UK: HFW Shipping Bulletin - September, 2009

Last Updated: 12 October 2009

The Rotterdam Rules - Deadline Day
By Craig Neame

23 September 2009 marks the opening for signature of the Rotterdam Rules, the latest attempt at harmonisation and unification of the current patchwork of cargo regimes encompassed predominantly in the Hague/Hague-Visby and Hamburg Rules. The ratification/adoption of 20 states is required before the Rules become law and it remains to be seen whether, unlike their Hamburg predecessors, the Rules will indeed attract universal acceptance. A decision on whether the UK will sign and ratify the Rules will be the subject of a full consultation exercise scheduled to be published early next year.

The vast scope of the Rules and potential impact on the carriage of goods both inland and by sea (at least in terms of teething problems in their implementation) promises a continued and forceful debate amongst the various stakeholders for months to come.

In terms of a carrier's liability, the Rotterdam Rules combine elements of the Hague/Hague-Visby and Hamburg Rules with a qualified presumed fault liability regime. The majority of the Hague/Hague-Visby catalogue of defences to the carrier's liability subsist but with the notable exception of the "negligent navigation" exclusion, raising crucial questions as to how this will impact the potential liability of carriers facing claims arising out of casualties, and consequently investigations as to cause. The balance of risks is likely to be affected, potentially with losses borne by cargo underwriters pursuant to the Hague/ Hague-Visby regimes to be assumed by P&I Clubs under the Rotterdam Rules, with ensuing uncertainty as to how and if this shift of responsibility will be translated into premiums. The list of parties affected by the Rotterdam Rules is significantly longer, again pointing towards changes in the insurance market in terms of, for example, freight and terminal liability policies.

The Rules regulate a significantly wider area of activity than earlier cargo conventions, applying from the point when the carrier receives the goods for carriage up to the point of delivery of the goods, and therefore (with some exceptions in the event that another international instrument is applicable to that mode of transport) extend to inland carriage. The introduction of so-called "volume contracts" creates a new ball game altogether and it will be interesting to observe the extent to which the market makes use of the relative freedom allowed under these arrangements. Another key aspect of the Rules is their application to and regulation of electronic transport documents, but will this be a sufficient stimulus for e-commerce to flourish?

Finally, and perhaps of fundamental importance from an English law perspective, the Rules also attempt to harmonise matters relating to jurisdiction and arbitration with a crucial point for consideration being how ratification or otherwise of the Rules by the UK may affect London as a centre for litigation.

Piracy At Sea: A Continuing Worry
By John Knott

Despite the presence of a large international force of warships in the Gulf of Aden and the Indian Ocean, the total of 111 attacks on shipping off the coasts of Somalia last year was easily exceeded by mid-2009, by which time there had already been 146 attacks. The tactical ingenuity of the Somali pirates has led to the hijacking of vessels many hundreds of miles into the Indian Ocean, which decreases the chance that defensive naval forces will be close enough to intervene.

The only good news is that the number of such attacks that resulted in vessels being seized by pirates during those periods decreased from 38 to 25 per cent. Clearly, piracy will remain a significant threat off Somalia until the situation in the country has stabilised, and there are sufficient security forces on land and at sea able to control the situation.

But while attention focuses on Somalia, there are signs of increasing pirate activity elsewhere, particularly in South-East Asia, the Gulf of Guinea, and Latin America—mostly consisting of armed robbery, often from ships at anchor. It is the virtual freedom of movement on land, and logistical support, that enables Somali pirates to operate in the way they do, whereas in most of the other places where ships are attacked, pirates are obliged to use hit-and-run tactics. The key strategies for owners remain adequate precautions and the careful planning of voyages; and, for crews, the utmost vigilance.

HFW scoops 2 major shipping law awards

This month HFW has been awarded both the Lloyd's List Global Awards Shipping Law Firm of the Year 2009 and, in Hong Kong, the Asian Legal Business Shipping Law Firm of the Year 2009.

The Lloyd's List Awards evening was held at London's Royal Lancaster Hotel on 8th September with over 400 of the leading lights of the global shipping industry in attendance.

When deciding to give the award to HFW, the judges noted that the firm has acted on most of the major piracy cases in the last 12 months - an issue that dominated the evening, where several other award winners in other categories also won for their work in this highly complex area. This award follows last year's, which HFW won for its work on the MSC Napoli.

Meanwhile, shortly before going to press, our Hong Kong office picked up the ALB Shipping Law Firm of the Year 2009 during a ceremony at the Conrad Hotel, Hong Kong. This is the fifth time in the past six years that we have won the title.

HFW opens in Sydney

HFW has recently announced the further expansion of its Australian capability with the launch of a new office in Sydney on 1 November. Former Blake Dawson partner, Alex Baykitch, is to head this office and will soon be joined by three senior lawyers who between them have extensive experience in running large litigation in London, New York and Australia.

Alex specialises in international commercial arbitration and litigation, with a focus on cross-border disputes involving the maritime, aviation, mining & energy, and insurance & reinsurance sectors.

Gavin Vallely, Managing Partner of HFW's Australian offices comments: "The recruitment of Alex adds an extra dimension to our growing Australian practice and he joins us at an exciting time of expansion."

Conferences and Events

Please email events@hfw.com for further information.

The Rotterdam Rules - what's happening?
HFW - Friary Court, London (29 & 30 September 2009)
Craig Neame

International Marine Claims Conference
The Grand Hotel, Malahide, Dublin (30 Sept - 2 Oct 2009)
James Gosling (Keynote Speaker) / Alistair Johnston

Private Equity in Shipping Seminar
Piraeus (7 October 2009)
Jonathan Campbell, Alistair Mackie, Nick Hutton, Andrew Johnstone

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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