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  • The Longchamp – Supreme Court Judgment on Rule F of the York-Antwerp RulesView More

    Wed, 25 October, 2017

     Simon Croall QC and Paul Toms, who acted for cargo interests

    The judgment can be found here.

    In one of two Supreme Court judgments released today in which Quadrant Chambers acted, the Supreme Court has handed down judgment in The Longchamp. The case is the first time the English Courts have had to interpret the meaning of Rule F of the York-Antwerp Rules 1974 (“the Rules”).

    Rule F, first introduced in 1924, admits expenses in general average which would not otherwise be allowable.  The expenses are allowed where they have been “incurred in place of another expense which would have been allowable as general average” but “only up to the amount of general average expense avoided”

    The judgment is an important one for shipping practitioners and, although arising in the factual scenario of a seizure by pirates of a vessel and her cargo, it is of wider application and hence significance.

    The Facts

    The Longchamp was a chemical carrier that was hijacked in January 2009 by Somalian pirates.  On 30 January 2009, the pirates demanded U$6 m for its release.  The shipowners refused that demand and – consistent with normal practice – negotiated with the assistance of expert ransom consultants over a 51 day period with the result that the ransom paid was US$1.85 m.  During that period they incurred various operational expenses, namely crew wages, additional wages payable because the vessel was in a high risk area, the cost of food and supplies, and bunkers. The expenses totalled c. US$160,000 and amounted to increased operating expenses. Shipowners claimed that the expenses should be allowed in general average under Rule F.

    At first instance, it was held that the expenses fell within Rule F on the basis that if the shipowners had paid the initial ransom demand in full the payment of US$6 m would have been an expense “reasonably … incurred” within the meaning of Rule A and, therefore, “would have been allowable as general average” within Rule F.  The Court of Appeal overturned that decision. The Court concluded that expenses only fell within Rule F if they were incurred in place of other allowable expenses and this required there to be two or more alternative courses of action open to the party seeking to mitigate the consequences of an incident when incurring the actual expense. The Court held that a short negotiation by which agreement was reached to pay the initial ransom demand was not a different course of action to a longer negotiation which led to a reduction in the ransom paid.  The Court, however, refused to reverse the Judge’s finding that, had Rule F been engaged, payment of US$6 m would have been “reasonably … incurred”.

    Decision of Supreme Court

    The Supreme Court (by a majority of 4 to 1) allowed the shipowners’ appeal.  The majority concluded that the language of Rule F did not require that the expenses were incurred following an alternative course and that, in any event, payment of US$6 m in response to the initial demand was a different course of action to negotiating for 51 days, incurring the expenses, and paying a ransom of US$1.85 m.

    On the question of whether the expenses were “incurred in place of another expense which would have been allowable as general average”, the majority did not follow the approach taken by the courts below.  Lord Neuberger, giving the main judgment of the majority, appeared to have misgivings as to whether payment of the initial demand would have been reasonable and hence allowable under Rule A [18-19] but concluded that the Rules did not require this test to be met. The correct interpretation of Rule F was, he said, that the “reference to an “expense which would have been allowable” [in Rule F] is to an expense of a nature which would been allowable” [19].  Thus to qualify as allowable under Rule F it did not matter that the hypothetical expense avoided would not have been allowed so long as it was of a type which in principle was allowable under Rule A. The reasoning placed emphasis on the language “allowed” in Rule C to which the majority concluded Rule F was referring when requiring the avoided expenses to be “allowable”.   

    However, the closing words of Rule F which provide that the actual expense incurred shall be allowed “only up to the amount of the general average expense avoided” acts as a cap on the allowability in general average of the actual expense.  Thus, in each case, it is necessary to determine what general average expense has been avoided so as to give effect to the cap. This, in the present context, involves considering whether a ransom payment in excess of that which was in fact paid by at least the sum of the Rule F expenses claimed would have been allowable under Rule A.  On the facts of this case, Lord Neuberger concluded that this was the case [20].

    Lord Mance dissented. He concluded that the requirement that avoided expenses would have been allowable referred back to Rule A and hence required those expenses to be allowable under Rule A (both as to type and quantum).  He concluded that the payment of the initially demanded ransom would not have been allowable because it was unreasonable in its amount. He considered that it was not legitimate to allow the expenses because some lesser ransom figure (for example US$2.4 m) might have been reasonable because the Adjuster and the parties had proceeded on the basis that the expenses incurred were recoverable during the whole period of the negotiation when in fact the period of time spent negotiating from US$2.4 m to the final ransom sum was much shorter.

    Implications

    As Lord Sumption noted in his judgment, General Average rarely reaches the Courts and even more rarely reaches the appellate courts. The consequence is that aspects of the Rules have never been the subject of interpretation by the Courts.  Rule F is just such an example.  Instead it has been applied in accordance with practices and understandings adopted by adjusters. There seems little doubt that the ruling in this appeal will challenge some of what had hitherto been regarded as orthodox thinking. As the majority judgements note, the Court of Appeal in overturning the judge were following reasoning supported by the leading textbooks and obiter statements. It would appear that those texts (particularly on the question of whether there is a requirement for two alternative courses) and the practices which they reflect will need to be revisited.

    The reasoning of the Court as to the true meaning and effect of Rule F is important and has potentially wide reaching consequences. Whenever a shipowner negotiates with a third party to reduce expenses which are of a kind allowable in general average (repair or salvage costs are two possible examples) all and any operating expenses incurred in that period are strong candidates for Rule F allowances. It has never previously been thought that such expenses would be allowed. That they are likely to be allowable appears to be so even where the original figure quoted or demanded is excessive or exorbitant so long as it could be said that it was reasonable to agree a figure in excess of that finally agreed and the excess is at least the amount of the expenses claimed.

    In the context of piracy cases the final point made above is striking.  Both the Judge and the Court of Appeal were critical of any regime which required adjusters or courts to determine when a hypothetical ransom payment in excess of that actually agreed and paid was reasonably incurred. However that is precisely the exercise which must now be undertaken without any guidance from the Supreme Court as to how to perform it.

     

    Simon Croall QC

    Simon Croall is an established commercial silk who has appeared in every court (including twice in the last 12 months in the Supreme Court). He is a sought after trial advocate as well as being respected in the appellate courts. In recent years much of his work has been in the context of International Arbitrations.

