Class act

Class act

A SHIP sinks and pollutes a politically, environmentally and commercially sensitive piece of coastline. Immediately, the race is on for somebody to blame. Every bad-news story about shipping for two years thereafter is incapable of being written without reference to that casualty. And so is most of the legislation over the same period.

Newspapers and magazines turn to the bete noire of the industry sector under attack and quote verbatim the familiar words of condemnation. Reporting Paul Slater saying that the class system is a recipe for the disasters that have plagued the shipping industry is akin to noting that foxes kill chickens. And it doesn't even have the dubious merit of selling newspapers.

Frank Iarossi provided some perspective recently when he told the ABS annual meeting, "This is an age where the indictment, the guilty verdict and the sentencing are all rendered even before the relevant facts have been established. Class is becoming the designated scapegoat, regardless of its culpability."

Iarossi is right. And so is BV's Bernard Anne, when he urges classification societies to co-operate more to improve safety. "There is a dilemma which all classification societies need to face up to," says Anne. "It is simple to improve an individual class society by ejecting all vessels and owners who fail to keep up in the drive for quality. But that does nothing to help world shipping. Those ships and owners are still trading. A policy of co-operation, education, support and help will do more to make ships safer than attempts to make class into a police service for shipping. The leading class societies have the technical knowledge and resources to help shipowners. Flag states have the authority, owners must maintain and operate their ships. Class should help both to succeed. And the strong should help the weak, not seek simply to get stronger at the expense of global safety."

It's a nice thought. Put the blame where it belongs, when it has been shown where it belongs. And use skill and experience to make things better. That way, shipping will have a much stronger case for directing its own future rather than mutely submitting to the hectoring diktats of callow politicians spouting dangerous rhetoric from a low knowledge base.

Control freaks

PORT state control is a powerful force for safe shipping. But it is uneven, geographically. So it is good to hear that the United Arab Emirates is offering something of a lead to PSC in the Middle East, which part of the world remains a mystery to a lot of people engaged in international shipping.

It depends how you define the Middle East but, notwithstanding Egypt's, Israel's and Jordan's membership of the Mediterranean MoU, there appear to be some big names missing from PSC. Dubai-based law firm Al Tamimi tells us that PSC inspections are already under way in the United Arab Emirates, and that reports of non-compliance are being submitted to interested parties.

The North of England P&I Club, meanwhile, has got together with Intercargo to produce a PSC guide for cargoships. The intention of the book is to alert shipowners and operators to the way PSC works. It offers advice on how to manage inspections, and on what to do when things go wrong. Intercargo doesn't miss the opportunity to ask for more consistency in the way inspections are carried out, improvements in the targeting of ships, better regional co-operation and exchange of information, and the implementation of a common deficiency coding system for all PSC regions.

The guide is available from the club at a cost of £30. Also available, from Informa, is a book entitled Port State Control, which claims to be "the only book on the market to deal comprehensively with the implications and regulations of port state control", and is described as "a must" for, among others, maritime lawyers. It costs £130, or $221. The dollar equivalent is a nice touch, the sort of thing you don't get from a mere club.

Going for a song

TALKING about how you define geographic areas determined not only by physical but by political, cultural, historical and other parameters that have long ceased to exist, I wonder how many of our readers watched the Eurovision Song Contest on television recently. It was held in Copenhagen, which is certainly part of Europe in my book. And it was won by Estonia, a country which disappeared from my consciousness for a long while (whither Danzig?) but which now feels right as part of Europe.

The Estonian song was so bad that a melted-down copy of the single would make a very shoddy flowerpot. France was the only rightful winner, yet came among the also-rans. This, of course, hits the eurovision nail on the head. It has nothing to do with quality. The real interest in the thing lies in the voting procedure, which is transparent and criminal. By comparison, the likes of IMO and IACS have nothing to reproach themselves for.

