delays in carriage, or claims for ticket refunds in the case of voyage cancellations.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
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 of the decision concerning the security, although this will always be subject to the court’s discretion. However, the security will cease to exist (regardless of the court or creditor’s view) if the debtor deposits the full amount of the security (as indicated in the motion for the security) in the bank account of the Ministry of Finance. If this is not done, the debtor can only negotiate an alternative security (bank guarantee, P&I letter of undertaking, etc.) with the claimant, in order for the claimant to agree to withdraw the motion for security. The creditor, however, does not have to consent to such an alterna-tive security.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Under Polish law, the court is not obliged to order the provision of counter security where an arrest is granted – such an order is subject to the court’s discretion. Nevertheless, the court may make the granting of security or its maintenance contingent on the submission of a counter security, both ex officio and at the application of an obliged person, in accordance with article 739 of the CPC. It is worth noting that, in practice, Polish courts rarely use this – this is more of an exception than a rule.
4.7 How are maritime assets preserved during a period of arrest?
According to the CPC rules, during the period of arrest, the ship ex lege remains in the management of the debtor. In specific cases, the court may appoint a third party as administrator, in particular where the management by the debtor is improperly carried out in a manner likely to prejudice the interests of the creditor.
The administrator is obliged to perform all actions necessary to preserve a ship and maintain its proper condition, and is also responsible for damage caused as a result of improper perfor-mance of his management duties.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Under Polish law, vessel arrest is considered a type of protec-tive measure aimed at securing both the claim and the future enforceability of a judgment or arbitral award. Thus, like other protective measures available to the claimants under the Polish Civil Procedure Code, the arrest will be considered “wrongful” if the claimant does not commence in rem proceedings within the deadline set by the court in the decision affirming the ship’s arrest (unless of course the parties reach a settlement after the arrest had been granted but before the deadline for commencing legal action or arbitration has lapsed). Similarly, if the claimant proceeds with the ship’s arrest but the subsequent lawsuit will concern a smaller claim or a different claim to the one which the arrest was supposed to secure, the arrest might be lifted by virtue of law and consequently considered wrongful. Furthermore, if the in rem action is eventually lost by the claimant or the lawsuit
prima facie basis – to convince the court as to the existence of a claim against the vessel and successfully arrest the ship.
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 of arrest. Poland is a party to the 1926 International Convention for the Unification of Certain Rules relating to Maritime Liens and Mortgages, and has not signed any of the later conventions. Article 2 of the 1926 Convention provides an exhaustive list of claims giving rise to maritime liens. It should be noted that a very similar list of maritime liens is later repeated in the Polish Maritime Code in article 91. The last (fifth) category provides for a maritime lien for claims resulting from contracts entered into or acts done by the master, acting within the scope of his authority away from the vessel’s home port, where such contracts or acts are necessary for the pres-ervation of the vessel or the continuation of its voyage. If the contract for the supply of the bunkers was entered into by the master in the above-mentioned circumstances, it may be easier for the claimant to arrest the ship in Poland (as it is justified by the possible enforcement of the lien against the vessel).
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Depending on the type of the specific claim arising from the contract of sale, the arrest of a ship is conceivable if the claim arises from “disputes as to the title to or ownership of any ship” as per article 1(1)(o) of the 1952 Arrest Convention.
Additionally, when the ship is not flying a flag of any of the states party to the 1952 Arrest Convention, the arrest can be based on the Polish domestic law. In such a case the claimant can request arrest even if the claim cannot be categorised as a “maritime claim” within the definition provided for in article 1 of the Convention. In such a case, the claimant must merely (i) demonstrate that it is likely that he has a claim against the shipowner, and (ii) that lack of security (arrest) would probably render enforcement of future judgment against the shipowner unsuccessful (in particular, if the shipowner has no other assets than the vessel in question).
4.4 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 options are available?
In general, the CPC contains a wide range of security measures comprising freezing injunctions (including bank accounts), and mortgages and pledges.
In addition, article 149 of the Polish Maritime Code gives the carrier the statutory right to refuse delivery and retain posses-sion of the cargo until the consignee covers the amounts relating to the carriage for which they are liable. The carrier will not be able to claim these amounts from the shipper/charterer once they have released the cargo to the consignee.
The Code also provides for the list of specific claims that are secured by a lien on the cargo. Claims secured with a lien on the cargo have priority over other claims, including those secured with mortgages (whether established by contract or the court’s decision). However, the lien will be extinguished once the cargo has been delivered to the consignee.
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims, as well as most transport-related disputes, are recognised by the commercial divisions of the regional or district courts (depending on the amount in dispute). Typically, the proceedings are started with a lawsuit being filed in the court and then served to the defendant (the latter moment constituting lis pendens and being decisive for preventing concur-rent proceedings which start in a different court or jurisdiction). The CPC invokes a system of preclusion, meaning in practice that parties need to present evidence and statements as early as possible, otherwise the court might not take them into consid-eration later.
The court will often order the parties to exchange further writs before scheduling a hearing, in order to narrow down the proceedings to only the disputed issues. Moreover, the court orders preliminary hearings during which the most important aspects of the case are introduced and organisation of the trial is planned. At a later stage, the witnesses will be heard, and the opinion of experts will be ordered (if required). The first instance proceedings are rarely closed within three months (save for judgments by default) and can take from six months to two years, largely depending on the complexity of each case and the involvement of the parties. Each first instance judg-ment can be appealed, but the second instance proceedings are usually shorter and are often concluded after the first hearing. Depending on the court of appeal, these proceedings will usually take no more than a few months.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Arbitration in Poland is still uncommon in maritime cases, and arbitration clauses from the standard forms (typically refer-ring to London arbitration) usually remain unchanged. There is, however, the International Court of Arbitration based in Gdynia, which is associated with the Polish Chamber of Maritime Commerce and predominantly deals with maritime disputes. Some commercial disputes with a maritime element are also dealt with by the Court of Arbitration at the Polish Chamber of Commerce which holds a list of many arbitrators qualified in law outside Poland.
Arbitration proceedings, unless arranged on an ad hoc basis, will usually be regulated by the terms and procedures of each tribunal, and the CPC will additionally apply (regulating, inter alia, the procedure for appealing from the award to the court).
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Mediation and alternative dispute resolution (ADR) have been promoted over the last few years and presently the courts strongly encourage parties to use mediation after the legal proceedings have been commenced. It is often the case that at an early stage in the proceedings, the judge will ex officio issue
is withdrawn by the claimant at some point (and no settlement regarding the consequences of the arrest is reached between the parties), the arrest can also be deemed wrongful.
In case the arrest is wrongful, article 746 § 1 of the CPC provides the defendant with the title to seek damages from the claimant. These damages can include both the actual loss as well as the loss of potential income. It should be noted that the action against the claimant is subject to a relatively short time bar (one year from the moment the claim for damages has arisen).
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
According to article 310 of the CPC, evidence can be secured if there is the potential risk that obtaining the evidence later will be impossible or very difficult, or if, for any other reason, it is neces-sary to determine the present facts. Evidence is secured by the court. Prior to the proceedings, this can be done only upon the party’s request; but once the proceedings have commenced, the court can also secure further evidence on its own initiative.
Where proceedings are subject to the Criminal Procedure Code (i.e., in the Maritime Chamber), the parties can also apply to the authorities in charge to collect and secure certain evidence.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Article 3 of the CPC (which applies to most commercial disputes in shipping) imposes a general obligation on the parties to the civil proceedings to act with decency and provide true informa-tion regarding the case without concealing anything. Witnesses are obliged to testify truthfully, and perjury is subject to prose-cution. The same penalty applies to parties if they provide false statements while under oath.
Parties are obliged not to impede the process of obtaining evidence and must comply with court orders regarding the delivery of certain documents. Failure to do so entitles the court to decide how this behaviour should be interpreted depending on the facts of each case (but usually leading to a conclusion that is disadvantageous to the party responsible for such failure).
5.3 How is the electronic discovery and preservation of evidence dealt with?
Evidence in electronic form shall be secured by the court as well as all other evidence. The party is obliged to provide electronic evidence to the court in a fixed form, by means of a digital media device (for example, on a CD or a flash drive). Furthermore, the electronic document should be followed up by its hard copy version.
law on the recognition/enforcement of judgments applies, the CPC will only have an ancillary application to a procedure.
In the case of judgments given in a state from outside the EU which, in addition, does not have any bilateral (or multilat-eral) agreement with Poland, the recognition and enforcement of such a judgment will be primarily governed by the CPC.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Poland is a contracting state to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958). Thus, arbitral awards given in other contracting states are recog-nised and enforced in Poland in accordance with the New York Convention.
Arbitral awards, as well as settlements made in arbitra-tion proceedings in countries which are not a party to the Convention, are recognised and/or enforced in accordance with the CPC. A proper application must be filed along with manda-tory attachments. As a rule of thumb, the foreign arbitral award will have to be recognised by the Polish court and once this takes place, the award can be enforced by the relevant enforce-ment officer/bailiff just like any Polish judgment.
The CPC provides that the recognition and/or enforcement of an award or settlement will be mandatorily refused by a Polish court if (i) according to Polish law, such dispute cannot be recognised in arbitration proceedings, or (ii) the recognition or enforcement of the award/settlement is contrary to the public policy of Poland. There is a list of defences provided by the CPC to prevent the enforcement of an award or a settlement.
8 Updates and Developments
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.
Safety measures introduced in court proceedings as a result of COVID-19 have improved the quality of litigation in Poland. Using the legislation introduced ad hoc, the courts are increas-ingly relying on online sessions (via Teams or similar software) allowing counsels and witnesses from various places to partic-ipate in the proceedings without commuting to the court and back. As a result, more sessions can be completed and there are less delays between each court hearing.
Furthermore, a massive revision of the CPC took place, with the objective of speeding up the proceedings. The courts are now encouraged to cooperate with lawyers on agreeing a proce-dural timetable and jointly devising a “road map” of the trial, although the judges are still at liberty to use the regular proceed-ings to hear the case.
It should be emphasised that in order to speed up commer-cial litigation, the new legislation limits the parties right to rely on witness evidence if specific facts could have been documented in writing or in e-mail. For this reason, the parties trading in Poland are advised to carefully consider if a specific fact or stipu-lation should be confirmed in writing or via e-mail, as it might be impossible to later prove a certain fact solely by providing witness evidence. This particularly applies to any contractual considera-tions of the parties which without a doubt, should be documented.
an order requesting the parties to try to reach a compromise through mediation within a given time. Whilst participating in the mediation is not compulsory, disputes are increasingly being resolved this way. One of the incentives of mediation is that reaching a settlement this way can entitle the claimant to the return of 100% or 75% of the court fee. Detailed regulations on mediation have been adopted into the CPC.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
Poland offers relatively low litigation costs, with low court fees (usually 5% of the claim amount but subject to a cap of no more than approximately. USD 54,000) and very reasonable attor-neys’ fees. Additionally, costs such as translations, commuting, and other expenses are considerably lower than in most Western European jurisdictions.
Arbitral institutions tend to be composed of experienced profes-sionals, generally well-prepared and well-versed in the merits of the matter. Among the most cited benefits of arbitration in Poland are its comparatively swift proceedings as well as its confidentiality.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
As an EU Member State, Poland shares a great deal of common legislation with other European countries; therefore, Polish judgments are quickly enforceable in Europe and vice versa. Commercial courts have also improved over the last decade, since they have been dealing with increasingly more trans-port-related cases, usually concerning parties from different jurisdictions.
The rather formal approach of Polish courts to procedural issues is one of the disadvantages that exists, but can usually be dealt with if the legal proceedings have been prepared in advance. In terms of speed, Polish courts are at Europe’s average level. Vessel arrests are carried out in days rather than hours, but this can in fact be seen by shipowners as an advantage.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Poland has been an EU Member State since 1 May 2004; there-fore, the recognition and enforcement of judgments given in other EU Member States is primarily regulated by the provisions of Regulation (EU) No. 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Therefore, judgments given in an EU Member State (except for Denmark, which has a separate agreement with the EU) are recognised in Poland without any special procedure being required.
In the case of the recognition and enforcement of judgments from outside the EU, various international conventions and agree-ments apply, both bilateral (e.g., with Russia, Ukraine, Belarus, etc.) and multilateral (e.g. the 2007 Lugano Convention, which applies between EU States – including Poland – and Denmark, Iceland, Norway and Switzerland). Where EU or international
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Shipping Law 2021
Maciej Grudziński is a qualified solicitor specialising in shipping law, marine insurance, international trade and the carriage of goods by road (CMR). He studied maritime law at the University of Southampton (LL.M.) and has considerable knowledge of English shipping law, including the carriage of goods by sea and marine insurance.Over the last 14 years, Maciej has furthered his experience by working for P&I correspondents and then as a claims handler for a major ship-owner, dealing with both Hull & Machinery and P&I insurance. He also worked for a mid-size law firm where he was involved in many aspects of shipping, including the sale of ships, ship financing and cargo claims, etc. Maciej regularly handles cases related to transport, and in particular, cases concerning contractual disputes (claims under charterparties, insurance claims and CMR claims), as well as claims in torts (collisions and ship sinkings, wreck removals and oil pollution). He also takes care of security and enforcement proceedings, including vessel arrests.
Piotr Rosicki is a solicitor who qualified in Poland, having previously spent several years abroad living and studying in both London and Rotterdam. Working in the legal profession since 2004, he provides legal advice in all matters related to maritime law (including legal assis-tance to Poland’s leading shipowners) as well as corporate law. In both of these fields, he took an active role in many projects, including establishing the legal terms of the development and operation of offshore enterprises, advising on some of Poland’s largest shipping and financing undertakings.Piotr has wide expertise in civil contracts and agreements, and his practice includes complex lease and sale contracts, including agreements relating to marine vessels, ship financing, maritime mortgages and service contracts in all areas of business (e.g., forwarding, transport, insurance and banking), as well as agreements regarding long-term cooperation or investments between business partners.
Rosicki, Grudziński & Co. is a Polish law firm advising clients mainly on transport law, in addition to insurance and international trade. Our exper-tise is largely focused on shipping law and international trade, as well as claims recovery, road carriage and all commercial disputes arising from trade, transport or otherwise. Our firm provides comprehensive legal services for the international busi-ness, including traders as well as 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.
or higher than 300 entering a Portuguese port are obliged to have an insurance covering the liabilities of the owner under the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC) and the 1996 Protocol.
In case of an accident, the owner of the vessel will be ordered to present to the Harbourmaster for approval, within a maximum of 30 days after the incident, a suitable plan for the removal of the vessel.
In cases where there is a risk of pollution, and if the vessel is not immediately removed, the authorities are allowed to choose the most suitable entity to remove the bunkers or other polluting substances on board the vessel. The owner or disponent owner of the vessel are liable for the payment of expenses incurred with the removal of bunkers, polluting substances or others.
(v) Limitation of liabilityPortugal was a party to the 1957 Brussels International Convention Relating to the Limitation of Liability of Owners of Sea-Going Ships as amended by the Brussels Protocol of 21 December 1979, but in June 2017, the Government approved for accession the 1976 LLMC Convention and the 1996 Protocol, which entered into force in January 2018.
(vi) The limitation fundDecree-Law No. 49029, dated 26 May 1969, determines the procedural rules for the establishment of the limitation fund. The applicant will have to justify the reasons for establishing the limitation fund, the amount calculated based on the applicable Convention, how the fund will be established, and attach a list identifying all the known creditors and amounts claimed.
1.2 Which authority investigates maritime casualties in your jurisdiction?
Maritime casualties in Portugal are investigated by Gabinete de Investigação de Acidentes Marítimos e da Autoridade para a Meteorologia Aeronáutica (GAMA). This public administration service was established in 2015 by Decree-Law 236/2015, dated 14 October.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
GAMA has the necessary powers to investigate casualties, to publish its reports and to issue recommendations in accordance with Directive 2009/18/EC, dated 23 April 2009.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionPortugal is a party to the 1910 Brussels Convention for the Unification of Certain Rules of Law Relating to Collision Between Vessels.
Portugal is also a party to the 1952 Brussels Convention for the Unification of Certain Rules Relating to Penal Jurisdiction in Matters of Collision or Other Incidents of Navigation, as well as to the 1952 Brussels Convention on Certain Rules Concerning Civil Jurisdiction in Matters of Collision.
(ii) PollutionPortugal has adopted the 1992 Convention on Civil Liability for Oil Pollution Damages (CLC), as well as the 1992 International Convention on the Establishment of an International Fund for Compensation of Oil Pollution Damage and the subsequent 2003 Protocol.
In 2006, Portugal adopted the 1990 International Convention on Oil Pollution Preparedness, Response and Cooperation (OPCR) and the 2000 OPCR-HNS Protocol to the OPCR Convention, and in 2015, the 2001 Bunkers Convention.
(iii) Salvage/general averagePortugal is a party to the 1910 Brussels Convention for the Unification of Certain Rules of Law Relating to Assistance and Salvage at Sea.
In 1998, with the publication of Decree-Law No. 203/98, the rules applicable to salvage were updated in line with the new 1989 Salvage Convention. The criteria for fixing the salvage reward were updated and enlarged in a way similar to those applicable under the 1989 Convention, and a special compensa-tion for situations where there is a threat of damage to the envi-ronment was also included.
General average is ruled by the provisions of the old 1888 Commercial Code. Provisions on the bill of lading (B/L) refer-ring to the York-Antwerp rules are considered applicable under the rules of the B/L.
(iv) Wreck removalPortugal has ratified the 2007 Nairobi International Convention on the Removal of Wrecks. The convention has been in force in Portugal since 19 January 2018. All vessels with a tonnage equal
nature of the goods to be transported as well as any particular requirements of the cargo (e.g. temperature).
The shipper is responsible for the damages resulting from the non-disclosure or incorrect or insufficient identification to the carrier of any relevant information on the cargo to be trans-ported, particularly where dangerous goods are concerned. The container weight is also relevant information to be provided and weighing costs will be charged to the shipper if the information provided is not accurate or reliable.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
A maritime claim will be considered time-barred if the one-year time limit established in the 1924 Brussels Convention is not respected. However, it is possible to obtain an extension of the time limit with the agreement of the carrier. The argument on a time bar will have to be put forward by the carrier on the defence arguments to be presented within judicial proceed-ings and the claimant will be able to submit counter-arguments before a court decision is given on the issue.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Portugal ratified the 2002 Protocol to the 1974 Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea.
Regulation (EC) No. 392/2009 of the European Parliament and Council, dated 23 April 2009, is also relevant to establish the obligations of the carrier.
3.2 What are the international conventions and national laws relevant to passenger claims?
The 2002 Protocol to the 1974 Athens Convention and Regulation (EC) No. 392/2009 of the European Parliament and Council, dated 23 April 2009.
It is also relevant to mention the national Decree-Law 349/86, dated 17 October, on the contract of carriage of passengers by sea.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The time limit of two years established on Article 16 of the 1974 Athens Convention should be taken into consideration. The carrier will have to put forward the time bar argument on the defence arguments to be presented within judicial proceedings and the claimant will be able to submit counterarguments before a court decision is given on the issue.
4 Arrest and Security
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?
Portugal is a party to the 1952 Brussels Convention Relating to the Arrest of Sea-Going Ships. Vessels sailing under the flag of a contracting state may be arrested for any of the claims listed under Article 1 of the said Convention. Vessels sailing under
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo 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.
National Decree-Law No. 352/86, dated 21 October 1986, is applicable to those situations not covered by the Brussels Convention. The main new rules introduced by this national Decree-Law, besides the clarification of the meaning of some words used in the Hague Rules, concern the definition of mari-time carriage as covering the period from port to port, the extension to carriage on deck of the provisions of the Brussels Convention regarding exoneration clauses and limits of 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 directly sue the vessel involved in those situations where the carrier is not identifiable through the B/L and when the B/L is issued by someone that is not the carrier.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The shipper and the receiver mentioned on the B/L are entitled to act against the carrier.
The provisions on the B/L apply to the contract of carriage. Charterparty clauses, if not expressly incorporated on the B/L, only apply to the parties entering the charterparty.
Clauses such as “said to contain” or “shippers load and count” are acceptable, provided that it is reasonable to expect that the carrier 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 carrier stowed, closed and sealed.
According to the provisions of the 1924 Brussels Convention (Article 4 No. 5), as updated by the above-mentioned Decree-Law No. 352/86, the limit of liability of the carrier corresponds to the amount of EUR 498.80 per package or unit mentioned on the B/L; when the goods are carried in containers, the number of packages or units identified on the B/L are considered for the calculation of the limit of liability unless the value of the goods is declared by the shipper, accepted by the carrier and included on the B/L before shipment.
The time limit to act against the carrier as stated on the 1924 Brussels Convention is one year after delivery of the goods or from the date the goods should have been delivered; extensions of the time limit are acceptable, provided that the carrier has granted the necessary permission.
The time limit to act is two years from when the loss or damage occurred before the cargo was shipped on board at the port of origin or after discharge at the port of destination; civil liability provisions apply to such damages.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The shipper is obliged, under the provisions of Article 3 No. 5 of the 1924 Brussels Convention, and of Article 4 of the above-mentioned national Decree-Law, to deliver to the carrier the list of cargo to be shipped on board, properly identifying the
223Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL
4.4 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 options are available?
The arrest of assets other than a vessel is possible under the provi-sions of national law regarding arrest, where besides producing evidence on the existence of the credit, it is also necessary to provide evidence on the need for the arrest as the only possible way of obtaining security for the payment of the debt.
Bunkers may be arrested, if it is possible to establish ownership thereof and that they belong to the arrestee.
The carrier is entitled to retain the cargo transported as a guar-antee for payment of the amounts in debt referring to the carriage.
According to recent national rules, shipping agents may also retain the cargo as a guarantee for payment of their own credits, as well as of the credits of the agent’s principal, thus including the carrier and enlarging the retention rights to previous unpaid transports.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Security may be provided in the form of a cash deposit at the court’s order; this would be the quickest and most effective form of security, giving rise to the immediate release of a vessel under arrest. A bank guarantee is the most commonly used form of security; if the wording is not previously discussed and accepted by the opponents, it will be submitted to the judge for approval. Protection and indemnity (P&I) letters of undertaking are only acceptable if they obtain the agreement of the other party.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
No. Although foreseen in the law, counter security from the arrestor is not requested.
4.7 How are maritime assets preserved during a period of arrest?
A trustee will be appointed by the court, most of the time after hearing the arrestor. The Master of the vessel or the shipping agent are frequently appointed as the trustee for the vessel. The trustee is supposed to take care of the vessel’s security and needs, informing the court and the arrestor thereof. In case the vessel is abandoned by the owner, the arrestor may be requested to pay for necessary expenses that will be reimbursed later when the vessel is sold or released from arrest.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Article 621 of the Portuguese Civil Code establishes the possi-bility for the vessel owner to claim damages from the arrestor in case of wrongful arrest or when the arrest is dismissed because of the inactivity of the arrestor in engaging the main proceeding subsequent to the arrest or in enforcing the judgment obtained thereafter. Civil liability rules will apply.
the flag of a non-contracting state may be arrested for any of the maritime claims listed in the Convention and for any other claim, provided that, besides the evidence on the probable exist-ence of the claim, the arrestor also provides evidence on the need for the arrest as the only possible means of obtaining a payment guarantee from the debtor.
The assets of the debtor may always be arrested, and it is necessary to provide evidence on the ownership of the vessel to be arrested. The vessel that gave rise to the credit may, in prin-ciple, always be arrested; to arrest a sister ship, it is necessary to provide evidence that such vessel is registered in the name of the same debtor.
The arrest application is submitted to court once the vessel has entered or is announced to enter a Portuguese port.
Within the next 24 hours (after-hours periods, holidays and weekends are not included), after analysing the arrest applica-tion, the judge gives a first detention order preventing the vessel from leaving the port; this detention order is immediately sent to the Harbourmaster office of the port where the vessel is staying. If the judge considers that the file does not have all the supporting documents and further evidence is necessary, the witnesses appointed by the arrestor are heard by the judge (normally within the next five days) to confirm the facts of the case, and the arrest order is given thereafter.
The arrestee then has 10 days to oppose the arrest, submitting written arguments and a list of witnesses if appropriate.
After the hearing of the witnesses for the arrestee, the arrest decision is either confirmed, dismissed or eventually changed (e.g. a reduction of the amount may be granted) in view of the new evidence put forward before the judge.
To release the vessel from arrest, either: (i) the parties reach any kind of acceptable agreement, the request for the release of the vessel is submitted to court by the arrestor and the arrest application is withdrawn; (ii) if an agreement is not reached, the arrestee may deposit the funds claimed at court and obtain the immediate release of the vessel; or (iii) the arrestee may present a bank guarantee and, provided that the wording is accepted by the arrestor and/or the judge, the vessel is released from arrest, and the main proceedings on the merits will then have to follow.
The competence of the Portuguese courts to deal with the main proceedings depends on the situation giving rise to the arrest; jurisdiction clauses are generally accepted. Counter secu-rity is normally not required.
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?
Yes, the arrest is possible as bunkers supplied may be considered maritime credits under Article 1 k) of the 1952 Brussels Arrest Convention.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Claims arising from contracts for the sale and purchase of a ship are not listed as maritime credits under the 1952 Brussels Convention Relating to the Arrest of Sea-Going Ships; there-fore an arrest for such claims would only be possible if the vessel is sailing the flag of a non-contractual state, and provided that evidence is given by the arrestor on the justified fear that unless the arrest is granted the arrestor will lose all chances of obtaining a payment guarantee from the debtor.
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The Lisbon maritime court is a first instance court competent for all maritime claim disputes taking place on the mainland. For the Islands of Azores and Madeira, the local civil court will be competent to decide all the maritime claim disputes. For regular proceedings, one should consider a timescale of about two years, unless the file is delayed with judicial inspections or service of documents or rogatory letters sent abroad.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There are no specialist arbitral bodies established to deal with maritime disputes.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There are no particular alternative dispute resolution bodies established to deal with maritime mediation. In some cases, it may be necessary to start a kind of mediation procedure before the Harbourmaster before engaging in judicial proceedings.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The Lisbon maritime court is a specialised first instance court established in 1987, presently with two permanent judges and competent to decide all maritime cases within our mainland territory. Because of the specialised area of activity, urgent cases such as arrest of ships are dealt with the necessary care and urgency. Portugal could therefore be considered a friendly forum for the arrest of ships, also bearing in mind that counter security is not requested and that jurisdiction clauses on the underlying contract will be accepted.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Decisions are disclosed within a timescale of about two years, unless the file is delayed due to unexpected circumstances or service of documents abroad.
Witnesses living abroad may be heard via videoconference or even Webex, thus reducing the cost of travel expenses.
Oral testimonies from witnesses appointed by the parties are very important for the final decision of a case.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
As Portugal is a member of the European Union, Regulation (EC) No. 1215/2012 of 12 December 2012 on jurisdiction,
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
According to Article 419 of the Code of Civil Procedure, in cases where there is a risk that it will become very difficult or impos-sible to obtain the testimony of certain persons (e.g. because of illness or travel abroad) or the verification of certain facts by way of inspection, it is possible to obtain such testimony or inspection in advance.
Such proceedings may be requested whenever the appli-cant considers suitable, within a court case which has already commenced, or when proceedings have yet to commence, even abroad.
The applicant will have to justify before the court, the need for such evidence to be produced in advance, identifying the parties against which the evidence obtained will be used (such parties will be called to the proceedings), the persons to be heard or the assets to be inspected and the facts on which evidence will have to be obtained.
The evidence thus obtained is recorded on tape or as a written document; it is considered valid and may be used against the iden-tified parties that took part in the evidence-gathering procedure.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Generally speaking, the party putting forward an argument has to produce evidence thereof by way of documents, oral testimo-nies or other means.
The court takes into account all the evidence produced, whether presented by the alleging party or the opposite party.
It is possible to obtain an order from the court for the oppo-site party to disclose documents or other necessary evidence items that are not voluntarily disclosed. The documents to be disclosed need to be identified by the requesting party.
Similar rules apply to third parties that may be compelled by the court to disclose documents or other pieces of evidence in their possession.
At the request and initiative of the judge, the parties involved in the litigation, or third parties, may also be compelled to disclose documents or other items to the court. The same rules apply to maritime disputes.
5.3 How is the electronic discovery and preservation of evidence dealt with?
All evidence-gathering procedures, when obtained outside judi-cial proceedings, may be challenged by the opposing party. Witness testimonies produced before the court are recorded on tape through the court’s recording system.
225Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL
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.
Jurisdiction clauses inserted in the B/L have, in the past, gener-ally been accepted as valid by the Portuguese courts; however, some recent decisions have considered that such clauses do not apply, essentially because the shipper/consignee has not expressly been informed in advance of the contents of the clause nor given its consent in writing thereto.
recognition and enforcement of judgments in civil and commer-cial matters applies. Judgments obtained outside the EU are subject to the procedure of recognition of foreign judgments by the Appeal Court before being suitable for enforcement. This recognition procedure aims at verifying: (i) the authenticity of the foreign judgment; (ii) that the decision is final and not subject to appeal; (iii) that the defendant has been regularly served; (iv) that the decision does not contain any provision contrary to the principles of international public order in force in Portugal; and (v) that the decision does not concern matters within the exclu-sive competence of Portuguese courts.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Portugal is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
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Shipping Law 2021
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, UK. She is a lawyer and has been a member of the Portuguese Bar Association since 1994. Since 2004, she has been a guest 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, RLAv. Elias Garcia, 176 – 2º Esq.1050-103 LisboaPortugal
Ana Cristina Pimentel & Associados, Sociedade de Advogados, SP, RL is a Portuguese law firm established in 1999. The law firm covers all areas of shipping, road and air transport as well as insurance law, repre-senting 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 association.
in cases falling within the scope of the CLC and the Bunkers Convention, prevalence shall be given to the said conventions.
(iii) Salvage/general averageRussia is a party to the International Salvage Convention 1989. Russian law on salvage is contained in Chapter XX “Salvage of Vessels and Other Property” MSC and is based on the Salvage Convention. Provisions relating to general average are located in Chapter XVI MSC and are based on the York-Antwerp Rules 1994. Most of the provisions in the Chapter are not mandatory and parties are free to agree to any version of the York-Antwerp Rules.
(iv) Wreck removalWreck removal is regulated mainly in Chapter VII MSC (Arts 107–114). The obligation to remove the wreck is placed upon the shipowner. Art. 109 MSC provides that the shipowner must raise and remove his wreck upon the order of a local harbour master if the wreck presents a threat to safe navigation, poses a risk of damage to the marine environment, or obstructs fishing activities or the normal functioning of the port. In 2021, Russia acceded to the Nairobi International Convention on the Removal of Wrecks 2007.
(v) Limitation of liabilityIn 1999, Russia acceded to the 1996 Protocol to amend the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC) with some reservations. Limitation of liability is dealt with in Chapter XXI MSC (Arts 354–366), which largely imple-ments the provisions of the LLMC. Art. 355 MSC contains a list of maritime claims subject to limitation, which is based on Art. 2 of the Convention. The increased liability limits of 2012 apply and are implemented into Art. 359 MSC. Similarly, the MSC incorporates the rules on limitation of liability with respect to oil pollution, bunker pollution, cargo claims, and passenger claims based on the respective international conventions.
(vi) The limitation fundThe limitation fund may be established by placing a cash deposit or by providing a bank guarantee or a liability insurer’s letter of undertaking (LOU) to the commercial court dealing with the claims subject to limitation. There have been rare cases where the liability underwriter’s LOU has been accepted for the consti-tution of the fund.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionRussian law on marine collisions can be found in Chapter XVII of the Merchant Shipping Code 1999 (MSC) (Arts 310–315), the provisions of which are based on the Brussels Collision Convention 1910. The COLREGS 1972 apply in Russia.
(ii) PollutionRussia is a party to the major international conventions, such as the UN Law of the Sea Convention 1982, the SOLAS 1974 and Amendments thereto, the MARPOL 1973/1978 and Protocols (Annexes I–VI), the Intervention Convention 1969 and the Protocol 1973, the International Convention on Oil Pollution Preparedness, Response and Co-operation 1990 (OPRC), the International Convention on Civil Liability for Oil Pollution Damage (CLC) and the Protocol 1992, the Fund Convention and the Protocol 1992, the Bunkers Convention 2001, the Anti-Fouling Convention 2001, Ballast Water Management Convention 2017, and others.
Some of the provisions of the said conventions are incorpo-rated into Russian legislation, in particular, in the MSC. Chapter XVIII MSC, which is based on the CLC, regulates liability for oil pollution and provides for liability limits as adopted by the IMO Resolution LEG.1(82). Chapter XX.1 of the MSC implements the provisions of the Bunkers Convention.
There are numerous internal legislative acts regulating pollu-tion and maritime pollution. The starting point is the Federal Law on the Protection of the Environment, as well as other federal laws, followed by governmental decrees, and regulations enacted by Russian administrative bodies, such as the Ministry of Transport and the Ministry of Natural Resources and the Environment. Domestic regulations also set requirements for oil response plans for ships and ship-operating companies and contain other environmental requirements.
Contrary to the provisions of the CLC and Bunkers Convention, national legislation provides for compensation for oil pollution damage (or damage caused by other pollutants) based on a math-ematical formula, according to which the amount of compensa-tion depends on the amount of pollutant spilled. Nevertheless,
whichever is the higher, provided that the nature and value of the goods had not been declared by the shipper before shipment and inserted into the bill of lading.
The carrier is not entitled to limit his liability if it is proven that the loss of or damage to the goods, or delay in their delivery, resulted from his personal act or omission committed intention-ally or with gross negligence.
The shipper and/or voyage charterer are liable for any damages caused to the carrier, unless they prove that the damage was not caused by their fault.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
If inflammable, explosive, or dangerous goods are misdeclared and the carrier could not establish their nature and character by external inspection upon receipt, such goods may at any time be unloaded, destroyed, or rendered harmless by the carrier without compensation to cargo interests. The shipper is liable for all damages and expenses directly or indirectly arising out of, or resulting from, such goods. The freight for the carriage of such goods is non-returnable. If freight was not paid upon ship-ment, the carrier is entitled to recover it in full.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The time bar for claims under bills of lading or voyage char-ters is one year (Art. 408(1) MSC). The date from which the limitation period runs may be different, depending on whether the claim is for cargo loss, damage, or delay, or whether it is to recover demurrage, detention, or dispatch (Art. 408(2) MSC). It is mandatory to follow a pre-trial procedure before filing a claim against the carrier to court.
The statute of limitations must be specifically pleaded as a defence.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Rules concerning passenger claims are contained in Chapter XI MSC (Arts 177–197). This Chapter largely follows the 1974 Athens Convention and the 1976 Protocol.
3.2 What are the international conventions and national laws relevant to passenger claims?
In late 2018, Russia acceded to the 2002 Protocol to the Athens Convention, denouncing the previously applicable 1974 Convention and the 1976 Protocol. Chapter XI MSC has not been amended yet to reflect the changes and is still largely based on the old Athens Convention and Protocol.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The time bar for most passenger claims is two years. The date from which the limitation period runs may be different, depending on whether the claim is for personal injury or death,
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Federal Transport Supervision Authority and its branch offices in Russian ports investigate marine casualties.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
In the case of an incident at sea, e.g. a collision, capsizing, or grounding, the shipowner is under a duty to inform the rele-vant port authority and to present evidence for investigation. The investigation of incidents involving only Russian-flagged vessels is conducted in accordance with the procedures set out in theOrderoftheMinistryofTransport№308/2013.Wheneverat least one foreign-flagged vessel is involved in the incident, the investigation proceeds under the rules of the IMO Casualty Investigation Code (Resolution MSC.255(84)).
The law enforcement agencies have very wide investiga-tion powers to identify and bring charges against the respon-sible persons if there is reason to believe that an administrative offence or a crime has been committed, e.g. in oil spill cases, serious casualties resulting in loss of life, etc.
As far as casualty response is concerned, the Ministry of Emergency Response gets involved if a major casualty occurs and participates in the casualty response. In specific cases (e.g. oil spills), salvage and response companies, whether state-owned or private, act in accordance with the shipowner’s oil pollution emergency plan and contract with the shipowner for emergency response. Such salvage/response companies will participate in casualty response along with the authorities from the Ministry of Emergency Response.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The Hague-Visby Rules (with the 1979 SDR Protocol) apply. Most provisions of the Rules are incorporated in Chapter VIII MSC. However, some provisions of the Hamburg Rules have also been included in that Chapter, although Russia is not a party to the Hamburg Rules. Russian law on the carriage of goods by sea is quite complex, as some of the Hague-Visby Rules relating to contracts of carriage covered by a bill of lading are extended to apply to charterparties.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Cargo claims may be brought against the carrier, who, under Russian law, is defined as the shipowner, bareboat or time char-terer, ship operator, or other person entering into a contract of carriage with the shipper in his own name.