    Recent reported highlights include Fulton Shipping v Globalia (The New Flamenco) [2017] UKSC 43 [2017] 2 Lloyd’s Rep. 177, [2015] EWCA 1299 and [2014] 2 Lloyd’s Rep. 230, MV Longchamp ([2016] EWCA 708, [2016] 2 Lloyd’s Rep. 375 on the interplay between piracy and General Average, The CV Stealth [2016] 2 Lloyd’s Rep. 17 on the consequences of long term detention of  a Vessel in Venezuela and Essar Shipping v Bank of China [2015] EWHC 3266 on anti-suit injunctions. He also appeared in The Achilleas [2008] UKHL 48, [2009] 1 AC 61 a leading case on remoteness of damage, AET Inc v Arcadia Petroluem (“The Eagle Valencia”) [2010] 2 Lloyd’s Rep. 257 (CA), Mediterranean Salvage v Seamar [2009] 2 Lloyd’s Rep. 639 (CA) on implied terms and The Rafaela S [2005] 2 AC 243 on straight Bills of Lading.

    simon.croall@quadrantchambers.com

    > view Simon's full profile

    Paul Toms

    Paul is an experienced junior barrister practising across a wide range of commercial disputes. He is recommended by the Legal 500 for Commodities and Shipping, by the Legal 500 Asia Pacific for Shipping, and by Chambers UK and Chambers Global for Shipping & Commodities.  Recent directory quotes include, “He has great tactical awareness and a good sense of humour; a very sharp and thorough junior” (Legal 500, 2017) and “He is completely on top of his game in knowing the law and being able to give commercial user-friendly advice” (Chambers UK, 2015).

    Paul has particular expertise in shipping, commodities, shipbuilding, energy and insurance disputes. He appears regularly in the High Court (mainly the Commercial and Mercantile Courts) and in domestic and international arbitrations. Paul has also twice appeared in the Court of Appeal as sole counsel in addition to a number of other appearances alongside a leader.

    Reported cases include:  Moran Yacht & Shipping Inc v Pisarev [2016] 1 Lloyd’s Rep 625 (claim for commission by yacht brokers), Banque Cantonale de Geneve v Sanomi [2016] EWHC 3353 (Comm) (claim under promissory notes executed to secure a trade finance facility provided to an oil trading business), BP Oil International Ltd v Target Shipping Ltd [2013] 1 Lloyd’s Rep 561; [2012] 2 Lloyd’s Rep 245 (claim for repayment of freight mistakenly overpaid raising questions of rectification, estoppel and the constituent elements of a claim in unjust enrichment based on mistake), Transition Feeds LLP v Itochu Europe PLC [2013] EWHC 3629 (Comm) (ss.68/69 challenge to award of FOSFA Board of Appeal), Rohlig (UK) Ltd v Rock Unique Ltd [2011] 2 All ER (Comm) 1161 (reasonableness of standard terms of freight forwarder under UCTA) and Hatzl v XL Insurance Company Ltd [2010] 1 WLR 470 (jurisdictional dispute under CMR).

    paul.toms@quadrantchambers.com

    > view Paul's full profile

  • Increased value policies may not always work as the market expects - David WalshView More

    Fri, 20 October, 2017

    Increased Value (IV) policies are a common feature of Hull and Machinery (H&M) insurance. Their purpose is to enable the assured, in certain circumstances, to recover on the basis of a higher valuation of his ship than that contained in the underlying H&M policy. They do not, however, always seem to work in the way that the market anticipates, as the decision of Mr Justice Leggatt in the case of Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 illustrates.

    The Case

    The case concerned a claim for the CTL of a mega yacht, The Galatea, whose ultimate beneficial owner was the Russian cement magnate Mr Filaret Galchev. The yacht had been insured by the London Market for a total value of €13m. The cover was split into two sections: section A for H&M, which incorporated the American Yacht Form R12 Clauses; and section B for IV, which incorporated the American Institute Increased Value and Excess Liabilities Clauses. As is often the case, the cover of €13m was split 75% - 25% between the H&M and IV sections respectively, i.e. €9.75m on H&M and €3.25m on IV. The same underwriters insured the H&M and IV sections of the policy. 

    On 3rd December 2011, the yacht was destroyed by fire. Underwriters denied the assured’s claim for a CTL on the basis that: (i) they were entitled to avoid the policy for the assured’s failure to disclose before the insurance was placed that it had been advised and believed the yacht to be worth significantly less than the sum insured; (ii) they were entitled to avoid because of a misrepresentation in the proposal form that the market value of the yacht was believed by its managers to be €13m; (iii) the assured had lost any right to sue underwriters because of its failure to comply with policy conditions requiring (a) provision of a sworn proof of loss within 90 days of the casualty and (b) the production of documents reasonably requested by underwriter; and (iv) the assured had failed to give a valid notice of abandonment.

    Trial

    At trial, underwriters succeeded in their argument that they were entitled to avoid for material non-disclosure on the basis that the assured’s marketing of the yacht for €8m and possession of a €7m valuation at the time it was seeking cover for €13m were material facts, which were not disclosed and which induced underwriters to insure on the terms they did.

    The judge also found that, had underwriters not been entitled to avoid, the claim for a CTL on the H&M section of the policy would have failed because the assured had failed to provide a sworn proof of loss within 90 days and failed to tender a valid notice of abandonment. Leggatt J found, however, that whilst these arguments would have been enough defeat a claim for a CTL on the H&M section of the policy, they would not have prevented the assured claiming under the IV section.

    The judge’s justified his conclusions in the following ways. First, he noted that the obligation on the assured to provide a sworn proof of loss within 90 days was a condition precedent found in the H&M section of the policy but not the IV section. Secondly, the judge explained that the IV clauses contained a waiver of interest in the proceeds from the sale or other disposition of the vessel or wreck in the event of a total loss. As such, he concluded that a notice of abandonment was of no possible benefit to the underwriters of the IV section of the policy and therefore, under section 62(7) of the Marine Insurance Act 1906, a notice of abandonment was unnecessary.

    Thus, had underwriters not succeeded in avoiding the policy, it would have produced the highly unusual result of the assured being able to recover €3.25m on its CTL claim under the IV section of the policy, notwithstanding the fact that it could recover nothing under the H&M section.

    Conclusion

    This conclusion is surprising in two respects. First, IV cover is generally understood to be written on the basis that it will not be called upon in the event that the claim for a total loss on the H&M section of the policy fails. It is for this reason that the premium charged for IV cover is usually lower than that charged on H&M.

    Secondly, as the editors of Arnould point out, the approach would have led Leggatt J to conclude (had it been necessary) that if the claim on the H&M section of the policy had been settled as a partial loss, no recovery could have been made on the IV section, but that if there had been no recovery on the H&M section at all (for non-compliance with the clauses applicable to that section), the assured might yet have recovered on the IV section by proving that the yacht was a CTL.

