Euromania

Euromania

IF you wanted to pick a location to launch a stinging attack on shipping safety, and to sound the death-knell for single-hull tankers, Athens would probably be the last place on your list. Clearly, nobody told Loyola de Palacio, vice-president of the European Commission, who bearded the shipping industry in its den at the Posidonia congress in June.

If de Palacio had wanted to put a pin in shipping's balloon, she couldn't have chosen a more public forum. If nothing else, she doesn't lack courage. What she does appear to lack, however, is the level of sympathy with shipping's problems that the shipping industry itself would like from an EC minister, given that such a creature must exist.

De Loyola spoke at length, and often quite incisively, about shipping. More precisely, she spoke at length about tanker shipping. More precisely still, she spoke about the Erika, and the can of euroworms that the wretched vessel has opened. She said the Erika was "a masterpiece in proving to the public that at least parts of the shipowning business are surrounded by opacity..." The Erika was arguably more a masterpiece in exposing the lack of resources shown by the media, but nobody should argue against the general message - we need more transparency in shipping.

Apart from her repeated, quaint references to 'boats' rather than ships, and her apparent refusal to seriously consider any other alternative than getting rid of single-hull tankers, it was de Loyola's insistence that Europe had fallen behind the Americans in terms of protecting its coastline from pollution that stuck most persistently in the shipping craw. The US has always gone its own way in shipping, as in most things. Good luck to it. But show me a person who wants Europe to follow blindly where the US leads, and I will show you an American.

It was difficult to sit and listen to de Loyola with anything other than a mixture of anticipation and dread. Above all, it was a wake-up call to shipping that the industry, in Brussels at least, is almost exclusively about politics. Frightening.

Show time

IT is difficult not to become increasingly cynical about almost everything as you get older. But there are times when you have to acknowledge that some things do change for the better. Take Posidonia, for example.

Two years ago, I might have advised you to avoid the broiling hell-hole that is Athens in June during Posidonia week. Now, after attending Posidonia 2000, I can only recommend that you get your exhibition gear out in June 2002.

I can't tell you why this year's event was so good. It just was. Everybody I met agreed that it was a great show, and a great week. The symposium was back, and had more delegates than I have seen at any comparable event, ever. Things were so lively that most delegates seemed ready to overlook even Frederick Chavalit Tsao, chairman of Intercargo, who made the most obscure and impenetrable presentation ever made by anybody, anywhere. This sort of thing might be alright for Intercargo, but it just doesn't cut the mustard elsewhere.

The exhibition - whether by dint of numbers of people and items of equipment, or by mere judicious landscaping - appeared to be as big as the biggest shipping show on earth. And even the weather seemed to be kind, with a friendly zephyr at Posidonia's shoulder most evenings.

Posidonia can be a terrible place when you are hot, lonely, disillusioned, and generally feeling very small. This year, it wasn't.

Empty vessels

THE prize for the most fatuous analogy of the year - so far - must go to European Shippers Council policy manager Nicolette van der Jagt, who has said that attempts to hold cargo owners partly liable for shipping casualties are akin to making dairy farmers responsible for crashes involving road tankers which they have contracted to carry their milk. And the point is?

Of course, there is no point. For milk read orange juice, or shoes, or pants. All are fairly harmless cargoes, even in the wrong place, when compared to heavy oil, or LNG, or even molasses or fishmeal. The point about trying to make charterers of hazardous cargoes accountable is that it motivates them to exercise some discretion and selectivity in the choice of third party carriers. They know the risks inherent in moving volatile cargoes, and they could be said to have a duty to entrust their carriage to reputable operators.

Even if such a system were in place, there would be no guarantee that a charterer which knowingly contracted a substandard carrier would be held responsible. But perhaps it is time to revive the industry call for charterer accountability, which more or less died out with the retirement of Lars Lindfelt from the Swedish Club. It is time somebody else took up the torch, not least to counterbalance tortuous analogies from people representing organisations which should know better.