The list of defences available to the carrier in claims for cargo damage, shortage, or loss, is similar to, and largely based on, Art. IV of the Hague-Visby Rules.
The carrier’s liability for any loss of or damage to the goods is limited to the equivalent of 666.67 units per package or 2 units per kilo of gross weight of the goods lost or damaged,
remain in force throughout the proceedings on the merits and until completion of the execution proceedings by a forced sale of the vessel.
An arrest application must be filed with a commercial court in whose jurisdiction the vessel is located (i.e. the port of discharge/loading) or with a court of general jurisdiction if the arrest is sought to secure a claim for death, personal injury, or wages. The applicant must present evidence that the vessel is within the court’s jurisdiction (typically, a confirmation from the harbour master), evidence relating to the maritime claim and its amount, as well as evidence concerning the vessel’s owner-ship, the party liable for the maritime claim, etc.
Under Art. 93 CPC, an arrest application is considered by a single judge without notice to the parties. The decision whether or not to order an arrest must be taken within one day after the application is filed; if that day is a weekend or a public holiday, then on the day following immediately thereafter.
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?
A bunker supply claim is a maritime claim, but under Russian law, it is not secured by a lien. Russian law recognises only in personam claims. Thus, only a contractual bunker supplier can arrest the vessel to secure a claim against his immediate contractual coun-terparty if the latter is the shipowner (see question 4.1(d)). A physical supplier is not entitled to arrest the vessel if he has no contractual relations with the shipowner. In order to arrest a vessel, the procedure described in question 4.1 must be followed.
Nevertheless, despite the fact that ship arrests are not very common in Russia, a number of wrongful arrests occur each year, where Russian courts grant arrest applications of physical bunker suppliers who do not have contractual relations with the shipowner. The courts’ reasoning is based on a misinter-pretation of the last sentence of Art. 4(3) of the 1952 Arrest Convention: the courts find that the physical bunker supplier may arrest the vessel based on the sole fact that a bunker supply claim is a maritime claim against the vessel, regardless of the fact that his contractual counterparty is not the shipowner (e.g. a bunker trader). Sometimes, physical bunker suppliers mislead the court by asserting that they are contractual bunker suppliers for the purpose of obtaining an arrest.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Similarly to the provisions of the 1952 Arrest Convention, Art. 389 MSC recognises any disputes about ownership or possession of a vessel as maritime claims. Art. 390(1) MSC expressly allows the arrest of a vessel in respect of which a maritime claim has arisen if the claim relates to the right of ownership or posses-sion of that vessel.
4.4 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 options are available?
Any type of security from any liable party is possible pursuant to the provisions of the CPC. The party seeking the arrest of cargo, bunkers, etc., or requesting another form of security for securing its claim against a party other than the vessel’s owner, shall prove to the court, on the balance of probabilities, that
or for baggage loss or damage (Art. 409(1)(1) MSC). The statute of limitations must be specifically pleaded as a defence.
4 Arrest and Security
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?
Russia is a party to the 1952 Arrest Convention. The provisions of Russian law on ship arrests are contained in Chapter XXIII MSC. It must be noted that Russia is not a particularly arrest-friendly jurisdiction. Most applications for arrest are denied. At the same time, a number of wrongful arrests are ordered each year.
A ship may be arrested only in respect of a maritime claim if:(a) the claim is secured by a maritime lien;(b) the claim is based on a mortgage or hypothecation of the
ship;(c) the claim relates to the ownership or possession of the
ship; or(d) in respect of another maritime claim, provided that the
person who owned the vessel at the time when the mari-time claim arose is liable in respect of that claim, and is its owner at the time when the arrest proceedings began, or such a person was a bareboat charterer of the ship liable for the claim at the time when that claim arose and at the time when the arrest proceedings began. Russian law also recognises the arrest of sister ships.
The list of maritime claims in respect of which a vessel may be arrested under Russian law includes claims listed in Art. 1 of the 1952 Arrest Convention, as well as some claims from the 1999 Arrest Convention, such as claims for insurance premiums, commissions, brokerages or agency fees payable in respect of the ship.
Art. 6 of the 1952 Arrest Convention provides that the arrest procedure is governed by the law of the state in which the arrest is sought. In Russia, most arrest cases are considered by the commercial courts under the provisions of Chapter 8 (“Measures to secure a claim”) of the Commercial Procedure Code (CPC) and arrests are treated as ordinary interim security measures.
Under Arts 90 and 99 CPC, an arrest of property (including an arrest of a ship) can be granted by the commercial court at any stage of the already pending litigation, at the execution stage, and also before any proceedings on the merits.
In order to obtain an arrest order, the applicant must persuade the court that: (1) without arrest, it would be “difficult or impossible to
enforce” a future judgment or an arbitral award on the merits, or that it may become necessary to enforce the court judgment outside Russia; or
(2) arrest is necessary to prevent “considerable damage” to the applicant.
It is at the judge’s sole discretion to assess the arguments of the applicant with due regard to proportionality of the claim to any potential damages that the shipowner may sustain.
If the arrest is granted by the court before proceedings on the merits begin, the applicant must, within 15 days from the date of the arrest order, file his substantive claim with the arresting court or present evidence that proceedings on the merits commenced in another competent court or arbitral tribunal, failing which, the arrest is lifted.
The arrest may be lifted on the shipowner’s request if he provides security for the claim in the form of a cash deposit, bank guarantee, or a P&I LOU. Otherwise, the arrest will
The remedy for a wrongful arrest is a claim for damages against the party who requested the arrest. General rules for damages suffered as a result of the wrongful arrest apply.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
There are no special provisions with respect to securing evidence in relation to maritime claims. Russian procedural codes gener-ally allow to secure evidence before or after the commencement of proceedings. A party who has justifiable reasons to believe that a specific piece of necessary evidence will become impossible or difficult to preserve may apply to the court and request the court to secure that piece of evidence. That party must explain to the court the facts that will be proven by the evidence in question and the reasons why this evidence needs to be secured.
The CPC uses the same procedure for securing evidence as for the provision of interim security measures (e.g. for arrest). In practice, this means that the court will issue a ruling ordering the evidence to be collected and, for example, placed in a secure storage. Such court rulings are executed by bailiffs authorised to obtain access to collect evidence and, for example, place it for secure storage for further examination by the court or court-ap-pointed experts.
Evidence can be obtained by an official inquiry of a lawyer (admitted to the Bar).
According to Chapter XX of the Federal Law on Notaries, evidence may also be secured by a Notary Public. Notaries are authorised to question witnesses and inspect written and phys-ical evidence.
Chapter XXIV MSC and Chapter XIX of the Federal Law on Notaries refer to “sea protests”, which are issued by the Notary Public based on the master’s statement, data from the ship’s logbooks, and interrogation of the master and at least two senior and two junior ship officers by the notary. The application for issuing a sea protest may be submitted to the Notary Public within 24 hours from the moment of the vessel’s entry into port.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Under Russian procedural law, the starting point is to send a copy of the statement of claim along with all evidence and supporting documents to the opponent and other parties to the proceedings by registered mail. Evidence that a copy of the statement of claim and supporting evidence were sent to the other parties must be presented to the court upon filing of the claim. Otherwise, the court will defer acceptance of the claim for consideration until such evidence is presented.
New evidence may be presented at further stages of proceed-ings at first instance pursuant to Art. 65 of the CPC, under which a party to proceedings is obliged to disclose the evidence to other parties prior to the start of the court hearing, unless a different deadline is set by the judge. Failure to do so may limit the party’s ability to refer to non-disclosed evidence in support of its claims.
there is a risk of non-enforcement of the future judgment on the merits, or that the applicant will suffer considerable damage unless the security is granted.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Russian procedural codes do not contain a comprehensive list of acceptable forms of security. The most common types of secu-rity are cash deposits into the court’s account and bank guaran-tees. LOUs of Russian fixed-premium insurers are also generally accepted. P&I Club LOUs are occasionally accepted, but would have to be substantiated by additional evidence of the Club’s financial standing along with an explanation of the nature of a P&I Club, as most Russian judges are not familiar with this type of security. Russian courts may be especially reluctant to accept Club LOUs in cases where Russian state-owned entities and/or their subsidiaries affected by US and EU sanctions are involved in the proceedings. In 2017 and 2018, several commercial courts specifically referred to sanctions when refusing to accept Club LOUs as security releasing a vessel.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Providing counter security is not mandatory. A commercial court has discretion as to whether to order counter security or not and in what amount on a case-by-case basis. The amount of counter security may match the amount of the claim plus interest but may never be less than half of the claim value. Providing counter security increases the chances of obtaining the arrest order but will not automatically lead to the arrest application being granted.
4.7 How are maritime assets preserved during a period of arrest?
The arrest is effected by the bailiff’s service on the grounds of the arrest order and a writ of execution. The bailiffs issue their order for arresting the maritime asset, and order for the assets to be placed in custody. The custodian can either be the claimant, the defendant or a third-party custodian. In cases of arrest of manned vessels, the bailiffs usually order for the vessel’s master to be the custodian. In case of arrest of unmanned vessels or other assets, the bailiffs may choose the asset to remain under the custody of its owner or appoint a third-party custodian.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The test for a wrongful arrest would be whether the final judg-ment on the merits of the claim could be enforced against the arrested vessel (by the judicial sale of the vessel). In other words, whether the defendant to the maritime claim was correctly iden-tified, or the claimant was exercising a maritime lien over the vessel (for claims secured by a maritime lien). A dismissal of the claim means that the arrest, which was granted to secure the claim, was wrongful.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The specialist maritime arbitral institution tribunal in Russia – the Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation in Moscow (MAC). However, maritime disputes are also considered by other (non-specialised) arbitral institutions.
Enforcement of arbitral awards is dealt with in the CPC. In general, it is similar to the procedure for the recognition and enforcement of foreign awards under the New York Convention 1958, to which Russia is a party. Upon recognition of an arbi-tral award, the state commercial court issues a writ of execution to be enforced by bailiffs.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There are no specialist maritime ADR bodies in Russia. The MAC offers mediation. Mediation is possible but is not popular and very few maritime disputes are referred to mediation.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The principal advantage of using national courts is that a final judgment can be anticipated within one to one-and-a-half years from the date the claim was filed (this term includes the term for appealing the first instance court judgment in the appellate and Cassation Courts).
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Commercial litigation in Russia is fast and relatively cheap. One may expect to receive a final judgment within one to one-and-a-half years from the date of filing the claim. However, the speedy nature of litigation means that, in many instances, cases are considered very superficially, while courts are overloaded – especially in St. Petersburg and Moscow, where it is common for judges to have 40–70 hearings every week.
In many cases, judges rely heavily on incident investigation reports prepared by administrative bodies, surveys and expert reports. The success of a party litigating in Russia largely depends on the ability of its lawyers to obtain evidence and work with experts in complex disputes, such as collisions and other casual-ties. The ability of lawyers to present a complex maritime case in a brief and simple manner is also crucial, since judges usually have no or very limited experience in maritime law or business.
Although there are a growing number of maritime cases considered by Russian courts every year, their percentage share is quite insignificant and most of the judges have little prior exposure to shipping issues and are not experienced in maritime law. Nevertheless, there are judges in the commercial courts of Russia’s “marine regions” (e.g. St. Petersburg, Murmansk, Vladivostok, Krasnodar, Petropavlovsk-Kamchatsky) who would demonstrate a considerable understanding of maritime law. Some of those judges have had experience in the shipping industry prior to their judicial careers.
The time bars and limitation periods under Russian law are relatively short. The general limitation period under Russian law is three years, while limitation periods for most maritime claims are even shorter. A one-year limitation period applies to cargo, towage, marine agency, time and bareboat charter claims,
There is no general duty on the parties to disclose all rele-vant materials and litigation generally proceeds on the basis of evidence, which each party can gather itself. Although a party might apply to the court for a request for production under Art. 66 CPC, such requests must identify specific documents in the party’s possession and are therefore rarely used. Moreover, penalties for contempt of court imposed for failure to comply with these requests are minimal.
Although Art. 66 CPC theoretically allows requests for produc-tion addressed to non-parties, they are quite rare in practice.
There are no specific disclosure obligations or procedures in maritime disputes.
5.3 How is the electronic discovery and preservation of evidence dealt with?
There are no special procedures for electronic discovery or pres-ervation of electronic evidence in Russia.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?There are no special maritime courts in Russia. Maritime disputes between commercial entities are generally considered by Russian commercial courts. Claims by individuals (crew, passen-gers, etc.) are considered by the courts of general jurisdiction.
There is one first instance commercial court in every region of the Russian Federation (84 in total). At first instance, the court usually considers a claim within six months and renders a judg-ment. The consideration of the case may be delayed for longer – up to a year or more, depending on the dispute’s complexity and the parties’ use of dilatory tactics. However, it is not very likely to be delayed for longer than a year, as judges tend to dispose of cases promptly and consider them rather superficially.
A judgment at first instance enters into force 30 days after the day on which it was delivered in the final form unless it is appealed. If appealed, the judgment does not enter into force until the case is heard by the appellate court. This usually takes around two months from the date of filing the appeal.
Once the appellate court rules on the matter, the judgment enters into force immediately and the court issues a writ of execution. The writ may then be presented to a bank or to court bailiffs for forced recovery of monies adjudged or forced execu-tion of non-monetary obligations, e.g. redelivery of a vessel.
The appellate court’s judgment may be appealed to one of Federal Courts of Cassation (the third instance courts). The Courts of Cassation may in some cases order a full retrial and remand to the first instance court, where the case will be consid-ered afresh. Appeals before Courts of Cassation usually take around two months from the date of filing the appeal. If the case was remanded for retrial and a new judgment is issued at first instance, it is possible to appeal against the new first instance judgment all the way up.
The court of final appeal in Russia is the Supreme Court, but the grounds for appeal are very narrow and specific, and the Court accepts only a small number of appeals.
specialised maritime courts or judges specialising in the field, and so complex maritime disputes are occasionally considered by ordinary commercial judges who are overloaded with work. The latter factors occasionally lead to an unexpected judgment. The Russian courts have been increasingly protective in recent years towards Russian state institutions and major Russian companies, companies with the participation of the Russian state (as share-holder or otherwise).
Whilst cabotage carriages were always restricted to foreign-flagged vessels (except for some special exceptions) by Art. 4 MSC, the restrictions have been further extended to the carriage of hydrocarbons. Promoting vessels to fly the Russian flag has been accomplished by allowing for the sea transportation of oil, natural gas, gas condensate and coal mined in the territory of the Russian Federation (including the continental shelf ), and loaded onto ships in the water area of the Northern Sea Route, up to the first point of unloading/reloading, to be accomplished only by Russian-flagged vessels. The same applies for storage of those commodities, if such storage is carried out on a ship in the water area of the Northern Sea Route. There is a trend of developing this protectionist policy further, where not only the requirement for the vessel to fly the Russian flag would be imperative, but also for the vessel to have been built in a Russian shipyard.
A new Russian Maritime Law Association (https://www.RUMLA.org) was recently established and registered by the Ministry of Justice of the Russian Federation. It is a non-profit organisation gathering practitioners, academics, representa-tives of ship-owning companies, insurers, brokers, etc., for the purpose of allowing Russia to have an input into important inter-national shipping conventions and to bring about conformity in the enforcement of maritime law conventions in the Russian Federation. The RUMLA provides a forum for those who are engaged in international maritime trade and organises and partic-ipates in seminars and conferences in the maritime industry.
As of 2021, the RUMLA is publishing Russia’s first-ever fully bilingual (Russian-English) Maritime Law Journal with reviews of jurisprudence and developments in maritime law.
The RUMLA is an influencer in Russia in the shipping industry and facilitates the co-operation of different persons involved in the maritime sector.
as well as to general average claims. A two-year period is set for passenger, marine insurance, collision and salvage claims.
Russian courts may apply foreign law upon request of the parties or if such law applies through a choice-of-law clause, as well as in other cases provided for in Russian conflict of laws rules and international conventions.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
As a general rule, foreign judgments can be recognised and enforced in Russia if an international treaty to which Russia is a party provides for such recognition and enforcement. Foreign court judgments can also be recognised and enforced in the absence of a treaty on the grounds of comity and reciprocity.
The procedure and grounds for refusing enforcement are set out in Chapter 31 CPC and are for the most part identical to the provisions of the New York Convention 1958.
When recognition/enforcement of a judgment from an EU Member State is sought, Russian courts also refer to Art. 6 of the European Convention on Human Rights and the EU-Russia Partnership and Cooperation Agreement 1994.
A number of English, Dutch, Korean and US commercial judgments have been recognised and enforced in Russia on the grounds of comity and reciprocity. Recognition/enforcement may be denied if, inter alia, there is evidence that recognition of Russian judgments is denied in the originating foreign state.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Foreign arbitral awards are enforced and recognised under the New York Convention 1958, which applies directly to such awards. Enforcement of awards is therefore a relatively straightforward procedure and the number of enforced awards is significant.
8 Updates and Developments
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.
Russia is generally a complex jurisdiction, with a lack of legal certainty and uniform application of law. There are no
233NAVICUS.LAW
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Konstantin Krasnokutskiy is the founder and managing partner of NAVICUS.LAW. He is also the co-founder and president of the modern Russian Maritime Law Association (https://www.RUMLA.org) and a member of the Ukrainian Maritime Law Association; he annually attends the Comitee Maritime International (CMI) meetings.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, collisions in ice involving nuclear icebreakers, and the largest (US $60m) maritime claim in Russia’s history so far for the International Group of P&I Clubs.Konstantin advises shipowners and P&I Clubs and regularly participates in shipping and legal conferences across the globe. Konstantin is an associate member of the Chartered Institute of Arbitrators and is fluent English, Russian and Greek.
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(vi) The limitation fund■ 1992CompensationFundforOilPollutionDamage.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The investigation is conducted by the Maritime Authority called Agence Nationale des Affaires Maritimes (ANAM).
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
ANAM is responsible for researching, recording and investi-gating offences relating to maritime navigation, marine pollu-tion, the public maritime domain, traffic at sea and the adminis-tration of seafarers and ships. This Authority is responsible for conducting investigations and is able to question the Captain, members of the crew and witnesses. It also inspects the ship and the premises in the location of the incident.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The main national law governing marine cargo claim is the Merchant Marine Code which sets out the duties and liabilities of all parties involved in the execution of a contract of carriage of goods by sea.
At international level, the applicable convention consists of the Hamburg Rules to which Senegal is a Party since 1st November 1992.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
One of the key applicable principles is that the carrier is deemed liable for the damage to the cargo unless she/he can prove that the damage occurred while the goods were under the shipper’s repre-sentative or the receiver’s control.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe key provisions are laid out in the following legal instruments:■ Article 195 and following as well as Article 664 and
following of Merchant Marine Law No. 2002–22 dated 16th
August 2002.■ Article66andfollowingofthe2001EnvironmentalLaw.■ The COLREG International Regulations for Preventing
Collisions at Sea.
(ii) PollutionThe provisions governing marine pollution are incorporated in the following legal instruments:■ TheMerchantMarineLawNo.2002–22dated16th August
2002 under Articles 115, 576 & seq., Articles 664 & seq.■ The Decree regulating the application of the Merchant
Marine Law, notably Article R69 relating to the posting of a bond or financial guarantee.
■ Convention internationale de 1992 International Convention on Civil Liability for Oil Pollution Damage.
■ 1992CompensationFundforOilPollutionDamage■ Article66& seq. of the 2001 Senegalese Environmental Law.
(iii) Salvage/general average■ Article232& seq., and Article 671 (Salvage) of the Merchant
Marine Law No. 2002–22 dated 16th August 2002.■ BrusselsConventionfortheUnificationofCertainRules
with Respect to Assistance and Salvage at Sea (Brussels 23 September 1910).
■ BrusselsConventionfortheUnificationofCertainRuleswith Respect to Assistance and Salvage at Sea.
■ Article210& seq. and Article 667 (General Average) of the Merchant Marine Law No. 2002–22 dated 16th August 2002.
■ York&AnversRulesforGeneralAverage.
(iv) Wreck removalArticle 250 & seq. of the Merchant Marine Law No 2002–22 dated 16th August 2002.
(v) Limitation of liability■ Article 198 & seq. of the Merchant Marine Law No
is entitled to request that the local court issue an arrest order against the vessel to which the bunker was provided, or even a sister ship under certain ownership-related conditions. Indeed, for the latter, proof must be established of the economic link or tie between the sister ship and that which has received the bunker supply.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
The sale and purchase contract may give rise to the legally binding owernership over a vessel.
Based on that premise, it is possible under Senegalese law to request an arrest order according to the general commercial law.
4.4 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 options are available?
The party that is not the vessel owner should seek from the local court an order to lift the lien exercised over her/his cargo. She/he would have to prove that she/he has any contractual relation-ship with the claimant. If, despite that evidence, the lien over the cargo is authorised then the cargo owner would have a right for legal action against the vessel owner.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
In Senegal, the general practice is both a P&I letter of under-taking as well as a bank guarantee. However, the latter tends to be more often requested in order to lift a maritime claim-based arrest or lien.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
It is not common practice for the Senegalese courts to order the provision of counter security where an arrest is granted. However, Article 110 of the Civil Procedure Code provides for a Senegalese debtor to request a caution judicatum solvi when the claimant is a foreign national.
4.7 How are maritime assets preserved during a period of arrest?
In the arrest order, the court indicates how the maritime assets (be they vessel or cargo) are taken care of during the period of arrest. Generally, the vessel is placed under the custody of the Port Authority and the goods are discharged and placed in custody in a private warehouse. Expenses relating to the security of both the vessel and the cargo will be borne by their respective owners.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The vessel is deemed wrongfully arrested when the court declares the arrest baseless. In that case, the owner who suffers financial loss or other damage, as a result of the wrongful arrest, will be
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
That may be the case, for example, when the shipper’s declara-tion relating to the goods has proven false and led to a Customs fine, penalty or caused damage to the carrier.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
As Senegal has joined the 1978 Hamburg Rules, the time line set by Senegalese law in relation to maritime cargo claims is consistent with the above referred Convention, i.e. two (2) years starting from the date at which the goods have been delivered.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Two provisions that are applicable are: Articles 471 & seq. of the Merchant Marine Act as well as the 1974 Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea.
3.2 What are the international conventions and national laws relevant to passenger claims?
Article 471 & seq. of the Merchant Marine Act as well as the 1974 Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Legal action for passenger claim lapses after two (2) years. The time limit for notification of loss or damage and the starting point of this limitation period is set in accordance with the provisions of Article 15 of the 1974 Athens Convention.
4 Arrest and Security
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?
To secure a maritime claim a party would generally request an order for the arrest of the owner’s vessel to exercise lien over that ship. To lift the arrest, the owner would have to post a secu-rity in the form of a P&I letter of undertaking or a bank guar-antee. This option is also open to the local Maritime Authority when it detains a vessel which has, for example, violated the marine environmental laws and regulations.
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?
Yes, a claim related to the bunker supply is listed by the Merchant Marine Law among maritime claims. Hence, the bunker supplier
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The principal advantages of using:■ Nationalcourts:auniquewaytoobtainanarrestorderas
well as an arrest-lifting decision.■ Arbitral institutions: cases areheardby shippingprofes-
sionals including less lenghthy proceedings compared to commercial courts.
■ Alternative dispute resolution (ADR): Mediation/concilia-tion are not in use in maritime cases, even though sometimes cases are settled amicably through negotiation.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Parties engaged in maritime commerce should be aware of Customs fines for manifest-related shortages. This can lead to the payment of huge amounts of money, even though parties can still explore negotiation avenues to settle the matter.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Senegal is a signatory of the 10th May 1958 International Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Further, the key provisions of this Treaty are embedded in the Arbitration section of the Senegalese Code of Civil Procedure.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
These provisions are enshrined in the Code of Civil Procedure and relate mostly to the recognition and enforcement of domestic arbitration awards.
8 Updates and Developments
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.
After almost 20 years of application and given the developments which have taken place in the shipping industry worldwide, the Senegalese government has undertaken to reform the 2002 Merchant Marine Act. In particular, issues relating to oil pollu-tion should be addressed as Senegal has recently discovered huge reserves of offshore oil and gas. Legal issues relating to (i) the posting of bonds or the provision of financial guarantees, (ii) the delivery of goods in the absence of the bill of lading, and (iii) elec-tronically submitted trade documents including the bill of lading, should be addressed by the upcoming legislation.
entitled to sue the wrongful arrestor to seek full compensation for the consequences of such an arrest of the vessel.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
As a civil law jurisdiction, Senegalese litigation procedures are of an accusatory nature, i.e. the examination of witness and pre-action disclosure are not common practice. Evidence to support a claim must be presented to the court after having been submitted or provided to the other party in the litigation proceedings.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
As a general rule provided by the Civil Procedure Code, the claimant must disclose all her/his evidence to the other party. Failure to do so would lead to the dismissing of her/his legal action.
There are no specific disclosure rules applicable to maritime disputes. The general rule set out in the Code of Civil Procedure does apply.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Despite some efforts towards the use of electronic devices in court proceedings, courts and parties still have to resort to manually presented and preserved evidence.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims are dealt with by general commercial courts, as there is no specialised maritime court. The applicable procedures are that of the general commercial claims (see question 5.2).
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?Senegal has set up an Arbitration and Mediation Centre at the Dakar Chamber of Commerce, which is competent to hear all commercial cases, including maritime cases.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction? The Arbitration and Mediation Centre at the Dakar Chamber of Commerce, which is competent to deal with maritime medi-ation. However, it is worth noting that parties neither have to resort to mediation, in general, nor maritime mediation, in particular.
237AF Legal Law Firm
Shipping Law 2021
Dr. Aboubacar Fall is the firm’s Senior Partner. He is a member of the Senegal Bar and a former member of the Paris Bar (France). Dr. Fall has been practising law for over 30 years. He has worked for over 10 years as Principal Legal Counsel for the African Development Bank (AfDB) Group and has served for three years as Chairman of the Management Board of the African Legal Support Facility (ALSF). Dr. Fall is the President of the Senegalese Maritime Law Association and the Senegalese Society of International Law. He is a Titulary Member of the Comité Maritime International (CMI) and has published extensively on maritime law and law-of-the-sea-related matters. In 2015 and 2016, he was nominated as one of the 100 most influential people in Africa by the magazine Financial Afrik. Dr. Fall’s areas of expertise include, among others, banking & finance, maritime & aviation, international business, trade finance, project finance, private equity and M&A, energy, mining, oil & gas, infrastructure (PPP), fraud & white-collar crime, international (commercial & investment) arbitration & ADR.
AF Legal Law Firm217 Rue de Diourbel X Rue BPoint EDakarSenegal
Papa Bassirou Ndiaye is a junior Senegalese lawyer. His profile is made up of legal as well as business training. Indeed, after a Masters in Banking & Financial Engineering from the African Institute of Management (IAM), he earned a LL.B. in Economic Law from Cheikh Anta Diop University of Dakar (UCAD).Mr. Ndiaye is currently studying for a Masters degree in Law at Cheikh Anta Diop University of Dakar (UCAD).He is fully bilingual in French and English and is experienced in the utilisation of ICT tools.
AF Legal Law Firm217 Rue de Diourbel X Rue BPoint EDakarSenegal
AF LEGAL Law Firm was created in 2019 from the merger of FALL & Co Law Firm and the Law Offices of Macodou NDOUR, both members of the Senegal Bar Association. AF LEGAL Law Firm is a full commercial service law firm with its main offices in Dakar (Senegal). It comprises the two founding partners, a Special Counsel, two Legal Counsels, four Of Counsels, a Junior lawyer and three support staff. The firm practices domestic and international law.
(b) damage caused by measures so taken, subject to the excep-tions and limitations specified at ss4–6 of both Acts.
Where the pollution falls outside the ambit of s.3 of both Acts, shipowners remain liable to pay for costs of measures reasonably taken by the appointed authority for removal of discharged pollut-ants and/or to reduce damage caused by the resulting contam-ination (s.18, Prevention of Pollution of the Sea Act (Cap. 243) (“PPSA”)). The International Convention for the Prevention of Pollution from Ships (“MARPOL”), as modified by the Protocol of 1978, has legal effect in Singapore (s.34, PPSA).
(iii) Salvage/general averageThe existing statutory framework on salvage is set out at ss166–177 of the MSA. There are presently no criteria for fixing the amount of reward for salvors, or any special compensation to salvors who prevented or minimised environmental damage.
Salvors are entitled to a “reasonable” amount of salvage to be determined in the event of a dispute (s.167, MSA). Disputes as to salvage (if not settled by agreement, arbitration or otherwise) where: (1) parties to the dispute consent; (2) the value of the prop-erty saved does not exceed S$50,000; and (3) the amount claimed does not exceed S$50,000, are determined summarily by the Singapore District Court (s.168(1), MSA), which often calls mari-time assessors and/or valuers of salvaged property. Disputes as to salvage which do not fall under s.168(1), MSA are determined by the General Division of the High Court; however, if the claimant does not recover in the General Division of the High Court more than S$50,000, he shall not be entitled to recover any costs, charges or expenses incurred by him in the prosecution of his claim unless the General Division of the High Court certi-fies that the case is a fit one to be tried by the General Division of the High Court.
The Merchant Shipping (Miscellaneous Amendments) Act 2019 (No. 3/2019) gives force of law to the International Convention of Salvage 1989 (“Salvage Convention”) in Singapore. However, commencement of implementing provisions under the act has not been announced. Until such time, the existing framework applies.
In respect of general average, the York-Antwerp Rules are often adopted in marine insurance contracts governed by Singapore law, and have long been applied by courts in Singapore in determining general average contributions.
(iv) Wreck removalPart IX of the MSA and the Merchant Shipping (Wreck Removal) Act 2017 (No. 25/2017) (“MSWRA”) makes provi-sion for the removal of wrecks within Singapore territorial waters. Singapore is a party to the 2007 Nairobi Convention (“Nairobi Convention”), which is given force of law by way of the MSWRA.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe key legislation in respect of collisions at sea is the Merchant Shipping Act (Cap. 179) (“MSA”) and the Maritime Conventions Act 1911(Cap. IA3) (“MCA”). These two acts are construed as one pursuant to s.10 of the MCA. The rule as to the division of liability is set out at s.1(1) of the MCA. If by the fault of two or more ships, damage or loss is caused to those ships, cargoes or freight, or to any property on board, liability to make good the damage or loss shall be in proportion to the degree in which each ship was at fault; where impossible to do so, liability is apportioned equally. In the event of loss of life or personal inju-ries, s.2(1) MCA provides that the liability of each ship at fault shall be joint and several.
As regards the ascertainment of fault, the International Regulations for Preventing Collisions at Sea 1972 (“COLREGS”) have force of law in Singapore pursuant to the Merchant Shipping (Prevention of Collisions at Sea) Regulations (s.3) and the Maritime and Port Authority of Singapore (Port) Regulations (s.28).
(ii) PollutionThe Merchant Shipping (Civil Liability and Compensation for Oil Pollution) Act (Cap. 180) and Merchant Shipping (Civil Liability and Compensation for Bunker Oil Pollution) Act 2008 (Cap. 179A) (collectively, “both Acts”), gives effect to the 1992 Civil Liability Convention and Bunker Pollution Convention 2001, respectively, governing liability arising from oil pollution.
Part II, Division 1 to both Acts sets out the liability of ship-owners as a result of any occurrence of oil pollution – s.3(1) of both Acts provides that shipowners are liable for:(a) damage caused by contamination resulting from discharge/
escape of oil; (b) cost of measures reasonably taken thereafter to prevent or
reduce contaminated damage so caused; and (c) subsequent damage caused in the territory of Singapore by
such measures.Further, s.3(2) of both Acts provides that where a grave and
imminent threat of damage caused by the resulting contamina-tion arises, shipowners shall be liable for:(a) the cost of any measures reasonably taken for preventing
crew/passengers involved with the incident; and (4) require that ships be docked for hull survey (Part V and ss205–206, MSA).
TSIB-appointed investigators will have expanded powers under the Transport Investigations Safety Act 2018 (No. 36/2018), which has been enacted but has not yet commenced. The expanded powers are to:(1) access accident site premises and/or transport vehicles/
wreckages; (2) examine, make records of, search for, transfer and/or seize
evidential material; (3) obtain information from persons acquainted with the inci-
dent and compel provision of documents/information; (4) require performance of an autopsy or medical examination; (5) detain, take control and possession of and move transport
vehicles reasonably believed to hold evidence; and (6) control access to accident sites and transport vehicles/
wreckages, and prevent movement of vehicles.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The Hague-Visby Rules (“HVR”) are given the force of law in Singapore by the Carriage of Goods by Sea Act (Cap. 243). The Bills of Lading Act (Cap. 384) (“BLA”) governs the acquisition of contractual rights against the carrier by a transferee of a bill of lading as well as the imposition of contractual liabilities on the transferee of the bill.
Although Singapore is a signatory to the Hamburg Rules, it has not been implemented in Singapore. Singapore is not a signatory to the Rotterdam Rules.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Under s.2 of the BLA, a marine cargo claim can be brought by any of the following:(a) the lawful holder of a bill of lading;(b) in the case of a sea waybill, the person to whom delivery of
the goods is to be made by the carrier in accordance with the contract of carriage; or
(c) in the case of a ship’s delivery order, the person to whom delivery of the goods is to be made in accordance with the undertaking contained in the order.
All rights of suit under a contract of carriage shall have trans-ferred to and vested in any of the above persons as if he had been a party to that contract. Thus, a lawful holder of a bill of lading can sue the carrier under that bill. Do note, however, that under s.3 of the BLA, a person who demands delivery or makes a claim under the contract of carriage shall become subject to the liabilities under that contract. In relation to a bill of lading, the contract of carriage means the contract contained in or evidenced by that bill.
Where rights under a bill of lading have been transferred to a lawful holder, the transfer extinguishes the shipper’s (or other transferor’s) rights against the carrier under the bill of lading, but he is not freed of his liabilities thereunder (ss2(5) and 3(3), BLA).
When a vessel is declared a wreck, registered owner(s) are to remove wrecks determined to constitute a hazard within a dead-line specified by the Maritime and Port Authority of Singapore (“MPA”) (Arts 7–9, Nairobi Convention; s.7, MSWRA). If the registered owner fails to do so, or where the wreck requires immediate action, the MPA may remove the wreck (ss8–9, MSRWA; Art. 6, Nairobi Convention).
Where costs are incurred by authorities for locating, marking and removing a wreck, the registered owner is liable for such costs, save where exceptions circumscribed at Art. 10 paragraph 1, Nairobi Convention are made out.
(v) Limitation of liabilityThe limitation of liability of shipowners, charterers or insurers (or any other person alleged to be liable) for certain maritime claims is provided for statutorily at Part VIII of the MSA.
Singapore is party to the 1976 Convention on Limitation of Liability for Maritime Claims ( “LLMC”). The LLMC provides an avenue for alleged liable parties to limit their liability for certain maritime claims (listed at Art. 2) via the constitution of a limitation fund in relation to the claim.
The LLMC has force of law in Singapore under the MSA, except in relation to wreck and cargo removal claims under Art. 2.1(d)–(e). The Protocol of 1996 to amend the LLMC (“1996 Protocol”) (as further amended in 2012) was implemented on 29 December 2019.
(vi) The limitation fundThe limitation fund may be constituted by depositing the sum into court, or by producing a guarantee acceptable under Singapore law and considered to be adequate by the court (Art. 11, LLMC). This includes letters of undertaking from a P&I club.
The size of the fund is dependent on the nature of the claim and the tonnage of ships involved, in accordance with the prescribed limits set out at Arts 6–7, LLMC (as updated by the 1996 Protocol). New limits prescribed by the 1996 Protocol only apply to liability arising from incidents occurring post-implementation. For prior incidents, the preceding set of limits under the LLMC shall apply.
Where a limitation fund is constituted, any person who has a claim against the fund is thereafter barred from claiming against any other assets of those for whom the fund was constituted (Art. 13.1, LLMC).
1.2 Which authority investigates maritime casualties in your jurisdiction?
In Singapore, the Marine Safety Investigation Branch of the Transport Safety Investigation Bureau (“TSIB”) and the Ship Investigation Department of the MPA investigates maritime casualties.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
MPA officers and TSIB-appointed investigators are empow-ered, in the course of investigations, to: (1) board and inspect any part of a ship; (2) order the production of books, certificates and/or documents to assist in the investigations; (3) question
passengers the ship is authorised to carry. For claims in respect of loss of or damage to property, and in respect of loss resulting from delay in the sea carriage of passengers or their luggage, the general limits in Art. 6(1)(b), which depend on the size of the vessel, would apply.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
There are no specific statutory time limits for passenger claims in Singapore. Applicable time limits depend on any prescriptive clauses in the contract between carrier and passenger. Otherwise, the time limit for actions founded in contract or tort is six years from the date on which the cause of action accrues pursuant to the Limitation Act (Cap. 163).
