The London P&I Club

Global Correspondents

Find a correspondent in our global network

Country:

News Alerts

Latest News and Updates on P&I can be accessed here.

Maritime Security - Guidance on Non-Piracy Risks in the Southern Red Sea

 

The International Chamber of Shipping, BIMCO and INTERTANKO have jointly published a document entitled “Interim Guidance Note on Maritime Security in the Southern Red Sea and Bab al-Mandeb” (the “Guidance Note”). The Guidance Note has been published in response to maritime threats arising from the conflict in Yemen beyond those posed by piracy in the region, including missiles, sea mines and water-borne improvised explosive devices. While merchant ships are not presently thought to be a target for the various factions engaged in the conflict, there is a risk of vessels being mistaken for military craft or finding themselves in close proximity to such non-piracy risks.

The Guidance Note is intended to complement the existing Best Management Practices for Protection against Somali Based Piracy (BMP4) and so assist Company Security Officers and Masters to conduct effective risk assessments prior to transiting the area. Emphasis is given to obtaining up to date information on activity in the region prior to preparing a pre-voyage risk assessment, in addition to reducing the opportunity for mistaken identity by making use of the Maritime Security Transit Corridor and reporting to the UKMTO and MSCHOA. 

A copy of the Guidance Note can be accessed by clicking here.
 

16 Feb 2018

USA – California’s Ballast Water Management Regulations 2017 and Fines

 

Members will be aware from the London Club Circulars of January 2017 and July 2017 that the United States is not a party to the IMO’s Ballast Water Management Regulations and has introduced its own legislation, with California State developing even stricter requirements.

Vessels arriving at ports in California from outside of the Pacific Coast Region intending to de-ballast in California waters are currently required to conduct any ballast exchanges in open seas. The Pacific Coast Region (“PCR”) is defined in California legislation as east of 154 degrees West longtitude and north of 25 degrees North latitude. Open seas is defined as at least 200nm from the nearest land and in minimum 2,000m of water depth. Vessels whose voyages begin within the PCR and which intend to de-ballast in California waters must conduct a ballast water exchange at least 50nm from the nearest land and in minimum 200m of water depth. A simple chart of the PCR and 200nm/50nm from land can be accessed by clicking here

Californian legislation now applies maximum fines of USD27,500 per tank where no ballast exchange has been made and between USD5,000 and USD20,000 per tank where there was an exchange within the zones of 200nm and 50nm from land, depending upon how close to land it occurred. Falsification of records and reports is also punishable by up to one year in jail.

The fines are imposed by the Californian State Lands Commission (CSLC), rather than the Coast Guard. Early experience of the activities of the CSLC points to very thorough investigations being made on board. The location where each ballast tank exchange took place is plotted precisely and substantial fines are imposed for any errors. As the fines are applied on a per tank basis, the sums can soon mount up.

In the most prominent example seen by the Managers, a vessel on a great circle route across the Pacific carried out a ballast water exchange mid-ocean and mid-voyage, but inadvertently within 200nm of the Aleutian Islands. While the authorities determined the ballast water after the exchange was free of invasive species which could be discharged within California waters, the mistake was innocent and a first time offence, the CSLC nevertheless sought to impose fines exceeding USD100,000. The fine was reduced by only 30% on appeal.

Members whose vessels are scheduled to call at Californian ports should note the above and take care in planning where a ballast water exchange is to be conducted. In particular, consideration should be given to the time needed to complete the exchange, the water depth, and weather, to ensure that such exchanges are completed well outside 200nm not just from California waters or the PCR but from any land, so as to avoid the risk of being having fines imposed and potentially being detained.  

13 Feb 2018

China – Stricter Waste Importation Regulations

 

 

One of the Club’s China correspondents, Huatai Insurance Agency & Consultant Service Ltd, has reported that the Chinese Government has implemented stricter controls on waste importation by adding a substantial number of solid waste types to the list of banned wastes which cannot be imported into China without a license. Their full advice, along with the current list of all excluded waste cargoes can be accessed by clicking here.

The potential consequences of breaching the regulations for Shipowners are:-

  1. A fine between RMB 100,000 and RMB 1,000,000; and
  2. Costs of disposal of the waste; and
  3. Depending upon the offence, a criminal prosecution.

Given the above listed potential consequences, Members - if asked to carry waste cargoes - are recommended to be duly diligent in verifying whether such cargoes are listed as banned or restricted solid waste before accepting the booking, including (but not limited to) obtaining the customs code and relevant licence.
 

