Source: https://abs.in.th/doc-fb-march-2009-reed-smith-rs-shipping-bulletin-1
Timestamp: 2017-08-23 21:21:43
Document Index: 785664912

Matched Legal Cases: ['ART 36', 'ART 36', 'art.36', 'art 36', 'art 36', 'art 36', 'art 36', 'art.5', 'art.1', 'art.5', 'art.31', 'art.31', 'art.31', 'art.31']

Absinth - MARCH 2009 REED SMITH RS SHIPPING BULLETIN 1 ARBITRATION.…
MARCH 2009 REED SMITH RS SHIPPING BULLETIN 1 ARBITRATION.…
MARCH 2009 REED SMITH RS SHIPPING BULLETIN 1 ARBITRATION .................................................................................... 2 1.1 LMAA INTERMEDIATE CLAIMS PROCEDURE .................................... 2 2 COSTS .............................................................................................. 3 2.1 PART 36 OFFER – COSTS ............................................................. 3 3 JURISDICTION ................................................................................... 4 3.1 ALLOCATION OF JURISDICTION .................................................... 4 3.2 SERVICE REGULATION – EXTRAJUDICIAL DOCUMENTS .................... 4 4 MISCELLANOUS ................................................................................. 6 4.1 CMR .......................................................................................... 6 5 PRACTICE ......................................................................................... 7 5.1 CPR – AMENDMENTS ................................................................... 7 5.2 NON-PARTY DISCLOSURE ............................................................ 7 5.3 UNLESS ORDER .......................................................................... 7 5.4 WITHOUT PREJUDICE CORRESPONDENCE ...................................... 8 6 SHIPPING.......................................................................................... 9 6.1 CONTRACT OF INDEMNITY / GUARANTEE ....................................... 9 6.2 LATE REDELIVERY .................................................................... 10 6.3 RULE B ATTACHMENTS .............................................................. 11 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN 1 ARBITRATION 1.1 LMAA INTERMEDIATE CLAIMS PROCEDURE The London Maritime Arbitrators Association (LMAA) has introduced a new procedure to limit the cost of arbitrating claims of between US$100,000 and US$400,000. The Intermediate Claims Procedure 2009 has been designed to enable any party using arbitration to settle a commercial dispute to predict the cost of proceeding from the outset of the case. Full details of the new LMAA Intermediate Claims Procedure 2009 are available on the LMAA website at: - http:// www.lmaa.org.uk -2- 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN 2 COSTS 2.1 PART 36 OFFER – COSTS In Fitzpatrick Contractors Ltd v Tyco Fire & Integrated Solutions (Uk) Ltd (formerly Wormald Ansul (Uk) Ltd) (No.3) – Lawtel 3.3.09 the court determined costs where one party had made a CPR part.36 offer that was not accepted within the relevant time period for acceptance but was subsequently accepted prior to the trial. The Claimant had made a CPR part 36 offer to settle litigation between the parties. The relevant period for acceptance expired and there was a trial of preliminary issues on which the Claimant was substantially successful. When the Defendant later accepted the Part 36 offer, the Claimant contended that had there been a trial and damages were recovered in the same amount as the part 36 offer it would have been entitled to indemnity costs, unless the court concluded that it was unjust to make such an order, because of the express words of r.36.14. The TCC held that as there had been a valid acceptance of a valid part 36 offer the starting point was r.36.10. There was no reference in r.36.10(4) and (5) to a presumption that, unless it was unjust to do so, the court would order a late-accepting defendant to pay a claimant's costs on an indemnity basis. The usual basis for the assessment of costs was the standard basis and if there was an entitlement to seek indemnity costs then that was expressly spelled out in the CPR. A party could seek indemnity costs in one of two ways, either because there was a presumption that such costs would apply, for example under r.36.14 or because it could demonstrate the necessary evidence of conduct under r.44.3. There was no basis under the CPR which would allow the court to order indemnity costs for any other reason or on any other basis. Accordingly, the Claimant's claim for indemnity costs failed as a matter of principle. An indemnity costs presumption should not be imported into r.36.10. There was a right to claim recovery of indemnity costs but no rebuttable presumption that such costs would be recovered. Whilst the case was complex, the parties' approach to it was generally reasonable on both sides and a settlement three months before