For personal injury claims, where an action is brought for damages for negligence, nuisance or breach of duty (including contractually imposed duties), the statutory time limit is three years, from either the date the cause of action accrued or the earliest date on which the claimant has the knowledge required to bring an action for damages in respect of the injury, whichever is later.
4 Arrest and Security
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?
In Singapore, parties seeking to obtain security for maritime claims against vessel owners can arrest the vessel once she is within Singapore’s port limits. Once security, whether in the form of bank guarantee or letter of undertaking, is obtained from the vessel owner, the court will order that the vessel be released.
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?
Yes, it is possible under s.3(1)(l) of the High Court (Admiralty Jurisdiction) Act (“HCAJA”), which allows a vessel to be arrested in respect of a claim for goods supplied for the maintenance and operation of a vessel, if the person who would be liable in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the vessel (s.4(4)(b) of the HCAJA). However, if the bunkers are sold and loaded as cargo, they would not be considered goods for the ship’s operations.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Yes. Under s.3(1)(a) of the HCAJA, a vessel can be arrested for claims to the possession or ownership of a ship or to the owner-ship of any share, which could also be in respect of the sale and purchase of a ship.
4.4 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 options are available?
In Singapore, a ship is arrested to induce her owners to appear and answer for their personal liability. As such, security by way of arresting a vessel can only be sought from either the vessel
Besides potential contractual claims under a bill of lading, claims under tort law may also be available to a cargo claimant – particularly where, for example, the cargo claimant does not have the bill of lading in his possession yet. To be entitled to sue in tort, the cargo claimant must be the owner of the goods or the person entitled to possession of the goods at the time the tort was committed.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
By virtue of Art. III.5, HVR, the carrier may bring an indem-nity claim against a shipper for inaccuracies at the time of ship-ment in “the marks, number, quantity and weight” furnished by the shipper.
Under Art. IV.6, HVR, if the shipper ships dangerous goods without the carrier, master or agent of the carrier’s consent with knowledge of the nature and character of the goods, the carrier may land at any place, or destroy or render innocuous such goods at any time before discharge without compensation, and the shipper “shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment”. A shipper also has a common law obligation to inform the ship-owner or his agent of risks involved when dangerous goods are shipped, unless the shipowner or his agent knows or ought to know of the dangers involved in the carriage of such goods.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Where the HVR apply, suits must be brought within one year of delivery of the cargo or of the date when it should have been delivered, unless extended by agreement between parties, and cannot be reduced for the carrier’s benefit. Indemnity actions against third parties for such cargo claims may be brought even after the expiration of one year according to the time limit prescribed by the lex fori, but shall be not less than three months commencing from when the person has settled such cargo claim or has been served with process in the action.
Where the HVR do not apply, the time limit to bring actions founded in contract or tort is generally six years from the date on which the cause of action accrued, as governed by the Limitation Act (Cap. 163).
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Singapore is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea. Maritime passenger claims are maritime claims for which admiralty juris-diction may be invoked pursuant to the High Court (Admiralty Jurisdiction) Act (Cap. 123).
3.2 What are the international conventions and national laws relevant to passenger claims?
The LLMC and 1996 Protocol limits of liability would apply (see question 1.1(v) above). For claims in respect of loss of life or personal injury, the shipowner’s limit of liability as per Art. 7 is 175,000 Units of Account multiplied by the number of
Where a finding of wrongful arrest is made out, damages for wrongful arrest may be awarded.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
A maritime claimant can obtain access to evidence by way of court-ordered disclosure only once proceedings in the Singapore courts have commenced and as ordered by the court. Generally, for an order of discovery to be granted, the court must be satis-fied that it is necessary to do so and there is relevance to the issues arising or likely to arise in the proceedings.
Prior to this stage, there is also the possibility for an appli-cation to be made for the discovery of documents, commonly known as pre-action discovery.
In addition, the courts may, on application (pursuant to Order 70 Rule 28, Rules of Court (“ROC”)), make an order for inspec-tion by any party of any ship or other property which may be necessary for the purpose of obtaining full information or evidence in connection with any issue in an action.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Specifically for maritime disputes, and especially so for a party wishing to arrest a vessel, there is a strict requirement that the claimant makes full and frank disclosure of all material facts rele-vant to the application, even those potentially adverse to its case. The foremost component of fulfilling the duty of disclosure is the proper identification of material facts. Apart from this, the pres-entation of such facts is also crucial to the duty of full and frank disclosure. Failure to do so may result in the arrest being set aside and a finding of wrongful damages against the arresting party.
5.3 How is the electronic discovery and preservation of evidence dealt with?
There are provisions dealing with electronic discovery (see Part V of the Supreme Court Practice Directions) and specifically in respect of collision actions (see Order 70 Rule 19, ROC). The rules state that every party to a collision action must give discovery of any electronic track data that is or has been in the possession of that party, by making and serving a list of all such electronic track data, and by filing an affidavit verifying that list.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?In Singapore, the High Court deals with maritime claims. The admiralty jurisdiction of the High Court may be invoked in accordance with the provisions of HCAJA. Admiralty
owner or the demise-charterer who is liable for an in personam claim and who was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the same ship that gave rise to the claim.
That said, an in personam claim may still be brought against a party other than the vessel, her owners or the demise charterer for contractual or tortious claims. For instance, this may be in the form of a claim for loss of or damage to the cargo shipped under a contract of carriage.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Security may be furnished in the form of bail, letters of under-taking from P&I clubs or bank guarantees. Payment into court as a form of security in respect of the plaintiff’s claim is available but is rarely used. Although the form and terms of security are matters for the parties to negotiate and agree upon, a Singapore court may order a plaintiff to accept a P&I club letter of under-taking instead of bail (The Arcadia Sprit [1988]1SLR(R)73).
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
In Singapore, courts do not require counter security. However, the Sheriff is entitled to request that the arresting party place security to cover the Sheriff’s expenses in maintaining the vessel while under arrest, as the arresting party is obligated under Singapore law to do so. If funds are not provided to maintain the vessel, the court may release the vessel.
4.7 How are maritime assets preserved during a period of arrest?
An arresting party is obligated to provide for maintenance and upkeep of the vessel and the Sheriff effectively has control over the vessel’s preservation and maintenance during this period.
Any party to the action may apply to court for an omnibus order whilst the vessel is under arrest, allowing the Sheriff to handle all materials in relation to the preservation and mainte-nance of the vessel.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The Singapore Courts have upheld and affirmed the test for wrongful arrest, set out in the English decision, the Evangelismos (1858) 12 Moo PC 352; 14 ER 945. Any inquiry as to whether an arrest is wrongful should be focused on the second part of the Evangelismos test, i.e. if the action/arrest were so unwarrantably brought, as to imply malice or gross negligence on the part of the arresting party.
The test is ultimately premised on a finding of malice. Malice may be found on the basis of direct evidence of the plaintiff’s state of mind at the time of the arrest, or it can be inferred if the claim is so unmeritorious that the arresting party could not have honestly believed that he had an entitlement to arrest the vessel (or at least recklessly disregarded whether he had grounds to do so). Crucially, any finding of wrongful arrest would turn on what the arresting party knew or must have known at the time of the arrest.
For arbitration proceedings, Singapore has implemented the appropriate international conventions, such as the New York Convention, and adopting the United Nations Commission on International Trade Law (“UNCITRAL”), which essen-tially minimises judicial interference. In addition, arbitration is generally considered to be less costly than litigation.
Aside from arbitration, one of the key pros in Singapore for litigation is the transparency of the courts and effectiveness of the procedures in place. That said, parties should bear in mind that litigation proceedings in Singapore are generally public.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
There are presently four legal regimes for the recognition and enforcement of foreign judgments in Singapore: (1) the Choice of Court Agreements Act 2016 (“COCA”); (2) the Reciprocal Enforcement of Commonwealth Judgments Act (Cap. 264) (“RECJA”); (3) the Reciprocal Enforcement of Foreign Judgments Act (Cap. 265) (“REFJA”); and (4) the common law regime.
Statutory framework for reciprocal enforcementThe COCA gives effect to the 2005 Convention on Choice of Court Agreements, and allows for the enforcement of certain foreign judgments obtained in contracting states to the conven-tion. The ambit of the COCA is limited to judgments obtained from courts of contracting states to the convention and where there is an exclusive choice of court agreement concluded. Parties seeking the enforcement of foreign judgments are to apply to the High Court (s.13, COCA). The High Court is bound to recog-nise and enforce the foreign judgment, save where grounds for exception under ss14–15, COCA are established.
REFJA, together with RECJA, facilitate the registration, and subsequent enforcement, of foreign judgments in civil proceed-ings in Singapore. Foreign judgments in 11 jurisdictions currently scheduled under REFJA and RECJA may be recognised and enforced in Singapore. To be enforced, the foreign judgment must be registered in the High Court of Singapore in accord-ance with Order 67, ROC. The RECJA has been repealed but the effective date has yet to be announced. The REFJA was also amended extensively in 2019, with the intention that the foreign jurisdictions scheduled under RECJA will eventually be gazetted under the REFJA. Further, other key amendments to the REFJA include (1) extending enforcement beyond judgments of superior courts, (2) extending enforcement to interlocutory judgments, and (3) extending enforcement to non-monetary judgments.
Common law Where a foreign judgment for a fixed or ascertainable sum of money is obtained but falls outside the scope of the REFJA, RECJA or COCA, parties may instead commence a common law action in respect of the same and apply for summary judgment on the grounds of there being no defence to the claim. Under Singapore common law, a foreign judgment may be recognised, subject to limited defences, if it is from a court of law of compe-tent jurisdiction, it is final and conclusive on the merits of the dispute, and the foreign court had international jurisdiction over the party sought to be bound. If successful, the claiming party may thereafter enforce the domestic judgment so granted.
proceedings may take the form of an action against a ship or person. In some cases, they may be commenced both against a ship and against a specific person or persons.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There are several arbitral bodies in Singapore that deal with maritime disputes. The specialist arbitral body is the Singapore Chamber of Maritime Arbitration (“SCMA”), which was origi-nally established in 2004 and reconstituted in 2009. The SCMA provides a framework for maritime arbitration specifically tailored to the needs of the maritime community.
There is also the Singapore International Arbitration Centre (“SIAC”), which commenced operations in 1991. In recent years, SIAC has introduced new procedures, such as those regarding emergency arbitrators and expedited procedure arbi-trations, which parties can adopt into their proceedings.
Another key institution is the Singapore International Chamber of Commerce, which, similarly to the above-mentioned arbitral bodies, offers its own set of arbitration rules and processes.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There is no specialist body that deals specifically with maritime mediation in Singapore. That said, the Singapore Mediation Centre (“SMC”) offers its services under its Commercial Mediation Scheme (for claims above S$60,000) or Small Case Commercial Mediation Scheme (for claims valued up to S$60,000). SMC has specialist mediators and industry experts who can assist in maritime claims. Alternatively, parties can also turn to the Singapore International Mediation Centre (“SIMC”). SIMC has launched a SIMC COVID-19 Protocol, which sets out preferential fees for cases filed during this time. SIMC also has specialist mediators and industry experts from various jurisdictions who can assist in maritime claims.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
It is well known that Singapore has continued to grow in promi-nence in Asia as a go-to dispute resolution hub. Singapore prides itself in having an efficient, competent and honest judiciary, and is widely recognised as a neutral venue for dispute resolution between parties from different jurisdictions. Singapore is also an established seat for international arbitrations and has become the seat of choice for investors across Asia looking for a neutral forum and independent arbitral tribunal in light of the rapid pace at which the region has embraced international commercial arbitration. As a by-product of the foregoing, Singapore judgments and arbitral awards also have greater recognition and enforceability globally.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
One of the key pros is the Singapore Convention on Mediation, which became law in February 2020 pursuant to the Singapore Convention on Mediation Act 2020 as part of Singapore’s efforts to strengthen its international commercial dispute reso-lution framework. It facilitates international trade by enabling disputing parties to easily enforce and invoke settlement agree-ments resulting from mediation across borders.
by a competent authority of the country where that award was made; or (2) under the law by which the award was made (s.31, IAA). This includes situations where an application to set aside a foreign award is filed in its country of origin.
8 Updates and Developments
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.
Pursuant to the Electronic Transactions (Amendment) Act 2021, which came into force on 19 March 2021, the Electronic Transactions Act (“ETA”) has been amended to adopt with modifications, the UNCITRAL Model Law on Electronic Transferable Records.
The amended ETA has paved the way, for the creation and use of electronic bills of lading (“e-BLs”) that are legally equiv-alent to the standard paper-based bills of lading. The shipping industry will, by and large, benefit from the usage of such e-BLs, in terms of faster transmission of documents/transactions, cost savings and lower fraud risks.
The transmission of e-BLs is instantaneous, and overcomes the delay that is often encountered in receiving paper-based original bills of lading. Furthermore, there will also be a reduc-tion of time spent on identifying and/or verifying any errors/inaccuracies, as well as mitigating against forgeries/fraudulent bills of lading, by way of digital authentication technologies such as digital signatures, centralised ledgers, or blockchain.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The statutory framework for the enforcement of arbitral awards is set out in the Arbitration Act (Cap. 10) (“AA”) and the International Arbitration Act (Cap. 143A) (“IAA”). Generally, arbitral awards may be categorised as:(1) domestic awards – awards made in Singapore in domestic
arbitration proceedings, as governed by the AA;(2) international awards – awards made in Singapore in
international arbitral proceedings, as governed by the IAA; and
(3) foreign awards – awards made outside Singapore.
Domestic and international awardsDomestic and international awards are final and binding under Singapore law, and s.46(1) of the AA and s.19 of the IAA provide that an award may, where leave is granted by the court, be enforced in the same manner as a judgment or order made in Singapore.
Procedural requirements in respect of enforcement applica-tions for domestic and international awards are set out in Orders 69 and 69A, ROC, respectively.
Foreign awardsSingapore is party to the New York Convention. If a foreign award is made in another party to the Convention, enforcement of that award is also governed by the IAA, in the same manner as an international award (s.29, IAA).
Enforcement of foreign awards may be refused where the award is not yet binding on parties or has been suspended: (1)
244 Singapore
Shipping Law 2021
Boaz Chan is a Director with Incisive Law LLC and heads the admiralty practice in Singapore. He is an experienced litigator qualified to practise law in both Singapore and the UK. Boaz regularly acts for clients in disputes before the Singapore courts and in arbitration under the auspices of SIAC, SCMA and LMAA. Boaz specialises in maritime and shipping law, and handles both contentious and non-contentious shipping matters. He has extensive experience advising on contentious matters ranging from collisions and casualties, charterparty disputes, sale and carriage of goods, and marine insurance. He also assists clients in the course of negotiating contracts and in providing risk mitigation advice both before and during the implementation of projects.
Incisive Law LLC 5 Shenton Way, UIC Building #19-01068808Singapore
Justin Seet is a dispute resolution and transactional lawyer with a particular focus in maritime and shipping law, and international trade. Justin has advised and represented clients at all levels of the Singapore Courts and is also experienced in other forms of dispute resolution such as international arbitrations (SIAC and SCMA) and mediations. Being no stranger to cross border work, Justin regularly works with his colleagues from the other Ince offices and with counsel from other jurisdictions.In his non-contentious practice, Justin has experience from the corporate shipping and finance practice of a Tier 1 Singapore law firm and advises on transactions such as ship finance and ship sale and purchase. Justin employs his unique background in both contentious and non-conten-tious work to assist clients with risk mitigation, prior to and after entering into transactions, and to achieve the most commercially suited outcome.
Incisive Law LLC 5 Shenton Way, UIC Building #19-01068808 Singapore
Kannan Balakrishnan is a Senior Associate in our Singapore office, and graduated from the University of Bristol, UK with a Bachelor of Laws. He was admitted to the Singapore Bar as an Advocate and Solicitor in 2016. Kannan specialises in dispute resolution, with a focus on commercial litigation and arbitration. He also has experience in shipping & international trade disputes, and insolvency & restructuring matters.
Incisive Law LLC5 Shenton Way, UIC Building #19-01068808Singapore
Thaddaeus Chan is an Associate in our Singapore office. He obtained his Bachelor of Laws (Hons) from the University of Nottingham in 2018 and was admitted to the Singapore Bar as an Advocate and Solicitor in 2020.Thaddaeus specialises in arbitration, litigation, and dispute resolution, with a focus on commercial and shipping disputes. Thaddaeus has exten-sive arbitration experience, and has been involved in international arbitrations governed by SIAC, SCMA, LMAA, LCIA Rules or Ad Hoc Rules. On the non-contentious side, Thaddaeus has assisted in the drafting and review of contracts, including standard form BIMCO time charterparties.
Incisive Law LLC5 Shenton Way, UIC Building #19-01068808Singapore
Incisive Law LLC is an independent Singapore Law Practice, cooperating with the Ince Group plc, qualified to provide expert advice on Singapore law and other laws including English law. Incisive Law LLC offers the full spectrum of legal services to local and multinational corporations across multiple sectors including shipping, trade and commodities, energy and infrastructure, financial services, tech-nology, media and telecommunications and many others. We represent clients in the Singapore Courts as well as in domestic and international arbitrations and our transactional practice covers major projects in Southeast Asia and beyond.
Fund) Administration Act. In terms of the Contributions Act, a levy is imposed on any person who, during a tax year period, receives in excess of 150,000 metric tonnes of “contributing oil” (as defined).
Separately, the International Convention for the Prevention of Pollution from Ships, 1973 (“MARPOL”) also applies.
In terms of the MPA, any discharge of oil from a ship, tanker or offshore installation within 12 miles of the SA coast is an offence, unless it can be shown the discharge was due to certain excep-tions, which mirror those found in the Civil Liability Convention.
Where the owner is found to be in breach, apart from the crim-inal penalty that can be imposed by the Courts, he will be liable not only for any loss or damage caused in SA resulting from the discharge of oil (by the State or any third party), but also for the costs and measures taken for the purposes of reducing the loss or damage or to prevent such loss or damage. The general limi-tations of liability of the Civil Liability Act apply.
The Bunker Convention has not as yet been adopted or given the force of law. The Conventions on the Territorial Sea and Contiguous Zone, the Continental Shelf, High Seas in case of Oil Pollution Casualties, Dumping of Waste and Intervention Conventions, do apply.
(iii) Salvage/general averageThe Wreck and Salvage Act No.94 of 1996 (“WSA”) regulates the law of salvage in South Africa. The WSA incorporates the 1989 Salvage Convention in its entirety.
A salvage claim is a maritime claim as defined in terms of section 1(1)(k) of AJRA. In terms of AJRA, an SA court exer-cising its admiralty jurisdiction is vested with jurisdiction to hear and determine any claim for salvage, including salvage relating to any aircraft and the sharing or apportionment of salvage and any right in respect of property salved or which would, but for the negligence or default of the salvor or a person who attempted to salve it, have been salved. This also includes claims in respect of ships, cargo and goods found on land.
A salvage claim is one that gives rise to a maritime lien and would entitle a salvor to enforce such a lien, in the absence of satisfactory security, against the maritime property salved. A claim for salvage may be enforced either by way of an action in rem or an action in personam.
(iv) Wreck removalIn terms of the WSA, a wreck includes any, “flotsam, jetsam, lagan or derelict, any portion of a ship or aircraft lost, aban-doned, stranded or in distress, any portion of the cargo, stores or equipment of any such ship or aircraft and any portion of the personal property on board such ship or aircraft when it was lost, abandoned, stranded or in distress”.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionCollisions in South Africa are regulated by section 255 of the South African Merchant Shipping Act, 57 of 1951 (“MSA”). This section in effect incorporates aspects of the 1910 Brussels Collision Convention. In broad terms, it provides that liability shall be in proportion to the degree in which the respective ships were at fault, and where this is not possible, fault shall be appor-tioned equally. In addition, and to the extent that it does not conflict with the MSA, the Apportionment of Damages Act, 34 of 1956 applies, most notably, in relation to matters involving a ship and a fixed or floating object. As regards the determina-tion of liability, the Collision Regulations will provide guidance in this regard. Curiously, and due to the provisions of section 6 of the Admiralty Jurisdiction Regulation Act No.105 of 1983 (“AJRA”), in interpreting the Collision Regulations, our courts will have regard to English cases dealing with this aspect. In certain instances, our courts may apply the law of the place of the collision; and where that is the high seas, this will be the law of the flag of the vessels, and if that is not possible or contradictory, then it will assume that the proper law is the law of South Africa (hereinafter referred to as “SA”). In terms of section 344(1) of the MSA, collision claims are prescribed (time barred) within a period of two years from the date when the damage or loss or injury was caused. This may be extended by application to court on good cause shown.
(ii) PollutionThe Marine Pollution (Control and Civil Liability) Act No.6 of 1981 (“MPA”) regulates pollution from ships, tankers and offshore installations (see below). The MPA is to be read in conjunction with the Merchant Shipping (Civil Liability Convention) Act (“Civil Liability Act”) No.25 of 2013, the latter giving full force and effect to the 1992 Convention on Civil Liability for Oil Pollution Damage.
The Convention for the International Fund for Oil Pollution Damage applies by virtue of the Merchant Shipping (International Oil Pollution Compensation Fund) Act (“the Fund Act”). Contributions in terms of the Fund Act are regulated by the Merchant Shipping (International Oil Pollution Compensation Fund) Contributions Act (“Contributions Act”), and the Merchant Shipping (International Oil Pollution Compensation
1.2 Which authority investigates maritime casualties in your jurisdiction?
SAMSA is empowered by the MSA to hold preliminary and full enquiries following shipping casualties in certain circumstances. SAMSA was established in terms of the SAMSA Act, 1998, and is responsible for administering various pieces of legislation to promote SA’s maritime interests.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
SAMSA’s investigating officer has general powers, which include, inter alia, the power to board any ship in South African waters, inspect the vessel, equipment or documents, interrogate the crew, summon any person who may be able to assist in the enquiry to be interrogated or produce books and/or documents, as the case may be. Failure to co-operate may result in a penal sanction being imposed either by way of a fine or imprisonment. The same sanctions will apply to any person/s who obstructs any enquiry. At the conclusion of a preliminary enquiry, the inves-tigating officer will compile a report to the relevant government official and a decision is then taken as to whether to pursue the matter any further or prosecute or abandon investigations.
A Court of Marine Enquiry (“CME”) can be constituted in terms of the MSA and is empowered to hold a full, formal inves-tigation into shipping casualties. It may be held at any time, irre-spective of whether a preliminary enquiry has been held or not but will always be subject to ministerial discretion. The predominant purpose of the CME is to enquire into the cause(s) of a particular maritime casualty, return with a finding as to how the casualty occurred and to make recommendations where deemed neces-sary or appropriate which would be aimed at preventing a similar occurrence. Punitive measures will be applied by the court against any party whom it identifies as having acted in such a way to have caused or contributed to a particular casualty. Its punitive powers relate only to the ship’s masters and officers of vessels registered or licensed in SA or which are registered in countries other than SA if they are wholly engaged in trading between ports in SA.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The SA Carriage of Goods by Sea Act No.1 of 1986 (“COGSA”) incorporates the provisions of the Hague-Visby Rules (“HVR”) into SA law and makes the HVR applicable in relation to and in connection with:■ thecarriageofgoodsbyseaonshipswheretheportofship-
ment is a port in SA, irrespective of whether or not the carriage is between ports in two different States within the meaning of Article X of the HVR;
■ anybillofladingifthecontractcontainedinorevidencedbyit expressly provides that the HVR shall govern the contract;
■ any receipt which is a non-negotiable document markedas such if the contract evidenced by it is a contract for the carriage of goods by sea and which expressly provides that the HVR are to govern the contract as if the receipt were a bill of lading, but subject to any necessary modifications; and
■ deckcargoorliveanimals.
Section 18 of the WSA provides that when a ship is wrecked, stranded or in distress, the South African Maritime Safety Authority (“SAMSA”) may direct the master or owner of such ship, or both such master and such owner, either orally or in writing, to move such ship to a place specified by SAMSA or to perform such acts in respect of such ship as may be specified by SAMSA. In addition, SAMSA may also cause any wreck or any wrecked, stranded or abandoned ship or any part thereof to be raised, removed or destroyed or dealt with in such a manner as it may deem fit, if it has not been able to contact the master or the owner of the said wreck, ship or part thereof.
If the master or owner fails to comply with SAMSA’s directive, then SAMSA may cause such an act to be performed and claim the cost of performing such an act from the shipowner, or in the case of an abandoned wreck or ship, from the person who was the owner thereof at the time of the abandonment.
It should be noted that wreck removal costs do not fall within any provisions for limitation of liability, whether specific or global.
South Africa has acceded to but not yet implemented the Wreck Removal (Nairobi) Convention.
In addition, the National Ports Act 12 of 2005 (in section 74) provides the port authority with wide powers in relation to the removal of a wreck within port limits.
(v) Limitation of liabilitySA is not party to any of the Limitation Conventions. Limitation is, however, regulated by, inter alia, section 261 of the MSA, which, while not making it applicable per se, follows the 1957 Limitation Convention regime (including the onus of proving a lack of personal fault or privity on the part of the owner or char-terer). The MSA provides that the owner or charterer of a ship, whether registered in SA or not, shall not be liable for damages in excess of certain amounts in respect of personal injury, loss of life or damage to property if that loss or damage was caused without his fault or privity. The provisions of the MSA apply to any kind of vessel used in navigation by water, however it is propelled or moved. Liability is assessed according to the tonnage of the ship, damaged or undamaged and Special Drawing Rights (“SDR”) are used as the unit of account.
Section 261 of the MSA distinguishes between three categories which are limited per gross registered tonne (“GRT”) as follows:1. Damages for loss of life or personal injury where there
is no damage to property; such claims are limited to the Rand equivalent of 206.67 SDR per GRT.
2. Damages incurred for loss of or damage to property where there is no personal injury or loss of life; such claims are limited to the Rand equivalent of 66.67 SDR per GRT.
3. Damages for both loss of life and property – such claims are limited to 206.67 SDR per GRT, provided that in this case claims for personal injury and loss of life have priority to the extent of an aggregate amount of 140 SDR per GRT and, insofar as the balance of the limitation fund is concerned, claims for injury and loss of life rank equally with the claims for loss of and damage to property.
(vi) The limitation fundIt is not necessary to establish a limitation fund or to commence litigation for limitation to apply. A shipowner/charterer may plead limitation by way of a defence to a claim, either alone or in the alternative to a general or specific demand as to primary liability on the merits. They can also apply to court under AJRA for a declaratory order that they are entitled to limit their liability but will bear the onus of establishing such entitlement. One can only apply for limitation, however, in circumstances where substantive proceedings have been instituted in South Africa.
A claim by a passenger (or a crew member), for collisions, sinking, loss or damage to baggage or personal effects, or any other claim related to the vessel or the carriage on her, are all maritime claims as defined in AJRA and can be brought and enforced before and by the SA court in the exercise of its admi-ralty jurisdiction, including the arrest in rem or attachment in personam of the ship or other assets of the carrier.
Such claims are subject to limitation in accordance with the provisions of the MSA.
3.2 What are the international conventions and national laws relevant to passenger claims?
SA is not a party to the Athens Convention (Convention Relating to the Carriage of Passengers and their Luggage by Sea). Nevertheless, in many instances the Athens Convention and its limitation provisions (and prohibitions) are very often incorporated and made applicable to the contract by the conditions themselves.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
In the absence of a contractual time bar, prescription of claims in SA is, in general, determined in accordance with the provi-sions of the Prescription Act 69 of 1969 (“the Prescription Act”), which provides for the extinctive prescription of contractual and delictual (tortious) claims after the lapsing of three years from the date on which such claim arises.
4 Arrest and Security
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?
There are two means of obtaining security for a maritime claim. Firstly, one can commence substantive proceedings in SA either through an in rem arrest of a vessel or, in certain circumstances, an attachment of a vessel. In respect of the former, security is limited to the value of the vessel, whereas in respect of the latter security must be established to the full value of the claim.
Secondly, where substantive proceedings are being pursued elsewhere (or where substantive proceedings are contemplated or have been commenced in SA), AJRA, through the provi-sions of section 5(3), permits the arrest of any property to obtain security for such proceedings. An arrest in terms of section 5(3) requires a formal application to the court before a judge in which the claimant must establish the following:1. that he has a maritime claim as defined by AJRA and that
such a claim is enforceable in SA;2. that he has a prima facie case with reasonable prospects of
success in the substantive proceedings;3. that the property to be arrested (which would include asso-
ciated ships) is susceptible to arrest; and4. that he has a genuine and reasonable need for security.
In this regard, he would need to establish that he has a genuine and reasonable apprehension that if proceedings are successful, his claim will not be met.
An arrest can be affected against the vessel in respect of which the claim lies, or, in certain circumstances, an associated ship. Association exists where there is common ownership and/or control exercised over the “guilty” vessel at the time the claim arose, and the associated ship at the time of the arrest.
Our courts will exercise jurisdiction notwithstanding any exclusive jurisdiction clause in a bill of lading which purports to oust our court’s jurisdiction, where suit is brought by a person carrying on business in SA and the consignee under, or the holder of any transport document for the carriage of goods to a destination in SA.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
In terms of Article IV Rule 5 of the HVR, a carrier would be enti-tled to limit its liability in respect of any cargo claims brought against it. The upper limit being 666.67 SDR per package or 2 SDR per kilogram of gross weight of the goods damaged or lost. This presupposes that the nature and value of the goods have not been declared by the shipper prior to loading and inserted into the bill of lading.
It is also worth noting that while a carrier is entitled to rely upon the limitation under COGSA when faced with a cargo claim, it may also invoke the limitation provided for under the MSA.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The obligation of the carrier to issue the shipper with a compre-hensive bill of lading as provided for in Article III Rule 3 of the HVR is to a large extent dependent upon the shipper’s recip-rocal obligation to provide the carrier with accurate details of the cargo by, inter alia, identifying the marks, number and weight of cargo clearly and legibly.
By virtue of Article III Rule 5, the shipper is deemed to have guaranteed the accuracy of the information provided to the carrier and consequently the carrier can call upon the shipper to indemnify it against all losses, damages and expenses arising or resulting from inaccuracies resulting from misdescription.
The Sea Transport Documents Act 65 of 2000 also has impor-tant provisions regarding the obligations and liability of the shipper and transferor of a negotiable sea transport document.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
The HVR impose a time limit of one year after the delivery of goods or the date when they should have been delivered within which the cargo owner must commence suit. In addition, and by virtue of Article III Rule 6 bis, an indemnity action following a cargo claim to be commenced against a third party is permitted even after the expiry of a year “if brought within the time allowed by the law of the courts seized of the case”, which in terms of SA legislation would be three years from the date upon which the liability arose.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
In SA, the carrier’s liability is normally determined by contract (generally by the Booking and Passenger Ticket terms and condi-tions, but subject to the limitations imposed by local consumer legislation such as the Consumer Protection Act No.68 of 2008).
appropriate for the custody and preservation of the property. The sheriff may incur such expenses as are reasonably necessary for that purpose and to this end may hold the arresting creditor responsible for reimbursing him those expenses.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Section 5(4) of AJRA provides that any person who, inter alia, without reasonable and probable cause, obtains the arrest of property or an order of court shall be liable to any person suffering loss or damage as a result thereof for that loss or damage. The expression “reasonable and probable cause” has enjoyed judicial consideration by our courts and has been held to include an objective and a subjective element. While each case will require a consideration of the facts concerned, briefly stated one may say that an action for damages will follow where the party obtaining the order did not have information which would lead a reasonable person to conclude that such person was probably entitled to the order. In addition, the party obtaining the order must have had an honest belief that the information in question made it probable that it was entitled to the order sought.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Section 5(5) of AJRA provides a mechanism for the preservation of evidence, including: physical, documentary, and in certain circumstances, witness evidence. The provision applies to both proceedings which are contemplated and those commenced. Relief under this provision can be obtained for proceedings abroad in “exceptional circumstances”, although in practice, and particularly when one is dealing with a casualty, it is accepted that exceptional circumstances would exist.
The usual practice is for relevant documentary evidence within the court’s jurisdiction to be retained by the vessel owner’s legal representatives on the basis that it will be disclosed to relevant parties by agreement, or pursuant to a competent court order or arbitral award, as the case may be. Access to physical property, such as the vessel or cargo, is usually permitted under supervi-sion. Any physical evidence which needs to be preserved will also be retained within the court’s jurisdiction on the same basis as documentary evidence. The court may order the taking of oral evidence in certain circumstances by way of evidence on commission. Usually access to both documentary and physical evidence is readily agreed; access to witnesses is usually more contentious. Failing agreement between the parties, a formal court application would have to be brought.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The general disclosure obligations in court proceedings, including maritime disputes, are regulated by Uniform Rule 35. In terms of this Rule, a party to an action may require the other party,
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?
It is only possible for a contractual supplier to arrest the vessel in circumstances where it can establish an in personam claim against the vessel owner to which the bunkers were supplied. SA does not recognise a maritime lien for the supply of bunkers.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
A claim arising from contracts for the sale and purchase of a ship is a maritime claim as defined in AJRA. A claim by the seller can be enforced through the arrest of the ship concerned, and by the purchaser through the arrest of an associated ship.
4.4 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 options are available?
There are a number of options available to a claimant. If in posses-sion of property to which the claim relates (e.g. cargo), a lien may be exercised over that property. If one has a claim against mari-time property (ship, bunkers, cargo, freight and containers) and that claim relates to the property in question, one may arrest that property in rem. If one has an in personam claim, one may attach any property of the debtor to found or confirm the court’s juris-diction and commence substantive proceedings. As referred to in question 4.1 above, it is also competent to arrest any property of the debtor as security for proceedings commenced or to be commenced either in SA or elsewhere.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
A first-class South African bank guarantee or a letter of under-taking from a Protection & Indemnity (“P&I”) Club is accept-able security. While the Admiralty Rules envisage cash being paid to the Registrar of the Court to be held as security, this seldom happens. In practice, P&I Club letters of under-taking, particularly from P&I Clubs that are members of the International Group, are usually accepted by claimants’ lawyers.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Whilst not standard procedure per se, the provisions of AJRA confer a wide discretion on our courts which may, where appro-priate, “order any person to give security for costs or for any claim”. A litigant may accordingly, in appropriate circumstances, bring an application for the provision of counter security.
4.7 How are maritime assets preserved during a period of arrest?
The effect of an arrest (or attachment) is to transfer custody and overall control of the property to the sheriff, who is the court’s officer and representative, and who has the duty to take all such steps as the court may order or as appears to the sheriff to be
time for commencement and completion of legal proceedings (or arbitration/alternative dispute resolution (“ADR”)) differs considerably between the different geographic divisions of the High Court, depending on the state of their awaiting trial rolls, which of themselves fluctuate. It also depends on the complexity of the matter, what factual issues are placed in dispute to be proved by evidence in person by witnesses – and therefore how many days need to be allocated for the trial hearing. The fewer number of days, the shorter the waiting period for the allo-cation of a hearing date. On average, proceedings may take at least a couple of years from inception to being heard in the High Court. In certain circumstances, on the basis of urgency, one can approach the court for an expedited hearing date.
In admiralty, certain matters are brought by application proceedings (such as security arrests and applications to set aside arrests). These proceedings are dealt with by way of an exchange of affidavits, to which supporting documents must be attached. The period of completion is generally shorter than action proceed-ings, particularly where urgency can be properly motivated.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?In terms of section 5(2)(e) of AJRA, a court is empowered in the exercise of its admiralty jurisdiction to order that any matter pending or arising in proceedings before it be referred to an arbitrator or referee for a decision or report for the appointment, remuneration and powers of the arbitrator or referee and for the giving of effect to his decision or report.
There is, however, no permanent, generally recognised arbitra-tion panel or tribunal for admiralty or maritime matters, albeit that an informal group of recognised maritime lawyers and retired judges exists from whose ranks arbitrators or referees can and are frequently appointed. Also, because arbitration, media-tion and ADR are to a large extent self-regulated, the timescale is much shorter.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There is no specialist alternative dispute resolution body to deal with maritime mediation.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
AJRA provides a wide range of powers to our courts to assist mari-time claimants, which notably includes that an action in rem may be brought by the arrest of an associated ship instead of the ship in respect of which the maritime claim arose, thereby affording an extended procedure to claimants to enforce maritime claims.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Generally, the courts do take cognisance of the exigency of admi-ralty claims, but there is no guarantee that a matter will be heard on an expedited basis, nor that one will be allocated a judge with admiralty experience. Arbitration may in certain circumstances be the more attractive option, particularly if one seeks an expe-ditious resolution to the matter before an experienced tribunal.
by notice in writing, to make a discovery on oath of all docu-ments and tape recordings relating to any matter in question in such action which is or has at any time been in the possession or control of such other party. This notice may only be issued after the close of pleadings.