Practice makes perfect

"THE LMAA is an association of practising arbitrators. We cannot elect people just because they have a desirable professional background, even if we are conscious that certain professions are under-represented in the LMAA membership." As a supporting member of the LMAA, my immediate response is 'Why not?'

The LMAA statement comes from Mark Hamsher, president, in his report to members dated March 2000, but only recently delivered to my office. The minutes of the 2000 meeting of the LMAA came in the same post as this letter, and included some of the most tedious reading it has ever been my misfortune to read.

Accounting for every last penny spent is a commendable trait, particularly in an arbitrator, but I would be happy to have access to such information only if I request it. Do I really want to know that two portable air-conditioning units were bought for HQ at a cost of £500 each, or that the assistant secretary had a much-deserved pay rise?

Reading the LMAA minutes, it is a wonder that anybody wants to become an arbitrator. Here we all are thinking that being an arbitrator is quite a lucrative profession, and yet the LMAA enumerates, with a zeal better reserved for deciding the finer points of a multi-million-dollar charter party dispute, the cost of retraining Mrs Lugg. Mrs Lugg is entitled to retraining. Just retrain her, and bill me.

And yet more and more people do want to become LMAA arbitrators. I know, because the increased expenditure on postage, telephones and faxes in 2000 was in part due to the increase in size - and therefore of postal weight - of the list of would-be arbitrators. I could ask why the LMAA is spending so much on postage, when it seems to take the best part of a year for anything to reach me. But I won't. Instead, I will tell you that, in the twelve months leading up to the 2000 AGM, the LMAA elected three new arbitrators.

Other highlights from the 2000 LMAA minutes include the expressed disappointment of G Clark that the speaker at the annual lunch had to be sandwiched between the first and second course. But rest easy, this was not lack of consideration for a guest. Mark Hamsher explains that, as the speaker was addressing the Court of Appeal that day, he "therefore had perforce to fit in with a tight timetable." A tautology, surely, and spoken like one who charges by the word.

Saddest comment in the minutes, though, relates to the "unavoidable absence from the AGM of R Faint, who had become stuck in a train enroute to London," but who asked another member to "urge that there should be more liaison between supporting members and the SMLC." (whatever that is). This is especially poignant, given that Richard Faint is the most determined of wannabe arbitrators.

Finally, you might like to know that the LMAA printing and stationery costs are likely to remain constant given "the annual reprinting of the handbook, which the committee felt was highly desirable in order to give the LMAA an up-to-date image." Perforce, it will take more than that.

Seeking approval

TANKER owners invest a lot of time and effort into getting and maintaining approval from major oil companies for their ships and managements. Two recent events, one at sea and one in the UK Court of Appeal, mean they will have to try even harder in future.

The first event was the sinking of the Erika. Oil majors took fright at the public reaction to the fact that the Erika held a number of oil company approvals. All of them have now tightened their approval award systems. They have tightened technical criteria, increased inspections, openly, or sometimes less openly, refused to accept certain classification societies, and placed restrictions on the ability of traders and charterers to override advice from their vetting departments.

The second event was the recent judgement in the Seaflower case. The Court of Appeal in England held that the owners' failure to obtain specific oil major approval within a set time limit was a breach of condition which entitled the charterers to cancel the charter party. The owners had to pay back hire paid in advance, and to reimburse the costs of bunkers and bunkering when the charterers redelivered the vessel.

The owners had agreed - admittedly in a poorly drafted clause - that they would seek to achieve Exxon approval within sixty days of the commencement of the charter party and would also maintain the validity of approvals already held for Mobil, Conoco, BP and Shell. They also agreed to a clause which imposed financial penalties if they lost an approval, and which gave the charterers the right to cancel the charter party if the approval was not reinstated within thirty days.

In the event it was a little over sixty days after the commencement of the charter when the charterers nominated the ship for an Exxon cargo, but the owners could not get an Exxon approval until three weeks or so later. Although the high court held that the guarantee given by the owners to obtain Exxon approval was not a condition of the charter party, the Court of Appeal thought otherwise.