Letter of the law

TWO passionate letters published by Lloyd's List in recent weeks caught my eye. The first was from the winning party in a shipping arbitration, complaining about the costs awarded by London arbitrators, and bemoaning the fact that Britain is no longer the home of democracy, costs no longer follow the award, and an Englishman's home is not his castle. The second letter was written a week or so later, as a counter-balance to the first, and recounted another personal experience with London arbitration that proved that England is the centre of the civilised world, and all its maritime arbitrators are a combination of the best bits of Cedric Barclay and Oscar Wilde.

Firstly, in this age of dotcom madness, we should be glad that there is still a print newspaper that publishes impassioned letters about maritime issues. Second, we should remember that the letters represent two extreme ends of the spectrum.

People who are simply satisfied with London arbitration - taking what they regard as the better decisions with what they see as some of the worst - don't write emotive letters to newspapers. They just get on with their lives.

So neither take all the London arbitration clauses out of your charter parties, nor blindly put all your dispute business into London. Trust your own judgment and experience, and enjoy for as long as you can the privilege of reading a shipping paper, where the newsprint still comes off on your fingers.

Honest guilt

WHEN is honesty not the best policy? Any lawyer will tell you, "When you are guilty". Deny everything, and let the prosecution do the hard work of proving you wrong. In the Netherlands, however, there are circumstances in which it is more rewarding to admit guilt than obstinately repudiate the charge - as one master on Holland's inland waterways found out.

Under Dutch law, proving gross personal negligence in the event of navigational error is hard to do. Recently, the courts dismissed a case in which a pilot had blithely mowed into a defunct bridge because he had failed to check whether it was still there. Gross negligence on the part of the pilot, you may say. Initially, the court in Rotterdam agreed. But the subsequent appeal court didn't, nor did the supreme court. Both felt that nobody would purposely drive their ship into a solid structure. The result of such thinking is simple. Admit your guilt when your navigational ability deserts you, and the courts are likely to be lenient.

The reverse, though, is equally true. Maintain your innocence in the face of glaring evidence of your culpability, and the judiciary is likely to take a very dim view.

Not long ago, a case appeared before an appeal court in the Netherlands involving a master who had driven the 900-tonne barge Linquenda II on to the submerged part of a breakwater along the River Scheldt. He had achieved this in spite of a series of navigational markers indicating a safe channel on the river. "I was inside the markers," the hapless master maintained. He had only struck the submerged breakwater after his vessel had been caught by a strong undercurrent that had pushed it out of the navigation channel.

Pieter den Haan, of the Rotterdam office of Dutch law firm Nauta Dutilh, who was representing the Irish cargo interests, was suspicious. Partly because "inside the markers" in fact means "outside the navigational channel" in the parlance of the Dutch inland shipping community. And partly because a barge carrying 880 tons of steel takes some shifting. In den Haan's view, the Linquenda II had already been cruising outside the navigation channel - a practice often employed by masters travelling in the opposite direction to the tide. Subsequent tests, carried out with the help of Rotterdam-headquartered survey bureau Touw Expertise- en Ingenieursbureau, proved that the master's recollection of events was suspect, to say the least.

Despite an increasing body of evidence against him, the master steadfastly maintained his innocence. The court found him guilty regardless. And so did the appeal court. However, ask any Rotterdam maritime lawyer about the case, and they are likely to tell you that, if the master had admitted his mistake, explaining he had good reasons both to leave the buoyed channel and to consider it safe to do so, he might just have got away with it. Gross personal negligence, after all, is a hard thing to prove, as it involves proof of deliberate risk-taking, in the knowledge that there would probably be some damage should things go wrong.

Den Haan, having won the case for the cargo interests, offers us this suggestion for such masters. "If the master had admitted he was in the wrong place at the wrong time, and had been able to give a more persuasive reason, such as 'I was evading a larger vessel and I was convinced this was safe', his life would have been a lot easier," he says. Guilty yes. Gross personal negligence no. Next time your clients are asked how they plead, consider your answer carefully.