    What can the market do to avoid such outcomes in the future and to ensure that IV cover works in the way that they anticipate? There are two potential options. Perhaps the most obvious solution is to include wording in the IV policy that makes clear that if the claim for a total loss on the H&M policy fails for whatever reason, the assured is not entitled to call on the IV policy.

    An alternative, however, would be to ensure that all condition precedents in the H&M cover are expressly incorporated into the IV cover. This would mean that any breach of condition precedent which is a bar to the assured claiming for a total loss under the H&M policy would automatically also be a bar to a total loss claim under the IV policy.

    Lastly

    The market also needs to be careful about the possible unintended consequences of waiver of interest clauses in IV policies. It is highly unlikely that such clauses were ever intended to provide the assured with a route to claiming a CTL on its IV policy even if its claim for a CTL on the H&M policy fails for want of a valid notice of abandonment. It may be necessary, therefore, to spell out with greater clarity in policy wordings precisely what such clauses are, and are not aimed at achieving. 

    David Walsh was junior counsel for the successful underwriters in Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289. This article was originally published in Insurance Day on 20 October 2017.

    David Walsh

    David is a highly regarded commercial junior with a strong reputation for intellectual rigour, skillful advocacy and client service. He has a broad practice with particular experience of insurance and reinsurance, shipping, commodities, shipbuilding and offshore construction disputes. He appears regularly in trials, interlocutory matters and on appeals in the English courts and also has a strong international arbitration practice, having been involved in numerous arbitrations on ICC, UNCITRAL, ARIAS, FOSFA, GAFTA, LMAA, LCIA and HKIAC terms.

    David is ranked as a leading junior in the Legal 500 UK, Chambers UK, Chambers Global and the Legal 500 Asia Pacific directories, in which he has been described as "incredibly bright and very easy to get on with", "an 'unflappable' dry shipping junior who is particularly noted for his skilful advocacy" and "a 'go-to' junior for marine insurance".

    david.walsh@quadrantchambers.com

    > view David's full profile

  • Quadrant Chambers in the latest Legal 500View More

    Wed, 18 October, 2017

    We are delighted to be recommended as a leading set in 8 different practice areas and are top ranked for Aviation, Shipping and Travel. We have 91 individual recommendations and 46 barristers recommended in this year’s edition.  We have a fantastic 19 new entrants and 7 barristers moving up the rankings.

    Set Overviews:

    Quadrant Chambers is ‘a top-flight go-to set in relation to commercial litigation, shipping and admiralty matters’, with additional expertise in aviation, energy and insurance disputes. For many, it is ‘at the top of its game’ due to the ‘quality of members across all ranks from QC to newly qualified’ and the ‘extremely proactive and approachable’ clerks, who are ‘among the best’. Leading the practice management, Gary Ventura and Simon Slattery are ‘well connected and respected; they know the market well and are very good at building relationships’. Ventura is ‘a tremendous support’ and will ‘never hesitate to put himself out to help if a crisis looms’, and Slattery is ‘hugely experienced’ and ‘sets a good example’.

    Leading set rankings:

    Aviation - Quadrant Chambers is a ‘first-class set for aviation-related disputes’, thanks to its ‘good strength in depth’. 

    Commercial Litigation - Quadrant Chambers has an excellent bench of commercial barristers, well versed in areas such as trade, commodities, shipping and more general contractual disputes. Members have been involved in several groundbreaking cases, including Enviroco v Farstad Supply that went before the Supreme Court, and Caterpillar NI v John Holt & Co.

    Commodities - Quadrant Chambers is ‘an excellent set with supportive clerks, who always deliver barristers of the right expertise and price to suit clients’ needs’. Simon Rainey QC represented Bunge in its landmark Supreme Court appeal against Nidera, while Simon Croall QC acted for Glencore in a $10m claim against Total Kenya concerning contract terms for oil shipments.

    Energy - Particularly recommended for the energy aspects of maritime work, Quadrant Chambers houses Lionel Persey QC, who appeared in Repsol Sinopec Energy UK v Baker Hughes. In other work, Simon Rainey QC represented Statoil in arbitration proceedings against Chevron, Petrobras and other oil major companies, pertaining to the redetermination of shares in oil field production in Nigeria.

    Insurance - Quadrant Chambers is highly regarded for marine insurance matters. Guy Blackwood QC acted for the defendant in AXA Versicherung v Arab Insurance Group, while Simon Rainey QC represented a number of London hull market syndicates in the fallout litigation from Brilliante Virtuoso.

    International Arbitration - Quadrant Chambers has ‘strength in depth in this area’ and a solid reputation for commodities, energy, insurance, shipping and general commercial disputes.

    Shipping - Quadrant Chambers is a ‘top’ shipping and admiralty set with ‘excellent people from its senior silks down to junior barristers’. Key instructions included Court of Appeal case Yemgaz FZCO and others v Superior Pescadores, which examined the meaning of a standard term in bills of lading, and Privy Council matter Borco v Phillips 66 (Cape Bari), the leading case on contracting out of the right to tonnage limitation.

    Travel Law (including jurisdictional issues) - Quadrant Chambers is ‘the go-to set for specialist aviation counsel’ with ‘great knowledge and experience’. 

    A full list of the recommendations can be found here

    We are also recommended in the Legal 500 Asia-Pacific guide for commercial, energy and shipping.

  • The Donald vs The Rocket Man - Simon Croall QC and David WalshView More

    Tue, 26 September, 2017

    Potential Legal Issues Under Time Charterparties for Vessels Operating in the Asia Pacific Region

    The escalating tensions on the Korean peninsula reached new heights following President Trump’s speech to the United Nations General Assembly last Tuesday in which he said that the United States could “totally destroy” North Korea (the DPRK). The DPRK’s Foreign Minister, Ri Yong-ho, who compared Mr Trump's speech to "the sound of a barking dog", warned on Friday that Pyongyang could conduct an atmospheric hydrogen bomb test in the Pacific in response to the US president's threat. Most recently he accused the United States of declaring war on the DPRK.

    The prospect of a hydrogen bomb test in the Pacific by the DPRK raises serious legal questions for ship owners and time charterers operating in the Asia Pacific region. We examine three such questions below.

    Might ports in the region be considered legally “unsafe” by reason of the latest DPRK threat?