The notice to discover results in the delivery of a discovery affi-davit which contains a comprehensive list of all documents – rele-vant to either party’s case – which the opposing party declares to be in his possession.
On receipt of the discovery affidavit, a party is entitled to either call for the inspection of certain documents described in the affi-davit, request the opposing party to specify which documents or tape recordings they intend to use at trial or produce the original of a discovered document at trial.
It should be noted that under the SA procedure, no witness statements need to be disclosed prior to or during the trial, as long as they were taken and noted in contemplation of litigation (so they retain privilege), nor are such statements exchanged prior to the hearing. Only expert witness evidence must be summarised prior to trial (but even then, their statements themselves do not have to be disclosed or exchanged, although they very often are).
In addition, where substantive proceedings have been commenced in SA, Admiralty Rule 14(3) provides a mechanism for early discovery (disclosure) of certain relevant documents and permits a party to request certain particulars.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Whilst the advantages of electronic discovery or eDiscovery have not formally found their way into SA courts, litigants themselves may agree to the exchange of disclosed documents by electronic means. Our courts, however, still tend to favour the filing of “hard copies” of evidence, although this may change in light of recent challenges brought about by the COVID-19 pandemic and calls for our court system to make better use of technological advances to streamline court procedures.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The law and practice of admiralty in SA is regulated by AJRA. Only the High Court of SA is able to exercise admiralty jurisdic-tion. The High Court has jurisdiction to hear and determine any maritime claim irrespective of the place where it arose, the place of registration of the ship concerned or of the residence, domi-cile or nationality of its owner. There are no specialised commer-cial or maritime courts.
Once substantive proceedings have been commenced, the parties exchange pleadings through which the factual issues in dispute are placed before the court. Generally, where there is compliance with the court rules and no interlocutory proceed-ings are brought, pleadings are closed within about three months (depending on how many pleadings are filed). Thereafter, the
provides for a simple procedure for the recognition and enforce-ment of arbitration agreements and foreign arbitral awards.
An arbitration award also constitutes, in and of itself, a mari-time claim, and can be enforced under the terms of AJRA as in the case of a foreign judgment referred to above.
8 Updates and Developments
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.
As part of the strategy enunciated under the Maritime Transport Policy published in March 2017, South Africa remains committed to building a strong maritime sector to contribute to the coun-try’s economic growth. Further to the June 2020 enactment of the Hydrographic Act, SA has also enacted the Marine Spatial Planning Act, which commenced on 1 April 2021, and provides, inter alia, for institutional arrangements for the implementation of marine spatial plans and governance of the use of the ocean by multiple sectors. Legislation promulgated therefore remains committed to ensuring the safe use and economic management of marine resources along SA’s 3,000-kilometre coastline, which is at the centre of an important global shipping route.
Publication of a revised draft of the voluminous Merchant Shipping Bill in March 2020, as reported in last year’s edition of this guide, has yet to be formulated into a final draft, and so it remains to be seen what the final version of this Act will contain.
Finally, and following a substantial delay since the enactment of the National Ports Act (which commenced in November 2006 and provided for the incorporation of the National Ports Authority as a separate company), the President announced on 22 June 2021 that the National Ports Authority (“TNPA”) will finally be estab-lished as an independent subsidiary of Transnet, SA’s state-owned company governing the country’s ports, rails and pipelines. The relevance of such announcement is that as a separate entity, albeit still state owned, the TNPA will be better placed to utilise the reve-nues generated into much-needed port infrastructure.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
The definition of an admiralty claim in terms of AJRA includes any claim arising out of or relating to any judgment or arbitra-tion award relating to a maritime claim, whether given or made in the Republic or elsewhere.
The Enforcement of Foreign Civil Judgments Act No.32 of 1988 (based on a recognition of the Convention) provides for certified judgments of certain designated countries to be regis-tered by a relatively simple procedure in SA and thereupon to have the full force of the law as if it were a judgment of a local court seeking execution.
However, the Minister of Justice has neglected to “designate” any countries other than our immediate neighbouring countries in Africa, and as such, the provisions of the Act are in effect of little use in international maritime litigation or disputes.
It is possible to have judgments from non-designated coun-tries recognised in SA by way of a substantive application to court. The enforcement of a judgment against a foreigner would require an attachment of the judgment debtor’s property in order to establish jurisdiction.
However, as the judgment of a foreign court with regard to a maritime claim is in itself a separate and distinct “maritime claim”, as defined in AJRA, it can be enforced under the terms of AJRA. In view of this, it is seldom, if ever, that the provisions of the Foreign Judgments Act are relied upon in the enforce-ment of foreign maritime claims.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
SA has given effect to UNCITRAL’s Model Law on International Arbitration in enacting the International Arbitration Act 15 of 2017, which commenced on 20 December 2017. This Act
251Shepstone & Wylie Attorneys
Shipping Law 2021
Pauline Helen Kumlehn is a Partner in Shipping & Logistics (including Customs) at Shepstone & Wylie’s Cape Town office. Pauline is exten-sively involved in admiralty litigation encompassing both the enforcement of maritime claims in South Africa and the arrest of property to obtain security for foreign proceedings by way of associated ship arrests, the arrest of bunkers and other maritime property. In addition, her litigation experience includes high-profile review applications relating to state-owned entities and other government departments, including the Minister of Transport, the Strategic Fuel Fund, and the Department of Agriculture, Forestry and Fisheries. In addition, her expertise extends to customs and commercial-related matters, as well as experience in property transactions and financing.Pauline is an admitted Conveyancer and a member of the Maritime Law Association of South Africa (“MLA”) and WISTA SA.
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Shepstone & Wylie Attorneys is a leading South African law firm with a repu-tation for integrity and excellence. Established in 1892, we attract some of the country’s finest legal minds specialising in Corporate & Commercial Law. The dynamic team of industry specialists is thoroughly conversant with all aspects of the law and backed by vast experience and integrity.With offices in Johannesburg, Cape Town, Durban, Pietermaritzburg and Richards Bay, we offer accessible and complete legal services to a diverse client base. Local and international affiliations further extend our representation throughout Southern Africa, Europe and North America.Our firm holds extensive experience in the following aspects of law:■ Tax.■ Commercial Property & General Conveyancing.■ Corporate & Commercial.■ Litigation.■ International Transport, Trade & Energy.■ Customs & Excise.
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The 1994 York Antwerp Rules apply in Sweden pursuant to Chapter 17 of the Swedish Maritime Code. Chapter 17 also provides that an average adjuster shall investigate and decide on liability apportionments in relation to general and particular average. The adjuster is appointed by the Swedish Government and is something of a quasi-judge. The adjuster’s decision can be appealed to the first instance court in Göteborg, Sweden.
In addition, provisions pertaining to marine accidents and inves-tigations thereof are to be found in Chapter 18. The provisions impose, inter alia, an obligation to maintain records and evidence which can be of relevance for the investigation of the accident.
(iv) Wreck removalSweden has ratified the 2007 Nairobi International Convention on the Removal of Wrecks. The provisions of the convention can be found in Chapter 11a of the Swedish Maritime Code, which consequently contains provisions on, inter alia, reporting require-ments for a master that has been involved in an incident that has resulted in a wreck (§6), removal requirements for the regis-tered owner of the wreck (§11), liability for costs for marking the wreck (§16), limitation (§18 and also Chapter 9 §2 sub-paragraph 4), compulsory insurance (§§20 and 21) and direct action against the insurer (§23). The provisions apply to all Swedish territorial waters, including lakes and canals. Regarding limitation, there is no mechanism for the establishment of a separate wreck fund.
The reporting requirements include lost cargo which may not pose a danger to navigation.
(v) Limitation of liabilityMaritime claims in Sweden are subject to global limitation pursuant to the 1976 Convention on Limitation of Liability for Maritime Claims, as amended by the 1996 Protocol. The convention’s provi-sions are codified in Chapter 9 of the Swedish Maritime Code.
(vi) The limitation fundProvisions on the establishment of a limitation fund and limi-tation proceedings can be found in Chapter 12 of the Swedish Maritime Code. Notably, accrued interest can increase the limi-tation amount significantly in Sweden; in particular, in case of prolonged limitation proceedings. Interest shall be calculated in accordance with the Act (1975:635) on interest.
1.2 Which authority investigates maritime casualties in your jurisdiction?
Accidents and incidents at sea should be reported to the Swedish Transport Agency pursuant to Chapter 6 §14 of the Swedish Maritime Code. The authority is concerned with accidents and incidents pertaining to Swedish merchant and fishing vessels,
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionProvisions pertaining to collision liabilities are to be found in Chapter 8 of the Swedish Maritime Code. The provisions are based on the 1910 Brussels Collisions Convention and are supplemented by the general provisions on shipowners’ liability in Chapter 7 as well as the general law of tort.
The main rule is that any party involved in a collision is liable for losses to the extent the party has caused the collision, i.e. contri-bution is proportionate to the level of causation. If the circum-stances do not give support for any particular liability apportion-ment, each party shall answer for half of the loss. If the collision is due to an accident or if it cannot be ascertained whether the parties have caused the collision, each party shall be liable for its own loss.
(ii) PollutionProvisions pertaining to oil pollution are to be found in Chapters 10 and 10a of the Swedish Maritime Code, which incorpo-rate the 1969 International Convention on Civil Liability for Oil Pollution Damage, as amended in 1992, and the 2001 International Convention on Civil Liability for Bunker Oil Pollution Damage, respectively. Hence, there are provisions on, inter alia, strict liability for the registered owner for oil pollution (with some exceptions) (§3), limitation of liability (§5), establishment of a limitation fund (§6), compulsory insurance (§12) and direct action against the registered owner (§14). There are further provisions on, inter alia, strict liability for the registered owner for bunker oil pollution (with some exceptions) (§7), limitation of liability (§9), compulsory insurance (§11) and direct action against the registered owner (§14).
In addition, detailed rules and recommendations pertaining to the discharge of oil and other types of pollutants from vessels are to be found in Regulation TSFS 2010:96, as amended, issued by the Swedish Transport Agency.
(iii) Salvage/general averageSweden has ratified the 1989 International Convention on Salvage. The provisions of the convention have been imple-mented in Chapter 16 of the Swedish Maritime Code. The provi-sions are optional, which means that it is possible to conclude salvage contracts on different terms, save for certain provisions pertaining to, inter alia, the salvor’s liability to exercise due dili-gence to prevent or mitigate environmental damages.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Under the Swedish Maritime Code, the carrier is liable for damage to or loss of the goods that occurs during the period of liability. The period of liability is, in principle, the whole period during which goods are in the carrier’s custody, i.e. not only during carriage but also when the goods are in the carrier’s custody at the port of loading and the port of discharge.
As a general rule, the carrier is vicariously liable for damage or loss caused by fault or negligence by the master, crew, pilot, tug and others performing work in the service of the ship (e.g. stevedores or harbour workers engaged in the loading or discharge process).
The basis for the carrier’s liability can be described as presumed fault. In other words, the carrier is liable unless it can demonstrate that the damage or loss was not caused by fault or negligence by the carrier (or by anyone for whom the carrier is vicariously liable). The “catalogue” from the Hague-Visby Rules is not incorporated in the Swedish Maritime Code. The exemptions regarding fire and nautical fault have, however, been included in the Swedish liability regime.
Where a contractual carrier employs a subcarrier, they are jointly and severally liable towards the cargo owner if the damage or loss occurs during the part of the carriage performed by the subcarrier. However, the contractual carrier may limit its liability for such an event if it is expressly agreed with the cargo owners that a certain part of the carriage shall be performed by a named subcarrier.
The carrier is, furthermore, liable for any loss resulting from delay, on the same basis (presumed fault, etc.).
As to the compensation regime, the general rule is that the carrier is only liable for damages computed by a standard loss calculation. Moreover, the liability is limited to 667 SDR per unit or 2 SDR per kilogram of the gross weight of the goods concerned, whichever is higher. The right to limitation of liability is lost where it is proven that the carrier itself has caused the damage or loss with intent, or recklessly with knowledge that such damage or loss would probably occur.
The Swedish rules on the carrier’s liability apply to both bills of lading and seaway bills and are mandatory in the cargo owners’ interests, meaning that carriers cannot derogate from the rules by contract to the cargo owners’ detriment. The rules will apply, and Swedish courts will have jurisdiction where, in summary and somewhat simplified, there is a carriage to or from Sweden. They do not, however, prevail over the Brussels Regulation or valid choices of law and/or jurisdiction made by the parties.
In the event of damage or loss, the cargo owner must give notice of claim immediately upon delivery, or, where the damage or loss is not apparent, within three days from delivery. The period of limitation of action against the carrier is one year from the date of delivery.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Under the Swedish Maritime Code, the shipper has a strict liability (guarantee liability) towards the carrier for the accuracy of statements relating to the goods that have been included in the bill of lading. When it comes to dangerous cargo, the shipper is furthermore liable towards the carrier, as well as any subcarrier, if the shipper has failed to inform about the dangerous nature of the goods or necessary safety measures. Such an omission may also give the carrier the right to discharge or destroy the goods without any liability to compensate for the value of the goods.
regardless of where in the world the event occurs, as well as foreign ships in Swedish territorial waters.
The Swedish Transport Agency, the Swedish Accident Investigation Authority and the Swedish Maritime Administration are the main authorities involved in the investigation of maritime casualties. For details about the respective areas of responsibility, see below.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
InvestigationsIn case of a collision, grounding or significant harm on prop-erty, a so-called “maritime declaration” must be held pursuant to Chapter 18 §6 of the Swedish Maritime Code. The declaration is conducted in court by one judge and two experts and can involve several Government agencies, e.g. the coast guard, customs authorities and the police, depending on the circumstances. The purpose of the declaration is to gather evidence and witness state-ments, meaning that the court does not draw any conclusions.
Severe maritime casualties and near-misses are investigated by the Swedish Accident Investigation Authority. This authority does not have any regulatory or supervisory role and its inves-tigations do not deal with issues of guilt, blame or liability for damages. The sole objective of the investigations is safety.
The Swedish Maritime Administration is involved in investi-gating aspects pertaining to wrecks, see e.g. Chapter 11a §8 of the Swedish Maritime Code.
Casualty responseThe Swedish Maritime Authority is responsible for operations pertaining to saving lives at sea pursuant to Chapter 4 §3 of the Act (2003:778) on protection against accidents.
In case of pollution or imminent risk thereof, the responsible authority is the Swedish Coast Guard pursuant to Chapter 4 §5 of the act.
If there is a danger to life, property or the environment, the responsible agency has far-reaching authority to infringe on other parties’ rights pursuant to Chapter 6 §2 of the act provided the steps taken are proportionate and otherwise justifiable.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Sweden is a party to the Hague-Visby Rules (International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1924, First Protocol, 1968, Second Protocol 1979). In addition to these conventions, Sweden has also chosen to adopt certain parts of the Hamburg Rules (United Nations Convention on the Carriage of Goods by Sea, 1978), to the extent they are not in conflict with the aforementioned conventions. In practice, this means that Chapter 13 of the Swedish Maritime Code, which governs the contract of carriage of goods, is somewhat of a hybrid between the Hague-Visby Rules and the Hamburg Rules.
Regarding the Rotterdam Rules (United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, 2009), Sweden has signed but not ratified the convention.
It may also be mentioned that Sweden is also a party to the CMR (Convention on the Contract for the International Carriage of Goods by Road, 1956), which thus may be appli-cable to transport by sea, e.g. Ro/Ro (see Article 2 of the CMR).
The aforementioned rules apply to arrests with some inter-national aspect (“international arrest”), but not for arrest of Swedish-flagged vessels if the applicant has its habitual residence or principal place of business in Sweden (“domestic arrest”). In such latter case, the regular rules on measures to secure a claim are applicable (cf. Chapter 15 of the Swedish Code of Judicial Procedure).
Under the rules on international arrest, a ship can only be arrested for a maritime claim. The Swedish Maritime Code contains a list of all such maritime claims, which corresponds to the list set out in Article 1 of the 1952 Arrest Convention.
A vessel can also be arrested for claims secured by maritime lien. The maritime liens recognised by Swedish law correspond to the list set out in Article 4 of the 1967 International Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages.
An arrest can be made against a vessel to which the maritime claim relates to and to other ships that are owned by the same owner at the time when the maritime claim arose. However, in the latter case (sister-ship arrests) arrest is not possible if the mari-time claim is related to i) disputes as to the ownership of any vessel, ii) disputes between co-owners of a vessel as to the ownership, possession, employment, or earnings of that vessel, or iii) mort-gage of a vessel.
Further, to arrest a vessel, the owner of the vessel must be liable for the maritime claim, unless the claim is secured by a lien.
An arrest applicant must file an application at one of the seven District Courts appointed by the Government to deal with mari-time cases (Maritime Courts), that has jurisdiction over the matter. To be granted an arrest order, the applicant must show probable cause that the applicant has a rightful claim that is or could be assumed to be brought for trial before a court or a similar manner. Further, unless the claim is secured by a mari-time lien, the applicant must show that there is a presumed risk that the defendant might slip away, hide assets or avoid payment in another way. Lastly, before the court accepts an application for arrest, the applicant must set up a security to cover all costs and damages that can be inflicted on the other party in case of wrongful arrest of the vessel.
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?
A claim relating to bunker deliveries is considered a maritime claim that is not secured by a maritime lien. Consequently, it is possible for bunker suppliers to arrest a vessel for such claim provided that the owner of the vessel is liable for the claim. If the bunkers have been delivered to a bareboat or time charterer, the bunker supplier can only rely on the general rules on arrest under Chapter 15 of the Swedish Code of Judicial Procedure to arrest bunkers on board or other assets of the charterer.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
If the claims arising from the contract for the sale and purchase of a vessel relate to the ownership of the vessel or a mortgage of the vessel, it would constitute a maritime claim and arresting the vessel would be possible, provided that the owner of the vessel is liable for the claim.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
In the event of damage or loss, the cargo owner must give notice of claim immediately upon delivery, or, where the damage or loss is not apparent, within three days from delivery. The period of limitation of action against the carrier is one year from the date of delivery.
The period of limitation may be extended by agreement between the parties if concluded after the claim arose (and not before). The total time extended may not exceed 10 years.
The period of limitation will continue to run until an action has been properly filed with the competent court or arbitral tribunal.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Under Swedish law, which reiterates the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, as amended by the 2002 Protocol, the carrier is liable for injury to a passenger, or damage to his or her luggage, during travel if such injury or damage has been caused by the carri-er’s negligence, or by the negligence of somebody for whom the carrier is responsible. The carrier is also liable for delay caused to a passenger under the same preconditions. The liability amounts of the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, apply.
3.2 What are the international conventions and national laws relevant to passenger claims?
The liability of a carrier of passengers is regulated by Chapter 14 of the Swedish Maritime Code. Sweden has ratified the Athens Convention, as amended by the 2002 Protocol, and is further bound by EC Regulation 392/2009 on the liability of carriers of passengers by sea in the event of accidents, which incorpo-rates the Athens Convention into EU law. Sweden is also bound by EC Regulation 1177/2010 concerning the rights of passengers when travelling by sea and inland waterway.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
The time limit of two years from the time when the passenger debarked the vessel, and/or the luggage was brought of the vessel, is interrupted by initiation of legal proceedings at court. Provided the court manages to serve the carrier, the date of the filing of the suit is the date that the time bar is interrupted. In Sweden, agree-ments on time-bar extensions are generally accepted.
4 Arrest and Security
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?
Sweden is a party to the 1952 International Convention Relating to the Arrest of Sea-Going Ships (the 1952 Arrest Convention), which is incorporated into Chapter 4 of the Swedish Maritime Code.
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
There are no specific rules regarding evidence with regard to maritime claims, and thus the provisions of the Swedish Code of Judicial Procedure also apply with regard to maritime claims.
A basic principle in the Swedish procedural system is the free evaluation of evidence, and the parties are generally permitted to refer to any evidence which would not evidently be of no effect.
There is no provision permitting pre-action disclosure and it is in our experience very unusual that any such procedure would take place on a voluntary basis between the parties. There is no rule against pre-action examination of witnesses, and counsels regularly, in a thorough manner, examine at least the own sides’ witnesses pre-action or at least before any main hearing.
It may be noted that witness statements are generally not permitted as evidence in Swedish court proceedings and may, according to the Swedish Code of Judicial Procedure, only be admitted under special circumstances, e.g. if an examination of the person who made the statement cannot be held at, or outside, the main hearing or otherwise before the court. There is no express prohibition against witness statements in arbitral proceedings, but it is generally considered that the opposite party must be given the possibility to cross-examine any witnesses.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The general provisions regarding disclosure found in Chapter 38 of the Swedish Code of Judicial Procedure apply with regard to maritime claims. In short, a party can request the court to order anybody who possesses a specified and identifiable written document that is a relevant piece of evidence to produce it.
5.3 How is the electronic discovery and preservation of evidence dealt with?
There are no particular provisions regarding electronic discovery and preservation of evidence.
With regard to production of documents/discovery and eval-uation of evidence in particular, the Swedish courts have, in general, adopted a technology neutral approach, meaning that pieces of evidence also stored electronically are considered docu-mentary evidence and may be subject to an obligation of disclosure.
The Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) has adopted an electronic case manage-ment system onto which all pleadings and evidence are uploaded and submitted. Submissions and exhibits are usually submitted electronically to the courts, with the important exception of the initial Power of Attorney (provided that the one authorising the counsel is not a holder of a Swedish electronic ID).
4.4 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 options are available?
As set out previously, to arrest a vessel for a claim against someone else other than the owner of the vessel, the claim must be secured by a maritime lien. As to other assets owned by such debtor, such as goods on board the vessel, bunkers on board or other property, the general rules on arrest set out in Chapter 15 of the Swedish Code of Judicial Procedure would apply.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
A defendant may lift the arrest if security is put up that meets the purpose of the claimant’s action. There are no explicit rules on what types of security would be acceptable, but according to the Enforcement Code a pledge, surety (“borgen”) or corpo-rate mortgage (“företagshypotek”) is sufficient as such. It is at the court’s discretion whether to accept the level of security, unless it is accepted by the opposite party. Bank guarantees and P&I letters of undertaking are generally construed as a surety and are therefore acceptable.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
It is, in general, a requirement that the applicant puts up a security for damage that the defendant may suffer as a result of a wrongful arrest. A claimant could be relieved from such requirement to put up a security only if the applicant is unable to put up a security and has shown genuine reasons (“synnerliga skäl”) for the claim. It is at the court’s discretion whether the type of security and the amount it would cover is sufficient.
4.7 How are maritime assets preserved during a period of arrest?
A decision to grant an arrest will be enforced by the Enforcement Authority, which will inform the vessel’s master about the arrest order. The vessel’s certificate and nationality documents will normally be taken into custody and a seal is fixed to the rudder. Breaching the arrest of the vessel is sanctioned by fines or impris-onment of up to one year. In general, the Enforcement Authority may require the arresting party to pay advance costs for main-taining the arrest. Such costs are related to harbour fees or similar.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The arrest applicant is strictly liable for all costs and damage that the defendant has suffered if the granted arrest is later revoked (“upphävd”), e.g. either due to the applicant not having initiated proceedings on the merits of the claim within one month or the applicant being unsuccessful in such proceedings. The vessel owner may claim recovery for such loss resulting from a wrongful arrest by initiating court proceedings against the applicant.
a separate court, but rather a special competence vested in a few ordinary District Courts, the Maritime Courts are affected by the heavy workload of the ordinary courts, which may lead to longer processing times.
The SCC is a very well-established and internationally recog-nised arbitral institution and offers efficient proceedings. The parties may of course appoint arbitrators with sufficient knowl-edge and otherwise the SCC will normally appoint highly skilled and knowledgeable arbitrators. A Swedish arbitration award cannot be appealed (but of course can be challenged on procedural grounds), appeals on “on point of law” are thus not permitted. Although this may entail some degree of risk, it also contributes to cost and time efficiency.
NOMA is a specialised maritime institution and is backed by very prominent individuals within the Nordic mari-time law community. NOMA rules are intended to lead to very cost-efficient procedures.
Arbitral proceedings can normally be conducted in English, whereas the courts normally require that the entire proceeding be held in Swedish.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Sweden is a well-reputed venue for arbitrations, and the SCC rules as well as the Swedish Arbitration Act are regularly attended to and updated if deemed needed.
The procedures, in court as well as arbitration, are often less burdensome and less costly compared to other jurisdictions.
Sweden has long traditions within shipping and maritime law and possesses highly skilled lawyers within the field.
In terms of notable cons: the volumes of maritime law matters are lower than in some other jurisdictions, which has resulted in fewer practitioners; and the Maritime Courts are not organised as separate entities, which may lead to longer processing times.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
A foreign judgment may be recognised and enforced under Swedish law if there is a treaty or a convention in place. For example, the Brussels I Regulation (Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) and the Lugano Convention (Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters) are both applicable in Sweden. Hence, judgments delivered within the EU or in Iceland, Norway and Switzerland are recog-nised and enforceable in Sweden.
Sweden is also a party to other conventions which allow recognition and enforcement of judgments within certain specific areas of law.
Moreover, if there is a prorogation agreement to a foreign court, it is possible to recognise the foreign judgment unless the recognition would be in violation of Swedish public policy. In such case, the recognition would be carried out as a summary check of the foreign judgment in a Swedish legal action, which results in a (new) Swedish judgment based on the foreign judgment.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The court of first instance in civil litigation concerning any matter covered by the Swedish Maritime Code is the Maritime Court. The Maritime Courts are thus a small number of ordi-nary District Courts which have been appointed to deal with maritime cases. There are currently seven such Maritime Courts in Sweden. A judge in the Maritime Court will have particular knowledge regarding maritime law, but in all other aspects the Maritime Courts and the procedure will be identical to the ordi-nary District Court.
Judgments from the Maritime Courts may be appealed to the Court of Appeal in accordance with the ordinary procedure, i.e. subject to a leave for appeal being granted. The Court of Appeal will have authority to decide on both legal and factual issues.
According to the Swedish Maritime Code (Chapter 9, 14 and 17), the Average Adjuster has mandatory jurisdiction in relation to certain issues, such as disputes between the insurer and insured in relation to a marine insurance.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The SCC is the main arbitral body in Sweden and deals with mari-time disputes, in addition to most other types of disputes.
In addition, the Nordic Offshore and Maritime Arbitration Association (“NOMA”) was established in 2017 on the initiative of the Danish, Finnish, Norwegian and Swedish Maritime Law Associations. NOMA has seen some initial success in a Nordic context, and we expect its importance to increase also in a Swedish context.
It may further be noted that ad hoc procedures under the Swedish Arbitration Act are also not uncommon within a shipping context.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?The SCC deals with mediation regarding any civil dispute, including maritime matters. However, in our experience, such institutionalised mediation is relatively uncommon in a Swedish maritime context.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
The Maritime Courts provide competent judges within the field of maritime law (however, not necessarily with any in-depth industry knowledge). The courts offer a structured and fore-seeable process, including regarding procedural matters. Judgments from the Maritime Court can be appealed, and appeals will regularly be admitted, which of course takes time and leads to costs. In addition, since the Maritime Court is not
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.
There are no such issues or trends worthy of note in this regard.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Sweden is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Recognition and enforcement of foreign arbitral awards is carried out pursuant to §§52–60 of the Swedish Arbitration Act.
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Sweden
Michele Fara specialises in dispute resolution and maritime and transport law. He has extensive experience of both international and domestic arbitrations and civil proceedings, particularly concerning complex contractual disputes. Furthermore, Michele is head of the firm’s maritime and transport law group and is regularly engaged by clients in the transport and logistics sector, industrial companies and insurers, for essentially all kinds of matters within shipping and transportation.
Vinge is one of Sweden’s leading law firms in the field of maritime law and has a long tradition of advising enterprises within the maritime and transport industries.We provide advice in relation to all issues which arise in the industry. In addi-tion to traditional maritime and transport law issues, we also provide advice concerning regulatory issues, competition law, maritime aid and tax issues.Due to our considerable experience and detailed knowledge, we also contribute to the development of the statutory framework governing the field of transport law. Among other things, our specialists are members of Swedish and international maritime organisations and often act as arbitra-tors in relation to maritime and transportation disputes.
www.vinge.se
Ninos Aho is counsel in Vinge’s Dispute Resolution Group and has more than 10 years’ experience from acting as counsel in court proceed-ings, as well as domestic and international arbitrations. Previous experience includes working in a top-tier shipping and transport law firm in London. His practice covers a number of industries, such as transport, energy and trade.
Paula Bäckdén is a lawyer in Vinge’s Shipping Team and Dispute Resolution Team. She has more than 15 years of practical and academic experience in maritime and transport law and assists clients with contentious as well as non-contentious matters. She is one of Sweden’s two average adjusters appointed by the Government and, as such, settles disputes related to marine insurance. She has experience as adjunct judge in the Court of Appeal and teaches regularly at a university. She has also been appointed as maritime law expert in two Governmental inquires. Paula is president of the Swedish MLA.
Anders Leissner has worked at a leading maritime insurance company for more than 20 years, which has given him broad and practical expe-rience within a number of practice areas ranging from corporate governance to dispute resolution – both from a Swedish and international perspective. Anders has extensive experience in relation to sanctions issues, in particular with regard to how the sanctions legislation in the United States affects companies within the EU, which has included both risk assessments, contract issues and management of incidents in co-operation with Swedish and foreign public authorities. He has also participated in several international industrial organisations that have prepared sanctions clauses and other contractual terms and conditions for the shipping and insurance sector. In addition, Anders has several years’ experience in respect of general legal advice for Swedish and foreign shipping companies.
(ii) PollutionSwitzerland has ratified the following conventions:■ The International Convention for the Prevention of
Pollution of the Sea by Oil of 12 May 1954.■ The International Convention for the Prevention of
Pollution from Ships of 2 November 1973, including its 1978 Protocol.
■ TheInternationalConventionRelatingtoInterventiononthe High Seas in Cases of Oil Pollution Casualties of 29 November 1969 including its 1973 Protocol.
■ The International Convention on Civil Liability forOilPollution Damage of 29 November 1969 including its 1976 and 1992 Protocols.
■ The International Convention on Civil Liability forBunker Oil Pollution Damage of 23 March 2001.
■ TheInternationalConventionontheControlofHarmfulAnti-Fouling Systems on Ships of 5 October 2001.
■ TheInternationalConventionontheEstablishmentofanInternational Fund for Compensation for Oil Pollution Damage of 27 November 1992.
(iii) Salvage/general averageSwitzerland has ratified the following conventions:■ The Convention for the Unification of Certain Rules
of Law respecting Assistance and Salvage at Sea of 23 September 1910.
■ TheInternationalConventiononSalvageof28April1989.There are no rules on who may carry out salvage operations
and there is no mandatory form.
(iv) Wreck removalSwitzerland has ratified the Nairobi International Convention on the Removal of Wrecks of 18 May 2007.
(v) Limitation of liabilitySwitzerland has ratified the Convention on Limitation of Liability for Maritime Claims of 19 November 1976.
(vi) The limitation fundArts 48 through 62 of the Ordinance on the Swiss Shipping Act provide for detailed rules regarding the establishment of a limita-tion fund, which apply in maritime and inland navigation matters.
1.2 Which authority investigates maritime casualties in your jurisdiction?
Under the Ordinance on the Safety Investigation of Transport Incidents (OSITI; SR 742.161), the Swiss Transport Safety
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionAs a general remark regarding all the below conventions: with regard to international treaties, Switzerland applies the so-called monistic system. According to that system, any international treaty is automatically part of the Swiss legal system, i.e. without the need for introductory domestic legislation. Provided that an international treaty is self-executing, i.e. if the rules contained in such international treaty are detailed enough to be applied in a specific case and are applicable to individuals, then the specific clauses of the treaty will be applied directly. This is the case with all the below conventions and the references to these conventions in Arts 48, 49, 120 and 121 of the Swiss Shipping Act are therefore superfluous. Maritime Conventions:Switzerland has ratified the following maritime conventions:■ The International Convention for the Unification of
Certain Rules of Law with respect to Collisions between Vessels of 23 September 1910.
■ The International Convention on Certain Rulesconcerning Civil Jurisdiction in matters of Collision and the International Convention for the Unification of certain Rules relating to Penal Jurisdiction in matters of Collision or other Incidents of Navigation, both of 10 May 1952.
■ The Convention on the International Regulations forPreventing Collisions at Sea of 20 October 1972.
Inland Navigation Conventions:Switzerland has ratified the following conventions regarding inland navigation:■ The Convention Relating to the Unification of Certain
Rules Concerning Collisions in Inland Navigation of 15 March 1960.
■ The1988StrasbourgConventiononLimitationofLiabilityin Inland Navigation (CLNI 1988); Switzerland has also signed the CLNI 2012 and the CLNI 2012 is expected to be ratified in the course of 2021. Although the CLNI 1988 is not in force anymore as an international treaty, Switzerland still has a respective reference in its domestic legislation and the old version of the CLNI therefore theo-retically still applies in Switzerland.
error and fire only applies if the parties agree so. The limitation of liability is similar to the rules regarding maritime claims. If a bill of lading is issued, which is not necessarily the case, then basically the same principles apply as for maritime cargo claims.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The Swiss Shipping Act, just like German law, distinguishes between the shipper and the so-called Ablader (Art. 106 of the Swiss Shipping Act). The Ablader is the party who, on behalf of the shipper, actually delivers the goods to the ship. This can be the shipper himself or, e.g. a forwarder or an agent acting on behalf of the carrier. The Ablader is liable towards the carrier for any damages caused by misdeclaration of cargo, regardless of fault.
The Ablader or the contractual shipper, if he is the one deliv-ering the cargo, will also be liable to other shippers who have cargo aboard and sustain damages. However, and contrary to the Ablader ’s liability toward the carrier, the Ablader will only become liable towards other shippers if they succeed in estab-lishing the Ablader ’s fault.
The carrier will not be liable for shippers’ damages in the event of misrepresentation (Art. 106 of the Swiss Shipping Act).
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Maritime cargo claims are time-barred after one year, commencing upon termination of the demise or time charter, or, in the event of a contract of carriage, on the date on which the goods were delivered or should have been delivered as per the contract.
Cargo claims in inland navigation are time-barred after one year, commencing on the date on which the goods were deliv-ered or should have been delivered.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Switzerland has ratified the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea of 13 December 1974 including its 1976 Protocol, but not the 2002 Protocol. Art. 118 of the Swiss Shipping Act explicitly refers to the Athens Convention. Switzerland has also ratified the Convention on Limitation of Liability for Maritime Claims of 19 November 1976 (LLMC). The provisions of those two conventions, including the global limitation of liability as per the LLMC and the limitation per passenger as per the Athens Convention therefore govern maritime passenger claims.
3.2 What are the international conventions and national laws relevant to passenger claims?
Since Switzerland applies the monistic system and international conventions are therefore directly applicable (provided that they are self-executing), there is no need for domestic legislation. For the sake of transparency, Art. 118 of the Swiss Shipping Act refers to the relevant international conventions.
Investigation Board (STSB) will carry out an investigation on the technical, operational, human and systemic causes in the event of an incident involving a ship under the Swiss flag. Shipping incidents abroad will only be investigated if they take place in international waters. An incident is defined pursuant to Art. 94 par. 1 no. 7 of 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 report will not opine on fault or the legal responsibility.
If a criminal act is committed on board a ship flying the Swiss flag, the authorities of the canton of Basel-Stadt, i.e. the prose-cutor’s office of Basel, shall be in charge of leading the criminal investigation (Art. 15 of the Swiss Shipping Act).
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The STSB has comprehensive powers and can take all measures necessary to conduct the investigation. This includes the hearing of witnesses, seizures, the mandating of experts, citations of witnesses and house searches.
The prosecutor’s powers are laid out in the Swiss Criminal Procedure Code.
The STSB and the prosecutors coordinate their efforts and are under a duty to disclose their documents and findings respectively.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Maritime ConventionsSwitzerland has ratified the Hague-Visby Rules. In Art. 101, the Swiss Shipping Act explicitly refers to the Hague-Visby Rules.
Switzerland has signed, but not ratified, the Rotterdam Rules. The Hamburg Rules have not been signed.
Inland Navigation ConventionsSwitzerland has ratified the Budapest Convention on the Contract for the Carriage of Goods by Inland Waterways (CMNI).
