The Loss Prevention revolution - The long arm of the law The LOI - a contract in its own right Inside Loss Prevention - The Swedish Club
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No.1 | 2019 The Loss Prevention revolution The long arm of the law The LOI - a contract in its own right Inside Loss Prevention
Contents
Leader
Virtue rewarded ......................................................................................................................3
Loss Prevention
Case study: Fall during cargo operation caused serious back injuries ..............................4
Emergency Response Training update: Three years on ......................................................6
The Loss Prevention revolution ............................................................................................8
P4
Safety in mind ......................................................................................................................12
Features
S&P upgrade recognises quality, strength and hard work ................................................14
Game on: The 2020 Sulphur Cap – technicalities vs legalities ........................................16
Charterer’s Online Declarations – making digitalisation work harder ..............................17
Legal
P8
Legal update : The long arm of the law ..............................................................................18
The LOI - a contract in its own right ....................................................................................19
Pacific Voyager ....................................................................................................................20
Review of Volcafe v CSAV ....................................................................................................22
Less is not more ..................................................................................................................24
Meet our crew
Inside Loss Prevention ........................................................................................................28
Maritime Resource Management P22
MRM Focus ..........................................................................................................................32
Club Information
Notice board..........................................................................................................................35
Out and about ......................................................................................................................36
Staff news ............................................................................................................................38
Calendar/Quiz ......................................................................................................................39
P32
The Swedish Club Triton is published three times a year and distributed free of charge. The Swedish Club Triton is an editorially
triton
independent newsletter and opinions expressed by external contributors are not necessarily those of The Swedish Club. Articles
herein are not intended to provide legal advice and the Club does not accept responsibility for errors or omissions or their
consequences. For further information regarding any issue raised herein, please contact our head office in Gothenburg.
No.1 | 2019
The Swedish Club Production Coordinator Layout Contact us:
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LEADER
Virtue rewarded
Dear members and associates
Virtue was rewarded in January. Digitalisation is not just fashionable. We into unchartered territory will provide
Standard & Poor’s raised its ratings on see a lot of potential down the line. Not food for thought. I have one
The Swedish Club to the level of A-. The only for streamlining internal processes recommendation – don’t miss it!
rationale for the decision was the but, more importantly, to help us make
combination of strong capital, disciplined communication and transactions with Many interesting topics and social events
underwriting and robust performance our members more efficient. Charterers’ are featured in this edition of the Triton.
demonstrated by the Club. In my book, Online Declarations, which you can read There are never two Tritons alike. I hope
it’s rather a testament to the quality of about in this issue, are only one example. you enjoy reading this issue.
the membership. We will provide further information in
future about how analytical data can
Insurance, from the perspective of an make our Loss Prevention initiatives
underwriter, starts with an understanding more tailored and relevant.
of the risk – in our case members – and
not with price. In the long term, quality ‘The International Group transition’ and
pays off, from both sides. ‘The successful brain’ will be the themes
of Members’ Day, core to the Club’s AGM
The Club’s offering is based on stability, events in June. The International Group
product range, casualty response and of P&I clubs has stood the test of
Lars Rhodin
forward-looking Loss Prevention. It is the challenging times. It is now time for Managing Director
combination that represents the value of changing the guard and we will meet
the offering. A true club is so much more those challenges involved. ‘The
than financial ratings and solvency. It is successful brain’ explores the brain at
the knowledge and willingness to assist work, which carries many dimensions;
in a casualty situation or, generally, in a those that we know about and those of
joint effort to reduce risk. which we are unaware. This excursion
Triton 1 2019 \ 3
Safety
LOSS PREVENTION
scenario
Fall during cargo operation
caused serious back injuries
By Joakim Enström, Loss Prevention Officer
Each month the Club’s Loss Prevention team issues a new safety
scenario to assist members in their efforts to comply with international
safety regulations and to follow best practice. Visit Swedish Club
OnLine (SCOL) for more examples.
CASE STUDY Discharge started in the evening. The
The package was
about 4 metres
Chief Officer had turned on the cargo
floodlights and all crew members were
above the top of the
A general cargo vessel was about to wearing proper personal protective
discharge packaged sawn timber in a equipment (PPE) such as boiler suits,
tank and the Third
small Caribbean port. Before discharging high visibility vests, safety shoes and
commenced the Master reminded the hard hats. The Third Officer and an AB
Officer lost his
crew of the importance of slinging each were in cargo hold 1. The Chief Officer
timber package at equal distances to and an AB were in cargo hold 2.
balance and fell
maintain its centre of gravity.
The vessel’s cargo cranes were
As the slings straight down
operated by the Bosun and an AB. On
the quay were three stevedores. The
tensioned and the
crew connected the slings to the cargo
in the cargo holds. Just before
timber was hoisted,
midnight there were some issues with
the slings in hold 1 so the Third Officer
one of the slings
called the bosun on the VHF and told
him that the slings needed to be
snapped and caused
repositioned. For some reason the
Third Officer then climbed onto the
the entire timber
timber package and grabbed one of the
package to start
slack slings. He told the bosun on the
radio to take up the slack and start
swinging.
hoisting slowly. The AB held the slings
on the inboard side to prevent the
timber from moving out of position.
4 / Triton 1 2019
LOSS PREVENTION
As the slings tensioned and the timber was
hoisted, one of the slings snapped and Questions
caused the entire timber package to start
swinging. The package was about 4 metres When discussing this case please consider that the actions taken at the time made
above the top of the tank and the Third sense for all involved. Do not only judge, but ask why you think these actions were
Officer lost his balance and fell straight taken and could this happen on your vessel?
down onto it.
• What were the immediate causes of this accident?
The AB in hold 1 called the Bosun and
• Is there a risk that this kind of accident could happen on our vessel?
