How to Resolve a Maritime Dispute?

Maritime disputes tend to be international and commercial in their nature and often highly complex. Thankfully today court litigation is not the only method for resolving a dispute. There are essentially six modern methods of dispute resolution, as follows:

Negotiation – This is where the parties get together and try to negotiate a settlement of the issues and perhaps claims between them. It can be effective because the dispute will be elevated to a higher level within the firms in question, perhaps taking the dispute out of the hands of the individuals who are at loggerheads. Commercial considerations begin to be more at play and there can be a greater appetite to compromise. It is also the most cost effective method costing nothing, other than perhaps the cost of supporting legal advice or assistance with the negotiation process.

Mediation – Mediation essentially involves the appointment of an individual to go between the parties and see if they can find common ground or tease out settlement terms that would be acceptable to both sides.

Conciliation – Tends to be reserved for employment disputes.

Adjudication – Tends to be reserved for construction disputes. This method is very quick because often there is a strict timetable for submitting evidence and providing an Award. The adjudicator in Construction disputes in the UK must provide a decision within 28 days of the instruction. This has been intentionally designed for construction disputes where daily costs are often being incurred of hundreds of thousands and if a project were to be delayed for a series of months it would cause considerable economic impact. So the parties sacrifice the ability to present their case and analyse it in granular detail for the right to obtain a swift judgment.

Arbitration – This where the parties appoint an arbitrator or a panel of three arbitrators to listen to their case and give a judgment in much the same way that a court would, but without the strict rules of evidence, delays, formality and the need for lawyers. Also, importantly, it can be done and normally is in private. So the media and the public never become aware of the facts or judgment. The parties can go to arbitration by having a standard term in their contract agreeing to do so, or by agreeing to resolve a dispute that has otherwise arisen by arbitration. They may decide on almost every element of how the arbitration should be conducted, but tend to choose a standard form of rules such as the UNCITRAL, CIArb, CII Rules etc., which provide adaptable templates for Arbitration procedures. Arbitration is by far the most common way to resolve maritime disputes and frequently the LMAA (or London Maritime Arbitrators’ Association) Rules are used.

Litigation – If all else fails the parties always have their original recourse to a court of law.

The Risks of Trading in the Ukraine

Many shipowners are asking at present - what are the risks of trading in the Ukraine in the current circumstances?

Well apart from the dangerous security situation in the eastern and southern provinces, the principal risk is that of breaching the US and western sanctions. The full sanctions of the US are available here but in short, in response to events in the region in 2014 there were three rounds of international sanctions, both from the US and the EU and other western nations (Australia, Switzerland, Japan etc.). Most of these actions were restrictions on Russian individuals, companies and banks from trading, travelling etc. but some of the sanctions are so far reaching that, in order to ensure no breaches occur, a party trading with or in Ukraine must essentially choose to either trade with Crimea (now under Russian control) or with the remainder of Ukraine (Odessa or Kiev for instance).

If you move between a contested region and government controlled Ukraine, especially if you transport cargo between the two, you will be at risk of sanctions related penalties, vessel seizures and potentially confiscations. The risk is especially strong trading from Crimea to Odessa and there are reports of an increase in vessel arrests in the region generally. Shipowners beware.

Laytime & Demurrage: A Back-to-Basics Guide

One of the more mysterious elements of shipping law, at least to the uninitiated, are the issues of laytime and demurrage. I thought, for this reason, that it might be useful to do a 'bare bones' guide to the area. As with other areas identified many people use the terminology incorrectly so don't get confused by people saying apparently contradictory things. 

This area of shipping law deals with the general principle that if you charter (hire) a ship to move cargo from A to B at a set price (i.e. a voyage charter), then you should pay the ship compensation if it gets held up whilst loading or discharging the cargo you wanted to move, i.e. if you delay in getting your goods to the port and the ship's journey takes 2 days longer as a result, you should compensate the ship for those 2 days lost. Here is the framework that has developed, in simple terms. 