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Maritime Cargo ClaimsAll the principles as established in the Hague-Visby Rules apply, i.e. the presumed liability except for the excepted perils, the exclu-sion of liability for nautical error and fire and the limitation of liability. The limitations apply not only to contractual claims, but also if 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 bill of lading may assert against the carrier, whereas the charterparty remains decisive for the legal relation between the carrier and the shipper (Art. 115 of the Swiss Shipping Act).
Inland Navigation Cargo ClaimsSome of the principles applicable to maritime cargo claims also apply under the CMNI, while other aspects are dealt with differ-ently: There is also a presumed liability but there is no refer-ence to excepted perils. The exclusion of liability for nautical
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Yes; although the provision of security is not a mandatory rule under statutory law and rather lies within the court’s discretion, it can be considered standard procedure.
4.7 How are maritime assets preserved during a period of arrest?
There are no specific rules for preservation of assets during an arrest.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Due to Switzerland being a landlocked country, this point is moot. Please also see question 4.1 above.
In the case of arrest of cargo, the owner or any third party who suffers a damage can claim compensation if the arrest turns out to be wrongful. An arrest is wrongful if either there is no claim or if the conditions for the granting of an arrest were not fulfilled.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Under Swiss civil procedural rules, the range of admissible means of evidence is limited to witness testimonies, documents, visual inspections, expert opinions, written testimony and parties’ state-ments (Art. 168 of the Swiss Civil Procedure Code). All these 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.
If a party is able to establish that evidence may be jeopard-ised, that party may apply to the competent court for provisional securing of evidence. The court may then, even if no procedure on the merits is pending, hear witnesses, get a preliminary expert opinion, or take other appropriate measures to secure physical evidence (Art. 158 of the Swiss Civil Procedure Code).
The Civil Court of Basel-Stadt is the competent court for all tort claims based on incidents that take place on a ship flying the Swiss flag. The same court is competent for any other civil claim which has its legal basis in the Swiss Shipping Act, i.e., among others, all claims relating to ownership, mortgages, liens, charter-parties and crewing contracts (Art. 14 of the Swiss Shipping Act).
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Under Swiss civil procedural law, there is no pre-trial discovery. Hence, with no proceeding pending and in the absence of a court order based on Art. 158 of the Swiss Civil Procedure Code (see
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Swiss law has different time limits depending on whether a passenger bases his claim on a contractual basis (breach of passenger ticket contract) or on tort. Claims based on tort are subject to a limitation period of three years which begins as soon as the passenger has positive knowledge of the liable party and the extent of the damage. In any event, claims will be time-barred after 20 years. Contractual claims are time-barred after 10 years.
4 Arrest and Security
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?
Switzerland has ratified the 1952 Arrest Convention but is not a signatory to the 1999 Arrest Convention.
Switzerland is a landlocked country and therefore seagoing vessels will, perhaps apart from yachts and similar small vessels on the Rhine, never be in the jurisdiction of Swiss courts/author-ities. As a consequence, Swiss courts/authorities will never have the opportunity to arrest a seagoing vessel.
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?
Due to Switzerland being a landlocked country, this point is moot. Please also see question 4.1 above.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Due to Switzerland being a landlocked country, this point is moot. Please also see question 4.1 above.
4.4 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 options are available?
Due to Switzerland being a landlocked country, this point is moot as far as ship arrests are concerned.
However, it is conceivable that cargo liens may be exercised based on, and under the conditions set out in the general provi-sions of Swiss national law on arrests.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
As mentioned above, ship arrests will never be carried out in Switzerland. In the case of arrest on cargo (see above), courts would accept the following securities: a bank guarantee; a cash deposit with the competent court; or any other asset replacing the arrested goods, if such assets, in the view of the court, provide an adequate security to the creditor.
arrest order will be issued with no delay (usually on the same day) and the Debt Enforcement Office will be instructed to secure the assets. Once this is done, the debtor will be informed about the arrest and the arrest deed will be issued.
Now the debtor has the possibility to object. If he does so, the parties will be summoned to court, where the court will decide, still based on prima facie evidence, whether the arrest will be upheld.
If the arrest is confirmed or if the debtor does not even object in the first place, the creditor is under an obligation to initiate the enforcement of his alleged claim within 10 days, either by commencing an enforcement procedure or by initiating a civil action on the merits against the debtor (as to the procedure on the merits, see above).
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There are no specialist maritime arbitration bodies in Switzerland.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There are no specialist maritime arbitration bodies in Switzerland.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
National Courts are, generally speaking, of rather high quality and procedures are completed within reasonable timeframes. Since costs largely depend on the amount of the claim, costs can be rather high if the claim amount is significant.
The commonly cited advantages of arbitration, costs and timeframe, are therefore not always applicable in Switzerland. Whether or not arbitration should be considered therefore depends on the circumstances of the specific case. Furthermore, it has to be noted that arbitration bodies have no means to enforce injunctions or to arrest goods, which may also be considered as a disadvantage, depending on the circumstances.
Mediation plays no significant role in the enforcement of claims. In any case, a mediator has no power whatsoever to grant interim relief or to arrest goods.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Pro: Swiss courts are generally of rather high quality and the average amount of time necessary to obtain a judgment on the merits is, compared to an international standard, rather reasonable. As a very general rule it may be expected that a first-instance proceeding on the merits of a case will take approx-imately one year. Of course, this is just 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 jurisdictions.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
Switzerland is party to various international treaties governing the recognition and enforcement of foreign judgments, the most important one being the so-called Lugano Convention
above), no party is obliged in any way to provide, disclose or secure evidence.
Once a matter is pending, every party to the proceeding, and also third parties who are not involved in the proceedings, are under a duty to cooperate which, inter alia, includes the duty to disclose documents and to give accurate witness statements.
A party to a proceeding is exempt from the described duty to cooperate, if this may give reason to a criminal investigation against 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, patent attorneys, auditors subject to a duty of confidentiality under the Code of Obligations, doctors, and others, including auxiliaries to any of the foregoing persons).
Third parties are exempt from the described duty to cooperate if there are certain family relationships to one of the parties as described in the Swiss Civil Procedure Code.
There are no special rules for maritime disputes, so the above would also apply to maritime disputes.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Discovery rules as such are not known under Swiss civil proce-dural law.
According to Art. 160 of the Swiss Civil Procedure Code, any person holding documents which may serve as evidence is under an obligation to surrender such documents. There are, however, no strict rules regarding preservation of such evidence or regarding possible consequences of a wilful destruction of evidence. According to court practice, such misconduct can be considered when assessing the evidence and when allocating the burden of proof.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?There are no courts in Switzerland that specialise in shipping or maritime issues. Any such issues will therefore be dealt with by the ordinary civil courts, or – if a specific canton provides for commercial courts – by the competent commercial court.
Procedure on the merits: any claimant wishing to enforce a claim on the merits will have to initiate, as a first step, a concil-iation procedure, which technically makes the case pending (this does not apply to cantons who have a commercial court). If the conciliation is not successful, the claimant may then file his writ, together with all evidence, at the competent civil court. Usually, the court will give each party the possibility to file two writs and will then proceed to the taking and assessment of evidence. Judgment will be rendered after evidence has been considered and after the parties will have delivered their final statements, which usually takes place in a hearing.
Arrest: A claimant seeking an arrest will have to apply to the competent judge to issue an arrest deed. The judge will do so if the creditor credibly establishes that he has a claim against the owner of the goods, that there is good cause for issuing an arrest order and the goods to be arrested belong to the debtor. The judge will normally decide on the spot, without hearing the other party. The
that he did not receive proper notice on the foreign proceeding, that fundamental procedural rights had been violated or that the same dispute has already been decided upon. Apart from these points, the merits of the case will not be reviewed.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Arbitration: Switzerland is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958. The provisions of the Convention therefore apply.
8 Updates and Developments
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.
As described above, foreign judgments are, in principle, recog-nised and enforceable in Switzerland. This does, however, not answer the question whether judicial sales of ships will also be recognised. Whilst this was a difficult issue in the past, the authorities have now signalled that a foreign judicial sale, gener-ally speaking, will be recognised in Switzerland, and therefore constitutes a valid legal title to a ship and will enable the new owner to amend the ship registry.
Switzerland was planning to introduce the possibility for cantons to introduce tonnage tax systems. This tool was omitted from the current tax reform package, but the project is still being dealt with in the federal administration and may be re-introduced in the near future. If such a regime would indeed be introduced, this would make the Swiss flag more attractive for shipping companies.
(Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 30 October 2007), which is basically the equivalent of the Brussels I Regulation of 2001 (Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters). Furthermore, several bilateral treaties are in place which deal with recognition and enforcement in civil and commercial matters.
If no international or bilateral treaty applies, the provisions of the Swiss Federal Act on Private International Law (PILA) would apply. Therefore, on a simpler note, it can be said that European judgments will be recognised according to the Lugano Convention, whereas most other judgments must meet the requirements as set out in the PILA. The main principles of these two systems are laid out below.
Lugano Convention: the Lugano Convention provides for a system of automatic recognition of foreign judgments, i.e. there will be no review on the merits, no review of jurisdictional issues and in general no decision by a Swiss judge is required to render the foreign judgment effective. However, if the enforceability is disputed, then any party may apply for a court order confirming the enforceability in Switzerland. To this end, a special form as defined in Art. 54 of the Lugano Convention has to be filed, by which the foreign court confirms enforceability of the judgment. The recognition and enforceability in Switzerland will only be denied in very exceptional circumstances as defined in Arts 34 and 35 of the Lugano Convention. The circumstances referred to in these articles mostly represent the material or procedural public order.
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 has to be submitted with the competent court. The court will then examine whether the foreign court had sufficient jurisdiction to render a judgment on the merits. If jurisdiction of the foreign court is established, then the defendant may still argue that the judgment is incompatible with the Swiss public order or
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Stephan Erbe, attorney-at-law, graduated in 1997 from the University of Fribourg in Switzerland. Before joining a Basel-based commercial law firm as a partner in 2004, he headed the legal department of KPMG in Basel and worked for KPMG in Switzerland and in the UK. In 2011, he joined the law firm ThomannFischer. Stephan Erbe is the Chairman of the Swiss Maritime Law Association. 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 the IBA Maritime and Transport Committee. He is a member of the legal committee of the IVR – International Association for the representation of mutual interests of 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 gener-ally 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.
commercial port authority or other relevant authorities. If a ship strands, sinks or becomes malfunctioned and adrifts outside the commercial port area due to beaching or other accidents, the commercial port authority should order the master and the ship owner to take necessary contingency measures, and to salvage and remove the ships and cargo to the designated area within a limited time period. The ship owner should be responsible for the fees caused by the measures.
If the sunken ships, objects, flotsam, pollutants and rafts within the fishing port area endanger or could endanger the voyage and anchoring of vessels entering or departing the port, or contaminate or could contaminate the fishing port area, the competent authority may take the following measures: (1) to notify owners of the ships, objects, flotsam, pollutants and rafts to remove them within a limited time period; these items will be deemed as waste and removed without further notification if they are not removed within the limited time period; and (2) in the event of emergency, these items will be removed without notification. The removal fees should be borne by the owners.
(v) Limitation of liabilityThe liability of a ship owner (including the registered owner, charterer, manager and operator) is limited to an amount equiv-alent to the value of the ship, plus the freight and other acces-sories of the particular voyage in respect of the following: (1) claims in respect of the loss of life, personal injury or loss of or damage to property, occurring on board or which directly resulted from the operation of the ship or salvage operations; (2) claims in respect of damage resulted from the infringement of interests or rights caused by the operation of the ship or salvage operations; provided, however, that any damage resulting from a contractual relationship should be excluded; (3) claims in respect of the removal or destruction of a sunken ship or property lost overboard; provided, however, that a reward or payment made under a contract should be excluded; and (4) claims in respect to the obligations incurred for taking measures to avert or mini-mise the liabilities set out in above items (2) and (3).
The “particular voyage” refers to the voyage covered by the ship from one port to the next port, “freight” does not include freight or ticket fares not collectible under the relevant laws, regulation or contract, and “other accessories” refers to compen-sation for the damage to the ship, but not including payments from insurance policies.
If the sum of limitation of liability is less than the following, the ship owner shall be liable for the deficit: (1) regarding prop-erty claims, an aggregate amount of 54 Special Drawing Rights (“SDR”) as defined by the International Monetary Fund for each tonne of the ship’s gross registered tonnage (“GRT”); (2) regarding loss of life or personal injury claims, an aggregate
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionIf a collision is caused by the fault of one of the ships involved, the ship at fault shall be liable for the damage. If the colliding ships are all at fault, each ship shall be liable in proportion to the percentage of its fault. If it is not possible to ascertain the degree of the respective fault, the liability is apportioned equally among the parties involved. The ships at fault shall also be jointly and severally liable for the loss of life or personal injury caused by the collision. If a collision is caused by force majeure, the victim is not entitled to claim for damage. The time limit of a claim arising out of a collision is two years from the date of the collision.
(ii) PollutionA ship owner (including the owner, lessee, agent and operator of a ship) shall be liable for the damage resulting from the pollution of the sea caused by the ship. The claimant for compensation for pollution damage may seek compensation directly from the liability insurer or seek the guarantee to secure compensation.
In the event of damage arising out of a foreign ship’s violation of the Marine Pollution Control Act (a.k.a., the Ocean Pollution Prevention Act), the port management authority may restrict the foreign ship and the related crew from leaving Taiwan if the foreign ship has not fulfilled its obligation of damage compen-sation or if there is further investigation required. Nonetheless, if a security is provided, in principle, such a restriction may be lifted subject to the authority’s discretion.
(iii) Salvage/general averageA shipmaster should make an effort to render assistance to persons in danger of being lost at sea or in distress, so far as he can do so without serious danger to his ship, crew and passen-gers thereon. Those who render salvage operations to a ship or the property thereon that have an effective result are entitled to proper reward for the result. The salvage reward is to be deter-mined by the parties; if the parties cannot reach an agreement on the reward, the parties may file for the arbitration award or a court judgment.
(iv) Wreck removalThe retrieval or removal of wrecks, materials or floating arti-cles within the commercial port area requires the consent of the
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Taiwan is not a party to any international conventions in respect of carriage of goods. Regarding the national laws, the Maritime Act of Taiwan (“MA”) is the main legislation regulating marine cargo claims in Taiwan and is essentially based on the principles of international practice.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The following are some of the key provisions of the MA relevant to marine cargo claims:■ Whereacontractofcarriageorabillof ladingcontainsa
clause, covenant or an agreement diminishing or relieving the carrier or the ship owner from liability for damage to, loss of or delay to the cargo resulting from negligence or a failure to fulfil the obligations provided in this Chapter, such clause, covenant or agreement shall be null and void (Article 61).
■ Thecarrierorshipownershallbebound,beforeandatthetime of the commencement of the voyage, to exercise due diligence to: (1) make the ship seaworthy; (2) properly man, equip and supply the ship; and (3) make the holds, refrig-erating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation (Article 62).
■ The carrier shall properly and carefully load, discharge,handle, stow, care for, carry and keep the cargo (Article 63).
■ Neitherthecarriernortheshipownershallbe liableforloss or damage arising or resulting from: (1) neglect of the shipmaster, mariner, pilot or the employees of the carrier in the navigation or in the management of the ship; (2) perils, dangers and accidents of the sea or of other navi-gable waters; (3) fire, unless caused by the intentional or negligent acts of the carrier; (4) acts of God; (5) acts of war; (6) riots; (7) acts by public enemies; (8) arrests, restraints of the authority, or seizures under legal process; (9) quar-antine restrictions; (10) strikes or other labour incidents; (11) saving or attempting to save life or property at sea; (12) insufficiency of packing; (13) insufficiency or inade-quacy of marks; (14) wastage or any other damage or loss due to inherent defects, quality or vice of the cargo; (15) act or omission of the shipper or owner of the cargo, his agent or representative; (16) latent defects of the ship not discov-erable by due diligence; and (17) any other cause arising without the carrier’s own intentional or negligent acts or without the fault or the neglect of the agent or employee of the carrier or the ship owner (Article 69).
■ Where the nature or value of the cargo is fraudulentlydeclared by the shipper at the time of shipment, neither 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 cargo have been declared by the shipper before shipment and inserted in the bill of lading, neither the carrier nor the ship owner shall be liable for any damage to or loss of the cargo in an amount exceeding 666.67 SDR per package or 2 SDR per kilogram, whichever is the higher. Neither the carrier nor the ship owner shall be entitled to the benefit
amount of 162 SDR for each GRT; (3) where the claims in the preceding (1) and (2) occur concurrently, an aggregate amount of 162 SDR for each GRT, of which a first portion amounting to 108 SDR for each GRT shall be exclusively appropriated to the payment of personal claims in respect of loss of life or personal injury, and of which a second portion amounting to 54 SDR for each GRT shall be appropriated to the payment of prop-erty claims; provided, however, that in cases where the first portion is insufficient to pay the personal claims in full, the unpaid balance of such claims shall rank rateably with the prop-erty claims for payment against the second portion of the fund; and (4) the GRT of a ship fewer than 300 tonnes shall be deemed to be 300 tonnes.
The aforementioned limitation of liability does not apply to: (1) claims arising out of an intentional act or negligence of the ship owner; (2) claims arising from the contract of employment with the shipmaster, seafarers or any other personal serving on board the ship; (3) claims for salvage reward or general average contribution; (4) claims arising from the carriage of toxic chemical substances or oil pollution; (5) claims arising out of nuclear incidents caused by nuclear substances or nuclear waste carried by ships; or (6) claims arising out of nuclear damages caused by nuclear ships.
(vi) The limitation fundIn Taiwan, there is no mechanism to establish the limitation fund.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Maritime Accident Committee established by the port authority is authorised to conduct an administrative investiga-tion and issue a maritime enquiry report on the cause of accident and assessment of the liability. The maritime enquiry report may also be used for the litigation purpose. Sometimes, however, the port authority would conduct the investigation by itself.
In addition, in August 2019, the Taiwan Transportation Safety Board was established in accordance with the Transportation Occurrence Investigation Act and the Organic Act of the Taiwan Transportation Safety Board to investigate on the mate-rial transportation (aviation, railway, maritime and highway) occurrences for safety purposes. However, it is still unclear how it will actually operate and what the real influence will be.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Maritime Accident Committee or the port authority may board the ship to conduct investigation or identification, inter-view the relevant personnel or request the personnel for the provision of relevant documents or articles as may be necessary.
Similarly, the Taiwan Transportation Safety Board may also interview the relevant personnel, request the relevant personnel for the provision of relevant documents or articles or entrust the prosecuting authorities, or commission any qualified inde-pendent and professional domestic/foreign authorities or organ-isations to perform the autopsy, detailed examinations, tests, and collection of other relevant information of the deceased crews and passengers, to identify their cause of death, and the status of using alcohol, drugs, or toxic substances.
the date when the cargo should have been delivered. This time limit is mandatory and cannot be extended or shortened by the parties’ mutual consent.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The MA and the Civil Code (“CC”) are the main pieces of legis-lation regulating marine passenger claims in Taiwan. Here are some of the key provisions:■ Wheretheshipisunabletocontinuethevoyageduetoforce
majeure, the carrier or shipmaster shall endeavour to carry passengers to the port of destination (Article 88 of the MA).
■ Wheretheshipisunabletoentertheportofdestinationdueto an act of God, war, epidemic or any other extraordinary events at such port, the carrier or shipmaster may, at the option of the passenger, send the passenger to the nearest port or back to the port of embarkation (Article 89 of the MA).
■ Iftheshiphastoberepairedduringthevoyage,thecarrieror shipmaster shall complete the voyage with another ship of the same class and furnish adequate lodging and provi-sions for passengers during the waiting period with its own costs (Article 90 of the MA).
■ The carrier of passengers shall be liable for any injurysuffered by the passenger in consequence of the trans-portation, and for the delay in the transportation, except if the injury or the delay 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 force majeure, unless otherwise provided by the trade custom, the liability of the carrier for passengers shall be limited to the increased necessary expenses paid by the passenger due to the delay of the transportation (Article 654 of the CC).
■ Astatement ina ticket, receiptorotherdocumentdeliv-ered by the carrier to the passenger, excluding or limiting the liability of the carrier, is void, unless it can be proved that the passenger expressly agreed to such exclusion or limitation of liability (Article 659 of the CC).
■ Claimsfordamagesforinjuryordelayinthetransporta-tion of passengers are extinguished by prescription if not exercised within two years from the date the transporta-tion ends, or from the date when the transportation ought to have ended (Article 623 of the CC).
3.2 What are the international conventions and national laws relevant to passenger claims?
Taiwan is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea or any other international convention relevant to passenger claims. Regarding the national laws, as provided in question 3.1, the MA and the CC are the main regulations governing marine passenger claims in Taiwan.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
According to Article 79 of the MA, unless otherwise provided in this Section (i.e., carriage of passengers), the provisions of Section I (i.e., carriage of cargo) of this Chapter apply mutatis mutandis. There is no article stipulating the time limits of
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 (Article 70).
■ Anydeviationinsavingorattemptingtosavelifeorprop-erty at sea or any other reasonable deviation shall not be deemed as breach of the contract of carriage, and neither the carrier nor the ship owner shall be liable for the damage or loss that resulted therefrom (Article 71).
■ Wherethecargowasloadedwithouttheconsentoftheship-master or carrier, neither the carrier nor the ship owner shall be liable for the damage to or loss of the cargo (Article 72).
■ Ifthecarrierortheshipmasterloadscargoondeckandthecargo 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 kind of ocean carriage or the trade practice (Article 73).
■ Theissuerofabillofladingshallberesponsibleforallactsstated in the bill of lading (Article 74).
■ Thecarrierandtheshipownershallbedischargedfromallliability in respect of the damage or loss, either totally or partly, of the cargo unless a lawsuit is brought within one year of cargo delivery or of the date when the cargo should have been delivered (Article 56(2)).
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
■ The shipper shall guarantee to the carrier the accuracyofthe name, quantity, packaging type, number and marks 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 particulars. The carrier is not entitled to such a defence against any holders of the bill of lading other than the shipper itself (Article 55 of the MA).
■ Thecarriershallrefusetocarrycargofraudulentlydeclaredor of a contraband nature if such fact is known to the carrier; the same rule applies where the nature of the cargo may cause damage to the ship or endanger the health of the personnel on board the ship, unless those are allowable under a custom of shipping or commercial trade. If the cargo of an inflammable, explosive or dangerous nature becomes a danger to the ship or cargo, even if it is shipped with knowledge and consent of the carrier, the cargo may at any time be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any (Article 64 of the MA).
■ If the carrier or shipmaster finds any cargo not beingdeclared, he may unload it at the loading port, or charge the freight at the highest rate on the same kind of cargo under the same voyage, and may also claim for damages, if any. If the cargo is found during the voyage and is contra-band or of a dangerous nature, the shipmaster may jettison the cargo (Article 65 of the MA).
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Article 56(2) of the MA provides that the carrier or the ship owner shall be discharged from all liabilities in respect of the total or partial damage or loss of the cargo, provided that the lawsuit is not brought against the carrier or the ship owner within one year from the date of the delivery of the cargo or
provisional attachment can only be imposed upon the debtor’s property. If the cargo on the vessel is under the name of the debtor, it is possible for the creditor to apply for the provisional attachment on the cargo.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
In principle, cash, a letter of undertaking or guarantee issued by an appropriate bank or P&I may be acceptable, but it is still subject to the discretion of the competent court or government authorities.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
In the event of a provisional attachment or provisional execu-tion, the court would normally order the party applying for the ship arrest to provide a security (usually equivalent to 1/3 to 100% of the claim amount) and order the arrested party to provide a counter security (usually equivalent to 100% of the claim amount) for the avoidance of such arrest. Nevertheless, the amount is still subject to the discretion of the court and the party may request a review of the amount.
4.7 How are maritime assets preserved during a period of arrest?
In practice, the court may appoint the port authority, the master of the ship, the creditor or other appropriate person to maintain the vessel during the period of arrest. In addition, the court may order the creditor to pay the costs of the maintenance in advance.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
In Taiwan, in principle, only the creditor of the ship owner can arrest the vessel, and the arresting party shall file the formal lawsuit to review the merit of the credit. If an arresting party loses the formal lawsuit at the end and can be found as having intentionally or negligently applied for the wrongful arrest of the vessel, the ship owner can seek compensation for the ship owner’s actual damage and the lost profit arising from the wrongful arrest. However, in practice, the ship owner needs to pass the causation examination before the court on a case-by-case basis for which examination is quite strict.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Where it is likely that evidence may be destroyed or its use in court may be difficult, or with the consent of the opposing party, a party may move the court for perpetuation of such evidence. Where necessary, the party who has legal interests in ascertaining the status quo of a matter or an object may move for expert testimony, inspection or perpetuation of documentary
passenger claims under the MA; therefore, the one-year time limit for cargo claims should apply mutatis mutandis to passenger claims (please refer to question 2.4).
4 Arrest and Security
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 party seeking to obtain security for a maritime claim against a vessel owner may file with an applicable court for provisional attachment (arrest) of the vessel in accordance with the Code of Civil Procedure. After obtaining the court’s approval, the party may further file for the exercise of the provisional attachment in accordance with the Compulsory Enforcement Act. A security (normally in the form of cash or negotiable bank deposit certif-icates or other securities acceptable to court) is usually required for the exercise of the provisional attachment (the amount of security shall be decided by the court). However, the provisional attachment may not be exercised on a ship during the period from the time the ship has completed preparations for commencing a voyage until arrival at her next port of call, provided that this restriction shall not apply in respect of obligations incurred for the purpose of making preparations for commencing the voyage or damage arising from a collision of ships.
Where a collision occurs within the territorial waters of Taiwan, its 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 injured party is a Taiwanese national or Taiwanese-flagged ship, the court may arrest the ship at fault upon her entry to the territorial waters of Taiwan. The arrested ship may apply for release by furnishing the court with a guar-antee. The guarantee may be substituted with a letter of under-taking issued by an appropriate bank or protection and indem-nity insurer (“P&I”) acceptable to the court.
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?
In principle, only creditors of the vessel owner can arrest the vessel. Accordingly, if the debtor of the claim relating to bunkers supplied to the vessel is the owner of such vessel, the bunker supplier may apply for the arrest of the vessel.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
In Taiwan, essentially, only creditors of the vessel owner can arrest the vessel. Therefore, it is possible to arrest a vessel if such vessel owner is the debtor of the claim arising from contracts for the sale and purchase of a ship.
4.4 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 options are available?
The carrier is entitled to retain the portion of the goods as may be necessary to secure the payment of freight and other expenses. In Taiwan, there is no “action in rem”; therefore, the
The key procedure and timescale to be complied with are provided below:■ Inmattersrelatingtoashiporitsvoyage,alawsuitmaybe
initiated against the owner or user of the ship in the court with jurisdiction.
■ Inmattersrelatingtoadebtarisingfromorsecuredbyaship, a lawsuit may be initiated in court for the arrest of the ship.
■ Anydisputearisingunderabillofladingwithoneoftheports of loading or ports of discharge in Taiwan may be adjudicated by the court of such Taiwan port.
■ Inprinciple, thecourtof first instance takesabouteightmonths to one-and-a-half years to render its judgment, and both the court of second and third instance take around one to two years to render their judgments.
■ Thecourtfeeforthefirstinstanceisapproximately1.1%of the claim value, and the court fee for both the second and third instance is approximately 1.65% of the claim value.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There is no special arbitral body especially established for the review of maritime claims. Nevertheless, some arbitrators under the arbitrator list of the Chinese Arbitration Association are specialised in maritime disputes and have relevant experiences.
The key procedures and timescales to be complied with are provided below.
Where a bill of lading (with one of the ports of loading or ports of discharge in Taiwan) contains an arbitration clause, any dispute arising therefrom, if so agreed by the contracting parties, may be submitted to arbitration in Taiwan, regardless of the arbitration place or arbitration rules stated in such arbitra-tion clause. This provision is deemed to be part of an arbitra-tion agreement. However, nothing in this provision will affect the validity of an agreement relating to arbitration made by the parties after the dispute has arisen.
The arbitral tribunal shall render an arbitral award within six months after the commencement of the arbitration. However, the arbitral tribunal may extend the decision period for an addi-tional three months if the circumstances so required.
In principle, the cost of arbitration would be lower than the court fee.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Maritime disputes may be resolved through mediation in court or other institutions in Taiwan. Such resolution mechanism will usually take several months and the result thereof depends on the parties’ attitudes, and thus it is difficult to say what the timescale would be.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
In principle, the MA follows international conventions; there-fore, the outcome of initiating a legal action in Taiwan may not be substantially different in comparison to other jurisdictions. However, the cost (including but not limited to attorney’s fees) for filing a lawsuit or applying for arbitration in Taiwan may be considerably lower than in Western countries.
evidence. In addition, a motion for perpetuation of evidence may be made before or after initiating a lawsuit. Nevertheless, in both cases, it should be subject to the discretion of the court.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
In order to elucidate or ascertain relations involved in a lawsuit, the court may take the following measures: (1) order the parties or their statutory agents to appear in person; (2) order the parties to produce drawings/illustrations, schedules/lists, translations of documents written in a foreign language, or other documents and objects; (3) temporarily retain the documents and objects produced by a party or a third party in court; and (4) conduct inspections, order expert testimony, or request an agency or organisation to conduct an investigation.
A party in the lawsuit has the duty to produce the following documents: (1) documents to which such party has made refer-ence to in the course of the litigation proceeding; (2) documents that the opposing party may require the delivery or an inspec-tion thereof pursuant to the applicable laws; (3) documents that are made in the interests of the opposing party; (4) commercial accounting books; and (5) documents that are made regarding matters relating to the action concerned.
There are no special disclosure obligations for maritime disputes; therefore, the above general rules also apply.
5.3 How is the electronic discovery and preservation of evidence dealt with?
The discovery procedure in Taiwan is not similar to that in the common law jurisdictions, and the electronic discovery and preservation of evidence are subject to the court’s discretion and will usually follow the rules on hardcopy evidence. In general, even if the evidence is stored digitally, the court would still request the parties to print it out and submit the hardcopy to the court, when possible.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?There is no special court especially established for the review of maritime claims. However, a few courts in Taiwan have internal maritime divisions designated to handling maritime claims. The general rules governing the choice of domestic jurisdiction also apply to maritime claims. In addition, where the dispute arises under a bill of lading and the port of loading/discharge is in Taiwan, such claim may also be brought to the applicable domestic court. Moreover, in matters relating to claims for damages arising from a collision or other accidents at sea, if the damaged vessel first arrived in the port of Taiwan, the vessel inflicting damages is arrested in Taiwan or the vessel is regis-tered in Taiwan, the applicable domestic court also has jurisdic-tion over such dispute.
recognised except for in the following circumstances: (1) where the recognition or enforcement of the arbitration award violates the public order or good morals of Taiwan; and (2) where the subject matter of the arbitral award lacks arbitrability in accord-ance with the law of Taiwan.
In addition, the respondent may request the court to dismiss the application for recognition within 20 days from the date of receipt of the notice of the application under one of the following circumstances: (1) the arbitration agreement is invalid as a result of the incapacity of a party according to the applicable law; (2) the arbitration agreement is null and void according to the law chosen by the parties to govern the arbitration agreement or, in the absence of choice of law, the law of the country where the arbitral award was made; (3) a party is not given proper notice of the appointment of an arbitrator or of any other matter required in the arbitral proceedings, or any other situations that give rise to lack of due process; (4) the arbitral award is not relevant to the dispute over the subject matter of the arbitral agreement or exceeds the scope of the arbitration agreement, unless the offending portion can be severed from and will not affect the remainder of the arbitral award; (5) the composition of the arbi-tral tribunal or the arbitration procedure contravenes the arbi-tration agreement or the law of the place of the arbitration; or (6) the arbitral award is not yet binding upon the parties or has been suspended or annulled by a competent court.
8 Updates and Developments
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.
Maritime legislation in Taiwan is deeply influenced by interna-tional conventions (e.g., the Hague-Visby Rules). Where there is a lack of applicable provisions under Taiwan laws, Taiwanese courts may also refer to the relevant international conventions or international maritime practice.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
■ The losing party of the lawsuit shall bear the court fee.However, the attorney fee, in principle, should be borne by each party no matter what the outcome of the lawsuit would be.
■ Unlessthepartieshaveagreedotherwise,theinterestpayableon claims is generally calculated at a rate of 5% per annum.
■ A foreign plaintiff who has no asset in Taiwanmay beordered by the court to deposit a court fee bond if so requested by the defendant.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
A final and binding judgment rendered by a foreign court may be enforced in Taiwan except for in any one of the following circumstances: (1) where the foreign court lacks jurisdiction pursuant to the law of Taiwan; (2) where a default judgment is rendered against the losing defendant, except in the case where the notice or summons of the initiation of a lawsuit had been legally served in a reasonable time in the foreign country or had been served through judicial assistance provided under the law of Taiwan; (3) where the performance ordered by such judg-ment or the proceeding of the lawsuit is contrary to the public policy or good morals of Taiwan; or (4) where there is no mutual recognition between the foreign country and Taiwan (neverthe-less, in practice, as long as there is no precedent in the foreign country that rejects the recognition of a judgment rendered by a Taiwanese court, the Taiwanese court would not refuse to recog-nise the foreign court judgment).
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
A foreign arbitral award is enforceable if it is recognised by a Taiwanese court. In principle, a foreign arbitral award may be
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Shipping Law 2021
Lee and Li, Attorneys-at-Law
Daniel T.H. Tsai is the partner leading the maritime law practice group at Lee and Li, and was the chairman and an active member of the Maritime Law Committee of the Inter-Pacific Bar Association from 2003 to 2004. He has successfully represented domestic and international 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.
Lee and Li, Attorneys-at-Law9F-13, 12 Fu Hsing 4th RoadChien Cheng DistrictKaohsiung, 80661Taiwan
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 interna-tional 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 and Taiwanese companies on maritime and related deals and litigation.
■ Protocol on the Protection of the Black Sea MarineEnvironment Against Pollution from Land Based Resources.
■ ProtocolonCooperation inEmergencySituationsAgainstPollution of Black Sea Marine Environment with Petroleum and Other Harmful Substances.
■ Protocol on the Prevention of Pollution of the Black SeaMarine Environment Due to Discharges.
■ ProtocolontheProtectionoftheBlackSeaAgainstPollutionConvention on the Protection of Biodiversity and Landscape in the Black Sea.
■ Basel Convention on the Control of TransboundaryTransport and Disposal of Hazardous Wastes.
Significant fines are imposed on vessels for causing pollu-tion in Turkish waters through discharge of petroleum products, dirty ballast, garbage and sewage into the sea under the Turkish Environmental Code. The tariff regulating the fines is updated every year. If the vessel and/or her Owners/managers clean up the pollution by their own means, without involvement of any third party, the imposed fine is reduced by 30%. If the fine is paid within 30 days, another 25% discount is applicable. The environ-mental fines can be opposed within 30 days.
The fines imposed by the authorities due to pollution need to be paid, or adequate and acceptable security must be deposited promptly. Security can be deposited by way of cash deposit, Bank Letter of Guarantee or P&I Letter of Undertaking. Otherwise, the vessel may be detained by the authorities. It is advisable to pay the imposed fine within the 30-day period in order to use the benefit of the 25% discount then oppose the same before the competent Administrative Court if there are rounds to disputing the imposed fine. Authorities that detect a pollution incident are under an obli-gation to report the incident to the public prosecutor immediately. On the other hand, the public prosecutor may initiate a criminal investigation against the master of the vessel.
(iii) Salvage/general averageThe TCC, which was drafted in line with the international conven-tions such as the 1989 International Convention on Salvage and 1910 Brussels Convention, are the main regulations ruling the salvage. The Turkish Directorate General of Coastal Safety has monopoly rights for the salvage operations at the Turkish Straits (Bosphorus and Dardanelles) and within the Marmara Sea.
The TCC provides that if the parties did not agree otherwise, the latest edition of the York-Antwerp Rules, as translated and published, would be applicable for general average matters.
The parties are at liberty to choose the place of adjustment. Otherwise, the place of adjustment must be the place where the voyage is concluded; otherwise, where the voyage was discontinued.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe Turkish Commercial Code (TCC), rules are the funda-mental key provisions regulating collisions, grounding or other major casualties. In addition to local rules, Turkey is a signatory to the following International Conventions:■ International Convention for theUnification of Certain
Rules of Law with Respect to Collision between Vessels dated 23 September 1910.
■ International Convention on Certain Rules ConcerningCivil Jurisdiction in Matters of Collision dated 10 May 1952, Convention on the International Regulations for Preventing Collisions at Sea, 1972 (COLREG).
The collision cases are considered as action in tort and the Courts at the place of the collision have jurisdiction for the cases thereof.