trial, at a figure that represented about half of the Claimant's claim, was an unexceptional result. It was impossible to say that there was any basis on which the Claimant could be entitled to have its costs assessed on an indemnity basis under r.44.3. The Claimant made a reasonable Pt.36 offer and it took the Defendant almost a year to conclude that the offer should be taken. During that period the Claimant incurred considerable further costs. In all the circumstances this was a case where it was appropriate to order interests on costs at one per cent over base rate. The Claimant was also entitled to an interim payment of costs. -3- 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN 3 JURISDICTION 3.1 ALLOCATION OF JURISDICTION In Youell & Ors v La Reunion Aerienne & Ors – Lawtel 11.3.09 the Appellant French insurers appealed against a decision that the court had jurisdiction under the Brussels Regulation (44/2001) to determine a claim of the Respondent English insurers. Both the French and English policies were treated as being governed by French law. The French insurers settled a third party claim on the English insurers' behalf, relying on an alleged irrevocable authority of the Respondent to conclude claims settlements on the Respondent's behalf. The Respondent maintained that the settlement was reached without any authority and without their knowledge or involvement and declined to pay. The Appellant purported to commence arbitration in Paris in accordance with a Paris arbitration clause in the French policy as a means of pursuing the contribution claim against the Respondent. However, the Respondent issued a claim in England for a declaration of non-liability to the Appellant under a contract, the existence of which the Appellant asserted but the Respondent denied. The judge at first instance held that art.5(1)(a) of the Regulation was applicable notwithstanding that the Respondent was denying he existence of the contract and that art.1(2)(d) did not oust the jurisdiction of a court under art.5(1) merely because the contract to which the claim related contained an arbitration clause. The Court of Appeal held that the judge at first instance had been entitled to so hold. The mere fact that the claim was the subject of an arbitration agreement did not deprive the court, which could otherwise determine the substance of the claim, of its jurisdiction. It was the nature of the claim which was critical. The principle claim by the Appellant was a debt claim based on an indemnity arising from an alleged mandate given by the Respondent to the Appellant. There was a subsidiary claim for damages arising from an alleged breach of the policy. There could be no doubt that those claims were not covered by the arbitration exclusion. The mere fact that the Respondent's claims were the mirror image of claims which were being asserted by the Appellant in the French arbitration to which the Respondent apparently had not agreed did not make them claims to which the exclusion applied. The rights which the Respondent sought to protect were the rights not to be sued on a claim which was denied. It did not matter that the Appellant pursued that claim in arbitration. 3.2 SERVICE REGULATION – EXTRAJUDICIAL DOCUMENTS In Roda Golf & Beach Resort (Area of Freedom, Security & Justice) [2009] EUECJ C- 14/08, the Advocate General of the European Court of Justice has issued an Opinion on the meaning of "extrajudicial documents" in Council Regulation (EC) No 1348/2000 on the service in member states of judicial and extrajudicial documents (the 2000 Service Regulation). -4- 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN In the view of Advocate General Ruiz-Jarabo Colomer of the ECJ, the definition of extrajudicial documents includes not only those documents on the case file, but extends to those documents which are required to be served regardless of whether proceedings have been commenced. The Advocate General gave further detailed guidance, concluding that it is for national courts to determine whether a particular document is an extrajudicial document in light of the requirements he identified. -5- 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN 4 MISCELLANOUS 4.1 CMR In (1) Emmerich Hatzl (2) Leopold Baumgartner v Xl Insurance Co Ltd – Lawtel 19.3.09 thirty-seven boxes of women’s clothing had been stolen whilst in transit by road from the premises of the consignor, the first Defendant, to the premises of the consignee, the second Defendant. The consignor and consignee had assigned their rights of action to their insurer, the third Defendant. The Claimants, who were the operator of the haulage business and the driver responsible for the consignment, commenced an action for declaration of non- liability in England pursuant to article 31, CMR. Article 31 provides, inter alia, that an action may be brought against the Defendant in their ordinary