    The classic English law definition of a safe port is that given by Sellers LJ in The Eastern City [1958] 2 Lloyd’s Rep 127, in which he stated at page 131 of the report that: “a port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship…”

    This test was recently approved by the Supreme Court in The Ocean Victory [2017] 1 WLR 1793. In that case, the Supreme Court focused, among other things, on the meaning of the words “abnormal occurrence” in Sellers LJ’s formulation. Lord Clarke JSC said at paragraph 25 of the judgment that the key question when considering whether something is an “abnormal occurrence” is to ask: “Was the danger…something rare and unexpected, or was it something which was normal for the particular port for the particular ship's visit at the particular time of the year?”

    Based on this approach it is hard to see how the threat of a hydrogen bomb test in the Pacific could, in the current circumstances, be anything other than an “abnormal occurrence” in the context of any potentially affected port. Assuming this is right, it seems likely that, for the time being, ports in the region will not be considered unsafe as a matter of English law: whilst the spectre of a hydrogen bomb test might be a danger to which a ship is exposed which cannot be avoided by good navigation or seamanship, it will almost certainly be an “abnormal occurrence” so far as particular ports are concerned.

    The position might be different, however, if extra-territorial weapons tests more generally by the DPRK became a regular occurrence. It might then be argued that for ports potentially affected by such tests the associated dangers had become features of such ports.

    It is also important to remember that the charterers’ obligation is to nominate a port which is prospectively safe. Thus, in The Evia (No. 2) [1982] 2 Lloyd’s Rep 307, it was held that although the vessel had become trapped after discharging at the port of Basrah during the Iran/Iraq war, this was unexpected at the time the port was nominated and so the charterers were not in breach of the safe port warranty. Unless there is greater clarity from the DPRK about where precisely such a test might take place, it would appear difficult to argue that any particular port in the region is prospectively unsafe.

    Might owners be entitled to refuse to sail to the region in light of the threat by relying on war risks clauses?

    Time charters often incorporate one of the BIMCO war risks clauses and the 1993 Conwartime clauses are often seen reproduced in full towards the end of the charterparty terms. The provisions entitle owners, among other things, to refuse to sail to areas which, in the “reasonable judgement of the Master and/or the Owners, may be, or are likely to be, exposed to War Risks”.

    What do these words mean?

    The words “reasonable judgement of the Master and/or the Owners” import an element of objectivity into the analysis. The court or tribunal considering the clause would be asking what a reasonable owner or master would think in the particular circumstances. The subjective instincts of a particularly sensitive owner or master would not be relevant.  

    In The Triton Lark [2012] 1 Lloyd’s Rep 151, Teare J suggested that the degree of probability required by the words "may be, or are likely to be” could include an event which had a less than an even chance of happening but would not include a bare possibility.

    “War Risks” are defined broadly in the clauses and include “any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which, in the reasonable judgement of the Master and/or the Owners, may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel.”

    In light of the above, one can certainly see scope for arguments between owners and charterers about whether orders to the potentially affected region can be refused. The tests themselves (especially set in a context where DPRK have indicated that the regard the US as having declared war upon them) might well be regarded as an act of war or a war-like operation. A more difficult question is likely to be the stage at which the risk of being exposed to a weapons test (or similar action) becomes more than a bare possibility for a particular vessel under time charter. This difficult issue is complicated further by the apparent unpredictability of the DPRK regime and the hyperbolic rhetoric which has recently been used on both sides.

    If the DPRK’s threat materialises, could owners or charterers cancel their charters by relying on the war cancellation provisions?

    A hydrogen bomb test in the Pacific, particularly if takes place anywhere near US territories such as Guam, could be construed by the US as an act of war by the DPRK. Indeed, as the DPRK’s most recent comments suggest, it is possible to envisage events short of such a test that will be regarded by one or both sides as meaning there is a state of war.

    War cancellation provisions are commonplace in time charters and can be found, for example, in Shelltime 4 (clause 33), NYPE 93 (clause 32), Asbatime (optional clause 31) and in the pre-2001 version of the Baltime (clause 21(E)). They do not usually require a formal declaration of war to be engaged (see for example the NYPE 93 form) but they are usually drafted by the parties such that the right to cancel arises only when two or more identified parties are at war. Clauses often identify those parties as the permanent members of the UN Security Council (the P5); sometimes the member states of the European Union and the flag state of the vessel are also included. One might not, therefore, expect such clauses to respond to an outbreak of war between the DPRK and the US.

    However, the Sino-North Korean Mutual Aid and Cooperation Friendship Treaty, signed between the PRC and DPRK in 1961, states in Article 2 that the two states will undertake all necessary measures to oppose any country or coalition of countries that might attack either nation.

    Might this open the door to arguments by owners or charterers that they are entitled to cancel because there has been an outbreak of war between two members of the P5, even if there are no actual hostilities between the US and PRC? We suspect such an argument would be difficult. The decision of the Court of Appeal in The Northern Pioneer [2003] 1 Lloyd’s Rep 212 suggests that the English courts would probably construe the ambit of such clauses restrictively. (In that case, NATO operations in Kosovo were not deemed to be a “war” for the purposes of the war cancellation clause.) The answer will, in the end though, depend on the precise formulation of the war cancellation clause in question. Indeed, given the current tensions, owners and charterers trading in the Asia Pacific region may think it worthwhile to include a more extensive list of countries in their war cancellation clauses than had hitherto been considered necessary.

    Conclusion

    As the war of words between the US and the DPRK intensifies, it is inevitable that some owners will become increasingly jittery about the prospect of sending their vessels into the region. They would no doubt be well advised to check that they have the necessary protections written into their time charters as it surely only a matter of time before these issues arise and are tested before courts and arbitration tribunals.

    Simon Croall QC

    Simon Croall is an established commercial silk who has appeared in every court (including twice in the House of Lords). He is a sought after trial advocate as well as being respected in the appellate courts. In recent years much of his work has been in the context of International Arbitrations.

    He led the team for Owners in landmark House of Lords case on remoteness in contract damages Transfield Shipping v Mercator Shipping ("The Achilleas") [2009] 1 AC 61. Recent reported highlights include another important case on damages Fulton Shipping v Globalia (The New Flamenco) in both the Court of Appeal [2015] EWCA 1299 and below [2014] 2 Lloyd’s Rep. 230, Essar Shipping v Bank of China [2015] EWHC 3266 on factors relevant to the grant of anti suit injunctions, AET Inc v Arcadia Petroluem (“The Eagle Valencia”) [2010] 2 Lloyd’s Rep. 257 (Court of Appeal), Mediterranean Salvage v Seamar [2009] 2 Lloyd's Rep. 639/ [2009] 2 All ER 1127 (Court of Appeal) on implied terms and Dalwood Marine v Nordana Lines (“The Elbrus”) [2010] 2 Lloyd’s Rep. 315.

    simon.croall@quadrantchambers.com

    > view Simon's full profile

    David Walsh

    David is a highly regarded commercial junior with a strong reputation for intellectual rigour, skillful advocacy and client service. He has a broad practice with particular experience of insurance and reinsurance, shipping, commodities, shipbuilding and offshore construction disputes. He appears regularly in trials, interlocutory matters and on appeals in the English courts and also has a strong international arbitration practice, having been involved in numerous arbitrations on ICC, UNCITRAL, ARIAS, FOSFA, GAFTA, LMAA, LCIA and HKIAC terms.