(ii) PollutionThe Turkish Environmental Code is the main legal regulation as to pollution. On the other hand, Turkey is a signatory to the conventions below:■ 1973/1978(OnlytotheANNEXI/IIandV).■ SOLAS1974.■ International Convention onOil Pollution, Preparedness,
Response and Cooperation.■ Convention on the Protection of the Mediterranean’s
Marine Environment and Coastal Zone.■ Protocol on the Prevention andElimination of Pollution
Caused by Unloading from Ships and Airplanes in the Mediterranean Sea or Burning at Sea (1976) 1995 Barcelona.
■ Protocol on Prevention of Pollution Caused byTransboundary Movements and Disposal of Hazardous Wastes in the Mediterranean.
■ Protocol on theProtection of theMediterraneanAgainstPollution from Land Based Resources and Activities.
■ ProtocolonStruggleandCooperation in thePollutionofthe Mediterranean with Petroleum and Other Harmful Substances in Extraordinary Situations.
■ ProtocolonSpeciallyProtectedAreas andBiodiversity inthe Mediterranean Convention on the Protection of the Black Sea Against Pollution.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The Harbour Master has authority to prevent the vessel from sailing before completion of the Administrative Investigation.
The Public Prosecutor is entitled to seize the vessel until the completion of the Criminal Investigation.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Turkey is a signatory to the International Convention for the Unification of Certain Rules of Law, Brussels 1924 known as the Hague Rules, which was ratified in and came into force in 1956. Although Turkey did not become a party to the Hague Visby, Rotterdam or Hamburg Rules, the Hague Visby and Hamburg Rules were largely, and the Rotterdam Rules partly, adopted in the TCC.
Otherwise, if there is no contractual choice by the Partiers as to applicable provisions, cargo claims are dealt with by the TCC within the Turkish jurisdiction.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The Carrier (or the actual Carrier) is liable for the loss or damage to the cargo or delay in delivery due to causations that may occur for the period of which the cargo was in the custody of the Carrier. Vice versa, the Carrier cannot be held liable for any situation that may have occurred during the period of which the cargo was not in its custody.
The Carrier is liable for fault or negligence of its Servants and Agents, whereas it is also liable for the acts and omissions of the actual Carriers’ Servants and Agents. The Carrier cannot be held liable if the loss, damage or delay in delivery occurs due to an act or omission in navigation or technical management of the vessel or fire.
The Carrier is not liable for damages without the fault or negligence of itself or of its Servants and Agents.
The Carrier cannot be held liable for the damage that may have been caused due to saving or the attempt of saving life or property at sea.
Any condition setting aside the liability of the Carrier with regard to seaworthiness of the vessel, substitution of the named vessel, deck cargo, and provisions as to the liability of the carried is deemed to be null and void.
The amount of the claim that may be raised against the Carrier shall be calculated with reference to the value of the cargo at the agreed discharge port as per the contract of carriage.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
The Bill of Lading is prima facie evidence that the Carrier received the cargo as described therein. The Carrier is entitled to and must include any reservation that it may have as to the condition of the cargo. In the absence of such reservation, it is deemed
(iv) Wreck removalThe Turkish Act on Ports is the largest applicable regulation for wreck removals in Turkish Ports. The Harbour Master is entitled to order the removal of a wreck within the port area. Owners, Masters and Agents are considered to be jointly liable for wreck removal. If the wreck is not removed within the dead-line given by the Harbour Master, the Harbour Master himself is authorised to arrange the removal of the wreck and then sell the wreck for the recovery of the costs thereof.
Although preparations were made, Turkey has not yet become a party to the Nairobi International Convention on the Removal of Wrecks 2007 (Wreck Removal Convention).
(v) Limitation of liabilityTurkey is a signatory to the International Convention on Limitation of Liability for Maritime Claims concluded on 19 October 1976 (1976 London Convention) and to the 1996 Protocol amending the 1976 Convention. The 1976 Convention came into force in Turkey on 1 July 1998, whereas the 1996 Protocol came into force on 17 October 2010.
Turkey is also a party to the Convention on Civil Liability for Oil Pollution Damage (1992 Convention) and to the International Convention on the establishment of an International Fund for Compensation for Oil Pollution Damage (FUND).
The above conventions, Protocol and the FUND have been largely adopted in the TCC no.6102 passed on 1 July 2012. Thus, we can conclude that the TCC is primarily applicable for the limitation of liability.
Various limitation of liability regulations in different conven-tions such as the 1910 Collision Convention have also been largely implemented in the TCC.
The Owners or their Underwriters may limit their liabilities for any single marine-related incident.
(vi) The limitation fundThe TCC provides that both the 1976 and 1992 Conventions are directly applicable under Turkish law. It is well established by Article 1337 of the TCC that Limitation and Fund Conventions are applicable for domestic matters as well.
For Turkish flagged vessels, the Maritime Court (which is the authorised Commercial Court) place of registry has the jurisdic-tion for Limitation of Liability matters and Establishment of Fund, whereas the Istanbul Maritime Court (which is Istanbul 17. Commercial Court) has the jurisdiction for all foreign flagged vessels.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The administrative investigation by the Harbour Master is compulsory under Turkish law in case of any maritime casualty. On the other hand, the Master has to file a court application before the Court at the place of the casualty to obtain a “Sea Report” in order to get the Court to determine the facts of the Marine Casualty. Generally, three crew members including the Master, Chief Engineer and the watchman have to give a statement before the Court. The Sea Report obtained from the Court must be submitted to the Harbour Master as a part of the Administrative Investigation.
Notwithstanding the foregoing, the Public Prosecutor is also entitled to investigate criminal procedures in case of death, injury or pollution as a result of the casualty.
per Passenger per incident. The limit of liability in no case can exceed SDR of 400,000.00.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
All claims due to the death of or personal injury to a Passenger are considered to be time-barred within 10 years.
All other claims, including claims for damage to luggage are time-barred within two years.
For luggage claims, the Passenger is obliged to give written notice to the Carrier or its Agents on redelivery of the luggage if the damage is apparent, and in any event within 15 days of disembarking if the damage is not apparent. In the absence of such notice, it is deemed that the Passenger received the luggage in sound condition. Notice is not required if a survey is carried out on the luggage at the time of delivery.
4 Arrest and Security
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?
The primary sources of the TCC as to the arrest regime and the maritime liens, are two significant conventions: the International Convention on Maritime Liens and Mortgages (Geneva 6 May 1993); and the International Convention on Arrest of Ships (Geneva 12 March 1999).
Any party entitled to maritime claim may file an ex parte appli-cation before the Turkish Court which has jurisdiction, over the vessel to be arrested whether flying a Turkish or Foreign Flag, and seek an arrest order. The Court having exclusive authority in maritime cases at the place where the vessel to be arrested is berthed, anchored, moored or drydocked, has the jurisdiction for granting the arrest order. If the vessel does not come to a complete halt within such jurisdiction, no arrest order can be granted, i.e. arresting vessels in transit is not possible.
As we will explain below, under Turkish law, counter security in the amount of SDR of 10,000.00 is required to be deposited in advance for filing the arrest application. The other option available to a party seeking to obtain security for a maritime claim against a vessel Owner, who is not willing to deposit security in advance, is to initiate direct enforcement proceedings by way of “enforce-ment proceedings” without judgment. However, in this option, the Owner is entitled to raise an objection against the proceed-ings within seven days after the service of the payment order. The applicant will be entitled to attach the vessel if no objection is raised within that seven-day period. The chance of obtaining security in this option is quite low as no attachment is possible if an objection is raised within the seven-day period or if the vessel sails.
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?
Any vessel within Turkish jurisdiction can be arrested for claims of ”maritime claim” nature. Maritime claims are listed and defined under Article 1352 of the TCC, which is identical to the relevant terms of the Geneva 1993 Convention. Bunker claims are also considered as maritime claims under Article 1352 1/l of the TCC and physical or contractual suppliers are entitled to seek an arrest order for a claim related to bunkers supplied to the vessels.
that the cargo has been delivered into the custody of the Carrier in an apparent good condition. If the Bill of Lading is assigned to a third party, the Carrier is not allowed to raise any argument contrary to this presumption.
The shipper or the charterer is obliged to provide a full and accurate description of the cargo. The Carrier may hold each shipper or the charterer for any loss or damage that may arise to misdeclaration of the cargo or any misinformation provided in the Bill of Lading.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
A damage/loss notice must be given to the Carrier in writing at the time of delivery to the Receiver at the latest, or within three days after the delivery if it is not possible to discover the apparent damage/loss at the time of delivery. The nature of the damage/loss needs to be defined in such notice. The notice can be skipped if the cargo was surveyed by the Court or another relevant Authority. Without such notice or survey, it will be deemed that the cargo has been delivered as described in the Bill of Lading or damaged due to a reason for which the Carrier cannot be held liable.
Maritime cargo claims are time-barred within one year as of the delivery of the cargo or if the cargo is not delivered as of the date when it should actually have been delivered. Recourse actions can be initiated against the Carrier by the subrogated Claimant within 90 days after settling the claim.
The parties are at liberty of extending the time limits by agreement.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Turkey is a party to the 1974 Convention on the Carriage of Passengers and their Luggage (the Athens Convention), which was concluded in Athens on 13 December and to the 2002 Protocol. The Turkish Parliament ratified the 1974 Athens Convention and the 2002 Protocol on 9 March 2017.
Beyond the 1974 Athens Convention and the 2002 Protocol, the key provisions applicable to the resolution of maritime passenger claims are Articles 1247–1271 of the TCC, into which terms of the 2002 Protocol has been partly implemented.
3.2 What are the international conventions and national laws relevant to passenger claims?
Turkey ratified the Athens Convention to relating to the Carriage of Passengers and their Luggage by Sea of 2002 in March 2017, which came into force on 2 April 2017. Terms of the TCC as to passenger claims are identical to the 2002 Athens Convention and to EU legislation.
Under Turkish law, the Carrier is simply liable for the death or injury of the Passenger and for the damage to their luggage. Any term that may have been concluded between the Carrier and Passenger lifting and/or reducing the limit of liability or recti-fying the burden of proof that falls with the Carrier is deemed to be null and void.
On the other hand, the Carrier is entitled to limit its liability as per Article 1256/6 of the TCC. The limits of liability can be increased by agreement in writing between the Carrier and Passenger as per Article 1264/1. The liability of the Carrier is in general limited to Special Drawing Rights (SDR) of 250,000.00
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Under Article 1363 of the TCC, the applicants are required to deposit a lump sum SDR of 10,000.00 counter security irrespec-tive of the claim amount. The counter security can be by way of cash deposit or Turkish Bank Guarantee. Provision of the counter security is a pre-condition for the arrest application and the Court will not even review the application if the counter security is not deposited. The respondent (Owners) may apply to the Court requesting the counter security to be increased. If the Court accepts such application to increase the amount of the counter security, it will set a deadline for the arresting party to supplement the counter security. If the additional security is not provided within such deadline, the arrest order will automatically become null and void. In the same sense, the arresting party may also request the Court to decrease the counter security amount.
Arrest applications for crew wages are exempted from providing counter security. No objection in this regard can be listened to by the Court.
4.7 How are maritime assets preserved during a period of arrest?
Upon application of the arresting party, the Enforcement Office prohibits the vessel under arrest of sailing and must take precau-tions for securing the vessel. The arrest order should be served upon the Owner, Disponent Owner or the Master. The person upon whom the arrest order is served (generally, the Master) will also be appointed as the Trustee. The Trustee may be held criminally liable if the vessel is not maintained as at the time of execution of the arrest. The condition of the vessel is described in the minutes issued by the Bailiff.
The Bailiff must promptly notify the Coast Guard, Police, Harbour Master and the Customs Authority of execution of the arrest order where the ship under arrest is. The Bailiff should also notify the Registry of the vessel. If the vessel is foreign flagged, the Consulate of the Flag State should also be notified by the Bailiff.
The Enforcement Office is obliged to take all precautions for the maintenance and the operation of the vessel under arrest. The Enforcement Office may get the vessel insured against H&M risks. The Arrest applicant may be required to deposit funds for maintenance of the vessel which shall be payable primarily from the auction proceeds
By provision of sufficient security, the Bailiff is even entitled to permit the vessel to continue trading, whereas all earnings of such trading compulsorily are paid to the Enforcement Office.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
Under Turkish Law no particular provisions have been set out in respect of the wrongful arrest of the ships. The Respondents may, at any stage, claim that the arrest is wrongful and unjus-tified. If the arrest is found to be wrongful, the applicant is liable against the Respondents and the third parties for any and all damages arising from or in connection with the arrest. The mere dismissal of the substantive proceedings (proceedings on merits) is sufficient to invoke liability against the arresting party
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Any dispute as to Ownership or possession of the ship under Article 1352 1/t and any dispute arising out of a contract for the sale of the ship under Article 1352 1/y, are considered as mari-time claims for which it is possible to arrest a vessel within the Turkish jurisdiction.
4.4 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 options are available?
Identical to Article 3 of 1999 Convention, under Article 1369 of the TCC the arrest of a ship is possible if:(a) the person who owned the ship at the time when the mari-
time claim arose is liable for the claim and is owner of the ship when the arrest order is effected;
(b) the demise charterer of the ship at the time when the mari-time claim arose is liable for the claim and is owner of the ship when the arrest is effected;
(c) the claim is based upon a mortgage or a “hypotèque” or a charge of the same nature on the ship;
(d) the claim relates to the ownership or possession of the ship; or
(e) the claim gives rise to a maritime lien pursuant to Article 1320 of the TCC.
In this regard, we can conclude that it is a requirement that the liability in personam and the ownership must be united in the same person.
As per Article 1321 of the TCC, appurtenances of a vessel which are not owned by the Owner of that particular vessel, do not grant any right of maritime lien. Thus, the cargo not being owned by the Owner of the vessel cannot be subject to mari-time liens.
On the other hand, as per Article 1201 of the TCC the Carrier has the right of lien over cargo for all receivables arising out of the contract of carriage. Such lien is exercisable during the time the cargo is in the possession of the Carrier. It is also possible to exercise the lien by application to the court within 30 days after delivery of the cargo provided the cargo is still in the possession of the consignee.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
The Owners should provide sufficient security covering the claim, interest and costs thereof for the release. In practice, the security is provided in the form of a Turkish Bank Guarantee. However, other forms of security by means of cash deposit or mortgage on real estate may also be accepted. The parties are also free to agree on the production of a P&I Letter of Undertaking as secu-rity. Otherwise, the Court will decide the form of the security which will be either a Turkish Bank Guarantee or Cash Deposit. Beyond the Owner, the time charterer, manager or the mortgagee are also allowed to provide security for releasing the vessel. If so, the Court will ensure that the final title issued against the person liable is also enforceable against the security provided. If the maritime claim exceeds the value of the ship, security covering the value of the ship will be sufficient for the release.
Civil Procedure Law Article 205/2, the documents that are signed by electronic signature are legal bonds. According to the purpose of the law stated in preamble, the law maker intends to eliminate the hesitation about the power of evidence in secured electronic signed papers. Indeed, the regulation (Article 205/2) repeated the former no. 1086 Law Judgment and Procedure Law Article 295/A c.1, and there is no difference between current civil proce-dure law and former civil procedure law in this regard.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?All maritime-related disputes, particularly maritime claims, under Turkish law are dealt with by the Chambers of Commercial Courts that are assigned to deal with Maritime Law matters by the Supreme Council of Judges and Prosecutors. If there is no particular assignment, the First Chamber of the Commercial Court must hear the maritime-related disputes, and if there is no Commercial Court, the First Chamber of the Civil Court of First Instance is authorised to deal with such cases.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There is no institutional arbitration centre in Turkey active at the desired level in the field of international arbitration, particu-larly in maritime disputes. However, it is possible to say that the Istanbul Arbitration Centre (ISTAC) and the Istanbul Chamber of Commerce Arbitration and Mediation Centre (ITOTAM) are becoming promising in this regard.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There are no specialist alternative dispute resolution bodies that deal with maritime mediation in Turkey. As will be explained below, mediation for maritime claims became mandatory under Turkish law.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
National Courts, particularly Maritime-specialised Courts having accredited Court Experts, have means of understanding the technical issues and addressing the disputes thereof in an appro-priate manner.
Arbitral tribunals consist of experts in particular fields and offer efficient, cost-effective and prompt resolution for mari-time-related disputes.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
As explained above, Turkey has Maritime-specialised Courts within the major ports such as Istanbul and Izmir. Such Courts have gained experience in technical matters as well, which ensures the maritime disputes referred to national Courts are also understood in a technical manner. However, being in the
for a wrongful arrest. Thus, it simply must be established that the claim, for which the arrest was granted, is rejected in full. However, if the claim was partly upheld, the liability would not arise. The court granting the arrest order has the jurisdic-tion for the claims arising out of wrongful arrests. The losses and damages arising out the wrongful arrest may be satisfied from the counter security deposited by the Arresting Party if the amount of the same is sufficient (if not, enforcement proceed-ings have to be initiated against the Arresting Party).
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
The provisions on preserving or obtaining access to evidence in Turkish law are regulated in the Turkish Code of Civil Procedure.
Any party that has legal interest in obtaining access to evidence may file an ex parte application for fact-finding, during which any kind of evidence can be obtained via the competent Court. The Court may order any governmental and/or corpo-rate bodies and individual to disclose any available evidence they have, may order expert investigation and may get witness state-ments as the case may require.
After the conclusion of the fact-finding, the petition, the deci-sion thereof, the minutes of the fact-finding, the expert report, if any, and copies of all evidence that may have been obtained should all be served upon the opponents who are entitled to raise objections against such findings within a week of the service.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Any party to a maritime dispute, whether the Claimant or the Defendant, is obliged to disclose any evidence that it relies on with a list explaining what fact the evidence proves. The parties may also request the Court to obtain evidence from various places such as governmental offices, banks, other legal entities or individuals. After the submissions are closed, no evidence can be disclosed without the permission of the opposing party.
The Court may also compel the parties to disclose evidence such as commercial books, bank account statements, etc. failing which the Court may rely on the evidence submitted by the opposing party on the same subject.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Any submission, evidence or other document is submitted to the Turkish Courts where the same is scanned and uploaded to the Turkish National Judiciary Informatic Systems (UYAP) and preserved there electronically beyond the physical court files.
Turkish legislators regulate the electronic signature’s technical and legal issues in the Electronic Signature Code (ESC), Law no. 5070. According to the ESC, an electronic signature is a signa-ture added to electronic data for the purpose of verification of the content and identity. The Turkish Civil Procedure Law no. 6100 which entered into force in 2012, regulates electronic docu-ment evidence in a similar way to the repealed Law Judgment and Procedure Law no. 1086 (HMUK). According to the Turkish
In the absence of any agreement between the parties as to jurisdiction, the Civil Courts of First Instance at the domicile of the party against whom the award shall be enforced are compe-tent for the enforcement of foreign arbitration awards.
As per relevant terms of IPPL and the New York Convention, recognition and enforcement of an arbitral award may be rejected if:■ Thereisanabsenceofanarbitrationagreementoranarbi-
tration clause in the relevant agreement.■ The subject matter is not referable to arbitration under
the public policy and morality of Turkey.■ Theparty,againstwhomtheenforcementoftheawardis
sought, was not properly served of the arbitration process and therefore could not use its right of defence.
■ Theparty,againstwhomtheenforcementoftheawardissought, was not given proper notice of the appointment of the arbitrator or the arbitration proceedings or was other-wise unable to present his case.
■ Thecompositionofthetribunalorthearbitralprocedurewas contrary to the agreement of the parties or with the law to which the agreement is subjected and/or the law of the country where the arbitration was concluded.
■ Thepartoftheawarddealswithadifferencenotcontem-plated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration.
■ Theawardsubmittedforrecognitionandenforcementhasnot yet become binding on the parties or has been set aside or suspended by a competent body.
8 Updates and Developments
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.
The Turkish Parliament passed legislation on 6 December 2018, requiring mandatory mediation for commercial disputes as a prerequisite for initiating a Court Action. The Act estab-lishes two criteria for assessing whether a particular dispute falls within the scope of the mandatory mediation requirement. First, the dispute must involve pecuniary compensation or debts arising out of obligations. Second, the dispute must either fall within the scope of Article 4 of the TCC or be a dispute of a commercial nature as prescribed in other Turkish codes. Thus, we may conclude that any maritime claim falls within the scope of the mandatory mediation requirement. If the party fails to mediate before initiating a Court case, its case will be dismissed on procedural grounds due to lack of meeting the mandatory mediation requirement.
middle of all transportation routes, the number of the disputes referred to Courts are increasing continuously, which causes inevitable delays in litigation.
The Turkish Parliament and Government continue to develop new regulations for the improvement of arbitral institutions and other alternative dispute resolution (ADR) bodies.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
The Turkish Code of International Private Law and Civil Procedural Law is applicable with regard to recognition and enforcement of foreign judgments.
For the enforcement or recognition of a foreign judgment in Turkey, there should be either an agreement, on a reciprocal basis between the Republic of Turkey and the state where the judgment is rendered or a de facto practice (de facto reciprocity) or a provision of law enabling the authorisation of the execution of final decisions given by a Turkish Court in that state.
Under Turkish law, foreign judgments regarding civil law matters are enforceable provided that they are final and unappealable.■ Judgments rendered by not only Civil Courts but also
those by Administrative Courts, are enforceable, provided that they are in relation to civil law matters.
■ The Civil Courts of First Instance are competent forthe enforcement of foreign judgments. In practice, the related Courts, such as Commercial, Intellectual Property or Labour Courts, hear recognition and enforcement of foreign judgment matters. The case for the enforcement of a foreign judgment must be filed before the Court where the opponents are located.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The main legislation as to enforcement of arbitration awards in Turkey are the Code of International Private Law and Procedure Law and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards which was ratified by Turkey on 2 July 1992 and entered into force on 30 September 1992.
To be enforced in Turkey, an arbitration award must be final and unappealable. The party seeking enforcement of a foreign arbitra-tion award must submit the original or a duly certified copy of the arbitration agreement or the arbitration clause; the duly authenti-cated original award with an annotation saying that the award is final and unappealable. If such documents are not in Turkish, the applicant shall provide a notarised (or approved by a diplomatic or consular agent) official sworn translation of the same.
278 Turkey
Shipping Law 2021
Sinan Güzel graduated from Ankara University, Faculty of Law, in 1999. During his education, he worked at various law firms to gain familiar-isation with the general practice of Turkish law. After his graduation, he joined a British marine consultancy firm in Istanbul and worked with a British solicitor. Güzel completed his master’s degree in the area of European Union Law at Marmara University. He qualified as a Turkish lawyer and was admitted to the Istanbul Bar in 2000.After his qualification, he continued to work with the British marine consultancy firm for eight years where he was actively involved in all kinds of Maritime Law-related matters locally and internationally, building up extensive experience.He set up TCG Fora Law Office with his colleagues in September 2008, which became one of the leading Law Offices in Turkey within a short period. Güzel has considerable experience in maritime-related litigations and Marine Casualties. He is fluent in English.
TCG Fora Law OfficeKısıklıMahallesiAlemdağCaddesiNo:15Çamlıca34692Üsküdar, Istanbul Turkey
TCG Fora Law Office was founded by three qualified Turkish lawyers, İbrahim Çetinkaya, Sinan Güzel and Capt. Huseyin Mitat Tombak, who are all members of Istanbul Bar Association, in the commercial capital of Turkey, Istanbul.With the considerable experience of its legal team, TCG Fora Law Office offers personal, speedy, responsible, high-quality and cost-effective legal service and assistance in a wide range of legal fields but mainly maritime, insurance, corporate, property and commercial law.TCG Fora Law Office is one of the leading Law Offices in Turkey providing high-quality and cost-effective legal service and assistance. In order to achieve this goal, a team has been put together who have considerable expe-rience in their fields. The team stretches the principle of providing a quality personal service, ensuring that clients’ needs are met as and when they arise.TCG Fora Law Office is a full-service Law Office and, with the high skills of its legal team, capable of addressing all legal issues on a prompt basis.The philosophy of the firm is to attach great importance to, and approach with responsibility, each individual case and ensure that clients are guided properly at each stage of complicated legal procedures.
We have good relationships with lawyers, surveyors, experts and key service providers, all highly qualified professionals, on a global basis which enables us to find cost-effective and quick solutions to our clients’ problems when-ever and wherever it occurs.
(iv) Wreck removalUkraine is not a party to the Nairobi International Convention on the Removal of Wrecks. Wreck removal in Ukrainian inland or territorial waters is regulated by Chapter 6 of Section IV of the MSC. The owner of the sunken property shall inform the harbour master of the nearest Ukrainian sea port of its intention to retrieve this property within one year from the day of its sinking. In the case such property poses impediment to the safety of navigation, marine fishing, carrying out of hydraulic or other works, or repre-sents threat to life or health or the environment, the owner of the sunken property shall inform the harbour master of the nearest Ukrainian sea port immediately and at the request of the port administration move away such property or destroy it. The obli-gation to remove the sunken property is placed upon its owner.
If the owner fails to make declaration of intention to retrieve the sunken property within a year, as said, or has not retrieved the same within the period determined by the port, such property becomes state property.
(v) Limitation of liabilityUkraine is not a party to the Convention on Limitation of Liability for Maritime Claims 1976 (CLLMC).
Limitation of liability for maritime claims is governed by Chapter 1 of Section X of the MSC, which follows basic princi-ples and limits set out in CLLMC.
Application of the MSC provisions is limited, however, to the ships registered in Ukraine, except for liability of the owner and operator of the nuclear ship, who are not entitled to limit their liability below the limits provided by the MSC, if the dispute on liability is considered by a Ukrainian court.
(vi) The limitation fundThe limitation fund is not mandatory. It may be established by payment to the court deposit account, providing bank guarantee or a letter of undertaking (LOU) of liability insurers.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Ukrainian Maritime Administration is authorised to inves-tigate maritime casualties. The Ministry of Infrastructure of Ukraine, Ministry of Agrarian Policy and Food of Ukraine, State Agency for Fisheries of Ukraine and harbour masters may also be authorised to carry out investigation.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionCollisions are governed by the Merchant Shipping Code of Ukraine (MSC), of which provisions basically follow the Brussels Collision Convention 1910, and by the Convention on the International Regulations for Preventing Collisions at Sea 1972, to which Ukraine acceded on November 17, 1992.
(ii) PollutionThe following international conventions governing pollution from ships are in force:■ The International Convention for the Prevention of
Pollution from Ships 1973 (MARPOL 73/78), as amended by the 1978 Protocol (Annexes I–VI).
■ The International Convention on Civil Liability forOilPollution Damage 1992 (CLC 1992).
■ TheInternationalConventionRelatingtoInterventiononthe High Seas in Cases of Oil Pollution Casualties 1969.
■ The International Convention on the Prevention ofMarine Pollution by Dumping of Wastes and Other Matter (LONDON 72).
■ The International Convention on the Control ofHarmfulAnti-fouling Systems on Ships 2001 (AFC).
As for domestic legislation, the Law of Ukraine “On environ-mental protection”, the MSC, followed by governmental decrees, applies to pollution from ships.
In case of pollution from ships, local ecological inspection would file a claim against the ship owner requesting payment of compensa-tion for damages, failing which the ship can be detained or arrested.
(iii) Salvage/general averageUkraine is a party to the International Convention on Maritime Search and Rescue, 1979 and to International Salvage Convention 1989.
Ukrainian law on salvage is contained in Chapter 6 of Section IX of the MSC.
Provisions relating to general average are set out in Chapter 1 of Section IX of the MSC and are in general based on the York-Antwerp Rules 1994.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Pursuant to Article 388 of Chapter 3 Section XI of the MSC, the time limit for bringing the maritime cargo claim is one year. The date from which the limitation period runs may be different depending on whether the claim is for cargo loss, shortage or damage, or delay of its delivery.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The provisions regarding maritime passenger claims are set out in Chapter 3 of Section V of the MSC.
Ukrainian law is applicable if: (i) a ship flies the Ukrainian flag; (ii) the contract of carriage is concluded in Ukraine; and (iii) in accordance with the contract of carriage, the port of departure or port of destination is located in Ukraine.
The carrier will be liable for death or injury of a passenger or loss of or damage to luggage if the incident occurred in the course of the carriage and due to the fault or neglect of the carrier. The carrier can limit its liability in case of a passenger’s death or injury claim, to which a limit of 175,000 SDR applies per passenger, per carriage. In respect of damaged or missing cabin luggage, 1,800 SDR per passenger, per carriage applies; in respect of loss or damage to vehicle including all luggage carried in or on the vehicle, 10,000 SDR per vehicle; and other luggage, 2,700 SDR per passenger, per carriage.
The carrier is not entitled to limit liability if the incident occurred due to its acting on intent to cause damage or reck-lessly and with the knowledge that such damage could occur.
3.2 What are the international conventions and national laws relevant to passenger claims?
Ukraine has acceded to the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea 1974.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Pursuant to Article 389 of Chapter 3 Section XI of the MSC, the time limit for passenger claims is two years. The date from which the limitation period runs may be different depending on whether the claim is for personal injury or death, or for baggage loss or damage.
4 Arrest and Security
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?
On May 16, 2012, Ukraine adopted the International Convention Relating to the Arrest of Seagoing Ships 1952.
The list of maritime claims in respect of which the ship can be arrested under Ukrainian law includes all claims contained in the 1952 Arrest Convention and, with regard to the ships regis-tered in Ukraine, also claims for damage to the environment, wreck removal, port and canal dues, unpaid insurance premiums,
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The investigation of maritime casualties is carried out in accord-ance with the Regulation on Classification, Investigation and Keeping Records of Marine Casualties.
When a foreign flagged vessel is involved in the casualty, the investigation is carried out in compliance with the princi-ples of the International Maritime Organization (IMO) Casualty Investigation Code adopted by IMO Assembly Resolution A.849(20).
The chairman of the investigation commission is empowered to: make decisions on all organisational, methodological and practical issues relating to investigation; give mandatory instruc-tions to all participants of the investigation; appoint labora-tory tests and research of physical evidences of marine acci-dent; demand the production of materials and documents with regard to investigation from officials of enterprises; institutions and organisations regardless of the form of ownership; involve experts in the work of the commissions; interview witnesses and any other persons in connection with the casualty; and deter-mine the work schedule of the commission.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
Ukraine is not a party to the Hague Rules, the Hague-Visby Rules or Hamburg Rules, or to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea.
Ukraine is a party to the Budapest Convention on the Contract for the Carriage of Goods by Inland Waterways.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
Defences available for the carrier in respect of cargo claims are set out in Chapter 2 of Section V of the MSC, which are basically similar to the provisions of Article IV of the Hague-Visby Rules.
The carrier’s liability for loss or damage to the cargo is limited to 666.67 units of account per package or 2.0 units of account per kilo of gross weight of the lost or damaged cargo, whichever is higher, provided that the value of the cargo was not stated and included in the bill of lading.
The carrier is not entitled to limit its liability if the loss, shortage or damage to cargo, or delay in its delivery, resulted from its act or omission committed intentionally or with gross negligence.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Under Article 153 of Chapter 2 Section V of the MSC in case of misdeclaration of dangerous cargo, it may at any time be unloaded, destroyed or rendered innocuous by the carrier without compensation of any losses to the shipper. The shipper is liable for all damages and costs resulting from carriage of such cargo. The paid freight is not returned and if it was not paid on shipment, the carrier is entitled to recover the freight in full.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
In practice, counter security is not generally required, although the courts are authorised to order provision of the same.
4.7 How are maritime assets preserved during a period of arrest?
Maritime assets stay under responsibility of their owner, unless otherwise determined by the court.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
If the arrest is subsequently lifted by the court due to non-observance by the applicant for arrest of the time limits set by the court, e.g. for filing of the claim on the merits, for payment of the court fee, for bringing the claim into compliance with procedural requirements, due to repeated failure of the arrest applicant to attend court hearing, or due to failure of the claim secured by the arrest on the merits, the vessel owner is entitled to claim damages resulting from the arrest.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Under Ukrainian civil and commercial procedural codes, evidences can be secured by the court by means of: ques-tioning of witnesses; ordering expertise; ordering presentation of evidences and/or examination of the same; interdicting to perform certain actions in respect of the evidences and obliging certain actions; and in other ways to be determined by the court.
The request for securing the evidences can be submitted to the court either prior to or after filing the statement of claim with the court.
The party requesting securing of the evidences is obliged to file the statement of claim with the court within 10 days from the date of issue of the court ruling on ordering securing of evidences, otherwise the said ruling will be cancelled.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
Under Ukrainian procedural law, the claimant shall send a copy of the statement of claim with all evidences and supporting documents to the opponent and other parties and produce to the court proof of sending the same, failing which the court will not process the claim until such proof is presented.
New evidences can be presented at further stages of the proceedings before court hearing, unless a different deadline is set by the court.
Evidences, which were not produced within the period deter-mined by the law or the court, are not accepted for consideration
unpaid commissions, brokerages and agency fees, disputes arising from contract of sale and purchase of the ship.
As a preliminary step, the claimant asserting the maritime claim is entitled by virtue of Article 80 of the MSC to apply to the harbour master of the port for detention of the ship and the ship can be detained for three days. If, upon expiration of the said period, no court arrest order is produced, the ship shall be imme-diately released.
The application for an arrest is submitted by the arresting party to the court, in whose jurisdiction the vessel is located, stating the amount claimed, details of liability for the maritime claim party, information about the ship, main points of the claim and the reasons why the arrest is necessary.
The application shall be considered by the court no later than two days from the day of its submission.
If, at the time of issue by the court of the ruling on the arrest of the ship, the claim on the merits has not yet been filed with the competent court or arbitral tribunal, the court states in the ruling the period of time within which the arresting party is obliged to file such claim and to produce proof to that effect. If the said time limit set by the court is not observed, the arrest will be lifted.
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?
If there is a contractual relationship between the vessel and the supplier, the arrest is possible.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
It is not possible to arrest the vessel for a claim arising from general disputes under a sale and purchase contract, unless the claim is in respect of possession and ownership of the vessel. If the vessel is registered in Ukraine, its arrest is possible in respect of any claim arising from the sale and purchase of the ship dispute.
4.4 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 options are available?
In accordance with Chapter 2 of Section V of the MSC, the carrier is entitled to exercise lien over cargo on board a vessel for outstanding freight, for general average and for expenses neces-sary to preserve goods by means of keeping possession of the cargo until the said outstanding amounts are paid.
The carrier loses the right to claim these amounts from the shipper or the charterer once the cargo is released to the consignee.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Most common forms of security are payment into a court deposit account and provision of bank guarantee. LOUs of reputable P&I Clubs can be also accepted.
cases, backed as far as possible by documentary evidence and expert reports, in the most plain and comprehensible way.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
The procedure for recognition and enforcement of foreign judg-ments is set out in Section IX Chapters 1–2 of the Civil Procedural Code of Ukraine and is also governed by bilateral treaties of Ukraine on legal assistance on civil matters and by several multilat-eral international instruments, which directly or indirectly regulate the enforcement of foreign judgments. In the absence of interna-tional treaties between Ukraine and a foreign state, the principle of reciprocity applies.
The application for recognition and enforcement of a foreign judgment must be filed with the competent Ukrainian court within three years from the date of coming into force of the foreign judg-ment. The Ukrainian court will not revisit the merits of the claim.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
Arbitration awards are enforced in accordance with the provi-sions of the New York Convention 1958, the Law of Ukraine on International Commercial Arbitration and the Civil Procedural Code of Ukraine.
Application for enforcement shall be filed with the appellate instance court of general jurisdiction in the city of Kyiv within three years from the date of coming into force of the award with enclosure of the following documents: ■ thedulycertifiedoriginalornotarisedcopyoftheaward;■ theoriginalornotarisedcopyofthearbitrationagreement;■ power of attorney or other document confirming the
authority of the person to sign the application;■ confirmationofthecourtfeepayment;and■ copiesoftheapplicationinaccordancewiththenumberof
participants.All documents must be translated into Ukrainian. The trans-
lation must be notarised.The grounds on which the enforcement can be refused are the
same as those set out in the New York Convention 1958.
8 Updates and Developments
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.
The impact of the COVID-19 pandemic, the political and mili-tary situation in Eastern Ukraine and Crimea, Ukraine losing control over certain of its maritime areas, and the need to uphold and defend its status as a maritime state, these are the main chal-lenges the maritime sector in Ukraine is facing nowadays.
As a result, the number of legal disputes in the sector has considerably increased.
There is a strong need to address these issues not only at polit-ical level, but also more effectively at legislative level, by means of adopting new laws and ratification of international conventions, a process that is already under way but considerably delayed.
by the court, unless the party presenting them justifies impossi-bility to do so due to the reasons beyond its control.
The party, who is unable to produce evidences by itself, is entitled to request the court to issue a ruling ordering produc-tion of evidences by the person in possession of them.