Ships are not like trains and cannot confirm absolute timetables for being in place A to B, especially when they are 'tramping' (just going where ordered next and not between set ports). So, when you enter a charterparty to hire a ship to move your goods the ship is given Laydays, being the period of days in which the ship can arrive to load your goods. After this point comes the Cancelling Date; if the ship is not there by this date the charterer may cancel the contract, basically because the ship is so late they either no longer wish to move the goods or wish to use another ship. This period is sometimes referred to altogether as the Laycan (Laydays + Cancelling).

When the ship arrives to load or discharge it tenders a Notice of Readiness (NOR) to the charterer, stating that they are ready to load / discharge. After a period of time (normally 6 hours) of giving notification it is considered reasonable for the charterers to have been able to start loading, so Layitme starts to run. Laytime is a period of time set out in the charterparty which gives the charterer an allowance for time to load (often 36 hours, but depends on trade and means of loading - oil tankers load faster than bulk cargo for instance). Once the charterers used up their laytime allowance time switches to Demurrage. Demurrage is a rate of compensation per day (or pro rata per hour) that they must pay to the shipowner for holding up the ship for longer than agreed. 

If the ship is held up for reasons for which the charterer is responsible but outside the running of laytime / demurrage then the shipowner can sue the charterer for Detention. Usually the compensation awarded for detaining the ship is the same as the demurrage rate, because the parties have already agreed a convenient compensation calculation for using the ship's time outside the contract so it is easy for the courts to apply this rate. 

Article: The Growing Business of Armed Guards on International Ships (to Counter Piracy)

We often wonder, when reading of news stories involving piracy, who are the people at the forefront of dealing with this problem day to day. I mean if you mention any of the places we commonly associate with piracy to a 'normal' marine professional / surveyor they would baulk at the offer of a trip there or a project involving sorting something out there. 

However, one company that springs to mind is Gray Page. They specialise in maritime investigations, crisis management and providing plans and intelligence in handling such situations. Check out their website for further information (linked above).

One of the issues they are presently warning about is the fact that there is an increasing need to vet companies offering armed guard (private security services) services to vessels. This is a burgeoning market at the moment and it appears that some think that a cautious approach needs to be taken to those rushing to enter the market.  

Gray Page advised that the IMO's Maritime Safety Committee’s (MSC) recently approved interim guidance on the employment of privately contracted armed security personnel (PCASP) to combat piracy underlines the requirement for independent vetting of private armed maritime security providers (AMSP).

The MSC guidance, issued in May, incorporates recommendations for flag States confirming that it is the responsibility of individual flag States whether to ordain the carriage of security personnel and their firearms on board ships sailing under their flags. Further interim guidance, for shipowners, ship operators and shipmasters, seeks to address the difficulties faced in selecting an appropriate provider of armed security services.

James Wilkes, managing director, Gray Page, commented: “The IMO should be commended for setting these guidelines focused, as they are, on ensuring that the provision on board of armed maritime security teams is managed safely and lawfully.”

“For a shipowner, employing the services of an armed maritime security provider is an exceptionally serious proposition, as the logical consequence of putting men with arms on board a ship is, fundamentally, to sanction the potential use of lethal force to defend the crew and vessel (albeit in extreme and proscribed circumstances). Any decision of such importance should be supported by comprehensive and objective due diligence.”

Gray Page has launched an ‘Armed Maritime Security Provider’ Vetting Programme to provide shipowners with a reliable and independent means of vetting prospective providers of armed maritime security services. The programme helps shipowners objectively and comprehensively evaluate prospective providers against professional, legal and ethics-based criteria encompassing corporate probity, financial substance, regulatory and legislative compliance, commercial experience, contractual integrity, operational and logistical capability, weapons licensing and accountability, and the selection, recruitment and training of security personnel.

About one in ten vessels off the Somali coast already carry armed guards. The IMO claims there were 489 reports of piracy and armed robbery against ships in 2010 - up more than 20% on 2009. So far this year more than 200 cases have been reported.
 
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Update October 2011 - We are told that the North of England P&I Club (a member of the International Group of P&I Clubs) has partnered with Gray Page to provide armed guard vetting services to all its members. 