    David is ranked as a leading junior in the Legal 500 UK, Chambers UK, Chambers Global and the Legal 500 Asia Pacific directories, in which he has been described as "incredibly bright and very easy to get on with", "an 'unflappable' dry shipping junior who is particularly noted for his skilful advocacy" and "a 'go-to' junior for marine insurance".

    david.walsh@quadrantchambers.com

    > view David's full profile

  • Can Cyber Risk Challenge Traditional Concepts such as Seaworthiness? Luke Parsons QC & Julian ClarkView More

    Thu, 14 September, 2017

    By Luke Parsons QC and Julian Clark, Hill Dickinson LLP 

    This article was originally published in The Charterer, the newsletter of the Charterers P&I Club on 1 Aug 2017.

    Cyber Risk and security in the shipping industry is a relatively new concern that has only begun receiving industry-wide attention over the past five or so years. This is largely a result of the increased frequency and publicity of cyber-attacks in other high value industries, and the increased integration of the internet and satellite-based information exchange system into ships to improve safety, their operational capabilities, and comply with international standards and Flag Administration requirements. Once again, however, the drive for greater efficiency and safety has opened up an entirely new category of risk.

    New though the concern may be, the reality is that most legal issues that will arise as a consequence of cyber-attacks will fall to be considered against a legal framework that is now centuries old. In this piece, we focus on one (albeit, a significant) element of that traditional legal frame- work: the seaworthiness of the vessel.

    Various hypothetical scenarios involving the compromise of a ship’s cyber security may be envisaged: the ECDIS or AIS systems on board may be attacked to facilitate piracy or other criminal or terrorist objectives; shippers of dangerous cargoes could electronically make changes to cargo manifests so as to give the appearance of carrying non-dangerous cargo; or criminals intent on stealing high value cargo could facilitate such a theft by electronically manipulating cargo handling systems (as recently took place in a major European port).

    In each scenario, there is high likelihood of legal claims and cross-claims involving shipowners, charterers, cargo interests, and insurers: in the piracy scenario shipowners (or their subrogated underwriters) may seek general average contributions in respect of any ransom and other payments; in the dangerous cargo scenario an explosion or a fire causing damage to other cargo will give rise to significant claims; and in the theft scenario, a claim by the owners of the stolen property can be expected. The adequacy of the ship’s preparedness to deal with the nature of the relevant cyber-attack will almost certainly fall to be considered in each case.

    In this respect, it is worth remembering three central tenets of the traditional concept of the seaworthiness of a vessel:

    First, a ship is seaworthy if she has that degree of fitness which the ordinary careful owner would re- quire his vessel to have at the commencement of her voyage having regard to all the probable circumstances of it. In short, the question is: would a prudent owner have required it should be made good before sending his ship to sea, had he known of it?

    Second, a vessel’s seaworthiness extends beyond its physical fitness of the relevant voyage. It extends to ensuring that the vessel has (i) sufficient, efficient and competent crew, and (ii) adequate and sufficient systems on board to address matters that might be encountered during the relevant contractual voyage.

    Third, whether a vessel is seaworthy is to be considered by reference to the state of knowledge in the industry at the time.

    Viewed against these tenets, the first observation in the context of the threat of cybercrime in shipping is that its precise parameters   are currently unknown. It will, however, become increasingly difficult for shipowners to argue successfully that the state of knowledge in the industry is such as to permit them to do nothing to address the potential of cyberattacks. P&I Clubs, international organisations, and critically, the IMO, have done a great deal over the past few years   to raise awareness of the threat which cyber security poses to the shipping industry. Take for example,  the “Be Cyber Aware At Sea” campaign supported by many significant players  in the industry, the “Guidelines on Cyber Security On Board Ships” produced by BIMCO, CLIA, ICS, INTERCARGO, and INTERTANKO in February 2016, and the IMO’s recent “Interim Guidelines on Maritime Cyber Risk Management” is- sued on 1 June 2016. If it is not there already, the industry is certainly moving closer to a world where shipowners will be expected to take positive steps to address potential cyber-crime risks that may arise in the course of a voyage, in order for the vessel to be considered seaworthy.

    Precise positive steps that would be required to ensure the seaworthiness of a ship in this respect are beyond the scope of this piece. However, it is noteworthy that two of the central themes of most of the publicly-available guidance on how to address the risk are described in terms that closely mirror two of the central tenets of seaworthiness – the implementation of cyber risk management systems and protocols (both on shore and at sea) designed to avoid, transfer, and mitigate the risk of cyber-attacks; and the training and education of relevant crew and personnel on the identification and mitigation of cyber-risks. In the absence of being able to show positive steps taken in line with either of these themes, a shipowner caught in a hypothetical claim of the type discussed above may well find itself in an uphill battle to establish the fitness of its vessel.

    The following are just two examples of recent cases that involve these issues. In case one unidentified cyber terrorists managed to hack remotely into the stability programs of an offshore platform. They were able to make changes that destabilised the rig which in turn led to its shut down and the loss of production for 48 hours. No direct demand or responsibility statement was received and it is believed that this could well have been the action of a protest group or simply an individual “trying their hand” at infiltrating the systems.

    Case two involved the hacking into accounting systems of both operators and their brokers changing two digits in a standard bank account number.  This lead to the mis-payment of funds to   a re-directed bank account. Initially when a query was raised the hacker (who had planted a virus in the system) was able to intercept email correspondence in order to pose as the client and explain the reason for the change in details. It was only due to the perseverance of the accounts personnel that the fraud was discovered and steps taken to intercept the accounts to prevent funds being removed from the duplicate account.