Master on the radio. The cargo operation
was immediately stopped. The Chief Officer • What could you have done to prevent this accident?
climbed quickly into the cargo hold. The • What are our procedures about climbing on a pallet or cargo that is being
Third Officer was lying on his back with his moved?
right leg bent at an unnatural angle, he was • What are our procedures if we see a crew member doing anything unsafe on
semi-conscious. The Master arranged for an board?
ambulance while the Chief Officer gave first • How do we ensure that crew members follow the required safety practices?
aid. The Third Officer complained about • Do we have a tool box meeting before a cargo operation commences?
severe pain in his back and leg. He also had
• If not, could this be useful?
difficulty breathing. A stretcher was
arranged by the crew and the Third Officer • What sections of our SMS would have been breached, if any?
was lifted onto the quay by the crane. • Does our SMS address these risks?
• How could we improve our SMS to address these issues?
It took about 30 minutes for the ambulance
to arrive. At the hospital the Third Officer • What do you think was the cause of this accident?
was found to have a broken leg and serious • Is there any kind of training that we could do that addresses these issues?
back injuries. He was not able to continue
working at sea.
Triton 1 2016 \ 5
3 2019
LOSS PREVENTION
ID 133214452 © Denys Yelmanov | Dreamstime.com
Emergency Response Training update:
Three years on
Interview with Magnus Gustafsson, Claims Manager, Marine
The Swedish Club’s Emergency organisations and authorities in any
Response Training (ERT) initiative can given jurisdiction would act and
accurately be described as a ‘win-win’ interact.
product.
“We are offering these ERTs free of
Members can use an ERT session as a charge to members and they definitely
way of meeting the International Safety give an added value to a company’s
Management (ISM) Code requirement to safety profile, regardless of whether or
carry out one major exercise a year. At not they choose to use it for their ISM
the same time by planning and enacting compliance.” says Magnus Gustafsson.
an ERT, The Swedish Club gains an “We issue a brief evaluation report after
insight into its members’ operations and
keeps updated on the requirements and
“We encourage all those taking part to
discuss the process and we identify areas
challenges its members are facing.
of improvement to be worked on.”
Both sides learn how they would handle
a major incident and how the various
6 / Triton 1 2019
LOSS PREVENTION
“Most exercises will for the exercise. Most exercises will “Yes, there is a technical element but our
involve a ‘classical’
involve a ‘classical’ accidental event focus is more on how people make their
such as collisions, groundings, drifting decisions and on cooperation between
accidental event with engine failures, oil spills etc.” the participants. We encourage all those
such as collisions,
taking part to discuss the process and
The Club has also carried out ERTs we identify areas of improvement to be
groundings, drifting
where the shipowner has had more worked on.”
with engine
specific requirements. One member
wanted to test their capability regarding
The Club’s expertise
failures, oil spills
compliance with the ballast water
treatment requirements in the US, and
etc.” another wanted to test their ability
should their IT communication system
From the Club’s perspective, the
exercises are supported mainly by
be disabled due to cyber attack. claims handlers, both P&I and H&M, all
contributing with different experiences
every ERT which may include a number and backgrounds. Magnus says: “I
of identified areas for improvement. If Taken unprepared myself have 15 years of seagoing
the shipowner can show that they have experience, and I’ve worked on the
addressed these issues, then that is One factor is the same for both; when shore side organisation of a shipowner.
usually sufficient to fulfil the ISM the exercise starts, the member should Perhaps more importantly for the ERT
requirement. be completely unaware of the scenario exercises however, I also worked for six
that is about to unfold. Equally, the years at the Joint Rescue Coordination
Club’s claims handlers join the exercise Centre (JRCC) in Gothenburg as a SAR
Two types of exercise unprepared. (Search and Rescue) Mission
Coordinator which has given me
Since the ERT programme was “What we need from the member is experience in how port states are
launched at the start of 2016, the Club information on the vessel, their SMS, involved in SAR operations. This will of
has run more than 30 exercises carried etc., so that we can build up a really course vary from country to country
out around the world. There are two good scenario. Then we do the rest of though the overall SAR management is
types: one involves only the Club and the work,” says Gustafsson. rather similar, as SAR is organised
the member, while the other also brings under an IMO Convention.”
in external stakeholders such as class, The Club asks members to leave their
rescue organisations, coast guards, SMS manuals and procedures behind
port and flag states, and other them. “We want people to think out Openness and honesty
authorities. loud and discuss options, not just give
direct answers or go straight to the Did he expect the ERT project to be
These larger exercises obviously procedures. These exercises focus on such a success? “Yes, I did. I have
require a large amount of planning: the decision making process and worked in a shipowning office myself
“One of the exercises where I was encourage individuals to draw on their and I know that this type of exercise is
involved took six months to prepare,” personal experiences.” something many struggle to arrange.
says Gustafsson. “The smaller versions We know that the quality of what we
can be arranged in a couple of weeks.” The ERT approach is about talking offer is a high standard.
through the process - how individuals
work with colleagues, how they use the “However, I have been really impressed
Realistic scenarios information they have, and whether that by the shipowners’ willingness and
information is passed on to the right interest in these exercises and their
The exercise scenarios of course can people, says Gustafsson. openness and honesty with us. Far
take place anywhere that the vessel from being a ‘tick box’, they have been
“We want people to
operates. “We always adapt the extremely helpful and put a lot of
scenarios to as realistic a situation as people and energy into it.”
think out loud and
possible,” explains Gustafsson. “If it’s a
discuss options,
scenario that takes place in the US for And in the future? “The scenarios and
example then we’ll build the exercise focus of the exercise can vary
not just give direct
around the specific requirements, and endlessly,” says Magnus Gustaffson.
the involved organisations, for that “What is important for a shipowner to
particular place in the world. The
answers or go focus on one year can be very different
straight to the
shipowner decides which geographical from the next, as their regulatory and
location the exercise scenario should be operational requirements change. I can
procedures.”
in, as well as the other background see these ERT’s continuing for the long
information that forms the starting point term.”