There are no special procedural rules on disclosure obliga-tions in respect of maritime disputes in court proceedings.
5.3 How is the electronic discovery and preservation of evidence dealt with?
There are no special procedures for electronic discovery and preservation of electronic evidences.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?There are no special maritime courts in Ukraine.
All claims are dealt with by general, commercial and admin-istrative courts of Ukraine depending on the status of the parties, i.e. whether physical persons are involved, legal enti-ties or a public entity.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The Maritime Arbitration Commission of the Ukrainian Chamber of Commerce and Industry (MAC) deals with mari-time disputes in Ukraine, acting on the basis of the Statute on MAC and the Rules of MAC.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There are no specialist ADR bodies in Ukraine. Mediation is possible and is used already occasionally in maritime dispute resolution.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
MAC is the best in terms of knowledge of commerce and ship-ping, and the quickest.
It is also worth noting that Ukraine is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, which provides a mechanism for MAC’s award enforcement in foreign jurisdictions.
However, proceedings in national courts are less expensive than in MAC.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Proceedings in Ukrainian courts are quite quick, relatively inex-pensive, and take on average six months or sometimes even less.
Although judges are not in general experienced in maritime law, many of them demonstrate a good understanding of it. Thus, it is of utmost importance that lawyers present maritime
283Jurinter Law Firm
Shipping Law 2021
Oleg Fedotov has been managing partner of Jurinter Law Firm since its foundation. His career is all about shipping and marine insurance. He started his work in the legal department of one of Ukraine’s biggest shipping companies – Azov Shipping Company, worked as a senior lawyer in UkLloyd, then as a head of the legal department of Azov Insurance Company.In 1999, he co-founded Jurinter Law Firm, being one of the first law firms after the proclamation of independent Ukraine to provide legal services in the field of maritime and international law.He has been involved in most of the major complex maritime accident cases and maritime claims in Ukraine.Oleg is a PEOPIL general board member for Ukraine, IR Global exclusive maritime law member in Ukraine, member of the International Bar Association, Ukrainian Bar Association and of a number of the UK-based international lawyers’ networking organisations.Languages: Russian, Ukrainian, English, German.
Jurinter Law Firm10/3 Admiral Lunin AvenueMariupol 87510Ukraine
Jurinter Law Firm was established in 1999, being one of the first law firms in Ukraine to begin rendering maritime law services after the proclamation of independent Ukraine.The firm represents both in Ukraine and on an international level the inter-ests of shipping companies in connection with ship arrests, exercising lien over the cargo, collisions, demurrage, crew and other maritime claims.Equally, the firm renders legal services to the charterers, leading insurance companies and mutual insurance associations.The firm has vast experience in settlement of mass fatal and injury cases, both local and cross-border, in connection with ship collisions, sinking and explosions.Deep understanding by the firm’s lawyers of the industry needs combined with experience and in-depth knowledge of maritime law and practice, best
foreign languages and correspondence skills, ensure speedy attendance and cost-effective solutions tailored for each client’s case.The firm is represented in Mariupol, Odessa, Chernomorsk (formerly Ilyichevsk), Nikolaev, and Kherson.
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(ii) Pollution■ Bunkeroilspill– UAE courts were applying the Federal
Law No. 24 of 1999 for the protection and development of the environment (Environmental Law), which does not provide the full/entire protection. However, the UAE has ratified the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001.
■ Oilpollution– UAE courts will refer to the International Convention on Civil Liability for Oil Pollution Damage, in addition to the Environmental law (where it is applicable).
(iii) Salvage/general average■ Article 327 to Article 339 of the UAE Maritime
Commercial Law No. 26 of 1981 deal with salvage. ■ Article340toArticle365oftheMaritimeLawdealwith
the general average.
(iv) Wreck removalCurrently, the UAE Maritime Law, as well as national circulars and federal decisions, are dealing with wreck removal. However, a new law will be issued shortly to cover wreck removal as well as abandoned vessels.
(v) Limitation of liabilityThe UAE has ratified both the 1976 Convention as well as the 1996 Protocol; therefore, the limitation of liability should be applied to any claim subject to limitation under the Convention and Protocol.
(vi) The limitation fundThere is an additional overlaying uncertainty when it comes to the establishment of the limitation fund under the UAE Judicial System, and the concept of constituting a limitation fund in the UAE is yet to be tested by the UAE legal and litigation systems.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The Federal Maritime Authority (FMA), as well as the courts during the litigation process, investigate maritime casualties in the UAE, through a maritime expert to be appointed by the courts.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
Depending on the severity of the incident, if it is a small colli-sion and damages the outside of both vessels, the parties of the incident will have the full power to support their claims and defences; if the incident is severe, then the UAE Authorities will have the full power to investigate the incident.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
1. The Convention on Limitation of Liability for Maritime Claims 1976.
2. The Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims of 19 November 1976.
3. The Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation, Rome 1998.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The carrier shall be liable for losses or damages incurred to the goods during the period running from the receipt thereof at the loading port until delivery to the person entitled thereto at
may be unloaded from the vessel and destroyed, or the danger thereof removed with the knowledge of the carrier, without responsibility incumbent upon him, taking into account, where necessary, the provisions relative to the common average.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
One year for claims arising from the maritime transport contract. The year starts from the date of receipt of merchandise or from the date on which delivery should have been completed.
Ninety days for recourse lawsuits against third parties by persons against whom a claim is made. The 90-day period starts from the date of payment.
One year for claims of restitution of undue payments. One year from the day of the knowledge, by the person seeking recovery, of his right to recover.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Article 288 to Article 302 of the UAE Maritime Code cover passenger claims.
3.2 What are the international conventions and national laws relevant to passenger claims?
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
According to Article 302 of the Maritime Law, the time bar is one year starting from the next day of departure of the vessel.
4 Arrest and Security
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?
The UAE is an arrest-friendly jurisdiction. However, there are several legal and procedural aspects that need to be checked before effecting the arrest order: (i) the arresting party has to prove to the court that his debt is considered a maritime debt – the bill of lading or charterparty to that effect would be suffi-cient evidence; (ii) the lawyers must produce an official Power of Attorney (POA) issued from the arresting party – such POA needs to be notarised and attested by the UAE embassy in the origin country; (iii) the arresting party would have to submit a written undertaking to indemnify against any loss and damage arising out of the arrest in case the court discovers that the arrest application was filed without justification and the case was mali-ciously filed; (iv) the courts also have the right to ask for security to de deposited in the court; such security might be up to USD
the discharge port unless it is established that said damages or destruction arose from the following causes:■ theseaunworthinessofthevesselprovidedthatthecarrier
shall act with due diligence to put the vessel in a seaworthy state and equip it properly with men and provisions. He shall prepare the holds, cold rooms and other parts of the vessel to receive, transport and preserve the goods. Moreover, the carrier shall also exert due diligence in the loading, stowing, stacking, arranging, transporting, preserving, unloading and delivering of goods;
■ errors occurring in the navigation or management ofthe vessel by the master, crew, pilot or other maritime subordinates;
to rescue persons or property at sea, or any other deviation for reasonable cause; or
■ anyothercausenotarisingfromthefailureofthecarrier,thepersons working under him or the representative thereof.
The onus of proof shall be on the person alleging such cause to show that no failure on their part is instrumental in causing such losses or damages.
The shipper, in cases set forth hereinabove, may prove that such losses or damages arise from the failure of the carrier or the persons working under him, in a manner not related to the navi-gation or management of the vessel.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
If the vessel is loaded with hazardous, flammable or explosive goods, the carrier may, at any time, remove such goods from the vessel, destroy them or remove the danger thereof without any compensation, should it be proven that the carrier did not consent to the loading thereof, even if he was aware of the type or nature thereof. In addition, the shipper shall be liable to pay damages and expenses for the prejudice resulting directly or indirectly from the loading thereof on the vessel.
Although the above happens with the consent of the carrier, if such goods become a danger to the vessel or the cargo, they
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
The only accepted security is either cash or Manager’s Cheque; a P&I letter of undertaking would not be accepted by the court. However, if the arresting party accepts the P&I letter of under-taking, the court will not mind and will release the vessel as per the request of the arresting party.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Yes. On top of the letter of undertaking from the arresting party, the court will also ask for security to be deposited by the arresting party, the amount will only be determined at the time of issuing the arrest order, and it will be according to the value of his claim.
4.7 How are maritime assets preserved during a period of arrest?
The arresting court will issue letters to the Port Authority as well as the coast guard, who will take the original documents of the vessel with them. Normally the port will keep the vessel at the anchorage area.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
We have crucially acted in one of the largest wrongful claims in the UAE. The main test to satisfy is the intention of the arresting party: if it can be demonstrated that the arresting party acted with an intention to cause a damage (e.g., fabricating evidence or submitting forged documents to obtain the arrest), then as long as the owner is able to prove its losses, the chances of recovery of such losses are very high.
If, however, the arrest was wrongful, such as, for example, it is found that it did not fall squarely within the category of marine debt (see the answer to question 4.2), then the chances of obtaining compensation for wrongful arrest are minimal.
The court normally appoints a maritime expert to evaluate the losses.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
In general, there are no duties of disclosure under UAE law, with the default position being that a claimant has to prove his right, and the defendant to disprove it. Therefore, even if, in theory, Article 18 of the Law of Evidence allows for a party to the liti-gation to request the court to compel his opponent to submit written documents, in practice the request must be specific and the existence of the documents can always be denied, making it very difficult to obtain a proper disclosure. Witness evidence is also very limited in UAE proceedings.
500,000 depending on the value of the claim; and (v) all docu-ments supporting the application have to be translated into Arabic by a sworn translator.
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?
The law specifically mentions maritime debts, and accordingly, the arrest shall be made only for the satisfaction of a maritime debt. The expression “maritime debt” shall mean a claim in respect of a right arising from any of the following causes:1. Damages caused by the vessel by reason of a collision or
otherwise. 2. Loss of life or personal injuries caused by the vessel and
arising out of use thereof. 3. Assistance and salvage. 4. Contracts related to the use or exploitation of the vessel
under a charter contract or otherwise. 5. Contracts related to the carriage of goods under a charter
contract, bill of lading, or other documents. 6. Loss or damage of goods or belongings carried on board
the vessel. 7. Common average. 8. Towage or piloting of the vessel. 9. Supplies of products or equipment necessary for the use
or maintenance of the vessel, in any location of supply whatsoever.
10. Construction, repair or fitting of the vessel, and costs at present thereof in docks.
11. Sums spent by the master, shippers, charterers or agents on account of the vessel or on account of the owner thereof.
12. Wages of the master, officers and crew, and other persons working on board the vessel under a contract of maritime employment.
13. A dispute of ownership of the vessel. 14. A dispute pertaining to the common ownership of the
vessel, to the possession or use thereof, or to the right to the profits arising from the use thereof.
15. A maritime mortgage. While we believe both the physical supplier and/or the
contractor have the right to arrest the vessel, there is contrary judgment as to the right of the physical supplier.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Yes, as long as the claim is to be considered a dispute related to the ownership of the vessel.
4.4 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 options are available?
The court shall release the vessel upon presentation of a guar-antee or other security sufficient to satisfy the debt. An appli-cation for the cancellation of sequestration or the provision of a guarantee or security shall not be deemed an admission of liability for the debt nor a waiver of the right of the vessel owner to the legal limitation of liability.
Most of the arbitrations, even in shipping, are, however, dealt with in the DIFC-London Court of International Arbitration (LCIA) Centre within the DIFC.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?Both EMAC and DIFC-LCIA’s roles extend to supervision and promotion of other dispute resolution mechanisms, including mediation.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
There are no particular advantages of using the jurisdiction, but for enforceability of judgments or awards locally and in the wider Gulf region under the Riyadh Convention and GCC Treaty.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
■ noClublettersofundertakingareacceptedassecurity,onlycash or guarantee from local banks;
■ itisalmostimpossibletodischargeanarrestwithoutgoingthrough the entire substantive claim procedures;
■ there are no preliminary or default judgments, and thereis an automatic right to appeal, hence the entire litigation proceedings can take a long time;
■ preparationtimeforanarrest(attestationandtranslationofdocuments) is long, particularly for foreign claimants; and
■ maritime claims are not extinguished by a change ofownership.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
As the UAE has a civil law system, there is no system of prece-dents and the application of the law, even in circumstances that would be considered less open to interpretation, is at times incon-sistent between different emirates. The relatively recent amend-ment to the rules of civil procedure are, however, a welcome step in the right direction, simplifying the recognition procedures that were unnecessarily convoluted.
Apart from the aforementioned, one of the few procedures available for preservation or obtaining of evidence is the appoint-ment by the court of an expert who will be granted full authority by the court to inspect, check and obtain any evidence and then prepare an expert report to the court; such report will be subject to the court’s consideration, who may rely on it totally or partially.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
As usual in many civil systems, court proceedings in the UAE have no disclosure obligations. Following a recent amendment to the Law of Evidence, however, in a few exceptions, the court may impose the party, upon request of his opponent, to prepare and present any evidence, documents or information – in any form whatsoever, whether electronic or paper – that is in his possession. If the opponent fails to produce the required docu-ments, he shall take oath that the document or information does not exist. If he refuses to take the oath, the court may consider the statement of the requesting party as full evidence.
5.3 How is the electronic discovery and preservation of evidence dealt with?
On top of the court authority to impose the parties to submit whatsoever in their hand, the court may also impose any third party to submit whatsoever in his/her hands, even if such third party is a government entity. In any event, the court-appointed expert will be granted full authority by the court to inspect and check any electronic system to discover and obtain evidence.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The Federal UAE courts have general jurisdiction over civil and commercial cases and the arrest of vessels in UAE ports. In the UAE judiciary system, there is, however, no specialised maritime court, so the commercial bench deals with maritime claims.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?There are several arbitration centres in the UAE; however, when it comes to maritime disputes, there are two that are considered more specialised in maritime claims, particularly due to the super-vision of the Dubai International Financial Centre (DIFC) courts as opposed to the Federal courts.
The Emirates Maritime Arbitration Centre (EMAC) was set up in 2016. EMAC arbitrations are seated in the DIFC, unless other-wise agreed, under the DIFC courts’ supervisory jurisdiction. It provides parties with the option of emergency and fast-track arbi-tration, and its Arbitration Rules comply with the latest interna-tional best practice, being largely modelled on the UNCITRAL Arbitration Rules 2010.
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.
A revamp of the Federal Maritime Law (currently Federal Law No. 26 of 1981) was commissioned in 2017 and is expected to be revealed shortly.
In addition, the co-existence of two different systems, the UAE Federal courts and the DIFC courts, sometimes creates confusion for parties looking for enforcement, and no clarity has been given by the Federal UAE courts in relation to the interpretation of the DIFC court judgment when used as a conduit jurisdiction.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
As the procedures for recognition and enforcement of a foreign judgment or award are the same, there are no substantial differ-ences with the answer given above.
289
Shipping Law 2021
Fichte & Co
Alessandro Tricoli is Partner and Head of the Shipping Department (non-contentious) of Fichte & Co. He specialises in ship finance, ship sale & purchase, construction and conversion and has acted for owners, yards and banks alike in contentious and non-contentious matters relating to ship building and ship finance contracts. His interests also lie in port development, where he has advised port authorities and operators regarding the development and restructuring of their operations. A keen sailor himself, Alessandro’s broad knowledge further encompasses many areas of the firm’s practice, with a particular emphasis on yacht and superyacht finance, construction and disputes in which he advises a number of the firm’s clients, ranging from very- and ultra-high-net-worth individuals, shipyards, and insurance companies. More recently he was involved in the dispute around the “Luna”, the second-largest expedition yacht in the world, and her arrest by the UAE courts.
Fichte & Co19th floor Prism TowerSheikh Zayed Road, Business BayDubaiUAE
Moaz Forawi joined Fichte & Co in February 2012. He has been a licensed lawyer in Sudan since 2006 and has worked for several companies as a legal adviser, gaining experience in civil law and insurance. With over 10 years experience as a litigator in the UAE, Moaz’s knowledge and experience in UAE litigation is broad. He has successfully handled all types of lawsuits before the federal and local courts of the UAE, particularly in the areas of corporate, commercial, civil, criminal, construction, insurance, agency, shipping, air carriage, tort, banking, trade-marks, medical liability, and labour disputes.Moaz supports our clients in all interactions of dispute resolution and as a true litigator spends the majority of his time drafting court submis-sions. Due to his extensive experience of working as a legal consultant in the UAE, he represents and advises our clients in all necessary ways for litigation and dispute resolution under the UAE laws. Moaz is a member of the Sudanese Bar Association, the Khartoum International Center for Human Rights since 2006, and the Sharjah International Commercial Arbitration Centre 2017, and is DIFC Court-registered.
Fichte & Co19th floor Prism TowerSheikh Zayed Road, Business BayDubaiUAE
Shehab Mamdouh is a litigation and shipping specialist with over 12 years of experience in the UAE and has been with Fichte & Co since 2013. He is a member of the Egyptian Bar Association and handles major litigation issues and provides legal advisory and consultation for promi-nent clients from various sectors. His matters include advising on criminal cases as well as civil, labour, real estate, commercial and shipping disputes for local and international clients. He is sought-after for his vast expertise and skills. With in-depth knowledge of the UAE law and technical know-how of the procedures of the UAE courts, Shehab has achieved success in all forms of litigation disputes and has handled the most prominent cases.
Fichte & Co19th floor Prism TowerSheikh Zayed Road, Business BayDubaiUAE
Established by Jasmin Fichte in 2005, Fichte & Co is a full-service law firm comprising an experienced international team of experts specialised in corporate, litigation, shipping and insurance law. Ranked as one of the leading law firms in The Legal 500 and Chambers and Partners, Fichte & Co has over 25 dual-qualified Arabic and international lawyers, with offices in Dubai.The staff includes local and international lawyers that are multilingual with experience from practising in a wide variety of countries, including the UK, Italy, Germany, Greece, Saudi Arabia, Russia, Korea, Egypt, Sudan, Bahrain, Lebanon, Canada, India, Australia, Romania and Armenia. The Fichte & Co lawyers possess proven capabilities and experience in repre-senting clients in litigation and arbitration in the UAE (Dubai Courts; Dubai International Financial Courts; Dubai International Arbitration Centre; and
the Dubai International Financial Centre-London Court of International Arbitration) and abroad. In addition, the firm has built a strong network in other jurisdictions, working closely with firms in the UK, Singapore, Europe, the GCC, and offshore locations such as the Cayman Islands, BVI, and Jersey.
between the parties incorporates a version of the York-Antwerp Rules, the English courts will give effect to those Rules.
(iv) Wreck removalThe Nairobi International Convention on the Removal of Wrecks 2007 has been implemented into UK law by the Wreck Removal Convention Act 2011.
The powers to remove, destroy or take possession of a wreck are granted to relevant local authorities under Part IX of the Merchant Shipping Act 1995.
(v) Limitation of liabilityThe UK is a signatory to the Convention on Limitation of Liability for Maritime Claims 1976 (“CLLMC”), as amended by the 1996 Protocol. The new liability limits introduced by amendments to the 1996 Protocol came into force in the UK in June 2015.
(vi) The limitation fundThe constitution of a limitation fund, as prescribed by Article 11(2) of the CLLMC, is given force in the UK under the Merchant Shipping Act 1995. The English Civil Procedure Rules (“CPR”) also govern the procedure for establishing limitation.
Pursuant to an English Court of Appeal decision in 2014, a suitable P&I Club Letter of Undertaking (“LOU”) has been held to be sufficient security to constitute a limitation fund, thereby negating the need for a payment to be made into court.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The UK Secretary of State’s Representative (“SOSREP”) is a civil servant appointed by the Maritime and Coastguard Agency (“MCA”) to oversee the UK’s casualty response and to work with stakeholders to minimise the environmental and financial impact of maritime casualties. The MCA is an executive agency sponsored by the Department for Transport.
Marine casualties are investigated by two separate bodies. The MCA Enforcement Unit undertakes investigations to deter-mine whether criminal proceedings or an administrative sanc-tion may be warranted.
The Marine Accident Investigation Branch (“MAIB”) carries out investigations to establish the causes of casualties and produces reports and makes recommendations to the shipping industry to prevent reoccurrence.
Although both these bodies are divisions of the Department for Transport, they conduct their work as separate entities and are wholly independent of each other.
1 Marine Casualty
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe UK is a signatory to the 1910 Collision Convention and the Convention on the International Regulations for Preventing Collisions at Sea, 1972 (as amended). These Conventions are implemented into national law by the Merchant Shipping Act 1995.
(ii) PollutionThe following international conventions governing pollution from ships and establishing an international compensation regime for pollution damage are in force in the UK:■ The International Convention for the Prevention of
Pollution from Ships 1973 (“MARPOL 73/78”), as amended by the 1978 Protocol and subsequently amended by the 1997 Protocol.
■ The International Convention on Civil Liability forOilPollution Damage 1992 (“CLC 1992”).
The CLC 1992 and the 2001 Bunkers Convention set out the liability and compensatory regimes for pollution caused by oil cargoes and bunker oil.
In the event that sufficient funds are not available under the CLC 1992, the shortfall in compensation may be obtainable under:■ the International Oil Pollution Compensation Funds
(“IOPC Fund”), as established by the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992 (“1992 Fund Convention”); and
■ the Protocol of 2003 to the 1992 Fund Convention(“Supplementary Fund Protocol”).
The CLC 1992, the 1992 Fund Convention and the Supplementary Fund Protocol are implemented into UK law by the Merchant Shipping Act 1995.
(iii) Salvage/general averageSection 224 of the Merchant Shipping Act 1995 gives force of law in the UK to the International Salvage Convention 1989.
There is no specific international convention governing general average. However, the Marine Insurance Act 1906 contains provisions governing the application of general average. Additionally, where the relevant contract of carriage
to sue pursuant to Section 2(2), to exercise those rights transferred to him for the benefit of the party who actually suffered the loss but does not have title to sue.
A cargo claimant must also ensure that its claim is brought within the 12-month time limit provided for in Article III Rule 6 of the HVR (see answer to question 2.4 below) to avoid the claim becoming time-barred.
A cargo claimant will need to prove causation, namely that the damage to and/or loss of the goods in question was caused by the carrier’s breach of contract and/or duty and/or negligence. It will also need to ensure that none of the exceptions to the carrier’s liability under Article IV Rule 2 of the HVR apply, e.g. perils of the sea, fire unless caused by fault or with privity of the carrier, nautical fault defence, etc.
Once the cargo claimant’s loss has been quantified, it will also need to consider whether package limitation applies pursuant to Article IV Rule 5 and, if so, whether the right to limit has been lost because the damage or loss has resulted from an act by the carrier done either with the intent to cause damage or recklessly, and with knowledge that damage would probably result.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Article III Rule 5 of the HVR provides that the carrier shall be indemnified by the shipper for any loss incurred as a conse-quence of inaccuracies in the “marks, number, quantity and weight” declared by the shipper.
Under Article IV Rule 6 of the HVR, the carrier is entitled to discharge at any place, destroy or render innocuous any dangerous cargo that is shipped without the knowledge and consent of the carrier, without compensation to the shipper. Further, the shipper is responsible to the carrier for any costs or damages it incurs resulting from the shipment of the dangerous cargo.
The shipper also has a common law duty to notify the carrier of any dangerous cargo. If the shipper fails to properly declare dangerous cargo, then the carrier will have a claim against the shipper for losses incurred as a direct consequence of the misdeclaration, e.g. for damage to the vessel.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Pursuant to Article III Rule 6 of the HVR, the time limit for bringing a cargo claim is one year from delivery of the goods or the date when the goods should have been delivered. In order to interrupt time, formal proceedings must be commenced either by issuing a claim form in the High Court, where the contract of carriage provides for the parties’ disputes to be determined in court proceedings, or by commencing arbitration, where the contract of carriage provides for disputes to be determined in arbitration.
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
The Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea 1974 and the 2002 Protocol, as imple-mented into UK law (see question 3.2) impose a liability and insurance regime for passenger ships in respect of passengers and their luggage. They also impose financial limits of liability for carriers in respect of passenger claims.
In some circumstances, such as death or serious injury to a shore employee on board a vessel, the casualty may be investi-gated by the Health and Safety Executive.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The SOSREP has wide-ranging powers that include the power to issue directions to parties on behalf of the Secretary of State. However, such powers are invariably used as a last resort, as the SOSREP seeks to work with the parties involved to achieve a successful outcome for all.
The Merchant Shipping (Accident Reporting and Investigation) Regulations 2012 grant the MAIB powers to investigate accidents involving or occurring on board:■ AnyUK-registeredvessel.■ AnyothervesselwithintheUKorUKwaters.■ Any vessel that, in the opinion of the Chief Inspector,
involves the substantial interests of the UK.Powers of investigation are granted to the MCA Enforcement
Unit under Part X of the Merchant Shipping Act 1995. The powers bestowed include those to demand the production of logbooks and other official documents, to inspect ships and to question crew.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The Hague-Visby Rules (“HVR”), which govern the interna-tional carriage of goods by sea, are incorporated into English law by the Carriage of Goods by Sea Act 1971 (“COGSA 1971”). In addition, the Carriage of Goods by Sea Act 1992 (“COGSA 1992”) deals with rights of suit relating to contracts for carriage of goods by sea. It applies to all bills of lading, waybills and any ship’s delivery order.
As England is a common law jurisdiction, the case law on marine cargo claims will also be relevant. The doctrine of binding precedent means that the English courts follow and apply the legal principles established in the earlier decisions of the more senior courts.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The HVR will apply to a claim under the contract of carriage where the bill of lading is issued in a contracting state, the carriage is from a port in a contracting state, or the contract contained in or evidenced by the bill of lading provides that the HVR shall apply.
To bring a claim under the contract of carriage, the cargo claimant must establish that it has title to sue. Pursuant to COGSA 1992, the following have title to sue:■ Section2(1)(a)provides that the lawfulholderof abillof
lading shall have transferred to him and vested in him all rights of suit under the contract of carriage as if he had been a party to that contract.
■ Section2(2)(a)conferstitletosueonthelawfulholderofthe bill of lading, regardless of possession of the goods, as long as he became the holder of the bill of lading pursuant to a contractual arrangement made before the bill of lading was spent.
■ Section2(4)entitlesa lawfulholderof thebillof lading,who does not own the goods but who has acquired title
cargo carried on board a vessel. The procedure for arresting a vessel in England and Wales
requires an in rem claim form to be issued in the Admiralty Court, together with the following documents:■ a “Declaration in support of application for warrant of
which is an undertaking to pay the fees of the Admiralty Marshal relating to the arrest, the care and custody and the release of the vessel; and
■ a“WarrantofArrest”.The arresting party must also check that no caution has been
entered against the vessel. A caution is an undertaking given to provide security to avoid the vessel being arrested. If a caution is registered, the party that registered it has three days following notice of the intended arrest to put up the security.
If the arrest is granted, the Admiralty Marshal will execute the Warrant of Arrest, which must be physically served on the vessel.
Often, the vessel interests (normally in the form of the vessel’s P&I Club, on behalf of the shipowners) will provide a LOU to prevent the arrest of the vessel or, if it has already been arrested, to secure the release of the vessel. The LOU will act as security for any claims against the vessel and its owners pending resolu-tion of the claims either in court or arbitration or pursuant to a settlement agreement.
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?
In principle, it is possible to arrest a vessel for a claim relating to bunkers supplied to it. Section 20(2)(m) of the SCA provides for an arrest to be made for: “Any claim in respect of goods or materials supplied to a ship for her
operation or maintenance.”Accordingly, if there is a contractual relationship between the
vessel owner and the supplier then an arrest may be possible, subject to jurisdictional issues. However, if the contract is not with the physical supplier, as is usually the case, an arrest will not be possible.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Section 20(2)(a) of the SCA allows for an arrest to be made for: “Any claim to the possession or ownership of a ship or to the owner-
ship of any share therein.”It is therefore possible to arrest a vessel where a party has a
claim for the possession or ownership of the vessel. However, it is not possible to arrest a vessel for general disputes under a sale and purchase contract unless they fall within one of the other grounds listed under Section 20 of the SCA.
4.4 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 options are available?
Where the contract of carriage incorporates an appropriate lien clause, a shipowner may be able to exercise a lien over cargo on
In broad terms, a carrier will be liable for damage suffered as a result of death or personal injury of a passenger or loss of or damage to luggage where the incident occurred during the course of the carriage and the incident was due to the fault or neglect of the carrier. The carrier can limit its liability unless it acted with intent to cause damage or recklessly and with knowledge that such damage could result. The 2002 Protocol significantly raised the limits of liability for the death of, or personal injury to, a passenger. The 2002 Protocol also introduced strict liability of the carrier for death or personal injury in shipping-related incidents except in very limited circumstances. Parties to the Convention are allowed to vary the limits provided that they do not introduce lower limits than those in the 2002 Protocol. The Protocol also requires carriers to maintain adequate insurance, as well as allowing direct action against insurers.
The provisions apply to all international carriage where a ship is registered in the UK, the contract of carriage has been made in the UK or the place of departure or destination is in the UK. They also apply to domestic voyages within the UK.
3.2 What are the international conventions and national laws relevant to passenger claims?
The Athens Convention 1974 (see question 3.1) has been given effect in the UK pursuant to Section 183 of the Merchant Shipping Act 1995. The UK has implemented the 2002 Protocol by virtue of the Merchant Shipping (Convention Relating to the Carriage of Passengers and their Luggage by Sea) (Amendment) Order 2014.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
Pursuant to Article 16 of the Athens Convention, claims for death or injury or luggage claims suffered as a result of a ship-related incident must be brought within two years of the date of disem-barkation from the vessel. Although this is less than the three-year time limit for personal injury claims under English law, the English Court of Appeal has held that this two-year limitation period cannot be extended.
4 Arrest and Security
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?
The UK is a party to the Convention Relating to the Arrest of Seagoing Ships 1952 (“Arrest Convention 1952”). Vessel arrest under English law requires the claimant to bring an in rem claim pursuant to Section 20 of the Senior Courts Act 1981 (“SCA”). Section 19 lists 19 types of maritime claim, including: ■ claimsastotheownershipofthevessel;■ claimsfordamagereceived,ordone,byaship;■ deathorpersonalinjuryclaims;■ cargoclaims,wherethecargowascarriedonthevessel;■ claims relating to a contract of carriage or charterparty
concerning the vessel;■ salvageclaims;■ claimsrelatingtotowageorpilotageofthevessel;■ claimsrelatingtotheconstruction,repairormaintenance
of the vessel or equipment/materials supplied to it;■ unpaidcrewwagesorclaimsfordisbursementspaidbythe
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
The test for wrongful arrest is whether the party arresting the ship did so in bad faith or was grossly negligent. In such a case, a vessel owner may be able to claim damages for the wrongful arrest. In a decision in 2018, the English Court of Appeal confirmed the Admiralty Court’s long-standing practice not to require an arresting party to provide a cross-undertaking in damages.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
Unlike some other jurisdictions, the UK courts will not grant arrest of a vessel or appoint a court surveyor simply for the purpose of obtaining evidence. However, the CPR provide a number of options for parties wishing to obtain or preserve evidence on application to the court. Where appropriate, the court can order pre-action disclosure, non-party disclosure and specific disclosure of evidence.
The court also has the power to grant a search order to preserve evidence or property that is or may be the subject of an action. The court may also make an order for delivery up or preservation of evidence or property.
Section 44 of the Arbitration Act 1996 permits the court to make certain interim orders in support of arbitration proceed-ings. Such orders include those for the purpose of: preservation of evidence; inspection, photographing, preservation, custody or detention of property; the taking of evidence of witnesses; the taking of samples; and the sale of property.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
CPR 31 governs the disclosure of evidence in court proceedings. As of January 2019, however, a mandatory disclosure pilot scheme has been operating in the Business and Property Courts pursuant to Practice Direction 51U and is due to remain in place until at least the end of 2021. The disclosure pilot applies to proceedings in the Commercial Court but not in the Admiralty Court. Under CPR 31, a party will be required to give standard disclosure of documents: on which it intends to rely; that adversely affect its or another party’s case or support another party’s case; and that it is required to disclose by a relevant practice direction. Where the other party considers that the standard disclosure provided is inadequate, it may seek an order for specific disclosure of certain specified documents or categories of documents. The court will not, however, grant an order for specific disclosure that is deemed to be a “fishing expedition”.
The term “documents” has a very broad meaning and includes not only physical documents, such as notes, letters and faxes, but
board a vessel where the freight or hire is unpaid. This remedy allows the owner to keep possession of the cargo until the outstanding freight/hire is paid. Furthermore, a shipowner may be able to exercise a common law lien over cargo in restricted circumstances, namely for freight payable at the time of delivery, for general average and for expenses necessary to preserve the goods.
Where the shipowner is the carrier under the bill of lading and is owed freight by its charterer, the owner may be able to intercept freight due from the shipper or bill of lading holder to the char-terer by giving notice to the shipper and bill of lading holder that they must pay freight to the owner instead. The owner will then deduct sums owed to him by the charterer from the intercepted freight and remit the balance to the charterer.
In addition, the contract of carriage might incorporate a clause that permits the owner to exercise a lien on sub-freights. Such a clause would allow the owner to claim the freight due to the charterer under a sub-charter or under a charterer’s bill of lading.
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
Parties are free to agree on what they consider to be accept-able security for any maritime claim that arises between them. Generally speaking, however, a P&I Club LOU from a Club with a strong financial rating will normally be acceptable to a mari-time claimant. Where a vessel is arrested and there is any dispute concerning the adequacy of any security being offered in order to release the vessel, the court requires the provision of “sufficient” or “adequate” security to satisfy the claim. In practice, a P&I Club LOU is likely to be considered an acceptable form of secu-rity by the court. Other potentially acceptable forms of security are a payment into court, a bank guarantee or a bond.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
Counter security is not generally required when an arrest is ordered. However, as stated in question 4.1, an undertaking for the costs of the Admiralty Marshal relating to the arrest, the care and custody and the release of the vessel must be filed alongside the applica-tion for arrest.
4.7 How are maritime assets preserved during a period of arrest?
The Admiralty Marshal is responsible for the custody and care of the vessel during its arrest, but the arresting party is responsible for reimbursing the Admiralty Marshal for all costs incurred. If security is not provided for the claim, an order for the judicial sale of the vessel can be sought.
Where a lien is exercised over cargo, the vessel owner remains in control of the cargo and is therefore responsible for the care of it. If the debt for which the lien has been exercised remains unpaid (i.e. hire or freight), it may be possible for the vessel owner to obtain a court order for sale of the cargo to a third party.
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?Maritime claims in England and Wales are dealt with by the Admiralty and Commercial Courts, which are part of the Business and Property Courts of the High Court of Justice. The applicable procedure and timetable will be governed by the CPR and the Admiralty and Commercial Court Guide. The courts have wide discretionary case management powers and will make case management orders that are appropriate for the type and complexity of the parties’ claims, with which the parties must comply. A failure to comply with the applicable rules or the court’s orders may lead to costs or other penalties being imposed on the defaulting party or parties. However, where appropriate, the courts may grant relief from sanctions.
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The London Maritime Arbitrators Association (“LMAA”) is the key maritime arbitral body. Arbitrations in England and Wales are conducted in accordance with the Arbitration Act 1996. LMAA arbitrations are also conducted in accordance with the LMAA Terms. The latest version of the LMAA Terms was published in April 2021 and came into effect on 1 May 2021. Other LMAA Terms are the LMAA Intermediate Claims Procedure 2021 and the LMAA Small Claims Procedure 2021. LMAA members normally accept appointment as arbitrators in maritime disputes on LMAA Terms. The arbitral tribunal will set out the appropriate timetable and procedure for the conduct of the arbitration proceedings in accordance with the LMAA Terms, the Arbitration Act 1996 and its own inherent discre-tionary powers.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?There is no one specific maritime mediation body. However, England has a well-established body of high-quality mediators. Furthermore, many maritime arbitrators, including some LMAA members, also act as mediators and some arbitral institutions have formulated alternative dispute resolution (“ADR”) terms. For example, the LMAA has published the LMAA Mediation Terms 2002 and the LMAA/Baltic Exchange Mediation Terms 2009. Maritime mediators may also be members of the Centre for Effective Dispute Resolution, which is based in London. Parties agreeing to mediate will enter into a mediation agree-ment with the mediator that governs the conduct of the medi-ation, the terms on which the mediator is instructed and the confidentiality obligations of the parties involved.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
UK judges are highly regarded and respected internationally for being impartial and experienced in dealing with complex cases. Judicial independence is an important feature of the English judiciary. The specialist courts, specifically the Admiralty and Commercial Courts in the case of maritime disputes, are
also electronic documents such as emails and text messages, as well as other forms of electronic evidence such as digital photo-graphs and VDR recordings.