    From a charterers’ perspective, as highlighted during a series of presentations recently given by the Club to charterers and operators in China, there are a number of areas where in the future charterers’ liability could well be extended into the arena of cyberattack. Take for example the charterers’ obligations in relation to providing a safe port. In circumstances where a vessel suffers damage as a result of a ports cyber security being compromised and it can be shown that the port had inadequate cyber security systems in place, could it be argued that the port is rendered unsafe for the vessel in question? Likewise in relation to the obligations for safe stowage which often may rest with charterers as a matter of contract, in circumstances where the loading operation is affected due to a cyber-attack could resulting damage, both physical and financial, ultimately be found to  be the responsibility of the charterer?

    Currently there is no direct case law which considers such issues in a maritime context. Further the extent to which existing clauses in commercial contracts and insurance policies effectively address the concerns is unclear, not least as every day new developments in cyber technology modify the way in which such crimes are carried out. While previously existing clauses were often aimed at “computer viruses” it is now regularly the case that the infiltration is not by means of something which can properly be termed a virus. Also the intentions of the person responsible may not fall within existing definitions of “intentional harm” - see case one above.

    Luke Parsons QC and Julian Clark (Global Head of Shipping at international law firm Hill Dickinson LLP)  

    Luke Parsons QC

    Luke is Head of Quadrant Chambers and a Commercial and Admiralty silk whose practice encompasses insurance and reinsurance, international trade, energy, sale of goods, banking, commercial contracts, and shipping. Shipping Silk of the Year at the Chambers UK Bar Awards, 2014, Luke is ranked by Chambers UK. Legal 500 UK, Chambers Global and the Legal 500 Asia Pacific legal directories. He has been described by the directories as: “…an excellent team leader and team player…who gives pragmatic, sound, commercial advice…” Legal 500 2014 and “very persuasive in advocacy, down-to-earth and easy to work with…..he has the ability to boil down different issues into a few important points that are easy for clients to understand.” Chambers UK 2016.

    Luke is often called in to handle the highest value, most complex claims, involving coordinating large teams of experts and has acted on many precedent-setting cases in the High Court, and Court of Appeal.

    Given the frequently international dimension of his practice, Luke has extensive experience in dealing with foreign law and multi-jurisdictional disputes.  In particular he frequently acts in arbitrations with a cross-border element and is experienced in making applications to the High Court in support of English arbitrations and also in support of foreign arbitrations in the English courts and advises on the enforcement of awards under the New York Convention.

    Before coming to the Bar, Luke worked with a firm of international Lloyd’s brokers and then with a multi-national underwriting company. This experience in the London and International Markets assists with his practical and commercial approach to disputes whilst maintaining the intellectual rigour for which he is well-known.

    > view Luke's full profile

    luke.parsons@quadrantchambers.com

  • Shortlisted for three awards at The Chambers UK Bar Awards 2017View More

    Wed, 30 August, 2017

    We are delighted to announce that Quadrant Chambers, Luke Parsons QC and Nevil Phillips have been shortlisted for The Chambers UK Bar Awards 2017 in association with Saunderson House.

    • Shipping Set of the Year
    • Luke Parsons QC – Shipping Silk of the Year
    • Nevil Phillips - Shipping Junior of the Year

     

    The awards ceremony will be held at The London Hilton on Park Lane on Thursday, 26th October 2017. Full nominations can be viewed here.

     

  • Applications to remit sentences for contempt of court - Jeremy RichmondView More

    Wed, 30 August, 2017

    Jeremy Richmond recently appeared for an overseas national in the Commercial Court case A v. B [2017] EWHC 2116 (Comm) where he successfully obtained the full remission of an 18-month prison sentence for contempt of court arising from breaches of court orders.

    Based on the particular circumstances of the case and further evidence, the Court granted full remission notwithstanding the fact that Jeremy's client had not served any of his sentence and for good reason did not appear at the application itself.

    The Judgment can be found here.

     

    Jeremy Richmond

    Jeremy specialises in commercial and modern chancery law.  He is described in Chambers and Partners as a “superb advocate” whose “expertise in chancery, commercial and banking matters is a useful complement to his insolvency skills”. 

    Jeremy’s practice encompasses a broad range of matters including contentious insolvency (covering a wide variety of cross-border insolvency issues in particular in relation to insolvency / restructuring in Chambers’ core areas of shipping, commodities, insurance and aviation e.g. Jeremy has advised and / or appeared for key parties in OW Bunker, Hanjin Shipping and Arik Airlines), company law (including directors misfeasance), shareholder and joint venture disputes, sale of goods (both international and domestic), fraud (with an emphasis on asset recovery) and all aspects of general commercial law.  He regularly appears in the Chancery Division as well as in the Commercial and Mercantile Courts.  Jeremy often works in conjunction with Counsel from other jurisdictions and with experts. 

    Many of his cases involve a cross-over between ‘modern’ chancery and commercial litigation. 

    Jeremy was admitted to the New York Bar in 1996 and has worked as a New York lawyer for blue chip law firms in Manhattan and then the City.  

    > View Jeremy's full profile

    jeremy.richmond@quadrantchambers.com

  • Which has priority “design” or “performance”? It’s all about performance - Jonathan ChambersView More

    Thu, 17 August, 2017

    MT Hojgaard AS v E.ON Climate and Renewables UK Robin Rigg East Ltd [2017] UKSC 59

    Jonathan Chambers

    This case should be required reading for those in the offshore infrastructure and ship-building industries and sets out the modern approach to conflicting design and performance obligations under infrastructure contracts and who bears the risk when compliance with design does not result in contractual performance.

    The Issue

    The issue before the Supreme Court was whether a designer and manufacturer (MTH) of the foundation structures of two offshore wind farms at Robin Rigg in the Solway Firth were in breach of contract. The structures failed shortly after their installation.

    The problem arose because under the contract MTH was required to design and install foundations which both (a)  complied with a particular design principle (called “J101”) and which also (b) “ensure[d] a lifetime of 20 years”.

    MTH produced the foundations in accordance with the required design principle but within 2 years the foundations failed. This was because the design principle (J101) contained a mathematical error such that compliance with the design standard could not give a lifetime of 20 years.

    This was not the first time that the English Courts have been called on to consider a contract which includes two terms, one requiring the contractor to provide an article which is produced in accordance with a specified design, the other requiring the article to satisfy specified performance criteria; and where those criteria cannot be achieved by complying with the design. However it is the most complete examination of the issue by the Supreme Court to date.

