Australia: Transport & Logistics News - March 2017: part 1

IN BRIEF - LOCAL AND INTERNATIONAL NEWS ABOUT SHIPPING, AVIATION, RAIL AND ROAD TRANSPORT

In this quarterly issue, we cover local and overseas transport and logistics news and summarise some interesting cases from Australia and around the world which have been handed down in recent months.

COLIN BIGGERS & PAISLEY NEWS

Stuart Hetherington and Stephen Thompson attended the 8th Asian Maritime Association Conference at the end of September last year where Stuart delivered the key note address and Stephen was on a panel dealing with the topic of Judicial Sales of Ships.

We are pleased that both Chambers and Partners and Doyle's Guide have recognised our practice and our partners as leaders in the fields of shipping and aviation law in their latest guides, with particular mentions to partners Andrew Tulloch, Stuart Hetherington, Stephen Thompson and special counsel Richard Arrage.

SHIPPING

Australian news

Antarctic pollution protection

The Australian government is in the process of amending the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 to set out requirements to reduce marine pollution by ensuring that further discharge restrictions apply for oil, noxious substances, sewage and garbage in polar waters. The amendments are aimed to further protect the pristine Antarctic environment and to comply with Australia's obligations under the International Convention for the Prevention of Pollution from Ships (MARPOL).

Australia has also worked with other countries and the shipping industry to develop the International Code for Ships Operating in Polar Waters.

Marine insurance market

The consolidation of marine businesses in the Australian marine insurance market has continued with the announcement made on 14 February 2017 of the merger of the CGU and Vero marine portfolios in their joint venture with National Transport Insurance. The new business is to be known as Marine Protect. This follows the acquisition by CGU of the Lumley business, including its marine portfolio, a couple of years ago.

Coastal Shipping Reform

The Federal Minister of Infrastructure and Transport, Darren Chester MP, has said that the government is committed to reform the coastal shipping reforms of the previous Labor government, noting that the "fleet of major Australian registered ships (more than 2,000 dwt) with coastal licences has plummeted from 30 vessels in 2006/07 to 14 in 2015/16". He has, at the same time, said he wants to "achieve reform through constructive stakeholder engagement". We await the outcome with interest.

New South Wales government

The Ministerial changes in the New South Wales government, introduced by the new Premier, Gladys Berejiklian, has resulted in the replacement of long serving Minister for Roads, Maritime and Freight, Duncan Gay, with Melinda Pavey.

International news

Maersk and Hamburg Sud

The announcement was made on 1 December 2016 that an agreement for Maersk Line to acquire Hamburg Sud had been entered into between Maersk and the Oetker Group. It will take Maersk's share of the global market for container shipping closer to 20% and extends its lead over the second largest operator, Mediterranean Shipping Company. Hamburg Sud is the seventh largest container shipping line and a leader in the North-South trade. It operates approximately 130 container vessels.

Nippon Yusen Kabushiki Kaisha, Mitsui OSK and Kawasaki Kisen Kaisha

The Maersk and Hamburg Sud announcement followed the announcement made on 31 October 2016 by Nippon Yusen Kabushiki Kaisha (NYK), Mitsui OSK and Kawasaki Kisen Kaisha (K Line) of their plans to merge their container operations in a joint venture.

K Line charged with criminal cartel conduct

In mid-November 2016, Japanese shipping line Kawasaki Kisen Kaisha (K Line) was charged with cartel conduct under the Competition and Consumer Act 2010 (Cth).

The alleged infringing conduct related to the international shipping of cars, trucks and buses to Australia between July 2009 and September 2012. Although the exact conduct is yet to be made public, it is understood the allegations include price-fixing, bid-rigging and customer allocations.

It is the second such case in Australia, following the guilty plea entered by NYK in July 2016. The NYK case is listed for a sentencing hearing in April 2017, in the Federal Court at Sydney.

Unlike NYK, however, it has been reported that K Line intends to contest the charges against it. K Line has already been prosecuted in the United States for ostensibly the same conduct, and pleaded guilty in that jurisdiction. The US prosecution yielded a criminal fine for K Line in excess of $67 million, and the imprisonment of executives for up to 18 months.

In Australia, the maximum fine for each criminal cartel offence is the greater of $10 million, 3 times the benefit derived from the commission of the offence or, if that benefit cannot be determined, 10% of the corporation's annual turnover connected with Australia.

It is interesting to note that the K Line prosecution was commenced in the Local Court at Sydney, rather than in the Federal Court of Australia, as in the NYK case. Although the Federal Court's jurisdiction in relation to cartel offences is, generally speaking, exclusive (except for the High Court), there are exceptions in relation to examinations and committals for trial on indictment.

