Limited appeal - THE honourable judges of the UK appeal courts

Limited appeal

THE honourable judges of the UK appeal courts are famed for the tight limits they impose on their own loquacity. One of my favourites used to confine himself to a dignified, "I agree", although he did once go over the top and carry on to say, "and I have nothing further to add".

Had Sir John Knox stuck to this practice, shipowners would now be sleeping more easily in their beds. But he didn't. In a judgement of an appeal on an anti-suit issue in the long-running Boss 400 saga, he added a dictum which has put into question a shipowner's immunity from further arrest for security once a limitation fund has been put up.

This is an unintended and uncontested change to legal practice. In a nutshell, Sir John made remarks - which were not part of the judgement nor on a point raised or discussed in court - which affect the practice of law. Until there is a substantive judgement to resolve the issue, shipowners relying on the accepted machinery of the 1976 Limitation Convention are under threat. The dictum of Sir John has opened the way for claimants to arrest vessels for further security, or to pursue other assets, even if a shipowner has properly constituted a limitation fund in a convention country.

Until now, shipowners facing a claim which fell within the coverage of the 1976 Limitation Convention could set up a limitation fund in a convention country, and then continue to trade in the knowledge that the claimants were barred from pursuing further assets of the shipowner while liability was being determined and a limitation decree granted. That commonsense proposition was the interpretation placed on Article 13 of the convention and made case law by The Bowbelle [1990]. Although this judgement has some defects, it does clearly establish that, once shipowners constitute a limitation fund in a convention country, their other assets are protected from proceedings to secure claims in respect of which the fund has been constituted, at least in other convention countries.

Sir John Knox held (and other members of the Court of Appeal agreed with his judgement) that this bar does not become operational until the shipowner's liability is established and a limitation decree is granted. If the Court of Appeal is right, there is no point in constituting a limitation fund in a convention country until the shipowner's liability has been established and a limitation decree is granted, except perhaps to avoid currency fluctuations. Given the possibly long-running proceedings to secure a decision on either liability or a limitation decree (the incident which triggered the Boss 400 case took place in 1995) the shipowner is left exposed to continual arrest of vessels in a way which could well impede the ability to operate.

The Court of Appeal's decision is difficult to justify on the wording of Article 13, and appears to be contrary to the obvious purpose of the article, at least for cases where the application of the Limitation Convention is not in dispute. However, as the dictum was not part of the judgement on the points raised in this case, there is no appeal, and so the decision represents the law until it is successfully challenged in another dispute. A good case here for limiting what judges say to the point in question.

Rate of progress

GOOD news for arbitration generally comes in the most recent newsletter from the London Maritime Arbitrators Association . The LMAA notes, "There was a dispute between the parties to a time charter as to whether a contractually binding addendum had been entered into whereby the charter party had been extended for a further period of three years. An urgent decision on this was required because the charterers, who were arguing that no binding agreement had been entered into, had given notice of redelivery under the original charter party to take place on a day in the week following the end of the hearing. An oral decision was given by the tribunal at the end of the hearing on a Thursday, and the award and full reasons were published the following Tuesday."

The LMAA points out that "this is by no means an isolated case, which shows what can be achieved with the right approach and an element of goodwill." It is absolutely right to be pleased with itself. A pity, then, that, in the same newsletter, the main concern of the LMAA supporting members liaison committee should be recorded as "delay in some awards being published."

Physician, heal thyself

INSERT an outspoken debt collector into a conference mainly attended by lawyers who specialise in arresting ships to claim other people's debts. Let the debt collector give some practical tips on how to avoid getting into debt in the first place. Then ask the audience how many of them follow the tips? And as a supplementary, how many have lost money on bills that were never paid? The answer, at the Fourth Annual International Forum on Ship Arrest, was that about one third of the delegates had faced unpaid bills at one time or another because they had failed to take elementary precautions to check out the creditworthiness of their clients. Incredible, but true. Inspires confidence, doesn't it?

This year's Arresting Ships Forum was held at the Park Lane Hotel, London, in early December, and IBC pulled in a good crowd from twenty-eight different nations. The debt collector, who rounded up the conference, was Jonathan Clegg, of Global Financial Recoveries, a lawyer himself and no stranger to arresting ships. He told the delegates they would be better checking credit and status before they start than claiming afterwards. Good advice but, given the realities of shipping, many of those present preferred their clients - unsecured ship suppliers, bunker suppliers and the like - not to hear it. Where would their arresting business be if everyone did their credit control properly?