ARTICLE: The World's Top Ship Registries (Flag States)*

From the below table it is interesting to note that the world's top five ship registries account for over half of the world's registered deadweight tonnage. 

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RANK - REGISTRY - PERCENTAGE SHARE OF WORLD'S REGISTERED TONNAGE 

1.    PANAMA  -  22.63 %

2.    LIBERIA  -  11.14 %

3.    MARSHALL ISLANDS  -  6.10 %

4.    HONG KONG  -  5.84 %

5.    GREECE  -  5.30 %

6.    BAHAMAS  -  5.02 %

7.    SINGAPORE  -  4.83 %

8.    MALTA  -  4.40 %

9.    CHINA  -  3.54 %

10.  CYPRUS  -  2.45 %

11.  SOUTH KOREA  -  1.63 %

12.  NORWAY  -  1.46 %

13.  UNITED KINGDOM  -  1.39 %

14.  JAPAN  -  1.39 %

15.  GERMANY  -  1.38 %

16.  ITALY  -  1.35 %

17.  ISLE OF MAN  -  1.31 %

18.  INDIA  -  1.17 %

19.  DENMARK  -  1.06 %

20.  ANTIGUA AND BARBUDA  -  1.02 %

21.  UNITED STATES  -  1.0 %

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All other ship registries have less than 1 % of the total worldwide registered deadweight tonnage. 

* As at January 2010, statistics compiled by UNCTAD Secretariat, with the assistance of IHS Fairplay. Reported in the UNCTAD Review of Maritime Transport Publication.

Acronyms

This is a collection of terms that I have built up after being asked by someone what something means or which I have heard people appear to misunderstand. I have endeavoured to explain each in simple terms.For my list of general terms please see my Glossary.

AB - Able-Bodied Seaman. A general crewmember onboard a vessel, in good health and with a general knowledge of working onboard a ship.

AIS - Automatic Identification System. This is a modern system for identifying ships and their exact locations / movements. Ships have AIS equipment onbaord which transmits information which gives the ships details and GPS coordinates. This information can be used by VTS operators, ports etc. for day to day interaction with the ship and logged by ship tracking systems (Seaweb, Lloyds MIU etc.) for long term records of a ships movements.

AOV - Any One Vessel.


AUV - Autonomous Underwater Vehicle. This is a subcategory of UUV submersible craft which can function without an operator at all, scanning the seabed using set parameters, for example.

AWIWL - Always Within Institute Warranties Limits.

CBA - Collective Bargaining Agreement. This is a document which acts as an extension to a group of employment contracts, usually for crewmembers onboard vessels. In general an employer who has a certain number of staff will be approached by a representitive of the employees as a group, who will negotiate terms which will be incorporated into all their agreements. It typically acts to fix compensation for injuries or provision of care for employees who fall ill.

C/M - Crewmember. A common industry shorthand.

DO - Diesel Oil. To distinguish from ship's bunkers.

ETA - Estimates Time of Arrival. Where followed by a location the time estimated to arrive at that location (e.g. ETA Liverpool 14:00 GMT).

ETD - Estimated time of Departure.


FFO - Fixed or Floating Object. This term is used to describe an incident where a ship hits something fixed or floating (but not another vessel, that would be a collision) and causes damage to it; for instance where a ship crushes a wooden pier (fixed) or dents a navigational buoy (floating). You will hear people talk of an 'FFO claim' accordingly. Some insurance policies will use the term 'fixed or moving object', to encompass claims where a ship damages third party property which is neither fixed nor floating (i.e. a delivery truck ashore).


IRTC - Internationally Recognised Transit Corridor. This is an area which has been marked out in the Gulf, in order to try to prevent Pirate attacks on vessels off the East-Coast of Africa. Discussions narrowed down the most popular route, furtherst from the cost and with least risk of attack and it is now recommended that all vessels use this when navigating the area for safety.

LS - Lump Sum.

MFV - Motor Fishing Vessel. Most ships powered mainly by engine are referred to as 'MV' so this is just a more specific title where the vessel is used for fishing.

NLRC - National Labour Relations Commission. The equivelant of an employmetn tribunal in the Philippines

OFC - Office.