Triton 1 2019 \ 7
LOSS PREVENTION The Loss Prevention revolution Tailor-made advice based on new technology and long experience 8 / Triton 1 2019
LOSS PREVENTION
Restaurant, shop or local
attraction? If you carry a smart
phone, you will often receive
useful recommendations,
suggestions and advice when
visiting a new area. Dig a little
deeper and you’ll likely find
information based on local
knowledge and expertise too.
Translate that idea across to your ship when
it’s heading for port – and you will have an idea
of The Swedish Club’s unique Trade Enabling
Loss Prevention tool.
This is a project that combines the best of new
and old, innovation and tradition: a marriage of
the latest automatic identification system (AIS)
technology with solid statistics and expertise
built up over years.
In short, The Swedish Club now has the
capacity to track every one of its member’s
vessels, match this with its own statistics and
records, and provide members and their
vessels with timely, tailored advice when they
are approaching areas of particular risk.
Tailor-made Loss Prevention
“This is tailor-made Loss Prevention,” says
The Swedish Club now
Senior Technical Advisor Peter Stålberg. “It is
built on the Club’s Loss Prevention statistics,
has the capacity to
which are core. For many years, The Swedish
Club has been electronically recording loss
track every one of its codes for each and every casualty. It can be
member’s vessels,
tedious and hard work, and it is always
meticulous. It means that for every cargo
match this with its own
claim, we know what type of cargo was
involved, where and why it occurred, where it
statistics and records, was loaded and where it was discharged. For
and provide members
every collision or grounding, we know where,
how and why it happened.”
and their vessels with From this information, it might be tempting to
timely, tailored advice draw swift conclusions on areas of high risk –
when they are
but, as Peter points out, it is only half the
picture. “Naturally we see a higher number of
approaching areas of
claims from Rotterdam compared to many
other ports – but Rotterdam is one of the
particular risk. biggest and busiest ports in the world, so it
doesn’t mean it actually has more risks.”
Triton 1 2019 \ 9
LOSS PREVENTION
In depth information
The Loss Prevention team has carried
out detailed analysis of the entire fleet
and where the ships have been trading,
based on AIS, and what casualties have
occurred. “That has given us a risk
profile, frequency and claims cost for
every port and sea area in the world,
based on our own statistics,” explains
Peter. “Now we know what is
happening in different ports around the
world and we have identified ports and
countries which are more risky to visit.”
Pilot project
In March, it was confirmed that four of
“This is a very
the Club’s members would participate
in a pilot project. “In this pilot we are Local issues
proactive approach,
proactively sending the member
information about the ports they are To further enhance the quality of the
visiting; we obtain that information
taking a leap beyond information that we send, we contact
generic feedback on
from daily uploads of the positions and the local correspondent in the area and
voyage intent of the vessels we insure,” request an update on local issues that
Loss Prevention,
says Lars Malm, Director Strategic may be relevant. “We have the local
Business Development & Client correspondent on standby to assist if
Relations. “The minute we detect that
where we share our need be,” says Malm.“This is a very
experience on a
one of the project members is setting proactive approach, taking a leap
course for a high-frequency area, we beyond generic feedback on Loss
global basis.”
will feed back a bulletin of the most Prevention, where we share our
important issues to watch out for. experience on a global basis. We can
10 / Triton 1 2019LOSS PREVENTION
“We believe that by
providing this
proactive approach
and advice, we can
help members to
trade more safely.”
our local correspondents, we could
provide other information from external
sources regarding the political
situation, kidnapping and other risks. It
is very much like booking an airline
ticket and being given information on
the exchange rate, the weather and
warnings on local concerns such as the
now break that experience down and member will add a lot of value,” says danger of pickpockets.
become very much more accurate in Lars. “We are very excited by the
pinpointing the expected exposure in project and are sure it will carry a lot of “As to the information – it could involve
that particular port area.” value for our members. We believe that problems with pilots or towage,
by providing this proactive approach difficulty with Customs or other
and advice, we can help members to authorities, navigational challenges in
Vessel specific trade more safely.” the approach channel, frequent issues
handling certain cargoes, weather
The information exchange can also go patterns to look out for, or tricky areas
both ways – AIS does not give A clear picture where there have been frequent
information on what cargo is being groundings or collisions.
carried, but if the member provides that Peter Stålberg adds: “As soon as one of
information then the Club can provide our ships sails for a destination
very specific guidance and advice identified as high-risk, we can send Delivering facts
relating to that particular cargo. them tailor-made Loss Prevention
advice based on where they are going, “The captain on board might never have
“This higher degree of interaction and the type of vessel they are operating, been to that port before and our
communication between Club and and the cargo. As well as advice from information can help them,” says Lars
Malm. “There may be anecdotal stories
of difficulties in a particular port, and
our statistics and experience can
ensure that the crew have the facts. We
can notify the owner and they can
share the information with the captain
and crew. We say – by all means go
there, but bear in mind it is a tricky
place. This is all about our ability to
interpret data, and we are very pleased
with the results so far.”
Whilst the pilot project has a degree of
manual involvement, on rollout the
service will be delivered to the
members electronically through an
automatic system.
“We have taken the last ten years of
claims statistics and built up a pretty
robust risk profile for different parts of
the world,” says Peter Stålberg. “That
can only benefit our members.”
Triton 1 2019 \ 11Safety in mind
LOSS PREVENTION
A new calendar from The Swedish
Club does much more than mark
the passing of time
The Swedish Club’s Monthly Safety Monthly safety
Scenario Calendar is simply unique.