Their arresting business could be anywhere. Ince & Co hosted a brilliant half-day workshop which was planned and executed by Ted Graham. The whole audience took part, and this was one of the few conferences where the hostesses with microphones had no time to do crosswords. Instead they had to get the mike to people who were exchanging cross words about how things were done, or might be done, in their part of the world. The unfolding saga of a series of unhappy ships named after fruits was a peach of a story, and it brought out the differences in practice and approach of lawyers from around the globe.

That was the big message at Ship Arrest 1998. Despite the imminence of the diplomatic conference on the new arrest convention set for the end of March 1999, there is little likelihood of either law or practice converging anywhere in the world. Just on one day, we hear from Panama, Rotterdam, Denmark and Korea, each with different schemes, different securities, different risks, different time scales and no plans to change. The best bet, it seems, is to run a shipkeeping business in Korea. You get to charge what you like and you get priority of payment. Put another way, don't arrest in Korea if you can avoid it, because there will be no money left to pay your claim once the shipkeeping bill has gone through.

Money changes nothing

SOME organisations, like all lawyers, are born to be unpopular. Yet popularity has little to do with success. The International Transport Workers Federation is a case in point. These days, the ITF is bestowing its benison on shipping in the manner of a stevedore with no pockets. A million here, half a million there. And more power to it.

It is richly ironic that a trade union of trade unions should end up as one of the few sectors of shipping which appears to have any real money at the moment. History does show that, where you find a labour movement, you will often find money. Yet not everybody has spent the money so wisely, or with such regard for the greater good, as has the ITF in the past couple of years.

The ITF's latest contribution to what it hopes will be a better and safer industry came recently in the form of a $500,000 donation to an international memorial to seafarers to be erected outside the IMO building on London's Albert Embankment. We could all think of better ways of spending the money than putting up another statue, but the ITF wants to help commemorate the 2,200-plus seafarers who die every year at sea. A decent sentiment, this, in an age when it is increasingly difficult to find anybody with the time or inclination to pray for those in peril on the sea. But it would be nice if, just for once, the ITF could do something like this without knocking flags of convenience.

"Seafarers on flag of convenience ships face at least twice the risk of being killed at sea compared to those on board respectable national flag vessels," said ITF general secretary David Cockroft when announcing the donation to IMO. He may be right, and I suppose asking the ITF to stop banging on exclusively about flags of convenience, as if they were all of the same standard, and for that matter as if they were the only unsafe part of shipping, is like asking the anti-hunt brigade to stop going on about the evils of the foxtrot. But should the ITF mantra today, in the brave new world of port state control and the ISM code, be unchanged from the bad old days when PanLibHon was a word, and a dirty one at that? If it should, there is something seriously wrong with shipping.

Ex-asperating

ONE unkind observer has said that ADR stands for A Drop in Revenue so far as the legal profession is concerned. But I know plenty of lawyers who are in favour of settling more disputes by mediation and conciliation. ADR is a good way of cutting back on time and money spent in litigation. Another way is not to allow disputes to go through the entire legal process up to the appeal stage when there is no merit to the point at issue in the first place.

This, at least, is how I view the case of Wunsche v Tai Ping Insurance and Others, news of which reaches me courtesy of the Holmes Hardingham newsletter. The case involved a dispute between marine insurers and cargo interests, in which the insurers reportedly argued that there was no intention to extend a marine cargo policy containing the words "ex-factory" to cover losses arising between the factory and the port of shipment. Every schoolboy with even a rudimentary grasp of the cargo clauses knows that `ex-factory' means that the cover starts at the place of manufacture. Where has Tai Ping been since 1906?

Paradise lost

CONFIRMATION that the world has finally gone mad comes with the news that Carnival Cruise line is boasting about the fact that up to fifty per cent of bookings for its latest ship, the no-smoking Paradise, came from first-time passengers. What else did it expect? My own feeling is that this is an abject failure. Surely anything less than one hundred per cent must be seen as a massive disappointment.

It is said to be only a matter of time before underwriters start offering cheaper insurance for no-smoking ships. Look at the really terrible, criminally dangerous tonnage afloat that has no trouble getting cheap insurance today and tell me this is not the most ridiculous thing you have ever heard. But read on.

Anybody caught smoking on this wretched ship will be fined $250 and put ashore at the next port of call. A blessed relief I should think. Once ashore, smokers will have to find their own way home at their own expense. They will not be entitled to a refund, irrespective of whether they pass Go or not. Monopoly for bullies.