residence or principal place of business. This, for the insurer, was England. The English court held that it had jurisdiction in respect of the claim of the Respondents (Claimants) for declarations of non-liability. The Appellant (third Defendant) insurer appealed against that decision. It contested the jurisdiction arguing that the Convention did not give the English court jurisdiction simply because the insurer was sued in England and was resident or had its principal place of business in England since art.31(1)(a) did not apply to a defendant sued purely as assignee of the rights of the consignor or consignee. The Court of Appeal held that the necessary purposive approach led to the conclusion that assignees were not included within the expression "the defendant" in art.31 (1) (a). The context of art.31(1)(a) and its place within the Convention strongly supported the view that it was primarily, and perhaps exclusively, concerned with jurisdiction in actions between the parties to whom the Convention ascribed, or was to be taken to ascribe, rights and/or liabilities, namely carriers, senders and consignees. The word "defendant" extended to the parties to the contract, and probably also to others to whom the Convention ascribed rights and duties, but did not extend to an assignee, even if he was also an insurer. It did not follow from a right of assignment, or from the fact that the Carriage of Goods by Road Act 1965 recognised that assignees might be concerned in the carriage, that art.31(1)(a) conferred jurisdiction on the residence or place of business of the assignee. -6- 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN 5 PRACTICE 5.1 CPR – AMENDMENTS In Bovale Ltd v Secretary of State for Communities and Local Government – Butterworths Law Direct 11.3.09 the issues which fell to be considered upon the appeal were, inter alia: (i) the extent to which a judge or a court could vary the CPR; what constituted a practice direction; (iii) who could issue and/or vary practice directions; and (iv) the extent to which practice directions were binding on a court. The Court of Appeal held that the CPR had the force of delegated legislation and a judge had no power to alter them, whether by judgment or practice direction. In particular cases a judge would be free to exercise case management powers, conferred by the statutory rules, under CPR 3, but he could not simply alter the rules or practice directions with general effect. The right way to alter the rules was through the Rules Committee and the right way to alter a practice direction was under the procedure set out in s 5 of the Civil Procedure Act 1997, as substituted by the Constitutional Reform Act 2005. Further, there was a distinction between directions and guidance as to the way in which rules and practice directions would be interpreted. Such guidance was not in itself a practice direction. 5.2 NON-PARTY DISCLOSURE In Gary Flood v Times Newspapers Ltd : Boris Berezovsky v (1) Commissioner Of Police of The Metropolis (2) Independent Police Complaints Commission – Lawtel 12.3.09 an application for a non-party disclosure order was refused where the applicant had failed to comply with the very strict criteria in CPR r.31.17, particularly the need to show that the disclosure was necessary. It was held that when determining whether a document or class of documents had a potentially relevant bearing on one or more live issues in the case it was necessary to focus narrowly on the pleadings as they stood, in order to see how the issues had been defined up to that point. 5.3 UNLESS ORDER In Azeez v Momson – Butterworths Law Direct 19.3.09 the Claimant had obtained an order debarring the Defendant from defending the proceedings unless a consent order relating to disclosure had been fully complied with by a certain date. The Defendant appealed, alleging that the order debarring him from defending the action fell to be set aside on the basis that the judge had failed to properly address the relevant considerations set out at CPR 3.9. The Court of Appeal found that disclosure of the specified documents had been accepted before the High Court judge as necessary for the fair trial of the Claimant's various claims, and therefore a different view of the facts could not be taken. It held that the judge had been correct in finding that a trial without the requested disclosure would have been manifestly -7- 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN unfair to the Claimant and that therefore the Defendant would not be granted relief from sanction. 