Published every year, it features
meetings
tear-off worksheets containing case
studies based on real incidents that Ideal for use in on board monthly
occurred on real vessels. safety meetings, the worksheets
also include guidance regarding
As well as outlining the incident and preventive measures relating to
how it happened, these worksheets each specific incident.
set out a series of questions as a
framework for discussion around The Club is delighted that several
the causes and factors behind the members have requested
accident, what should have been additional copies to be provided
done differently, and how such risks for both onshore and on board
could be eliminated or reduced. use.
British Bulkers Inc practical situations, encouraging them to think on their feet
and apply preventive action.”
Among them is bulk carrier owner and manager British
Bulkers Inc., whose Managing Director, George There is a calendar on board each of its ships, and British
Agathokleous, says: “The topics in the calendar are well Bulkers also uses the calendar onshore, he says. The
chosen, and include the particular scenarios which we topics covered have further expanded the company’s
always try to prevent from happening. This is an excellent checklist and shipboard training sessions.
initiative from The Swedish Club – the contents are easily
digested both by the office and seagoing personnel.” “The calendars were sent on board only recently, and we
are already hearing that they are very useful. We are now in
He adds: “In each case, the questions place our people into the process of study and implementation,and reporting
back from the ships.”
Norbulk Shipping UK calendar includes lessons learned from high-profile
incidents and it also includes best practice on carrying out
Norbulk Shipping UK, which provides technical jobs that are common to many ships and which may result
management, crewing, compliance and quality assurance in high-severity incidents. Discussion of these topics will
services, has also welcomed the calendar, and now has a hopefully prevent such incidents happening in our fleet.”
calendar on more than 70 vessels.
Is there anything else he would like to see on the calendar?
“Calendars were distributed to the fleet so that relevant “No. When safety learning tools are brief and simple, they
topics could be pulled into the agenda of safety meetings,” are easier understood,” he says. “I think it’s better to keep it
says Artiom Guzar, Norbulk’s QA and ISM Manager. “The simple.”
Would you like your own calendar? Request your copy today at marcom@swedishclub.com
12 / Triton 1 2019Event speakers
The Swedish Club
Andrew Bardot Nick Shaw Daniel Ruge Katarina Gospic
Retiring CEO, International Incoming CEO, International Professor, MD, PhD, MSc, entrepreneur
Group of P&I Clubs Group of P&I Clubs lecturer and consultant and author
AGM 2019 12-14 June 2019
Clarion Hotel Post
Gothenburg
The Swedish Club’s 2019 AGM is the time to make new friends, meet old ones
and catch up with what is happening at the very heart of the shipping industry.
We invite our members from around the world to accept our hospitality, review
2018 and to share our plans for the future.FEATURE
S&P upgrade
recognises
quality,
strength and
hard work
In January, S&P Global
Ratings upgraded The
Swedish Club’s insurer
financial strength and
issuer credit ratings to
A- with stable
outlook.
Apart from obvious delight from
“Our members play
an important role –
members and staff at the news, there
was also one almost universal reaction:
it is their
in most people’s eyes, The Swedish
performance and
Club has been A-rated for several years.
quality that has
“It was never a question mark for us.
My personal view is that we have been
performing as A-rated for quite some
enabled us to
achieve this
time,” said Chairman Lennart
Simonsson. “We are proud that S&P
upgrade.
has shared our view with regard to the
quality of our organisation and our
network around the world, our financial
standing and our mutuality. Together, Lennart Simonsson, Chairman
those factors stand for very controlled a sturdy operating performance, should
stability – and to have this confirmed enable the Club's capital position to Teamwork
by S&P is very, very positive for us.” remain resilient to market challenges
over the next 24 months. He paid tribute to members and staff
alike for their contribution, recognising
Resilient capital position The confirmation of A- status will be the quality and support of members,
important for the future because it and the commitment and expertise of
In its report, S&P noted that, through clearly recognises The Swedish Club’s the entire team.
disciplined underwriting and strong risk strong standing, said Managing
controls, The Swedish Club had Director Lars Rhodin. “This is an This was echoed by Anders Leissner,
continued to record combined ratios important step for the Club which will Director Corporate Legal and FD&D,
close to 100%, despite testing conditions enable us to further develop our growth who said: “This was about explaining
in its main markets. S&P said it believed and diversification strategies around our message and selling our credibility.
that these improvements, combined with the world,” he said. It really was about teamwork.”
14 / Triton 1 2019FEATURE
“We carry out a great deal of analysis
into our different products, how they
work together and what type of
business we should write; we see the
whole spectrum and therefore we are
well informed in our risk assessment,
being able to base this on our
experience in terms of claims cost and
frequency. Of course, Loss Prevention
ties in with all of this too.” Khalid Hashim
Managing Director,
Precious Shipping
Strong underwriting “In a word, we are proud. This is
Lars Rhodin, Managing Director
a great accomplishment! Frankly,
“This is an
It was particularly pleasing that S&P it should have taken place more
remarked on the Club’s strong than five years ago.”
important step for
underwriting discipline which reflects
ongoing improvements the Club has
the Club which will
made to its enterprise risk management
enable us to further
(ERM) capabilities, said Lars Rhodin. “We
have worked to reduce volatility in our
develop our growth
capital position and have ensured that
the Club is well positioned for further
and diversification
development,” he explained.
strategies around “S&P has recognised the Club’s
the world.”
commitment to deliver robust
underwriting performance and preserve
Mikael Livijn
extremely strong capital adequacy in
Head of Insurance & Legal,
the future. During difficult operating
Long term efforts conditions, the Management Team has
Wallenius Marine
worked to keep a steady hand on the “The S&P rating is a triumph and
Lars Malm, Director Strategic Business tiller, and we are delighted to see that is the result of long, hard,
Development & Client Relations, added: dedication rewarded.” purposeful work. The figures
“The upgrading by S&P isn’t something more than justify the rating.”
that happened overnight. It was
recognition of many years of hard work. Quality of members
First of all, we have been able to produce
good numbers; second, S&P listened very Lennart Simonsson added: “Our
carefully when we explained our business members play an important role – it is
model. We were able to show them that their performance and quality that has
we had business diversity, including both enabled us to achieve this upgrade. Our
P&I and H&M, which pays off in the bottom members share the view with the Club
line and in our combined ratio. that quality pays off, and every member
makes a difference.”