International Conventions

The Ballast Water Convention enters into force internationally on 8 September 2017. While Australia has signed it, there has, as yet, been no ratification by Australia of the Convention. The Biosecurity Amendment (Ballast Water and Other Measures) Bill was introduced into the House of Representatives on 15 February 2017 and on achieving Royal Assent the ratification process for the Convention will commence.

London Maritime Arbitrators Association 2017 Terms

The London Maritime Arbitrators Association (LMAA) has recently revised it arbitration terms which come into effect after 1 May 2017.

Specific reference is now made to section 17 of the Arbitration Act 1996 under which an arbitrator appointed by one party can become the sole arbitrator where the other party fails to appoint an arbitrator. There is also provision for appointment by the President of the LMAA where there is failure to comply with agreement for arbitration by a sole arbitrator.

The Small Claims Procedure 2017 now has a financial limit of US$100,000 and the Intermediate Claims Procedure 2017 applies to claims of US$100,000-US$400,000, unless the parties agree otherwise.

Australian decisions

Reiter Petroleum Inc v The Ship "Sam Hawk" [2016] FCAFC 26

The Full Court of the Federal Court overturned the first instance decision of McKerracher J in late September 2016. See the case note of this important decision of the Full Court prepared by Andrew Tulloch entitled Maritime lien challenge appeal successful: Ship "Sam Hawk" v Reiter Petroleum Inc [2016] FCAFC 26.

Wilmington Trust Company (Trustee) v The Ship "Houston" (2016) FCA 1349

A recent decision of Justice Siopsis in the Federal Court of Australia in Wilmington Trust Company v the Ship "Houston" [2016] FCA 1349 emphasises the approach that the Court will take in relation to challenges to the Court's jurisdiction, in the context of proprietary maritime claims within the meaning of the Admiralty Act 1988 (Cth) (Admiralty Act).

The plaintiffs had commenced proceedings against the Ship "Houston" in late December 2015 by way of an action in rem in respect of claims for (1) loss and damage arising from the detention and/or conversion of the "Houston" and (2) delivery up forthwith of the "Houston" at Singapore, pursuant to a bareboat charterparty with the defendant.

The "Houston" had been chartered by the defendant and was, at the time, carrying a cargo of locomotives for discharge at Port Hedland in Western Australia for use in one of the large mining projects.

The defendant filed a caveat against arrest of the "Houston" in the Federal Court of Australia.

The defendant sought to challenge the Court's jurisdiction on the basis that the two claims were not properly characterised as proprietary maritime claims.

Section 4(2) of the Admiralty Act states:

A reference in this Act to a proprietary maritime claim is a reference to:
  1. a claim relating to:
    1. possession of a ship;
    2. ...

In support of its challenge to jurisdiction, the defendant relied upon on several bases, including that:

  • on the facts asserted by the defendant, the "Houston" was held by the defendant as gratuitous bailee and that the first plaintiff already held possession, with the result that both claims were misconceived
  • submissions that the evidence showed that The "Houston" was available for physical possession by the plaintiffs after its arrival at Port Hedland, with the result that the claim for delivery up was misconceived
  • on the proper construction of the charterparty, there was no right in the plaintiffs to seek delivery up of the "Houston" in Singapore

The plaintiffs contended that section 4(2)(a) of the Admiralty Act was to be given a broad interpretation having regard to the use of the words "relating to" and that the section was sufficiently broad to encompass the plaintiffs' claims for loss and damage arising from the detention and/or conversion of the "Houston" and the claim for the delivery up forthwith of the "Houston".

In rejecting the defendants' challenge to the Court's jurisdiction, Justice Siopsis referred to the decision of Allsop J (as he then was) in Elbe Shipping SA v The Ship Global Peace [2006] FCA 954 (Global Peace), and the following statement at [70]:

In Shin Kobe Maru the only 'fact' that needed to be shown was the existence of a claim that bore the 'legal character' of the kind referred to in s 4(2)(a)(i) and (ii) of the Act. The claim might fail for any number of reasons, but as a claim, that is as a body of assertions, it bore the legal character or answered the description of a 'claim relating to possession of, or title to or ownership of a ship.

Justice Siopsis held that the defendants' arguments went not to the legal characterisation of the claims, but to the merits of the plaintiffs' claims and the reasons why those claims might fail. As such they were not directed towards the "body of assertions" in the sense which that phrase was referred to by Allsop J in the Global Peace.

He concluded that the claims were to be characterised as claims relating to possession of a ship and that the plaintiffs had properly invoked the in rem jurisdiction of the Court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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This article is part of a series: Click Transport & Logistics News - March 2017: part 2 for the next article.
Authors
Andrew Probert
Andrew Tulloch
 
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