This article first appeared in Lloyd's List on Wednesday 30th September, 2009.
Rotterdam Rules Threatens UK Claims Work
Roger Hailey - Wednesday 30 September 2009
A top London maritime lawyer has warned of the "theoretical threat" that the UK may lose some claims work due to the Rotterdam Rules liability convention, but added that traders, liner operators and ship owners will still elect to keep London as their "preferred base of resolving disputes".
Holman Fenwick Willan partner Craig Neame told a London maritime audience: "When I started looking at the Rotterdam Rules, I was concerned, from a practitioner's point of view, that there was a real risk of a flight of disputes from the London market."
Under the Rotterdam Rules, signed last week by 16 nations but still requiring 20 states to ratify them, the existing exclusive jurisdiction clauses in liner and nvocc bills of lading will no longer be effective, hence the theoretical threat that claims processing could switch to other maritime centres.
"There is a fear that business is going to flood to other jurisdictions, because of the likelihood that quite a few states are going to adopt the jurisdiction and arbitration provisions within the Rotterdam Rules. And that would affect claims handling, lawyers, and recovery agents," Mr Neame said.
"But having spent a long time considering this, and in debating the issues with the industry and fellow firms, I now feel less worried about the effect on London."
He continued: "The reality is that, if we in London prepare ourselves for this convention and work hard to understand it and to put a better face on our expertise than any other jurisdiction, then, as now, the faith in London banking, the faith in London cargo insurance, liability insurance and its lawyers will remain.
"I think that traders, liner operators and ship owners will still elect to keep London as their preferred base of resolving disputes, whether by entering into an agreement for London jurisdiction and arbitration or simply by going with a non-exclusive jurisdiction clause."
In a two-hour "canter" through the Rotterdam Rules, Mr Neame highlighted important legal issues set to arise within the new liability convention.
Among those issues were a heads-up for port terminal operators, now covered as "maritime performing parties" under the new convention. The Rotterdam Rules, unlike previous regimes such as Hague-Visby and Hamburg, establish a direct liability link between port container operators and cargo interests, with the latter now able to make a claim.
Mr Neame suggested that terminal operators may want to get indemnities from their carriers, the liner ocean clients, "to protect them from that extra exposure".
In a domino effect, road hauliers and rail operators, not actually subject to the new convention, may find themselves having to pay more as their customer base "wants to pass that higher liability down the line".He added that the "default regime" appears to be "relatively cargo friendly" because there is no longer a negligent navigation exception in the Rotterdam Rules, which also has higher liability limits and a longer time bar, from one to two years.
"So you would expect recoveries to be much better. As that feeds through the system, it will perhaps mean that cargo insurance premiums will go down and that P&I premiums will go up."
Mr Neame added: "I think that in the long term this convention will be of overall benefit to the industry, once all the litigation has sorted out its problem areas."
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