“The upgrading by
Lu Jian
Vice President,
S&P isn’t
Winning Shipping
something that
“I am really very proud of The
happened
Swedish Club achieving this
upgrade. It is thanks to the effort
overnight. It was
of the Management Team and
also with the support of the
recognition of Board members and our
many years of hard
shipowners. It is a very good
result and I think it is long
Lars Malm, Director Strategic Business work.” overdue.”
Development & Client Relations
Triton 1 2019 \ 15FEATURE
Game on: The 2020 Sulphur Cap –
technicalities vs legalities
As every member of the shipping In this area there are many unknowns The Sulphur Guide has
been written by experts
community will surely now know, on 1 facing ship operators. Will low sulphur
January 2020 vessel owners must have fuel be available? If so, what will it
made the decision to install exhaust cost? What risks do we face in the in their field, providing
information based on
gas scrubbers or to burn low sulphur or changeover period? How can we turn
alternative fuels. The cost implications this to our advantage? One thing we do
of any decision are difficult to predict know is that, at least at the beginning, real life situations they
have encountered in
and there is no shortage of opinions the Sulphur Cap 2020 legislation will
and ‘helpful’ advice from interested produce a two-tier charter market –
parties in the marketplace. scrubbers installed versus no their working lives.
scrubbers.
The Club has cut through the chatter,
and to give members an informed and
accurate picture of the situation, has
obtained expert advice from a leading
marine engineering consultancy and
from experts in contract law.
The Club’s Sulphur Guide provides advice
from both a technical and a legal
perspective. It explores technical
considerations when making the decision
between operating with low sulphur fuels
and retrofitting scrubbers and explains
the legal implications, both in terms of
compliance and in relation to the terms
of any charterparty in place, following
that decision.
The Sulphur Guide has been written in
conjunction with Tony Grainger, Marine
Engineer, TMC Marine; Paul Harvey,
Associate, Ince & Co and Jamila Khan,
Partner, Ince & Co. All are experts in
their field, providing information based
on real life situations they have
encountered in their working lives.
The Sulphur Guide is aimed at providing
no-nonsense information to those
thinking about the effect potential
modifications will have both on the
operation of their vessels, and existing
charterparties and charterparties
entered into in the future.
To download the Sulphur Guide, visit
‘Publications’ on The Swedish Club
website, or contact
‘marcom@swedishclub.com’ to request
a hard copy.
16 / Triton 1 2019FEATURE
Charterer’s Online Declarations –
making digitalisation work harder
Jakob Osvald
Senior Manager Underwriting
key information as the declarations
process moves forwards.
On one screen the declaration shows the
user what is declared, what has been
accepted by the Club, and what items are
currently in risk. Past declarations are
easily accessible through an archive
Digitalisation is very much a watchword “Previously the process of declaring a function and anything you need to know
today, a term applied to a multitude of chartered vessel was carried out about past or present claims is just the
processes and functions in the manually through an exchange of click of a mouse away.
business world. Much happens behind emails and form filling,” says Jakob.
the scenes however, and it is not often “You would send us an email, we would
that something comes along which, send an email. During the voyage there Clear benefits
through digitalisation, radically would be a further exchange of emails.
simplifies a process - saving time and All very well if only one vessel is Jakob Osvald is clear as to the benefits
making life easier at the same time. involved, but our members run fleets of the system: “Everything you need is
of many vessels and need to have all in in order,” he says. “You can find
The Swedish Club’s new tool, the information they need in one everything you need to know about your
Charterer’s Online Declarations, does place.” declarations, on one screen. You can
just that. It removes the need for use filters to easily find your vessel and
brokers and clients to maintain the module helps you to easily access
paperwork and carry out manual At a glance automatically created insurance
tracking when declaring and managing documentation. This can be used
chartered vessels, and reports an Charterer’s Online Declarations alongside the relevant claims
overview of activities at the touch of a provides an ‘at a glance’ solution. documents, accessed through SCOL.“
button. Vessel details are entered straight into
the insurance system, ensuring that all The outputs can be viewed,
Jakob Osvald, Senior Manager records are in one place. This also downloaded, or attached to emails and
Underwriting, explains: “Our members enables instant reporting – data can be users can keep up to date with
and brokers are used to working in the pulled off instantly at any time. It is a progress on open claims via automatic
Club’s Swedish Club Online (SCOL) truly automated system.“ reports which are generated in SCOL
platform to support their insurance every month.
handling. We have always called SCOL The module has been carefully designed
‘the gateway to Club’ and the new to be process driven. It provides access to As Jakob says: “As far as we can tell,
declaration enables the process to be data for vessels across the world and there is little in the market just like it,
seamlessly integrated into what is provides a clear overview of voyage and we are proud that we have been
already a popular and well used progression, using notifications to able to develop this unique and
system. highlight outstanding issues and request invaluable tool for our clients.”