5.4 WITHOUT PREJUDICE CORRESPONDENCE In Ofulue & Anor v Bossert – Lawtel 11.3.09 the House of Lords held that a statement made by a party in "without prejudice" correspondence written with a view to settling proceedings between him and another was not admissible in subsequent proceedings between the same parties save perhaps where it was wholly unconnected with the issues in those proceedings, or where there were exceptional circumstances. -8- 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN 6 SHIPPING 6.1 CONTRACT OF INDEMNITY / GUARANTEE In Associated British Ports (A company created by statute) v Ferryways NV – Butterworths Law Direct 23.3.09 in January 2000, the first Defendant ferry service provider entered into an agreement with the Claimant port operator. In September 2006, that first agreement was replaced by a second agreement. At the same time, the Claimant and MSBC (the second Defendant), the company which owned 40% of the first Defendant's share capital, concluded a written agreement which provided, inter alia, that the second Defendant would: '... assume full responsibility for ensuring (and shall so ensure) that, for seven years from the date of this letter, [the first defendant] (i) has and will at all time have sufficient funds and other resources to fulfil and meet all duties, commitments and liabilities entered into and/or incurred by reason of the agreement as and when they fall due and (ii) promptly fulfils and meets all such duties, commitments and liabilities ... The construction, validity and performance of this letter shall be governed by English law and we submit to the exclusive jurisdiction of the High Court in London in connection with any disputes arising out of this letter' (the letter agreement). In February 2007, the Claimant and first Defendant concluded a further agreement (the time to pay agreement) which took the form of a supplementary memorandum to the second agreement. The Claimant and first Defendant continued to operate under the second agreement until June 2007, when the Defendant ceased trading and was put into liquidation. It was eventually declared insolvent, in February 2008. The Claimant issued proceedings against the first and second Defendants, seeking to recover sums due under the second agreement and the letter agreement from each party respectively. At the hearing of those proceedings, in June 2008, the judge found that, inter alia, the letter agreement constituted a guarantee or guarantees, giving rise to a secondary liability on the second Defendant's part, rather than an indemnity giving rise to a primary liability for the sums due. He further held that the time to pay agreement had discharged the second Defendant's liability under the letter agreement. The Claimant appealed. In dismissing the Claimant’s appeal, the Court of Appeal held that, applying established authority, whether a document was a guarantee or an indemnity, or whether it imposed a secondary or a primary liability, would always depend upon the true construction of the actual words in which the promise was expressed. In this case it was abundantly clear, not least from the terms as to choice of law, exclusive jurisdiction and the service of process, that the letter agreement created and was intended to create legal rights and obligations. It was not merely a letter of comfort giving rise simply to moral obligations. It contained a 'see to it' obligation: the second Defendant would see to it that the first Defendant performed its obligations under the second agreement. If the first Defendant could not meet its liabilities to the Claimant as and when they fell due (the primary liability), then the secondary liability of the second Defendant would accrue by way of guarantee. That would have been sufficient to protect the Claimant but for the legal significance of the subsequent time to pay agreement and would still have protected it if the letter agreement had included the common provision found in guarantees whereby a -9- 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN subsequent variation or time to pay agreement between the creditor and the debtor was expressed not to discharge the surety. However, such a provision was absent from the letter agreement in the instant case. In all the circumstances, therefore, the judge had been correct to construe the letter agreement as a contract of guarantee, the enforceability of which had foundered on the subsequent time to pay agreement. It held that a letter of comfort, properly so called, was one that did not give rise to contractual liability. The label used by the parties was not necessarily determinative; it was a matter of construction of the document as a whole. The court's task was to ascertain what common intentions should be ascribed to the parties from the terms of the documents and the surrounding circumstances. 