ICMA change

IN our last issue, we told you about the ICMA international congress, which is to be held in New York in October 2001. The Society of Maritime Arbitrators tells us that its former president Henry Engelbrecht has taken over from Peter Vismans as chair of the arrangements committee. You can reach him on henr...@worldnet.att.net

For more information about ICMA, you can also email the SMA at i...@smany.org

Ad hoc arbitration

ARBITRATION in London or New York is not free and, in the opinion of some, it isn't cheap. But at least the manner in which the LMAA and the SMA operate means that the arbitration fees accrue to the people who do the work - the arbitrators.

In the recent case of Dobbins v Hawk's Enterprises in the United States courts, a demand for an upfront arbitration fee deposit got in the way of a commercial resolution. Briefly, the facts were as follows.

Dobbins contracted with Hawk's to buy a mobile home, and alleged that the unit was delivered in a substantially damaged condition. It furthermore claimed that it had tried several times to resolve the dispute but eventually filed suit, claiming damages under multiple legal theories, including the Truth in Lending Act. In response, Hawk's filed a motion to stay the federal court proceeding and compel arbitration. The district court granted the stay and ordered the parties to arbitrate.

Subsequently, Dobbins filed a motion to lift the stay on the basis that the fees imposed by the American Arbitration Association, and Dobbins' inability to pay the fees, prevented it from effectively asserting its claims.

In response to the motion, the district court held an evidentiary hearing to provide Dobbins with an opportunity to present evidence on its financial condition and inability to pay the arbitration fees. The district court lifted the stay, reopened the case and held that the arbitration fees precluded Dobbins from availing itself of the arbitral process.

Hawk's appealed, contending that the arbitration agreement in the purchase contract was enforceable. The court of appeals, whilst acknowledging that arbitration fees can render an arbitration agreement unconscionable, reversed the district court, and ordered Dobbins "to present a reduced demand for damages and to seek a diminution or a waiver of fees from the AAA."

The obvious question here is what went wrong. In line with the perception that arbitration is cheaper, faster and commercially grounded, many consumer contracts contain arbitration clauses. The AAA is without question one of the largest institutions administering arbitrations. It is an organisation with a substantial operating budget and a good PR machine. For these reasons, it may not come as a surprise that the AAA requires deposits from disputants (the amounts of which are determined by the size of the claims involved) to cover the administrative/overhead expenses of the AAA and reserves for arbitrators' fees. Dobbins probably had no idea what it got itself into when agreeing to the AAA, and furthermore by setting its claim at $50million.

Cargo gone mad

I ALMOST lost it recently when reading two news items on the same day in the maritime press.

The first claimed that new electronic sites are set to give a fillip to depressed insurance premium rates in the cargo market by stimulating wider layers of business. I don't even pretend to understand the comment, but the fact is that the only thing that will give a fillip (or a 'prince' as some of us call it) to cargo rates is a combination of the Hamburg Floods and the Rape of Venice. History shows that, only when they lose so much money that they are unable to give any more away, do cargo underwriters start upping the ante.

The second news item was arguably even more remarkable. It seems the aviation insurance market has taken a leaf out of the marine market book. Leaving aside the jargon, aviation underwriters are apparently going to start judging assureds on individual performance, as they do in the marine market, rather than subjecting them to general market swings.

This assumes that the owner of a fleet of, say, twenty big-ticket ships gets a really tough deal on renewal when one of his vessels produces a monstrous claim during the currency of a twelve-month hull policy. When that happens, I'll juggle soot. Please. The last people who engaged in this sort of scientific underwriting wore stovepipe hats on dress-down Fridays.

Sailing, just sailing

SOME maritime lawyers have a reputation for being fiercely competitive. Richards Butler's head of admiralty, Richard Harvey, is one who is known as a litigator not to tangle with lightly. So how can he explain that in five years of racing in Norway's Fearncup, the best position he has managed was thirty-eighth? Easy, because he was sailing with The Maritime Advocate's team, on a boat more noted for its well turned out and party-minded crews than any undue zeal with winches and ropes.