Triton 1 2019 \ 17Legal update
By Anders Leissner,
Director, Corporate Legal & FD&D
The long arm of the law
Sanctions have increasing impact on
international trade. There are several
reasons - sanctions no longer concern
only obscure states but also major
trading nations such as Iran, Russia
and Syria, for example. In addition
modern sanctions legislation targets
businesses that enable the underlying
prohibited activity. For instance, it has
proven more efficient to pursue ship
operators, banks and insurance
companies involved in the transport
chain instead of solely focusing on the
true wrongdoer buying and selling a
prohibited product. This is
understandable – we all have
responsibilities towards making the
world safe and sustainable. As a
lawyer, however, one cannot help but
Avoid over-shooting the
make certain observations about the
increasing use of sanctions. inherently problematic from a public
law perspective if they do not directly target
Sanctions and sovereign serve the purpose of safeguarding
states peace and international security. The sanction checks clearly have to be
automated and to be on the safe side
In its purest form, sanctions are Fear of non-compliance raise warning flags at even the slightest
uncontroversial in that they – according suspicion of a problem. For example the
to United Nations resolutions – should Sanctions are also in the spotlight due Club has experienced issues with
be used to safeguard peace and to the severe consequences for non- stopped payments to local
international security. However, as soon compliance. It is reported that sanction correspondents only because the vessel
as sanctions are imposed for purposes evaders have paid hundreds of millions involved has called into Iran previously, or
that are not clearly within that remit of dollars in fines. In addition, a because the initials of the claims handler
problems start to arise. sanction breach can restrict access to resemble the name of a company on a
financial institutions and payment sanction list. Sanction filters therefore
The first question one should ask is systems. This has prompted tend sometimes to over-shoot the target
‘against what entity do the sanctions companies in the financial sector to and as a result create unpredictability in
apply?’ States are generally prohibited apply very strict sanction controls in the payment system.
in dictating what other states (or their businesses. For banks this
persons and companies outside their includes checking the purpose of the Should this development continue there is
jurisdiction) should or should not do payment and also the parties involved a risk that sanction compliance will have
according to fundamental public law in the payment. From a practical less to do with the law and instead be
principles, one being the non- perspective this is a clever undertaking more a question of meeting companies’
intervention principle. Sanctions that considering the millions of payments risk policies. Such a development would
apply outside a state’s territory - extra that are processed yearly. be unfortunate, with commensurate
territorial sanctions - are therefore negative effects on global trade.
18 / Triton 1 2019LEGAL FD&D
The LOI - a contract
in its own right by Malin Högberg
Head of Claims, P&I,
Team Gothenburg
The independence of the terms of agreement in the voyage charter party (iii) there was neither any reservation
a Letter of Indemnity (LOI) was as to a limitation of time for all LOIs nor reference to the voyage charter
confirmed in the ruling by the issued under it, was indeed applicable party or its provisions in the LOIs
Court of Appeal in the Navig8 to all LOIs, without the LOIs making issued by Glencore;
Chemicals Pool Inc v Glencore express reference to neither the time
Agriculture BV ‘The Songa Winds’ bar nor to the voyage charter party (iv) the LOIs did not contain any
[2018] EWCA Civ 1901. itself. express time limit;
In the first instance, the case Glencore submitted that the terms of (v) the LOIs set out self-contained
concerned alleged misdelivery of a clause 38 of the voyage charter party obligations and rights and it was
cargo of crude sunflower seed oil in (with reference to the validity of the common ground that they could be
bulk, where the cargo was delivered LOIs expiring after three months) must relied on by third parties as against
without production of the original bills be read into the LOIs issued by them Glencore.
of lading, the question of agency under and that the effect was to bar Navig8’s
an LOI on an International Group claim, which had been made well after The Court of Appeal thus dismissed
standard form, and what the applicable three months had expired. the appeal and agreed with the first
time bar of the LOI would be. instance judge that the LOIs issued by
It was Navig8’s case, on the other Glencore did not contain any terms
The main point of law that will form the hand, that the LOIs they had received limiting their validity, nor were they to
topic of this article is that the first from Glencore were standalone be treated to include any such
instance judge held that Navig8’s claim contracts and that, as a matter of limitation.
was not defeated by the operation of a construction, clause 38 of the voyage
The LOI is a contract
time bar in the underlying voyage charter did not exclude a claim made
charter between Navig8 and Glencore. after the expiry of three months.
It is easy to forget that an LOI is a
The Court of Appeal
Clause 38 of the voyage charter stated: contract of indemnity and thus a
‘The period of validity of any letter of contract in its own right. What this, in
indemnity will be three months from decision short means is that with express
the date of issue…’ and went on to language absent in the LOI itself, the
provide for various ways in which the Simon LJ, who gave the opinion of the LOI is operating separately from the
owners could obtain an extension to Court of Appeal, expressly rejected terms of any underlying charter party.
that period, which had not been done. Glencore’s case on the following basis;
There was no reference to the voyage Owners and charterers must thus
charter in general, nor to the above (i) there was no reference to any remain cautious of the terms
terms in clause 38 in the LOIs issued extraneous terms limiting time in the contained in any LOIs they
by Glencore to Navig8. LOIs issued by Glencore; contemplate creating under their
charter period, even where they
Key question (ii) the voyage charter party and the consider that the issue has been dealt
LOIs issued by Glencore were distinct with in terms of the charter party
The key question on appeal therefore agreements with separate rights and itself.
concerned whether an express obligations;
Triton 1 2019 \ 19Pacific
LEGAL FD&D
Voyager
The Court of Appeal recently examined the
obligation of an owner under a voyage charter
party to commence the voyage, in circumstances
where the charter party did not contain any date of
expected arrival (ETA), or expected time of
readiness to load (ETRL) at the load port.