No smokers were found on the ship's first two voyages, but a couple were "identified" when the ship stayed over in New York. We are not talking here about Dr Crippen and Ethel Le Neve. Just a couple of people having a smoke. And, inevitably, a covey of secret smokers was eventually uncovered during a subsequent voyage, fined heavily, rolled up in a Turkey carpet and set to work on a beetroot farm. (I may have made that last bit up, but only in the interests of sensationalism.)

What puzzles me is why smokers would set foot on this vessel in the first place. Having done so, they forfeit the natural empathy I would normally feel following the barbaric treatment they were meted out and so clearly deserved. The Paradise is Carnival's 13th "fun" ship. I should hate to see any of its non-fun variety.

Publicity pays

RECENTLY, a consulting engineer contacted us in connection with the summary of an arbitration award printed in our last issue. His company had been retained by a law firm in the dispute, and had not been paid. On reading the summary in the magazine, he realised that the case was not only completed but also that the law firm which had retained him had prevailed in the arbitration. He duly took a copy and sent it to counsel, and was promptly paid.

Delay down under

I FINALLY made it to Australia last month. Sydney. Brisbane. Cairns. I think it a very fine country, despite a disconcerting habit of continually winning at sports and an incipient confusion between service and obsequiousness in restaurants. I intend to go back. Apart from anything else, it is lovely to meet so many people who are so very proud of their country.

Picking up the Sydney Morning Herald was almost like being home from home, full as it was of stories about the latest waterfront squabbles. How is it possible not to know whether you are supposed to be working over christmas and new year, and whether or not you are going to be paid for it? Shopkeepers don't seem to have any problems, so why should stevedores?

If I finally settle in Australia I shall install myself as either a stevedore or a lawyer, or possibly both, and shall not want for work, or payment, on either footing.

Pastures new

ANOTHER marine underwriter has quit the market. Raymond Dumas is to forgo the pleasures of underwriting at syndicate 1028. But we are told that this has nothing to do with the current abysmal state of the marine insurance market, which has seen the disappearance of a number of household names as red ink has turned even redder in the wake of rampant competition for business. Mr Dumas is going to concentrate on personal affairs and on his family's agricultural business.

We wish him well. He has a fine family name to uphold, although I suppose a lot of people in the market today may not even be aware that Dumas used to be as much a part of Willis Faber as Higgins is a part of Johnson. For ten years, back in the sixties and seventies, Henry Dumas shook hands with me - and with everybody else in the WF&D office in Leadenhall Street - each Christmas. These were the days of brylcreemed hair, chalk-stripe suits and brokers who smoked fragrant pipes of pungent tobacco while quaffing a lunchtime half in the Lamb & Flag - and that was just the women. I don't suggest we can ever go back to those days - or even that it would be a good thing if we could - but it would be nice to return to a market where marine underwriters wore check suits on a Friday and ran farms as a sideline.

Widening gap

STILL on the subject of insurance, intelligence reaches me from Nigeria that underwriters in that country are feeling the pinch, as elsewhere. A clue to the problem can be seen from official figures from the Nigerian Insurers Association which confirm that, while gross premiums were up 21 per cent last year, claims were up by nearly 55 per cent. This is not rocket science, although it would seem to be beyond the ken of our underwriting friends. Mr Micawber, were he alive and well and living in Saka Tinubu Street, Lagos, would dedicate a sermon to the subject.

Pin-pong priority

AS with many public buildings in China, the admiralty court in Shanghai is also used for other purposes. It doubles as a table-tennis venue for local workers. At the allotted time each day, irrespective of whether the court has finished its business, the workers arrive to duel it out at the tables. This can occasionally lead to confusion in the court - whether to hear the litigants out, or watch the triumphs and defeats at the ping-pong tables? No prizes for guessing which side wins.

Remain calm

IT has become fashionable in my part of the world for people to go in search of new ways of relieving so-called "stress". People of my acquaintance - including some lawyers - have taken to playing tapes of killer whales singing An Old Raincoat Will Never Let You Down, or rubbing buttered cauliflower florets in their hair, or reading The Little Book of Calm.

Call me Mr Grumpy, but I cannot be doing with any of this. My preferred option if feeling a little batey at the end of the day is to open at random any volume of Benchley or Betjeman or Bierce, and read for five minutes. Then I am ready for the best of three sets with Kublai Khan. Just last week, I came upon this gem from Bierce:

"An inoffensive person walking in a public place was assaulted by a stranger with a club, and severely beaten. When the stranger with a club was brought to trial, the complainant said to the judge, "I do not not know why I was assaulted. I have not an enemy in the world."
"That," said the defendant, "is why I struck him."
"Let the prisoner be discharged," said the judge. "A man who has no enemies has no friends. The courts are not for such."