This year's Fearncup, as usual well organised by Fearnleys' gas department, was held unseasonably early at the end of May. Over sixty yachts raced from Oslo to Son in driving rain and cold, very cold, winds. Most of the entries were, as usual, shipowners, with Jens Ulltveit-Moe showing his usual competitive spirit. Lawyers were there, and last year's winner, Wikborg Rein, again had the King of Norway on its boat. It made a good showing, but didn't quite pull off the double.

But perhaps the party afterwards was when Wikborg's were able to cuddle up with Tom Evensen, of Evensen & Co, who is another non-competitive but fun entry, and who has now disbanded his team and his firm to sail and work with Wikborg Rein in the future. Harvey is made of sterner stuff (see photo), and insists he will continue to prefer the good company of The Maritime Advocate's boat , aptly named Chianti, to any chance of a place on the winner's podium.

On the net

POSIDONIA stories continue to leak out of Athens months after the dust has settled on addled brains and aching limbs. Good to see, too, that sport has a role to play in the great shipping extravaganza, never mind that the ratio of physical exercise to drinking is about one to ten thousand.

There was a good turnout for the now-traditional tennis tournament we hosted along with law firm Holmes Hardingham. An eclectic bunch competed for the Tsavliris Cup, sponsored by tugnocrat Andreas Tsavliris, the first winner of the competition.

Fun and good sportsmanship were the order of the day, and pairings were decided arbitrarily by slim controller Ken Scott of Holmes Hardingham. No allowance was made for physical condition, although anybody who had had more than two hours' sleep the previous night was deemed to be a pot-hunter and a cissy. Neither was there any dispensation - or time - for sex.

The final saw the pairing of Greek shipowner Aristidis Efstathiou and French insurance broker Jacques Watin-Augouard defeat Andreas Tsavliris and Bruce Trentham of Chandris 6-3 in an exciting match. Trentham has supposedly had a hip replacement operation, but made most of his opponents look like they needed one instead. Star turn, though, was undoubtedly the 83-year-old uncle of Philip Embiricos, who turned up - and partnered on court - a svelte-like female Russian tennis coach, and who might actually have won the tournament but for the fact that he had to leave early to compete in a triathlon.

Andreas Tsavliris, a finalist for the fourth successive time, presented the trophy to the winners, and Jean Richards of Fairwind vowed to get back onto the tennis court on a regular basis at home before packing away her whites for another two years. Deja vu or what?

Opening up

THE debunking of Lloyd's of London is complete with the news that the old lady of Lime Street is to open up its doors next year to non-Lloyd's brokers from both the UK and overseas.

These brokers will be able to access the market from January 1 next year, provided they are externally regulated and meet new technical and customer service standards. There is to be a transitional period, which has already started, during which all existing Lloyd's brokers will be required to become members of the General Insurance Standards Council in the UK. Umbrella brokers may also become full Lloyd's brokers, but only if they are open.

Will the security be any better? Opening up to outsiders will bring with it a risk at least commensurate with the one which prompted regulation at Lloyd's in the first place and which that very regulation sought to eliminate. But change had to come, along with corporate capital, electronic trading and women. Many will regard it as a good thing, too. It's not as if Lloyd's made such a grand job of it when it was an elitist oligarchy. But time was you had to have the pedigree of a Romany prince, land in Shropshire, and a royal doulton teapot in your briefcase before you were admitted to Lloyd's. Now, you just have to have a referee, a pulse and a few bob in the bank.

Clothes thing

I ADMIRE people who have a talent for languages. I suppose that is why my heart went out recently to the coach of the Croatia football team who, after his side had surrendered a three-goal lead to Yugoslavia in the Euro 2000 soccer championships, said, "I have just come out of the dressing room, and the lads are a bit down in the wardrobe."

Clearly, an allegory on the banks of the Nile.

Wrong turn

COPYWRITING is a tricky business. George Orwell was once fired as a copywriter because he wrote a slogan designed to sell a particular brand of chocolate which described the product as, "Rich and dark, like the aga khan".

Well, frankly, I would sack the copywriter used by a major banking and finance law firm which advertised recently in The Times law reports under the headline, "More Paths To Take, Less Wrong Turns." You can have fewer wrong turns, but nobody can have less wrong turns. Not even a lawyer.