Documents protected by privilege must be disclosed but need not be made available for inspection.
Under the disclosure pilot, disclosure is divided into four stages: (i) document preservation – this covers the parties’ and
their legal representatives’ duties to preserve documents in their control that might be relevant to any issue in the proceedings;
(ii) initial disclosure – where parties will provide with their statements of case copies of key documents that they rely on in support of their case and that are otherwise neces-sary for their opponents to understand the case that they have to meet;
(iii) extended disclosure – where a party requires disclosure extending beyond initial disclosure, in line with one of the disclosure Models; and
(iv) the disclosure Models – there are five Models A to E, and the court may order different Models for different issues of disclosure. Model D echoes standard disclosure under CPR 31.
The aim of the pilot is to impose on litigating parties require-ments to co-operate with each other and to assist the court in dealing with disclosure as efficiently as possible, with the objec-tive that disclosure is no wider than is reasonable and propor-tionate in order to fairly resolve the issues in the proceedings.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Directions on the management and storage of electronic evidence are contained within Practice Direction 32B of the CPR. Litigants are required to effectively manage electronic documents and provide them in a format that ensures parties receiving documents have the same ability to review and search the documents as the party giving disclosure.
In practice, this is normally achieved by use of a dedicated electronic disclosure platform. Although there is a cost asso-ciated with the use of such a platform, savings are invariably achieved in the reduction in time taken to review documents through effective use of the platform.
The parties may exchange an Electronic Documents Questionnaire in order to provide information to each other in relation to the scope, extent and most suitable format for disclo-sure of electronic documents in the proceedings.
In collision claims, parties are required to disclose electronic track data within 21 days of the defendant filing an acknowledg-ment of service and to allow inspection of same within seven days of being requested to do so by another party.
As with hard copy documents, where litigation is contem-plated, steps must be taken to preserve electronic documents, including those that would otherwise be deleted in accordance with a document retention policy or otherwise deleted in the ordinary course of business.
Where a party has concerns that its opposing party is taking steps to conceal or destroy evidence, they may apply to the court for a search order or appropriate injunctive relief. The threshold applied by the court in deciding whether to grant such orders is high and requires substantial proof that the applicant would be severely prejudiced if the order is not granted.
Under the disclosure pilot, the parties are required to co-operate and liaise in relation to the use of disclosure technology and must consider, as part of the Disclosure Review Document, which tech-nological tools and software they intend to use.
judgments predating 10 January 2015) and the Recast Brussels Regulation (for judgments obtained on and since 10 January 2015) ceased to govern the reciprocal enforcement of civil judg-ments between the UK and other EU countries except in rela-tion to proceedings commenced before the end of 2020.
However, in April 2020, the UK submitted its application to accede to the Lugano Convention 2007 in its own right. To accede to the Lugano Convention 2007, the UK needs the unan-imous approval of the other contracting parties (including the EU and Denmark). In March 2021, Switzerland approved the UK’s accession application. Iceland and Norway have also indi-cated that they support the UK’s application. However, as of April 2021, the approval of the EU and Denmark was pending.
Furthermore, the UK has acceded in its own right to the Hague Convention on Choice of Court Agreements 2005 as of 1 January 2021 (the Convention having been in force in the UK since 1 October 2015 by virtue of the EU’s accession to it). The Hague Convention, therefore, applies as between the UK and EU Member States (as well as non-EU parties) where there is an exclusive jurisdiction clause entered into after the Convention came into force for the country whose courts are chosen, subject to certain exclusions.
Where none of the above conventions or pieces of legisla-tion apply, and there are no other reciprocal arrangements in place, foreign judgments may nonetheless be enforced in the UK under common law. Common law requires the commencement of a new action on the judgment.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The New York Convention has, as of April 2021, 168 signato-ries including the UK. Therefore, the majority of arbitration awards can be enforced under the provisions of the New York Convention. Section 66 of the Arbitration Act 1996 also applies to the enforcement of arbitration awards. The recognition and enforcement of non-Convention awards is governed by common law, as well as Section 66. In brief, the requirements for enforce-ment are that the arbitration agreement must be valid under the governing law and the award must be final.
8 Updates and Developments
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.
Without a doubt, the most significant global development that has impacted the global economy in 2020/2021 has been COVID-19. The effect of the pandemic on the maritime sector was highlighted in a United Nations Conference on Trade and Development (“UNCTAD”) report published in November 2020, the “Review of Maritime Transport 2020”. The report indicates that COVID-19 caused unprecedented disruption to global maritime trade, impacting supply chains and cargo trade volumes and affecting shipping networks and ports. To cope with pandemic-related disruptions, the global maritime sector adjusted its working practices and procedures, as well as its oper-ations, finances, sanitary and safety protocols. For example, the container shipping industry adopted more discipline, cutting capacity and reducing costs to maintain profitability. As a result, freight rates remained stable despite reduced demand. In addition, several governments implemented reforms to the
presided over by specialist judges who are recruited from the ranks of senior legal practitioners and who will have many years of experience in the maritime, commercial or other specialist field. English court judgments are respected internationally and will be recognised and can be enforced in many key jurisdictions.
More maritime disputes are referred to arbitration in London than to any other place where maritime arbitral services are offered. Maritime arbitrators in England and Wales offer signif-icant specialist experience in maritime matters. For example, LMAA Full Members have at least 15 years of legal, commer-cial or technical shipping expertise. Furthermore, the English judiciary is very supportive of arbitration and respects the parties’ choice to resolve their disputes in arbitration. The courts will, therefore, be reluctant to interfere unnecessarily with the arbitral process or to overturn arbitrators’ awards except in limited circumstances. The UK is also a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“New York Convention”), which provides a highly effective mechanism for enforcing arbitral awards in courts worldwide.
Maritime mediators will also bring many years’ worth of mari-time experience to any ADR process. Many specialist shipping lawyers, as well as former lawyers and maritime judges, offer mediation services. Furthermore, the majority of mediators will have been accredited by at least one of the main mediation services providers, who also provide training.
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
English is one of the most widely spoken languages in the world and is the language of international business. Proceedings conducted in English will, therefore, be preferred by most commercial parties.
English common law, based as it is on a combination of statute and case law, is comprehensive and gives guidance on almost every issue that might arise. It, therefore, offers parties certainty and predictability.
London is one of the major financial and commercial centres in the world and offers top-class law firms and highly respected specialist lawyers. London is also recognised as having one of the most sophisticated and dedicated business courts in the world, offering specialist courts including the Admiralty, Commercial, Companies, and Technology and Construction Courts.
Furthermore, the English courts actively encourage ADR, including directing litigants to mediate their disputes where appropriate.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
The Foreign Judgments (Reciprocal Enforcement) Act 1993 allows for the enforcement of judgments from a number of countries with which the UK has reciprocal agreements. The Administration of Justice Act 1920 governs the recognition and enforcement of judgments from the Commonwealth and a number of other countries. Under these Acts, a foreign judg-ment must be registered in the UK so that it may be enforced. Registration is a relatively straightforward process.
Following the UK’s exit from the EU on 31 December 2020, the Lugano Convention 2007 (EFTA countries, namely Iceland, Norway and Switzerland), the Brussels Regulation (for
climate change in shipping. Post-pandemic recovery initiatives should focus on sustainability and a “green” shipping sector. In this regard, it is worth highlighting that, in November 2020, the IMO’s Marine Environment Protection Committee approved draft regulations aimed at reducing greenhouse gas emissions from shipping by at least 40% by 2030 (compared to 2008 levels) and improving the energy efficiency of vessels. The draft regu-lations are scheduled to be formally adopted in June 2021 and would then come into force on 1 January 2023.
UNCTAD also highlights the countless challenges that the pandemic has brought with regard to the situation of seafarers, many of whom were stranded at sea for months beyond the end of their contracts. Issues that have had to be addressed include: effecting crew changes; seafarers’ mental and physical well-being; seafarers’ working and living conditions; and applicable human rights and labour laws and regulations. The challenges faced by public and private sector stakeholders, who have been working closely together to try to resolve the various problems encoun-tered, will hopefully contribute to establishing best practices for seafarers’ conditions in the future.
Ultimately, the findings of the report suggest that while COVID-19 has presented the global maritime industry with serious challenges whose effects may continue to be felt for some time, it has also presented the international shipping community with an opportunity to reconsider many of its established working practices and identify changes that can enhance the future of the industry and facilitate global international trade going forward.
way in which their border agencies, port authorities and customs administrations operated in order to keep trade flowing while keeping people safe. Best practices emerged from these expe-riences that will facilitate future international trade. Further, according to the report, maritime trade is expected to resume expansion and growth during 2021.
The UNCTAD report states that COVID-19 has strength-ened the pre-pandemic case for digitalisation and eliminating paperwork in the maritime industry. Accepting digital copies instead of paper originals, pre-arrival processing, electronic payments and customs automation all help speed up the trade process. However, digitalisation also introduces increased cyber security risks with potentially severe consequences for supply chains and global maritime services.
This heightened risk highlights the importance of having effective cyber risk management solutions in place in the mari-time industry. Cyberattack has become a crucial concern for the shipping community in recent years and has led to the development of a variety of integrated cyber security solu-tions designed to assist shipowners, operators and managers to protect their commercial and reputational interests, as well as to comply with industry-wide regulation and requirements, such as the International Maritime Organization’s (“IMO”) Maritime Cyber Security Guidelines.
The UNCTAD report also emphasises that concentra-tion on pandemic-related issues should not result in neglecting pre-COVID-19 objectives, including an environmentally friendly maritime industry and a continued commitment to combatting
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Shipping Law 2021
Ince
Julian Clark is the firm’s Global Senior Partner with global responsibility for the firm’s practice sectors and client base both in London and internationally. He is himself an internationally recognised leader in shipping and international trade with over 30 years’ experience in media-tion, arbitration and litigation. Julian has, for over 15 years, been ranked in the world’s leading legal reference guides, including Chambers and Partners 2020 where he is described as being “recommended in the market for his strong relationship with P&I Clubs”, The Legal 500 where he is ranked as a member of the Hall of Fame, the US publication Super Lawyers and Who’s Who Legal who rank him as a “Global Leader”.
Reema Shour has been a professional support lawyer since 2009, having previously pursued a fee-earning career in shipping, trade and commodities, marine insurance and dispute resolution. Reema produces and co-edits the firm’s external shipping and trade publications and has also contributed to various other external publications, including Getting the Deal Through, World Arbitration Reporter and Chambers Shipping Guide. She speaks five languages and works closely with the firm’s global shipping, trade, marine insurance and dispute resolution teams, providing research, knowledge management, marketing and training support.
The Ince Group is a dynamic international legal and professional services business with offices in nine countries across Europe, Asia and the Middle East. With over 900 people, including over 100 partners worldwide, The Ince Group delivers legal advice, strategic guidance and business solutions to clients ranging from the world’s oldest and biggest businesses operating across numerous industries to ultra-high-net-worth individuals. Through its entrepreneurial culture and “one firm” approach, the business offers its clients over 150 years of experience, insight and relationships. The Group is driven by a unique team of passionate people whose broad expertise and deep sector specialisms provide their clients with solutions to all their complex legal and strategic needs.
1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:
(i) CollisionThe United States did not ratify the Brussels Collision Liability Convention of 1910, and has historically followed the general maritime law of the United States, only belatedly adopting prin-ciples of proportionate liability and comparative fault. See, e.g., United States v. Reliable Transfer Co., 421 U.S. 397, 411, 95 S. Ct. 1708, 1716 (1975). The United States adheres to the International Regulations for Preventing Collisions at Sea 1972 (COLREGS). The U.S. Departments of Defence and Commerce, as well as the U.S. Coast Guard (USCG) within the Department of Homeland Security, publish regulations to ensure U.S. compliance with the COLREGS.
(ii) PollutionWith respect to pollution, currently, the United States is a signatory to Annexes I, II, III, V and VI of The International Convention for the Prevention of Pollution from Ships 1973 (MARPOL). Annexes I, II, V and VI have been incorporated into U.S. law by the Act to Prevent Pollution from Ships (APPS) and implemented within 33 U.S.C. 1901 and 33 CFR 151. The United States incorporates Annex III by the Hazardous Materials Transportation Act (HMTA) implemented within 46 U.S.C. 2101 and 49 CFR 171–174 and 176. The United States has not ratified Annex IV, but has equivalent regulations under the Federal Water Pollution Control Act (FWPCA) (as amended by the Clean Water Act, 33 U.S.C. 1251 et seq. and implemented by 33 CFR 159) for treatment and discharge standards of ship-board sewage.
On December 4, 2018, the Vessel Incidental Discharge Act (VIDA) was also signed into law, restructuring the way the Environmental Protection Agency (EPA) and USCG regulate incidental discharges from commercial vessels. The VIDA requires the EPA and USCG to develop standards of perfor-mance and implementing regulations, respectively, for these
discharges. The EPA expects these new regulations to be effec-tive in late 2022. In the interim, the existing EPA Vessel General Permit (VGP) and USCG ballast water regulations remain in full force and effect.
The United States likewise has an extensive body of federal and state environmental laws and regulations concerning oil pollution prevention and spill response including, for example, the Oil Pollution Act of 1990, 33 U.S.C. § 2701, et seq.
(iii) Salvage/general averageWith respect to salvage, the United States has adopted the International Convention on Salvage 1989. Courts have noted the parallels between the 1989 Salvage Convention and pre-existing general maritime law, and continue to look to applicable prin-ciples in those cases. With respect to general average, disputes concerning this are often resolved under the York-Antwerp Rules. Under Rule A: “There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intention-ally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure.”
(iv) Wreck removalWith respect to wreck removal, the United States has not adopted the Nairobi International Convention on the Removal of Wrecks 2007. Certain provisions of the Rivers and Harbors Act of 1899, also known as the Wreck Act, impose a duty of diligent removal upon the owner, lessee or operator of a vessel sunken in a navi-gable waterway. Failure to remove such a vessel subjects it to removal by the U.S. government, and subjects the vessel owner, lessee or operator to reimburse the government for the cost of removal or destruction and disposal.
(v) Limitation of liabilityThe United States is not a party to the 1976 Convention on Limitation of Liability for Maritime Claims. Instead, the United States continues to apply the Limitation of Liability Act (the Limitation Act), passed in 1851 to encourage investment in ship-ping. Under this Act, vessel owners (including demise char-terers) may limit liability to the value of the vessel and pending freight in certain circumstances where the loss occurred without the privity or knowledge of the owner. As a matter of procedure,
which are not yet ratified. COGSA has been in place for gener-ations and provides a reasonable and predictable cargo loss and damage liability regime. COGSA applies “tackle to tackle” (that is, from the time the cargo is loaded onto the receiving vessel until it is offloaded at the port of discharge). The period it covers is frequently extended by clauses in bills of lading, for example, to the inland portion of an intermodal shipment.
2.2 What are the key principles applicable to cargo claims brought against the carrier?
The COGSA governs all contracts for carriage of goods by sea to or from ports of the United States in foreign trade (and bills of lading as evidence of such contracts). 46 U.S.C. § 30701, note § 13. COGSA governs the carrier’s liability to cargo inter-ests whenever a bill of lading or similar document of title is the contract of carriage. The “carrier” is identified in COGSA as “the owner, manager, charterer, agent, or master of a vessel” and can include all owners or charterers involved with carrying the cargo.
2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?
Under circumstances involving the shipment of inherently dangerous goods, a shipper may be held strictly liable for damages resulting directly or indirectly from such shipment, where the carrier had no actual or constructive knowledge of the danger. 46 U.S.C. § 30701 note (previously codified at 46 U.S.C. § 1304(6)). Such a circumstance could arise where the shipper fails to or inaccurately declares the particulars of the cargo. That said, the liability of the shipper under COGSA turns on the carrier’s lack of knowledge concerning the nature and character of the cargo, and courts have found that a carrier has “knowledge” when it has notice of any aspect of the cargo’s dangerousness.
Carriers may also seek to establish a claim for a shipper’s negli-gent failure to warn of dangers posed by the cargo where the shipper does not disclose the nature or character of the cargo or where its warnings are inaccurate or misleading, and the ship-per’s actions cause the harms complained of.
A shipper’s misidentification of cargo may also permit carrier claims for breach of contract or for indemnification against liability arising out of the misidentification of the cargo. Such claims will be governed by the terms of the contract of carriage.
2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?
Cargo claims must be brought within COGSA’s one-year limita-tion period. COGSA § 3(6), 46 U.S.C. § 30701 note (previously codified at 46 U.S.C. § 1303(6)).
3 Passenger Claims
3.1 What are the key provisions applicable to the resolution of maritime passenger claims?
Passenger claims involving personal injury or death are governed by applicable contracts of carriage and by the general maritime law of the United States, as the United States is not a party to the Athens Convention. Passenger contracts are liable to be subject
a vessel owner’s action for limitation must be commenced within six months of the owner being given adequate written notice of a claim, whether or not a claimant has initiated a legal proceeding. Limitation may apply to claims brought by the U.S. govern-ment. The Limitation Act may be applied to a wide variety of claims but is not generally favoured by the courts, and there are different limits in cases of personal injury and death, pollution liabilities, wage claims and others.
(vi) The limitation fundIn the United States, a limitation proceeding is commenced under Rule F of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (the Supplemental Rules) and creates not only a limitation proceeding, but also a concursus of claims where all claims are marshalled into one proceeding. To commence the proceeding, the owner must deposit with the court a sum equal to the value of the owner’s interest in the vessel and its pending freight (or security therefor), together with such sums as the court may deem necessary to carry out the provisions of the act.
1.2 Which authority investigates maritime casualties in your jurisdiction?
The National Transportation Safety Board (NTSB) has authority to investigate and establish the probable cause of any major marine casualty or any marine casualty involving both public and non-public vessels under 49 U.S.C. § 1131(b)(1). This report is based on factual information either gathered by NTSB investi-gators or provided by the USCG from its informal investigation of the accident. As specified by the NTSB regulation, “[NTSB] investigations are fact-finding proceedings with no formal issues and no adverse parties […] and are not conducted for the purpose of determining the rights or liabilities of any person”. Title 49 Code of Federal Regulations, § 831.4. NTSB reports may be provided to the USCG or other governmental agencies.
Concurrently, the USCG is authorised to conduct examina-tions and enforce compliance with the laws and regulations within its ambit, including with respect to maritime casual-ties, and may detain or deny entry to the territorial waters of the United States for vessels operating outside of acceptable stand-ards. The USCG may issue civil penalties for deficiencies, as well as conduct oversight and enforcement efforts arising from maritime casualties within its jurisdiction.
1.3 What are the authorities’ powers of investigation / casualty response in the event of a collision, grounding or other major casualty?
The USCG functions as a law enforcement agency that may conduct criminal investigations separately or in coordination with other federal agencies, such as the Department of Justice and the EPA, which may result in the issuance of fines or other sanctions, including in some circumstances criminal prosecu-tion, for violations of safety or environmental regulations or arising from a collision, grounding or other major casualty.
2 Cargo Claims
2.1 What are the international conventions and national laws relevant to marine cargo claims?
The United States applies a version of the Hague Rules through the Carriage of Goods by Sea Act (COGSA) as well as the Harter Act. The United States also signed the Rotterdam Rules,
may be brought as an in personam claim for attachment or garnish-ment against the vessel owner or third-party garnishees in possession of property of the defendant, or in rem arrest, which may be brought against the vessel. These operate under Rule B and Rule C, respectively, of the Supplemental Rules.
In a Rule B action, seeking in personam attachment or garnish-ment – which may include vessel seizures – the court requires a verified complaint by the plaintiff setting forth a prima facie valid admiralty claim at the time of the filing of the complaint, and an accompanying affidavit signed by the plaintiff or the plaintiff’s attorney stating that, to the affiant’s knowledge, or on informa-tion and belief, the defendant cannot be found within the district.
In a Rule C in rem arrest action, the court likewise requires a verified complaint that describes with reasonable particularity the property that is the subject of the action, and that the prop-erty is within the district or will be within the district while the action is pending.
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?
Vessels are routinely arrested to enforce necessaries liens and many ship mortgage foreclosures are commenced by such suppliers rather than mortgagee banks. Under the Commercial Instruments and Maritime Lien Act (46 U.S.C. § 31301 et seq.), vessel arrests may proceed in rem against the vessel so long as necessaries are supplied on the order of the owner or a person authorised by the owner. Under the statute, charterers are gener-ally presumed to have authority to procure necessaries for the vessel and suppliers of necessaries are also generally presumed to rely on the credit of the vessel and will typically be entitled to a maritime lien unless they have actual notice of a “no lien” clause in the charter.
4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?
Admiralty jurisdiction, and thus, in rem remedies to arrest a vessel, do not extend to contracts that are solely for the sale of a vessel. That is, the breach of a contract for the sale of a vessel is not a maritime contract and does not give rise to a maritime lien, although jurisdiction may be extended to the charter portion of a charter-sale contract. Cary Marine, Inc. v. M/V Papillon, 872 F.2d 751, 755 (6th Cir. 1989); Gaster Marine Recovery & Sales, Inc. v. M/V “The Restless I”, 33 F. Supp. 2d 1333, 1334 (S.D. Fla. 1998).
4.4 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 options are available?
In Rule B attachment proceedings under the Supplemental Rules, a plaintiff may seek maritime attachment or garnish-ment against any tangible or intangible personal property – up to the amount sued for – in the hands of garnishees named in the process. These actions may proceed ex parte on the basis of a verified complaint and an affidavit stating that, to the affi-ant’s knowledge, or on information and belief, the defendant cannot be found within the district. If an attachment is ordered, Supplemental Rule E provides a prompt hearing for any person claiming an interest in the property, at which the plaintiff is required to show why the arrest or attachment should not be vacated. In the case of cargo liens, which derive “from the right
to forum selection clauses, arbitration agreements or other limi-tations that may vary the position under the general maritime law, if they are “reasonably communicated” to the passenger. Compensation for wrongful death outside the three-mile nautical limit that separates the territorial waters of the United States from the high seas is also provided under the Death on the High Seas Act, 46 U.S.C. §§ 30301 et seq., with damages gener-ally confined to those of a pecuniary nature for the benefit of a decedent’s family. Provisions under 46 U.S.C. §§ 30501 et seq. regulate a carrier’s ability to limit its liability, including that the liability of a vessel owner shall not exceed the value of the vessel and pending freight (§ 30505) except with respect to claims for personal injury or death (see §§ 30506, 30509).
3.2 What are the international conventions and national laws relevant to passenger claims?
The United States has not acceded to or ratified the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea.
Under the Limitation Act, claims against a ship or its owner for cargo loss, personal injury and death that are subject to limitation: “Are those arising from any embezzlement, loss, or destruc-
tion of any property, goods, or merchandise shipped or put on board the vessel […] any loss, damage, or injury by colli-sion, or any act, matter, or thing, loss, damage, or forfei-ture, done, occasioned, or incurred, without the privity or knowledge of the owner).”
Moreover, under the Limitation Act, a shipowner may not limit liability for negligence to passengers.
3.3 How do time limits operate in relation to passenger claims in your jurisdiction?
With respect to passenger claims, carriers by sea may impose a contractual limitation period of no less than one year to file a civil action for personal injury or death, running from the date of injury or death. Likewise, a carrier may impose a limitation period of no less than six months to provide notice of, or file a claim for, personal injury or death. 46 U.S.C. § 30508(b) (former 46 U.S.C. App. § 183b). These periods are tolled in the event of a claim involving a minor or mental incompetent, or in the event of wrongful death, until the earlier of: (1) the date a legal repre-sentative is appointed for the minor, incompetent or decedent’s estate; or (2) three years after the injury or death. Finally, where notice of a claim is required by contract, the failure to give such notice may be a bar to recovery unless the court finds that: (1) the carrier had knowledge of the injury or death and the vessel owner was not prejudiced by the failure; (2) there was a satis-factory reason why notice could not have been given; or (3) the owner fails to object to the failure to give notice. 46 U.S.C. § 30508(c).
Unless modified by contract, a claim for personal injury or death arising out of a maritime tort must typically be brought within three years. 46 U.S.C. § 30106.
4 Arrest and Security
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?
To obtain security for a maritime claim against a vessel owner, the United States has powerful prejudgment remedies, which
bona fide maritime lien claim or where the seizure was supported by the advice of counsel in deciding to proceed with the arrest.
Should a vessel owner establish the required showing and overcome any defences, the caselaw suggests that all damages that proximately flow from the wrongful arrest, insofar as they can be proved to a reasonable certainty, may be recoverable (e.g., lost charter hire, demurrage, lost profits or loss of business opportunity). Punitive or exemplary damages may be available at common law upon evidence of wanton, wilful, or outrageous conduct. However, the U.S. Supreme Court recently declined to recognise punitive damages claims for Jones Act unseaworthi-ness actions in 2019 in Dutra Group v. Batterton, which casts some doubt on their availability in other contexts in maritime law.
5 Evidence
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 preservation of physical evidence, examination of witnesses or pre-action disclosure?
One of the procedures available to a person who expects to be a party to an action but cannot presently bring it or cause it to be brought is found under Fed. R. Civ. P. 27, allowing for deposi-tions to perpetuate testimony that may then be used in any later-filed district-court action involving the same subject matter. This procedure is not typically available as a vehicle for discovery prior to filing a complaint but instead in circumstances where a testi-mony needs to be preserved that may otherwise be lost.
Separately, parties seeking to obtain discovery in the United States for use in a foreign proceeding may petition the court for testimony or documents under the provisions of 28 U.S.C. § 1782.
5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?
The Federal Rules of Civil Procedure and applicable rules of professional responsibility govern disclosure obligations in admiralty proceedings.
Under Rule 26(a), initial disclosures are required to be exchanged without awaiting a discovery request, identifying persons likely to have discoverable information, the docu-ments and things that a party may use to support its claims and defences (other than impeachment material), the categories of damages claimed, and any applicable insurance agreements.
Under Rule 26(b), unless otherwise limited by court order, parties may obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or defence and proportional to the needs of the case, considering “the impor-tance of the issues at stake in the action, the amount in contro-versy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit”. Information need not be admissible in evidence to be discoverable.
5.3 How is the electronic discovery and preservation of evidence dealt with?
Rules 26 and 34 principally govern the procedures for requesting and responding to requests for electronically stored information (ESI). Ordinarily, a responding party must: produce documents
of the ship owner to retain the possession of the goods until the freight is paid” prior to unconditional delivery, The Bird of Paradise, 72 U.S. (5 Wall.) 545, 555 (1866), attachment or arrest proceedings are likewise available to enforce the maritime lien, where the lien survives a qualified delivery. Cf. In re World Imps., Ltd. v. OEC Grp. N.Y., 820 F.3d 576, 588 (3d Cir. 2016) (permit-ting enforcement of cargo liens obtained prior to bankruptcy on post-petition goods, considering owner’s contractual rights of non-waiver and substitution).
4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.
The procedure to secure the release of a vessel is set out under Rule E(5) and permits the parties to stipulate to “the amount and nature of such security” by way of a special or general bond conditioned to answer the judgment of the court or of any appel-late court. Accordingly, a Club letter of undertaking (LOU) or other third-party surety bond may be acceptable if the parties can agree. In the absence of agreement, the court may fix the principal sum of the bond at an amount sufficient to cover the plaintiff’s claim fairly stated with accrued interest and costs, up to a maximum of the smaller of twice the amount of the plain-tiff’s claim, or its value upon due appraisement, with interest thereon at six per cent per annum.
4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?
It is not standard procedure for the court to order counter secu-rity to be provided upon the arrest of a vessel. The U.S. Marshals Service, however, will require a deposit of sufficient funds to cover anticipated custodial costs before arresting a vessel, which vary based on the characteristics of the vessel and other circumstances. In addition, under Rule E of the Supplemental Rules, if the vessel owner asserts a counterclaim, the court will require that counter security be provided under Rule E(7). Rule E mandates that secu-rity be in the form of a bond or other suitable security, and the court may require security in the form of a sufficient amount to pay all costs and expenses that may be awarded against a party.
4.7 How are maritime assets preserved during a period of arrest?
If the parties cannot agree on the provision of substitute secu-rity, such as a special bond, Club LOU or deposit of cash into the registry of the court, the vessel is often ordered to be held by a substitute custodian to maintain the vessel within the district during the period of arrest. If the vessel or cargo is at risk of loss, any party to the action, the Marshal or the custodian may make a motion to the court for interlocutory sale of the vessel.
4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?
A claim for damages arising from the wrongful arrest of a vessel requires a claimant to make a showing of “bad faith, malice or gross negligence” on the part of the arresting party in proceeding with the attachment or arrest. A party may have a good defence to such a claim where the circumstances involve a
6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.
Awards issued by the SMA are published and the SMA rules likewise require reasoned awards, unless the parties opt out. There are over 4,000 awards available online and the availa-bility of this precedent gives predictability to parties seeking to understand the strengths and weaknesses of their case. It also enhances mediation as the mediators and parties can point to precedent in negotiations. The Federal Arbitration Act (FAA), adopted in 1925, has put arbitration on a strong footing and is the touchstone for the U.S. Supreme Court’s vigorous pro-ar-bitration jurisprudence, which provides for summary confirma-tion proceedings and only limited grounds for vacatur or modifi-cation of awards.
7 Foreign Judgments and Awards
7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.
There is no uniformity in the United States with respect to the recognition and enforcement of foreign judgments, which is governed by individual state statutes and the common law. Many states have adopted either the 1962 Uniform Money-Judgments Recognition Act or the 2005 Uniform Foreign-Country Money Judgments Recognition Act, seeking to codify the recognition of foreign judgments. States that have not adopted either version of the model acts rely on common law principles of comity.
7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.
The United States is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), as implemented by the FAA, 9 U.S.C. § 201 et seq. Foreign maritime arbitration awards are frequently enforced under the New York Convention.
The grounds to resist enforcement of the award are limited. As specified in the FAA, “[t]he court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention”. As such, the FAA incorporates only the limited enumerated exceptions or defences set forth in Article V of the New York Convention. Absent such a defence, a U.S. court “shall confirm” the award.
8 Updates and Developments
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.
One item worthy of consideration concerns applicable statutes of limitation and the equitable doctrine of laches in admiralty juris-diction. Although statutes apply to limit actions on many kinds of maritime claims, common law claims may also be asserted for enforcement of a maritime lien or other claim where no specific statute applies. In these cases, the limitation period is governed by the equitable doctrine of laches, under which courts will ask whether there has been “inexcusable delay” and resulting preju-dice to the party against whom the claim is brought. In making
as kept in the usual course of business or must organise and label them to correspond to the categories in the request; and produce ESI in a form in which it is ordinarily maintained or in a reason-ably usable form. Parties will frequently negotiate the scope of ESI or agree on search terms in light of the considerations in the Rules.
The obligation to preserve evidence attaches when a party reason-ably anticipates litigation. A culpable failure to comply with a party’s obligation to preserve relevant evidence subjects a party to spoliation sanctions, which are in the discretion of the court and can include precluding the introduction of certain evidence, imposing an adverse inference, assessing attorneys’ fees and costs, or the dismissal of a party’s complaint or entry of judgment by default.
6 Procedure
6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.
6.1.1 Which national courts deal with maritime claims?The federal courts have original jurisdiction over any civil case of admiralty or maritime jurisdiction (saving to suitors all other remedies to which they are otherwise entitled), and permit arrest or attachment proceedings under Rule B and Rule C “maritime claims”. Such claims include suits to enforce a judgment of a foreign admiralty court or to obtain security in aid of arbitration. In general, maritime claims include actions under contracts with sufficient reference to maritime service or maritime transac-tions, see, e.g., Norfolk S. Ry. v. James N. Kirby, Pty Ltd., 543 U.S. 14, 24, 125 S. Ct. 385, 393 (2004), and tort claims occurring on the high seas, or on the navigable waters of the United States where they bear a sufficient connection with maritime activity, see, e.g., Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534, 115 S. Ct. 1043, 1048 (1995).
6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?The relevant arbitral body is the Society of Maritime Arbitrators (SMA) in New York. Houston and Miami also are looking to become centres of maritime arbitration. Many charter parties specifying arbitration in New York are ad hoc and do not require that arbitrators be members of any specific arbitral body.
6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?As set forth in response to question 6.1.2, the SMA likewise has procedures for non-binding mediation or conciliation proceedings.
6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?
With respect to maritime arbitrations, the SMA is very active in promoting maritime arbitration in the United States, main-taining its roster of arbitrators and in publishing panel awards, which are available on the LEXIS and Westlaw services. The SMA provides only limited administration of arbitrations or mediations, which generally proceed autonomously under rules promulgated by that body.
Our previous report on activity in the sanctions space also remains applicable for 2021. Many shipping companies are currently seeking advice in the area of international sanctions, particularly with respect to China, Iran and Venezuela. The possibility of new or enhanced sanctions against those coun-tries or others such as Russia, ensures this will be an active area in 2021. Finally, the May 2020 guidance issued by the USCG, the State Department, and the Treasury Department’s Office of Foreign Assets Control, remains an important touchstone, encouraging a risk-based approach to sanctions compliance with guidance concerning the development of a sanctions compliance programme tailored to the organisation’s business. Taking such a risk-based approach is particularly important when companies and individuals are operating in or near high-risk jurisdictions. Entities and individuals involved in the supply chains of trade in the energy and metals sector should exercise caution as well, including those that trade in crude oil, refined petroleum, petro-chemicals, steel, iron, aluminium, copper, sand, and coal.
this determination, a court sitting in admiralty will often use anal-ogous local limitation statutes as a rule of thumb. If outside of the analogous limitations period, the burden will fall on the plaintiff to show that laches does not apply. If within an analogous limi-tation period, a presumption of laches would not attach and the burden of showing inexcusable delay would fall on the defendant.
With respect to current trends and future developments, the National Defense Authorization Act, passed in late December 2020 by the U.S. Senate, has codified that the Outer Continental Shelf Lands Act applies to offshore wind and other renewable energy projects constructed on the U.S. Outer Continental Shelf. This means that all U.S. laws, including the Jones Act, will apply to offshore wind development. Vessels that work on these offshore wind developments should take note of their Jones Act compliance obligations to the extent their activities fall within the reach of that statute.
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Bruce G. Paulsen is co-chair of Seward & Kissel’s Litigation Group and chair of the Maritime Litigation Group. Ranked in the top 10 maritime lawyers by Lloyd’s List in 2020, he specialises in handling complex commercial, maritime and international disputes. He is highly experi-enced in international sanctions. Bruce also handles finance and securities-related disputes in the shipping industry. He has represented bondholders, bond issuers, secured lenders and other creditors in matters arising from some of the most significant financing defaults in the shipping business and is experienced in maritime bankruptcy. He represents industry participants in litigations and arbitrations involving traditional maritime disputes and environmental matters. Bruce and the team recently had substantial success in numerous O.W. Bunker litigations and obtained the largest arbitration award in the history of New York maritime arbitration.
Seward & Kissel LLPOne Battery Park Plaza, New YorkNew York 10004USA
Hoyoon Nam is a partner in Seward & Kissel’s Maritime and Transportation and Corporate Finance Groups. He primarily devotes his time to the representation of financial institutions and borrowers in connection with bank financing and restructuring transactions, with a particular focus on matters of interest to clients in the transportation industry. He is experienced in other corporate transactional matters ranging from securities, mergers and acquisitions, private equity, joint ventures and corporate governance matters. Hoyoon is qualified in New York, England and Wales and the Marshall Islands, having previously practised law with an international law firm in London and New York. Hoyoon has contributed to several publications relating to shipping law.
Seward & Kissel LLPOne Battery Park Plaza, New YorkNew York 10004USA
Seward & Kissel LLP enjoys a global reputation as the “go-to” U.S. law firm in the maritime arena. Our more than 50 attorneys in the maritime practice serve as trusted advisers to many of the world’s most notable public and private maritime companies, financial institutions and other industry partic-ipants in the areas of banking and finance, capital markets, mergers and acquisitions, private equity, restructuring and insolvency, tax, litigation and regulatory, and have handled many of the world’s biggest, most complex and innovative transactions in the United States and around the globe.
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Brian P. Maloney is counsel in Seward & Kissel’s Litigation Group and a member of the Maritime Litigation Group. Brian is a commercial litigator with significant experience across a wide range of sectors, including banking, maritime and securities. He also represents clients in matters involving civil and criminal enforcement inquiries and regulatory investigations. He is a member of the ABA subcommittee on Admiralty Law, contributing as Second Circuit co-author to that committee’s 2018–2019 survey article, and has served as the Young Lawyers’ Committee Liaison to the Marine Finance and Insolvency committee of the Maritime Lawyers’ Association for the past three years. He has contributed to several shipping-related publications.
Seward & Kissel LLPOne Battery Park Plaza, New YorkNew York 10004USA