The situation is about to get even more complex. Oil majors are taking a close look at how they approve vessels and applying sophisticated risk management techniques to protect themselves. Shell recently announced its STAR Voyage Risk Assessment tool. This is a dynamic system which is able to consider each proposed voyage charter on a case-by case basis. It considers, among other things, the ship, the management, the charter party, the route, the cargo and the expected weather. The system's output is mandatory within Shell, and classifies the risks involved as Intolerable, Medium or Low. If the risk is Intolerable or Medium, then risk management options have to be taken, which could include substituting another vessel. Where does that leave an "approved" vessel which, perhaps because it is single hull, does not meet the STAR Low risk rating for a particular voyage? In a legal limbo, and certainly without a cargo.

BP has also said it will no longer give approval to ships for a fixed time, but will instead assess them on a voyage-by-voyage basis. Following that logic, it has found it impossible to include a vetting clause in its own proposed tanker charter party.

Both owners and charterers can expect more disputes over oil major approvals, but neither party can live without them. The lessons must be:

Commenting on these developments in the latest issue of its Lawgram newsletter, London law firm Lawrence Graham says the Seaflower case warrants close scrutiny, and warns that charter party clauses must be tightly drafted to reflect the commercial outcome the parties want to achieve. "While breach of the oil major's approval was held to be a breach of a condition in the Seaflower case," says Lawrence Graham, "other wordings may not lead the courts or arbitrators to the same conclusion. The result could be that charterers may be compensated in damages, rather than become entitled to cancel the charter.

"Consider, when fixing, how changes to approval procedures will affect clauses under which owners warrant to hold oil major approval. If the approval becomes a shifting standard, how can they ever be sure of meeting the condition?

"Owners' bodies such as Intertanko and BIMCO need to sit down with the oil majors and clarify how approvals can be sought and maintained against a background of strict but changing standards."

It seems that tanker owners and charterers may have to steel themselves for more disputes over oil major approvals.

Arresting obligation

IN our last issue, Xavier Bureau of Paris law firm Rembauville-Nicolle wrote about the ship arrest procedure in France. It was explained in the article that French law does not place an obligation on claimants to institute legal proceedings on the merits before the competent court within one month of the performance of the arrest. In fact, it does. Our apologies.

SMAshing succession

A WORD of congratulation is in order for David Martowski, who has just been elected to a two-year term as president of the Society of Maritime Arbitrators in New York. David succeeds Lucienne Bulow - a hard act to follow. We wish him well. He may be the right man for the job, at the right time. His vice-president is Don Szostak.

Klaus Mordhorst, meanwhile, was named by Lucienne - in one of her final jobs as president - to succeed Henry Engelbrecht as chair of the ICMA arrangements committee. The unhappy Henry felt obliged to resign because, among other things, his ICMA registration brochure had been "unacceptably interfered with". Arbitration, anybody?

I have seen the brochure, and so has my accompanying person. It's fine. The good news is that Klaus Mordhorst is likely to be above that sort of thing.

Good losers

MANFRED Arnold's article in this issue on how people respond to arbitration decisions they don't agree with makes very interesting reading. People are different. The responses elicited by Manfred from the shipping industry and the admiralty bar worldwide range from, "Arbitrators are infallible" to, "Generally, I have been able to take my lumps and get on with it". Our favourite comment, though, is, "As I rot through ageing, I grow less and less enchanted with the long reasoned awards … You don't always like them, but you get over them quicker, and it certainly saves on time and expense." Marvellous.

About average

THOSE of you who thought there was nothing more boring than insurance will have been encouraged by a recent opinion poll in the UK which revealed that insurance is actually more boring than ironing. But you are all wrong. There is a subsection of insurance which takes the cherry and the cake.