By James Bamforth
Head of Claims, Team Piraeus
20 / Triton 1 2019LEGAL FD&D
The facts The law Comment
The vessel had been voyage It is trite law that, where a voyage The Court of Appeal’s decision in
chartered on a Shellvoy 5 form for charter contains: the Pacific Voyager is important
a voyage from Rotterdam to the • An obligation that the owner will because it provides guidance for
Far East. The charter party proceed with all convenient speed parties in understanding how the
principles in Monroe -v- Ryan
contained a cancellation date, as or utmost despatch to a load port;
should be applied where there is
well as a clause whereby the and
no ETRL or ETA. The decision
vessel must ‘… perform her service • gives a date of expected arrival
highlights that, where a charter
with utmost despatch.’ or expected readiness to load at party contains an express
the load port obligation to proceed to the load
At the point of fixing the charter, port with utmost despatch, the
the vessel was carrying out a the owner has an absolute owners will be liable if their vessel
voyage for the previous charterers, obligation to commence the is unable to make the laycan due
from Egypt to France. voyage to the loading port by a to a failure to commence the
date when it is reasonably sure approach voyage by a date when it
While transiting the Suez Canal that the vessel will arrive on or is reasonably certain it will meet
under that prior fixture, the vessel around the ETA or ETRL. her cancelling date. This is an
hit an underwater object and was absolute duty which arises
forced to dry dock for repair. The However, prior to the Pacific irrespective of whether the charter
effect of this was that the vessel Voyager, it was not clear whether party contains any ERTL or ETA.
missed the laycan (laydays such an absolute obligation No due diligence defence is
cancelling) under the new fixture. existed when a charter party did available.
In view of the lengthy delays not contain any ETA or ETRL.
arising from the repairs, the new
charterer terminated the fixture,
The owner has an
absolute obligation
and claimed damages.
The Court of Appeal decision
In finding for the charterers, the Court to commence the
The arguments of Appeal in the Pacific Voyager
voyage to the
loading port by a
affirmed the decision of the High
The owners’ position was that the Court that, if the obligation to proceed
date when it is
obligation to commence the with utmost despatch was to be
reasonably sure that
approach voyage and proceed with given any effect at all, there needed to
‘utmost despatch’ could only be a date by which the approach
the vessel will arrive
attach when the vessel had voyage must be commenced. This
departed from the last discharge should be determined by considering
port under the previous charter. all relevant terms of the charter party;
on or around the
ETA or ETRL.
Given that the vessel never did so, not only by reference to an ETA or
then the obligation did not arise. ETRL.
The charterers’ case was that the The decision of the Court of Appeal
inclusion in the new fixture of the effectively focussed on the need for
itinerary for the previous charter certainty in commercial contracts,
demonstrated that it was meant to and to give effect to what had been
be taken as the time at which the agreed between the parties.
vessel was expected to arrive or be
ready to load. Failing that, the The utmost despatch obligation was
obligation to commence the identified as being especially
approach voyage with the utmost significant, as its inclusion gave a
despatch must at least arise when degree of comfort to a charterer. If a
it was reasonable to suppose that charter party included an obligation
the vessel should sail to meet the of utmost despatch but no ETA or
cancelling date. ETRL, the utmost despatch obligation
would be rendered meaningless
unless there were some time at which
that obligation attached.
Triton 1 2019 \ 21Review of
LEGAL FD&D
UK Supreme Court puts onus on owners:
Volcafe v CSAV
By Jonas Adolfsson, Partner, Ince Gordon Dadds, London
In many cargo disputes, the reason for and ceilings. When the containers were
loss of or damage to the cargo is quite opened, some bags were found to have
clear, but that is not always the case. suffered water damage. This gave rise
When there is some doubt about how to a claim that was relatively small in
the incident occurred, which party has quantum, just USD 62,500, but became
to carry out the hard work of offering important as a test case on the burden
the factual explanation? of proof in cases where the carriers
seek to invoke a Hague Rules
Traditionally, in claims subject to exception.
English Law, the shippers have usually
High Court and Court of
started their claim with as detailed a Jonas, a native Swede, joined the firm as a
case as possible, in an effort to prevent
Appeal decisions
trainee in 2008 and qualified as a solicitor in
the carriers from setting up a defence 2010, being promoted to Partner in 2018. Jonas
based on one of the Hague Rules is primarily a shipping litigator and deals with all
types of 'wet' and 'dry' disputes.
exceptions. In their 2018 decision in the The cargo interests alleged that the
case of Volcafe v CSAV, the Supreme carriers, as bailees, breached their
Court has clarified the law so that this common law duty to take reasonable
The High Court held that
balance is reversed: shippers will be care of the cargoes: the carriers failed
able to start their cases simply by to deliver the cargoes in the same good
showing evidence that cargo was lost order as that recorded on the bill of
the carriers’ case failed.
This was because the
or damaged. lading on shipment. Alternatively, they
pleaded that the carriers had breached
Background the equivalent obligations contained in
carriers were obliged to
do more than merely
Article III Rule 2 of the Hague Rules.
The claim concerned bagged coffee
shipped from Colombia to Germany, on The carriers relied on Article IV Rule
show evidence to make a
prima facie case that a
terms that made the carriers 2(m) of the Rules, which provides that
contractually responsible for container they shall not be responsible for loss or
preparation and stuffing. In 2012, both damage resulting from ‘wastage in bulk Hague Rules exception
applied.
ventilated and unventilated containers of weight or any other loss or damage
were in widespread use for the carriage arising from inherent defect, quality or
of bagged coffee beans and the vice of the goods’.
shippers chose unventilated containers evidence on the industry use of Kraft
to save costs. The container walls were The High Court held that the carriers’ paper prevalent in 2012, and concluded
lined with an absorbent material, Kraft case failed. This was because the that it was not possible to decide
paper, to counteract the potentially carriers were obliged to do more than whether the carriers had used a ‘sound’
harmful effect of condensation. merely show evidence to make a prima system. For that reason the carriers
facie case that a Hague Rules had failed to satisfy their burden of
Because the coffee beans, which are exception applied. They also had to proving that they had not been
hygroscopic in nature, were shipped prove that they had taken reasonable negligent in their carriage of the cargo.