09 Feb 2018

Indonesia – Nickel Ore

 

Members should take note of the following notice circulated by Intercargo concerning the increased risks associated with the carriage of Nickel Ore from Indonesia during the wet season:

QUOTE

As you will all be aware it is currently the wet season in Indonesia (October to April), you may also be aware of the recent reports of heavy rain in Indonesia which has resulted in significant congestion at both loading and unloading ports in Asia.

The heavy rainfall increases the risk of Nickle Ore and other Group A cargoes (i.e.cargoes that may liquefy) being shipped with a Moisture Content (MC) above its Transportable Moisture Limit (TML). The transportation of Group A cargoes with a MC above its TML can lead to cargo failure (liquefaction/dynamic separation) with catastrophic results.

Additionally it has been brought to the INTERCARGO Secretariat’s attention of a case, in Indonesia, where Nickel Ore has been misdeclared as Iron Ore.

In view if the above INTERCARGO respectively reminds its Members to be especially cautious when accepting cargoes from Indonesia and the region during the wet season and times of heavy rainfall.

UNQUOTE

The Club similarly advises such caution during the ongoing wet season.

19 Jan 2018

P&I cover and the use of side-agreements to the Lloyd‘s Open Form (LOF)

 

The LOF salvage agreement is a well-recognised and well established emergency response contract.  

The use of LOF is widely accepted in the industry and the London Club supports its use in emergency situations.  For about twenty years the Special Compensation P&I Clause (SCOPIC) has been used in conjunction with LOF to encourage salvors to respond in cases of doubt over the availability of sufficient reward under Article 13.  The use of SCOPIC is supported by all International Group P&I Clubs. 

However, there is an increasing trend for Owners and their hull and machinery (H&M) underwriters to enter into arrangements (known variously as side letters, pre-settlement agreementsand side-agreements) which run parallel to LOF and SCOPIC, with a view to managing the H&M underwriters and Owner’s exposure under LOF Article 13.  In certain cases, these side-agreements have either direct or indirect effects on the operation of the SCOPIC clause and, therefore, have a bearing on P&I insurance. 

Members are generally encouraged to submit contracts which may impact upon P&I liability for review by the Club.  This includes situations where an LOF side-agreement is being proposed.  The Club will be able to assess the potential impact of the side-agreement on SCOPIC and alert Members to any provisions that might affect P&I cover. Members are encouraged to contact the Club as soon as discussions regarding side-agreements are raised in order that we are able to provide input at an early stage. 

11 Jan 2018

International Group Reinsurance Rates 2018/2019

 

Renewal terms for the IG’s General Excess of Loss Reinsurance Contract have been finalised; and the Group’s reinsurance rates for the year commencing 20 February 2018 are now shown below:

 Owned Entries  

Category

2018 rate per GT

% change from 2017

DIRTY TANKERS

$0.5845

% - 1.85

CLEAN TANKERS

$0.2626

% - 1.83

DRY CARGO VESSELS

$0.4038

% - 1.85

PASSENGER VESSELS

$3.2707

% - 1.84

Further information on the reinsurance renewal can be viewed on the IG’s website here. And details of other arrangements for the 2018/19 policy year will be set out in a Circular to be issued in February in the usual way.  

15 Dec 2017

Turkey – Restrictions on vessels calling at Crimean Ports

 

Members will already be aware of EU sanctions in place following the annexation of Crimea and Sevastopol in Spring 2014, as set out in previous News Alerts on the Club’s website (click here). Members calling at ports in Crimea and the Black Sea should note that Omur Marine Limited, one of the Club correspondents in Istanbul, has drawn attention to a Circular from the Turkish Chamber of Shipping (click here for a copy along with free translation) that the Turkish government/Turkish port authorities:

 

  •  Will not allow vessels from Crimean ports to call at Turkish ports.

 

  •  Will not allow vessels departing from ports in Turkey to call at Crimean ports.

 

  •  Require agents to provide undertakings:
  1.  for vessels arriving at Turkey to confirm the previous departure port; and/or,
  2.  for vessels departing Turkish ports to confirm that the vessel will not call the ports of the Crimean region;and,
  3.  that if any part of the trade/voyage has or will involve Ukraine, then no part of it, including the customs, port and trade documents contain anything relating to Crimea.

 

The Correspondent advises that the authorities will be enforcing this strictly and may inspect any relevant documents, log book extracts and other available sources (AIS/VDR data etc).

Members should ensure that they avoid trading between Crimean ports and Turkey in order to avoid breaching the Turkish regulations and potential delays/detentions/fines.