It is deductibles. The chairman of the Association of Average Adjusters recently wrote a sixteen-page paper on deductibles, for the benefit - if that is the word - of the AAA's annual meeting in London. He said the system of deductibles in hull policies needs to be modernised.

A quick read of the first and last paragraphs of the paper leads me to conclude that average adjusters think there is too much confusion about the meaning of "separate incidence or occurrence." I can help. It means something that only happens once.

The AAA misses the real point - and the real talking point - about deductibles. It is that marine underwriters want to put deductibles in policies to make shipowners pay a bigger slice of their own claims, and as a way of quoting even lower hull rates in order to keep business they would be better off without in the first place. Shipowners, meanwhile, are being urged to resist higher deductibles.

Both underwriters and owners have their eyes on the hole rather than the doughnut. The truth is that higher deductibles make sense for some owners, and not for others.

The AAA says that, without reform, the marine deductible system faces becoming "an interesting but legalistic irrelevance". The only word of that you could reasonably disagree with is 'interesting'. Oh, and by the way, don't ever get embroiled in a conversation with anybody about the difference between an average adjuster and a loss adjuster. You'll never get away.

Think first …

LAW firms can boost email security with thinkmail. If you don't understand that sentence, you're probably a lawyer. Join the club, by the way. I don't understand it either. But it is just one of the snappy lines used by internet service company iomart to try and sell a piece of electronic kit to law firms.

"Many in the legal profession are only now becoming fully aware of the implications they face daily whenever they click the send button on an email," says iomart. In my experience, many in the legal profession are only now becoming fully aware that they have a send button on their email, or indeed that they have an email at all.

Look at this, from the minutes of the 2000 meeting of the London Maritime Arbitrators Association. "By way of expenditure, the LMAA needed a new computer and printer. The previous one was purchased in 1994, and in fact in order to access the LMAA's own website it had been borrowing an old computer belonging to one of the committee members." How fabulous.

Lawyers are not technophobes. On the contrary, they tend to mistrust technology, and turn to it only when it can be used to buttress the quill and the abacus. So urging lawyers to make their email "intra-domain" is like trying to sell public liability insurance to a pavement artist.

When you have the time, ask ten lawyers for their email address. If more than four of them can tell you what it is immediately - without looking for a company brochure, or asking their secretaries to look for a company brochure - I will buy you a cup of tea and a fig newton.

… Think again

THINKING is overrated anyway, and difficult to bill the client for. A philosophy student once wrote the word Think on the wall of the campus washroom. A law student promptly scrawled Thoap underneath it.

Blues primer

I HAVE been sent a self-styled Blues Primer by a maritime lawyer, which makes fascinating reading. It is supposed to be helpful if you want to learn to sing the blues but, even if you don't, it will make you smile.

"Most blues begin 'Woke up this morning'," says the primer. " 'I got a good woman' is a bad way to begin the blues, unless you stick something nasty in the next line like, 'I got a good woman, with the meanest face in town'.

"The blues is simple. After you get the first line right, repeat it. Then find something that rhymes, like, 'Got a good woman with the meanest face in town. Yes I got a good woman with the meanest face in town. Got teeth like a grizzly, and she weighs 500 pound.

"Walkin' plays a major part in the blues lifestyle. So does fixin' to die. Blues don't travel in Volvos, BMWs or sport utility vehicles. You can't get the blues any place that don't have no rain. You can't have no blues in an office or a shopping mall. The lighting's wrong. Bad places to get the blues are WalMart, gallery openings, Ivy League institutions and golf courses.

"No-one will believe it's the blues if you wear a suit, and you don't have the right to sing the blues if you have all your teeth, you were once blind but now can see, you have a trust fund, or the man in Memphis lived. Perrier, Chardonnay, Snapple and Slim-Fast are not blues drinks. Muddy water is.

"Finally, you can't have a blues death if you die during a polo match or getting liposuction."

Most of our readers are blues-proof, we reckon.