6.2 LATE REDELIVERY In Lansat Shipping Co v Glencore Grain BV – Butterworths Law Direct 25.3.09 the Commercial Court considered as a preliminary issue the interesting question of whether a clause in a charter providing as follows was a penalty clause and therefore unenforceable. “The Charterers hereby undertake the obligation /responsibility to make thorough investigations and every arrangement in order to ensure that the last voyage of this Charter will in no way exceed the maximum period under this Charter Party. If, however, Charterers fail to comply with this obligation and the last voyage will exceed the maximum period, should the market rise above the Charter Party rate in the meantime, it is hereby agreed that he charter hire will be adjusted to reflect the prevailing market level from the 30th day prior to the maximum period [d]date until actual redelivery of the vessel to the Owners.” The Owners argued that the clause was concerned with the breach inherent in an order for an illegitimate last voyage, not the breach which happens on late redelivery and that the clause was in fact a liquidated damages clause, ie a genuine pre-estimate of damage. Charterers made much of Owners’ concession that if the clause had simply provided for an extra 30 days of hire to be paid in the event that the vessel was redelivered late, then that would clearly be a penalty. The judge found that the possibility of loss arises if an illegitimate last order is given. If the order is maintained the owners can bring the contract to an end and go into the market. In that case they will suffer no loss. If they accept the order, owners’ loss is not what the vessel would have earned at market rates for the remainder of the charter period but the market rate for any overrun period. The Judge was of the view that in that case the Owners have not lost the chance of an early redelivery but have chosen not to take that chance. The Charterer contended that the clause did not in any case create an obligation not to give an invalid last voyage order, but was about late redelivery. The Charterer submitted that, contrary to the Owner's construction, the clause could respond even when the last voyage order was legitimate, in other words, one which was reasonably expected to be completed within the redelivery date; and was a penalty, and not a genuine pre-estimate of damage resulting from a breach of contract. It was held that on a fair reading of the clause, it had to - 10 - 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN do with the possibility of an illegitimate last order and the effect of such an order on the redelivery obligation, and those were linked concepts. Having regard to the amount claimed by the Owner on the basis of the clause, had the vessel been redelivered on hour late, the amount of the claim of USD$471,602.32 would have been payable in full. As stated by the arbitrators, that would be an 'unconscionable' amount within the meaning of the case law, and equally so in the case of a delay in redelivery of just over six days, as in this case. The primary purpose of the clause had been to deter the Charterer from breaching its obligation to redeliver the vessel in time, and whilst such a purpose might in a sense be understandable because of the limits to the Owner's knowledge about the likely length of the final voyage at the time of the order, the clause had been a penalty, and not a genuine pre-estimate of damage resulting from a breach of contract. 6.3 RULE B ATTACHMENTS In STX Panocean (UK) Co., Ltd. v. Glory Wealth Shipping Ltd – 19.3.09 the Court of Appeals for the Second Circuit affirmed the decision of the district court holding that registration to do business in New York is sufficient to preclude a Rule B attachment. - 11 - 4912542 MARCH 2009 REED SMITH RS SHIPPING BULLETIN This Briefing is a summary of developments in the last month and is produced for the benefit of clients. It does not purport to be comprehensive or to give specific legal advice. Before action is taken on matters covered by this Briefing, reference should be made to the appropriate adviser. Should you have any queries on anything mentioned in this Briefing, please get in touch with Sally-Ann Underhill or your usual contact at Reed Smith. Reed Smith Richards Butler LLP Beaufort House 15 St Botolph Street London EC3A 7EE tel 020 7247 6555 fax 020 7247 5091 email [email protected] © Reed Smith Richards Butler LLP 2009 Reed Smith is a trade name of Reed Smith Richards Butler LLP Reed Smith Richards Butler LLP is a limited liability partnership registered in England and Wales with registered number OC303620 and its registered office at Beaufort House, Tenth Floor, 15 St Botolph Street, London EC3A 7EE. Reed Smith Richards Butler LLP is regulated by the Solicitors Regulation Authority. A list of the members of Reed Smith Richards Butler LLP, and their professional qualifications, is available at the registered office. The term partner is used to refer to a member of Reed Smith Richards Butler LLP or an employee of equivalent standing. Reed Smith Richards Butler LLP is associated with Reed Smith LLP of Delaware, USA [and the offices referred to below are offices of either Reed Smith Richards Butler LLP or Reed Smith LLP]. - 12 - 4912542