30 Nov 2017

The London P&I Club Position & Performance Review 2017

27 Nov 2017

The London P&I Club – Prestige: Pollution Incident Update

 

 

Members may have received press and other reports of a recent judgment in Spain involving the 2002 loss of and pollution from the Prestige. This note aims to provide information on the judgement, the ongoing international legal proceedings and the potentially much wider and far-reaching implications of this development for Shipowners, insurers and other industry stakeholders. 

Note on Prestige Judgement

The Prestige was a conventional pre-MARPOL persistent oil tanker entered by her Owners with the Club continuously from 1988 to her loss in the Bay of Biscay in 2002. The ship was classed from build with ABS and had the approval of one oil major.  

In November 2002 the Prestige was carrying a cargo of 77,000mts of heavy fuel oil from St Petersburg to the Far East. While crossing the Bay of Biscay in adverse conditions the ship developed a sudden list to starboard as water entered the mid-ship starboard ballast tanks following an assumed side shell failure. Pollution was minimal in the initial stages of the incident. Refuge was requested from Spain but denied. Instead the vessel was required to be driven unsympathetically out to sea where, six days (and two storms) later she sank together with the then remaining cargo. Pollution regrettably affected much of the northern coast of Spain and the Southern Atlantic coast of France.

Assessment of pollution claims

Spain and France are parties to the CLC and Fund Conventions. Joint claims handling offices were established with the Fund in Spain and France. The Owners’ CLC limit of US$26.7m was lodged in cash with the Court in Spain in June 2003. The Fund provides supplementary compensation of about US$144m. Claims for pollution damage were presented for about US$2.3bn and assessed by the Fund experts at about EUR350m.

The Spanish Proceedings

The Public Prosecutor commenced criminal proceedings against the senior crewmembers and a representative of the state (in respect of the denial of refuge), on grounds of alleged disobedience and for serious pollution damage. As a consequence of this, the civil claims arising attached to the criminal action. After an exhaustive nine month trial all of the defendants were acquitted of causing the pollution. It was determined that whatever weakness in the ship existed could not be identified and therefore was not known. As a consequence there was no civil liability finding.

A number of parties, including the Public Prosecutor, appealed on points of law. Following a one day hearing the Spanish Supreme Court (Criminal Division) reversed the acquittal of the Master on grounds he must have known it was reckless to perform the intended voyage. The Owners were found vicariously liable for the Master’s negligence. The CLC Convention, under which the Insurer Club benefits from the CLC limit irrespective of the alleged conduct of the Owners, was said to be applied. However, the Court also held that under Spanish criminal law, the Club was directly liable for the Owners recklessness up to the policy limit of US$1bn.

The case was referred back to the trial court to determine the quantum of the recoverable claims. In the meantime the Master is pursuing an appeal to the European Court of Human Rights on the basis that his conviction was unfair.  

Quantum proceedings

The trial court has just issued its judgment on the quantum aspects of the case.  The various claims have been assessed at around EUR1.66bn which is materially greater than the Fund experts’ assessments noted above and is therefore disappointing. This includes about EUR1.63bn assessed in respect of the Spanish and French States and about EUR25m for the non-State claimants.The Club’s liability limit of US$1bn is reiterated; as a Member of the International Group, the Club benefits from the reinsurance purchased collectively which extends to US$1bn for pollution claims.

Next steps

Judgements obtained and legal proceedings on foot in other jurisdictions will be of relevance. These include: 

  1. A contested judgement already obtained by the Club from the English Court of Appeal against Spain and France. This recognises that the Club has no direct liability to the States claims other than permitted by the CLC Convention.  This judgment is irreconcilable with the Spanish judgments and should provide a basis to resist enforcement;

  2. The Master’s action before the European Court of Human Rights. This is relevant because enforcement of a judgement obtained unfairly would be contrary to public policy. The extremely superficial nature of the Supreme Court hearing being an example of an unfair process.

At the same time, the Club together with its IG partners and other interested parties will continue to give close attention to the wider implications of the judgement. We are concerned at the direction taken by the Spanish Court including its by-passing of an established international Convention. This development underscores the importance of initiatives including but not limited to the adoption of concerted action by ship-owners, insurers, the IMO and IOPC Funds to encourage states not only to sign up to the International Convention regimes, but also to respect and to apply these correctly and consistently; in a way the recent judgments in the Prestige have failed to do.  

17 Nov 2017

News Alerts Archive

Page 1 of 16 Next >