    The Decision

    The Supreme Court decided that MTH were liable for the costs associated with the failure of the foundations on the basis that:-

    1. The reconciliation of the conflicting terms and the determination of their combined effect is to be decided by reference to ordinary principles of contractual interpretation (Wood v Capita Insurance Services Ltd [20l7] 2 WLR l095);
    2. A contractor who bids on the basis of a defective specification provided by the employer only has himself to blame if he does not check their practicality and they turn out to be defective;
    3. Where a contract contains terms which require an item (i) which is to be produced in accordance with a prescribed design, and (ii) which, when provided, will comply with prescribed criteria, and literal conformity with the prescribed design will inevitably result in the product falling short of one or more of the prescribed criteria, it does not follow that the two terms are mutually inconsistent.
    4. Instead, the proper analysis is likely to be that in most contracts the contractor has to improve on any aspects of the prescribed design which would otherwise lead to the product falling short of the prescribed criteria, and in other contracts, the correct view could be that the requirements of the prescribed criteria only apply to aspects of the design which are not prescribed.
    5. Thus the English Courts “are generally inclined to give full effect to the requirement that the item as produced complies with the prescribed criteria, on the basis that, even if the customer or employer has specified or approved the design, it is the contractor who can be expected to take the risk if he agreed to work to a design which would render the item incapable of meeting the criteria to which he has agreed” (Lord Neuberger paragraph 44).

    Conclusion

    The trenchant comments of the UK Supreme Court ought to be a warning to manufacturers working to design principles that they need to both adopt more careful drafting of their guarantees of performance limiting these where necessary and to check that compliance with design requirements will in fact give the desired performance before signing contracts.

     

    Jonathan Chambers

    Jonathan has a broad practice covering all aspects of commercial and transport law.  He is consistently ranked by Chambers UK and Legal 500 as a Leading Senior Junior  with Chambers UK (2018) commenting that he is “Noted by peers for his meticulous preparation, strong advocacy skills and easy manner with clients” and Legal 500 (2017) describing him as "...always well prepared".

    Jonathan has a strong international practice and he is qualified to practise in England & Wales, Northern Ireland (practising) and Australia (currently non-practising). He has also advised on disputes involving Australia, Canada, the Channel Islands, Hong Kong, Northern Ireland, Scotland, Singapore, and the United States of America.

    > View Jonathan's full profile

    jonathan.chambers@quadrantchambers.com

  • Insurers’ Duty to Speak: Silence is not always golden - Tim MarlandView More

    Fri, 11 August, 2017

    In Ted Baker v AXA [2017] EWCA Civ 4097 the Court of Appeal has for the first time considered the issue of whether and in what circumstances an insurer might be under a duty to speak during the claims process, ie is required to make its position plain in order to avoid being estopped from running certain procedural defences in due course. The Court of Appeal did not confine the duty to speak to insurance contracts but made it clear that the principle was of general application.

    The dispute in question arose out of the sustained theft over a number of years of stock from Ted Baker’s distribution centre by a trusted employee. When the cause of the losses became apparent, Ted Baker duly claimed under its Commercial Combined insurance, in respect of which AXA was the lead underwriter, for both stock losses and loss of profit as a result of the thefts.

    Trial
    In a trial of preliminary issues centred around the coverage afforded by the policy the defendant insurers “lost on every issue” (CofA judgment para. [2]) having run a defence which “left “no stone unturned” and seemed to ignore all sense of proportionality” (Ted Baker v AXA [2014] EWHC 4178 at [19] per Eder J). At the subsequent trial of issues relating to notification, alleged breach of condition precedent and quantum, at first instance Eder J found in favour of insurers on breach of condition precedent (the non-provision of management accounts which had been requested by the loss adjusters) and quantum: essentially the finding was that it was impossible to find any single loss in the series of thefts which exceeded the policy, deductible on the balance of probabilities. What that means for business interruption claims of a similar nature is likely to be a matter of some debate.

    The learned judge noted that: “I have to say that I do not reach this conclusion with any great enthusiasm having regard, in particular, to the facts that (i) as I previously concluded in the earlier trial of preliminary issues, the policy covered theft by an employee; (ii) there is no doubt that TB suffered substantial losses arising out of the thefts which I have held were carried out by JON who was, of course, one of TB's employees; (iii) such losses amounted, even on the defendants' experts' evidence, to some £2.16 million; and (iv) the legal costs apparently incurred by TB were in excess of £2.5 million even before the beginning of this trial.” Ted Baker v AXA [2014] EWHC 3548 at [175].

    Appeal
    Ted Baker duly appealed. At the Court of Appeal, as it had been throughout, Ted Baker was represented by Tim Marland of Quadrant Chambers and Stephen Cogley QC, XXIV Old Buildings, instructed by Nichola Evans of Browne Jacobson LLP.

    Although Ted Baker was ultimately unsuccessful in its attempts to reverse the judge’s findings on quantum, in reversing his decision on the condition precedent point the Court of Appeal addressed directly for the first time the circumstances in which an insurer might be under a duty to speak.

    The factual scenario was that the loss adjuster appointed by insurers had, as was routine, requested a ‘shopping list’ of documentation which he required to substantiate the claimed quantum. One of the items on the list was copies of Ted Baker’s management accounts for the relevant years. Some of this documentation (although not the management accounts) would have been time-consuming and expensive to produce. Ted Baker, in concert with its broker, therefore took the position that it was not prepared to produce the documentation until either liability was admitted in principle or insurers confirmed that the costs of retaining accountants to produce the information would be covered by the Professional Accountant’s Clause (‘PAC’) in the policy.

    The loss adjuster left matters stating that he would take instructions from AXA and revert. In the event he never did revert; the requests were not renewed and at no stage until AXA filed its pleaded defence in the case was the point taken by insurers that the failure to produce the requested documentation was a breach of condition precedent.

    At first instance Eder J had held that, because the management accounts would have been easy to produce and because their production would not have required outside accountants to be involved, they were not covered by any ‘agreement to park’ production of material until the instructions of AXA were received and communicated by the loss adjuster and the defence based on breach of condition precedent succeeded.

    The Court of Appeal disagreed. They agreed with the judge that there was no unequivocal agreement that production of the management accounts was parked, and agreed that those accounts were not covered by the PAC. They did, however, find that in circumstances where insurers knew that the insured regarded the production of all quantum documentation as parked pending resolution of liability issues, a duty to speak arose if that was not in fact the position as far as insurers were concerned. In staying silent and then subsequently seeking to take the point as a breach of condition precedent, AXA was acting with the requisite degree of ‘impropriety’ and the estoppel founded on breach of the duty to speak succeeded.