OWS - Oily Water Separator. Most commercial ships have bilge wells which collect bilge water; a combination of water drained off from various sources on board which can include water from mechanical leaks and it normally contains oily residues. Bilge water generally needs to be pumped overboard to maintain the ships stability, but in line with international conventions (MARPOL) the oil in the water must be separated before thesis done. This is then normally done by an overboard pipe.

PDPR - Per Dar Pro Rata. This normally appears in charterparty wordings against an amount. 'USD 1,000 PDPR' means that if you are referring to 2 hours the relevant amount is USD 83.

POEA - Philippines Overseas Employment Administration. An organisation which represents Filipino crewmembers on foreign vessels. They assist mainly with the creation of collective bargaining agreements and providing standard contract terms for employment.

RDC - Running Down Clause. An old fashioned term for a a collsion with another vessel is 'running down', and therefore the clause in a marine insurance policy which relates to collision claims is often called the 'Running Down Clause' or 'RDC'.

ROB - Remaining on Board. Use in vessel shorthand, for instance, 'bunker spill occurred, ship now grounded and leakage stopped, 10 mt of Bunkers ROB.

PAX - Passenger. A commonly industry shorthand, i.e. 'hit by rogue wave, some damage to stern windows, no PAX injuries'.

ROV - Remotely Operated Vehicle. This is a description of a category of small machines which are designed to operate underwater without a controller onboard, but being operated by someone onboard a larger vessel on the surface, usually they will use a remote control of some form linked to the unit by electrical cable. It is a subcategory within the UUV group of marine equipment and includes, for instance, robots which can film deep sea wrecks.

SITREP - Situation Report. Shorthand for an update provided on a particular situation.

TTL - Total. Commonly used in fixture notes for charterparties.

TEU - Twenty-foot Equivelant Unit. This is the term for measurement of how many containers a ship can take onboard based on the maximum number of original twenty foot long container units it could carry. Of course sometimes a 40 foot container or other structure may be used in some areas of the ship, so a 10,000 TEU ship may be full laden but carrying a lot less than 10,000 individual containers, so giving the number of TEU it is capable of carrying is a better way of comparing it with other ships. Some people use the words Totally Enclosed Unit instead but it refers to the same thing.


UUV - Unmanned Underwater Vehicle. This is a group of small submerged craft, designed to be operated from a surface vessel, but with with no one actually onboard (not including, for instance, mini-submarines). This group of underwater equipment includes ROVs and AUVs.

VSL - Vessel - A commonly industry shorthand.

VTS - Vessel Traffic Services. This is the term for an organisation which controls vessel traffic in a given area. Usually controlling movement of ships and boats on a busy river or near a port.

WP - Generally this means Without Prejudice, which is a short for of saying without prejudice to our rights or position in law (i.e. if someone accuses you of a wrong against them you may feel that you did not commit it or do not know whether it happened but wish to get rid of the problem by offering them some money but you would do so 'WP', i.e. if they didn't accept it you would not want them showing the offer of money to the judge as proof that you did commit the wrong, the offer would be without prejudice, or damage, to, your rights). However, I have also seen this used in c/p's to mean 'Weather Permitting' (i.e. vessel to begin loading WP, 10/10/2012).

WWWW - This is a term often found in charterparties. It sets out the conditions when a Notice of Readiness can be tendered, to confirm that a vessel has arrived in port for the purposes of commencement of laytime. As an acronym of four separate acronyms it can be quite confusing. It means WIBON (whether in berth or not), WCCON (whether customs cleared or not), WIFPON (whether in free pratique or not) and WIPON (whether in port or not).

GUIDE: Great Reference Works of the Maritime Law World

There are many very useful books in the world of Maritime Law, but in each area there is one which can be considered almost a bible for the subject.

In my opinion, some of the main ´biblical´ works are as follows:


Bills of Lading (3rd Ed.) by Richard Aikens, Richard Lord and Michael Bools - £ 405.



Voyage Charters (3rd Ed.) by Julian Cooke & others. £ 475.