from a warm to a cool climate, they care of the cargo – in other words that
emitted moisture, causing there was no negligence on their part. The Court of Appeal made the opposite
condensation on the container walls The High Court heard complex finding. It was held that the carriers’ key
22 / Triton 1 2019LEGAL FD&D
burden was to establish a prima facie
More than ever, carriers cargoes are loaded are as well-
should make sure that
case for one of the exceptions under documented as is practicable, on the
Article IV Rule 2 (m). In this context, that basis that such documentary evidence
could be evidence proving that coffee
the conditions in which could be vital if there is a claim. Where
cargoes are loaded are
beans had an inherent propensity to problems with cargo emerge during a
deteriorate. It was then for the cargo voyage or on delivery, the earlier the
interests to satisfy the burden of proving
as well-documented as response the better: cargo samples,
is practicable, on the
that the carriers had not taken detailed photographic records,
reasonable care of the cargo. In other preservation of contemporaneous
words, the Court of Appeal thought that,
basis that such documents and interviews with the
documentary evidence
where the carriers can show that a relevant crew may help avoid liability.
Hague Rules exception seems to apply,
they do not usually have to also prove
could be vital if there is Carriers of perishable or otherwise
a claim.
that their negligence was not a cause of potentially unstable cargoes – such as
the cargo loss or damage. coffee – should also consider reviewing
their protocols for care of those cargoes.
Supreme Court decision The result was that, because it had not If the carriers can provide evidence of
been possible to prove that the carriers their systems and their soundness, they
The Supreme Court completely had fulfilled their duty to take will be in a strong position. This is
disagreed with the analysis of the Court reasonable care of the cargo – which it especially relevant to the use of the
of Appeal. In relation to the carriers’ was their burden to do – they could not inherent vice defence, where it is now
duties in a contract of carriage subject rely on the inherent vice exception. The clear that it is not enough simply to show
to the Hague/Hague-Visby Rules, it was claim against the carriers therefore that a cargo has a potentially problematic
clear that the contract remains one of succeeded. characteristic (such as coffee’s
bailment. That means that, when cargo hygroscopic nature). If there is a
is entrusted to the carriers (who are the Practical conclusions precaution that could reasonably be taken
bailees of that cargo) in good condition, to counteract that characteristic, a failure
but is delivered damaged, they must do The Volcafe decision shifts the onus in to do so on the carriers’ part will
the same as any other bailee, i.e. show terms of evidence gathering towards constitute negligence and they will not be
that the goods have been cared for to carriers. More than ever, carriers should able to rely on the inherent vice
the required standard. In the context of make sure that the conditions in which exception.
the Hague Rules that means showing
that they have taken reasonable care of
the cargo by instituting and following a
proper system of caring for the cargo.
The Supreme Court’s analysis of the
working of the Hague Rules exceptions
was essentially similar. The Hague
Rules are primarily concerned with the
standard of care to be exercised by
carriers – not the burden of proof.
Therefore, where carriers seek to rely
on a Hague Rules exception, they must
prove both that the exception applies
and that they took reasonable care of
the cargo. The burden is therefore not
on the cargo interests to prove that the
carriers were negligent.
In making this decision, the Supreme
Court held that the 19th Century
decision in The Glendarroch did not
justify placing part of the burden of
proof on cargo interests. In fact the
decision was dismissed as ‘technical,
confusing, immaterial to the
commercial purpose of the exception
and out of place in the context of the
Hague Rules’.
Triton 1 2019 \ 23Less is not
more
ARBITRATION
The dangers of not
paying proper attention
to the DRC
By Steffen Pedersen,
Partner, Thomas Cooper
Singapore LLP
Steffen’s experience covers the full range of
shipping and offshore matters, from
collisions, to charters, cargo claims,
construction contracts and financing projects.
He has handled both contentious and non-
contentious cases with an emphasis on
contentious work throughout Asia and in
London.
24 / Triton 1 2019ARBITRATION
The dispute resolution clause Simple DRCs create Scenario
problems
(DRC) is normally the last clause
parties consider when entering a To illustrate this, let us consider briefly
contract. It is easy to see why: Shipping, uniquely it seems, likes what would happen in Singapore,
everyone is thinking of good simplicity when it comes to DRCs. The London and Hong Kong, when using the
returns and win-win co-operation. classic shipping DRC is just a few above clause, and the counterparty is,
What could possibly go wrong? words: ‘Arbitration in [Singapore / and remains, entirely unresponsive.
Quite a lot in fact, so experience London / Hong Kong], English law to
tells us. When it does, it is then apply.’ Number of arbitrators in the Tribunal
too late to become extricated As the number of arbitrators has not
from a DRC which has left This may seem easy and quick, but it is in been agreed, this will need to be
remaining only unpalatable fact full of potential problems. These determined. To do so, it will be
options in dealing with a problems arise from what is left unsaid. necessary to fall back on what the local
defaulting counterparty. In particular, the clause does not identify law stipulates.
the number of arbitrators, the procedure In Singapore and London, the default
So how do you avoid putting for appointing the arbitrators, what would be a sole arbitrator under the
hurdles in your own way and happens on default of appointment, or the Singapore International Arbitration Act
ensure that you construct a DRC procedural rules that will apply to the (Cap 143A)(IAA) and Arbitration Act
that is right for you? arbitration. Omitting this information can 1996 (AA), respectively.
cause delay and have a significant
influence on the costs and time spent In Hong Kong, there would be either
getting the arbitration started in a one or three arbitrators, which would
situation where your counterparty has have to be determined by the Hong
disappeared and is not responding. Kong International Arbitration Centre
(HKIAC) as the appointing authority
For that reason, the above under the Arbitration Ordinance (Cap
clause is not ideal - unless 609)(AO). That determination requires
you are a defaulter an application to the HKIAC incurring
wishing to make life an application fee of HKD 8,000
difficult for a claimant. (around USD 1,000). Applying can take
some time, as the HKIAC must
Triton 1 2019 \ 25You can also read