    Conclusion
    The importance of this judgment is that it establishes for the first time that there may be circumstances where an insurer is obliged to spell out to an insured that its actions (or inactions) during the claims process may risk jeopardising a claim. This is in spite of the fact that, as was common ground between the parties, there is no general duty on insurers to warn an insured of the need to comply with policy conditions, in particular there is no general duty to warn an insured that its conduct is or might amount to a breach of a condition precedent or that the insurer will later insist on procedural requirements having been met (see eg Diab v Regent Insurance [2006] UKPC 29).

    Moreover, the Court of Appeal did not confine this to insurance contracts. Although Sir Christopher Clarke observed that the fact that insurance is a contract of utmost good faith “will, if it does anything, increase the likelihood of a party having a duty to speak” (para [89]) he made it clear that the principle was of general application. Drawing on previous case law in the general contractual arena, the Court of Appeal found that the duty to speak “may arise if, in the light of the circumstances known to the parties, a reasonable person in the position of the person seeking to set up the estoppel would expect the other party acting honestly and responsibly to take steps to make his position plain.” (para.[82])  As to previous suggestions that some kind of impropriety or dishonesty was an essential ingredient, the Court observed that “An estoppel of this nature in a contract of this kind does not require dishonesty or an intention to mislead; nor any impropriety beyond that inherent in the conclusion that the insurers should have spoken but did not.”  (para.[88]). As such, it should be easier in the future to establish an estoppel of this kind in the right factual circumstances.

    A copy of the judgment is available here.

    Tim Marland

    Tim is consistently recommended as a leading junior by the Chambers & Partners and Legal 500 legal directories where he is praised as: "the epitome of what we look for in a modern barrister; he doesn't just sit in chambers, but gets involved in cases and sees clients with you…”"He's good at giving strong, commercial, practical and down-to-earth advice..” and “is able to guide a court through complex case law in a very simplistic way and convey technical points that would otherwise take days at trial". Tim is currently the only practising junior listed in Who’s Who Legal: Transport 2017 and recommended in the Insurance & Reinsurance Barristers Guide 2017.

    Tim has particular expertise in insurance, travel regulation and aviation, including aviation-related finance. Prior to joining Chambers, Tim worked for a number of years at Lloyd's, specialising in contentious insurance and reinsurance matters, predominantly in the field of aviation. Tim's experience includes handling excess of loss problems and direct insurance coverage issues arising out of the September 11th terrorist attacks and liability issues arising in multi-jurisdictional aviation disasters. Tim's industry experience has given him invaluable knowledge of the workings of the London insurance market and the commercial aspects of case handling.

    Tim's practice continues to be aviation and insurance-focused, but embraces all aspects of commercial law and he appears regularly in the High Court and Court of Appeal, as well as in arbitration and mediation.

    Tim is co-editor of Margo on Aviation Insurance (4th Edition).

    tim.marland@quadrantchambers.com

    > read Tim's full profile

  • Procedural agreement to accept service is not a jurisdiction agreement for the purposes of the Brussels Regulation Recast - John Russell QC and Tom BirdView More

    Fri, 04 August, 2017

    John Russell QC and Tom Bird win in Court of Appeal:

    The sole issue on this appeal was whether an interlocutory agreement reached by the parties’ solicitors in correspondence constituted an exclusive jurisdiction agreement in favour of the English courts within the meaning of Regulation (EU) No 1215/2012 on jurisdiction and enforcement of judgments in civil and commercial matters (“the Brussels Regulation Recast”).

    The judgment can be found here.

    The agreement in question concerned the appellant’s application to join two French companies, PHP Trading and SODIPAM, as third and fourth parties to additional claims. As part of an exchange of correspondence on procedural issues, the respondents’ solicitors agreed to accept service of the joinder application “without prejudice to their position on jurisdiction” and, if the application were successful and the respondents’ jurisdictional challenge failed, to accept service of the additional claims.

    Although the appellant succeeded on its joinder application, the judge stayed the additional claim under article 29 of the Brussels Regulation Recast because, before the hearing, PHP Trading and SODIPAM had issued proceedings in the French court, which became first seised of the dispute.

    On appeal, the appellant argued that the respondents’ agreement to accept service of the additional claims amounted to an exclusive jurisdiction agreement within the meaning of the Brussels Regulation Recast. Agreeing to accept service of the additional claims, the appellant submitted, was inconsistent with a stay of the proceedings.

    The Court of Appeal dismissed the appeal. It noted the practical difference between an agreement about conferring jurisdiction on the courts of a Member State and an agreement, such as the one in the present case, about handling interlocutory matters. There was nothing in the correspondence which looked like a jurisdiction agreement, let alone could be clearly said to be one.

    Two points of interest arise:

    Although the court ultimately rejected the appellant’s position, the facts provide a salutary reminder, whenever drafting interlocutory correspondence, to be alert to the possibility that a straightforward agreement to accept service might have unforeseen jurisdictional consequences.

    The Court of Appeal left open an interesting point of EU law. The parties disagreed as to the scope of application of EU law when determining whether there was a jurisdiction agreement for the purposes of Article 25. The appellant’s argument was that the autonomous EU concept was simply¸ “an agreement”. If there was an Article 25 agreement, then everything else was a question of construction to be determined by the national law. The respondents contended that the EU concept was “an agreement conferring jurisdiction” and so at an EU law level the court had to be satisfied that jurisdiction was clearly and precisely conferred. The Court of Appeal considered it unnecessary to decide this point, since even on the appellant’s preferred approach, they lost as a matter of construction.

    John Russell QC   Tom Bird
     

    John Russell QC is an experienced and determined advocate and has acted as lead Counsel in numerous Commercial Court trials, international and marine arbitrations and appellate cases.

    "The kind of barrister you would want to have on your side. He's not afraid to challenge anyone on anything." "He's bright, commercial, user-friendly and he delivers when you need it."  (Chambers UK Bar 2017)

    John accepts instructions in many fields of commercial dispute resolution with a particular focus on shipping, commodities, international trade and marine insurance. He is ranked in the Legal 500 and Chambers & Partners in Shipping, Commodities, Aviation and Travel.

    john.russell@quadrantchambers.com

     

    Tom Bird has a broad commercial practice with a focus on shipping, commodities, aviation, insurance and reinsurance. 

    Chambers UK recommends him as “a rising star ... He's responsive, accessible, bright, tenacious, and user-friendly."

    Tom has represented clients in the High Court, Court of Appeal and Supreme Court. He is equally at home in arbitration. His significant cases include appeals to the Supreme Court in The DC Merwestone – a marine insurance dispute concerning the fraudulent device doctrine – and Stott v Thomas Cook, the leading case on the exclusivity of the Montreal Convention and its relation to EU law.

    tom.bird@quadrantchambers.com