Time Charters (6th Ed.) by Terence Coghlin & others - £ 470.



P&I Clubs: Law and Practice (4th Ed.) by David Semark - £ 360.



The Law of Tug & Tow (2nd Ed.) by Simon Rainey - £ 390.



Thomas Stowage (5th Ed.) by Captain G.M. Pepper Master Mariner - £ 100.



Ship Knowledge (6th Ed.) by Dokmar - £ 60.



Marine Cargo Claims (4th Ed.') by Prof. William Tetley - £ 220.

Glossary

This is a collection of terms that I have built up after being asked by someone what something means or which I have heard people appear to misunderstand. I have endeavoured to explain each in simple terms.

Click here for my list of industry acronyms.

Actual Total Loss - A reference to a vessel which has been completely destroyed or irretrievably lost. For example where a boat is broken to pieces in a storm and scattered by the sea or where a ship sinks in very deep water. Can be contrasted with Constructive Total Loss (below).

Air Draught - Refers to the space available above water, for instance to warn of low handing objects of cranes.

Allision - Contact between a ship and some fixed object like a quay or shore crane.

Anchorage - An area where vessels can safely drop anchor and stay, usually close to a port.

Bunkers - The fuel used on ships, i.e. people will often say the ship is going into port to 'take on bunkers'. The term can actually apply to any form of fuel oil which is used onbaord a ship, it doesn't have to be used in the ship's main engine. Therefore even diesel oil used by equipment onboard can be said to be 'bunkers'. Lub oil would not however be classed as bunkers because it is not fuel.

Butterfly Valve - This is a type of valve used in pipes or pipelines which allows the pipe to be closed or flow through it limited, from the outside. This is done by turning a handle or moving an actuator (often controlled by a motor) on the outside of the pipe which turns a circular piece inside the pipe which can close off the pipe. When turned completely sideways the pipe is fully open. A picture of the pipe design is available here. Because defects in the valve are only usually noticeable after a failure occurs (the working mechanism is invisible from the outside) this can lead to incidents onboard.

Butterworthing - This describes the system of cleaning the tanks onboard a vessel with a special hose with multiple nozzles, like this, which spray high pressure water in all directions. The system was used by, and hoses produced by, a company called Butterworth, which resulted in the type of tank cleaning being described as Butterworthing (much like how 'vacuum cleaning' became 'hoovering').

Common Carrier - Most 'carriers' for the purpose of shipping law are contractual carriers, in other words they carry cargo or people against a Bill of Lading or passenger ticket, i.e. on agreed terms. There do still exist what are known as 'common carriers' who basically agree to move certain goods or people based only on common law terms. They generally issue no documents with terms on them and carry lots of small amounts of goods or people on short journeys and wish to keep admin' costs low. The equivalent on land would be a public bus, where someone can jump on and off without agreeing any carriage terms.

Constructive Total Loss (CTL) - This is a reference to a vessel which is being treated as a total loss for insurance purposes even though it is physically still there. This generally applies where the cost of salvaging the vessel or making it usable again is greater than the value of the vessel itself (i.e. greater than the cost of buying another similar vessel). For example where a ship worth USD 50,000 is grounded and a hole is punctured in its hull, the quoted cost of patching the hull, towing it to port and fully repairing it might be USD 75,000. In the circumstances its owners would call their hull insurers and tell them they were treating it as a CTL.

Ice Demurrage - This is a type of Demurrage which uniquely occurrs when a port that a charterer has asked a ship to go to is closed or blocked due to ice. Generally the ship will be able to claim demurrage for the resultant delays at the standard demurrage rate as it is a risk of the charterer, trading in such areas, that the ports will be closed and it is generally considered that the price of the goods involved will 'factor in' such risks and costs.

Zodiac - This is a type of small, inflatible boat. They get their name from the manufacturers, Zodiac, but the boats have proven so popular in their field that in the same way peolpe might describe any vaccum cleaner  as a Hoover, any boat mathcing this description is sometimes referred to as a Zodiac.

ARTICLE: Shipping Accidents on Video

A few of the maritime accidents of the world caught on video.