Arrested Development - Hot ticket in maritime law

Arrested Development

ARRESTING ships has become a hot ticket in maritime law. Books have been written on the subject, guides published, and conferences convened, but still the appetite is barely whetted.

A few months ago a phalanx of lawyers descended on London for the third annual IBC Ship Arrest Conference. They listened politely to Dr Marin Fagfhouri, an unexcitable bureaucrat who earns her living as officer-in-charge of the preposterously long-winded Legal Unit of the Division for Services Infrastructure for Development and Trade Efficiency at the United Nations Conference on Trade and Development in Geneva. UNTAD to you and I.

Dr Fagfhouri explained that the new ship arrest convention being thrashed out by UNCTAD and IMO was ready now to progress beyond the draft stage and go on to a diplomatic conference. In theory, the new convention will change the manner in which arrests are made and will bring greater uniformity to the way in which ships are arrested around the world. In theory.

Having listened with interest to Dr Fagfhouri, the lawyers took the opportunity to explain that the draft convention was unlikely to change anything. Patrick Knox, of Sinclair Roche & Temperley, pointed out that the UK was unlikely to ratify the new convention because it doesn't like the widening of the definition of maritime liens which it allows. Stephen Simms, of Greber & Simms, said the US courts would take no notice of the discussions and would continue to go their own way.

This left Ignacio de Ros, whose comments on how to collect your money in Spain you can read elsewhere in this issue. Ignacio explained that, in Spain, he has always found the law to be an irrelevance. Over the course of many years, he has shaved the system of ship arrest down to the point where he goes along to the local judge with a short notice asking for the arrest or freeing of a ship, together with enough ready cash in his trousers to pay for any deposits. He avoids dragging points of law into the discussion, as these just complicate things.

Many lawyers will take offence at this. Many more will welcome it as a breath of fresh air. But between the two extremes, and even allowing for the likely opposition from the US and the UK, there is a strong desire in the international legal world for a more uniform approach to ship arrest.

The new arrest convention will affect ship arrests everywhere, and will change the way in which maritime liens are viewed. But don't hold your breath. Arrests come out of the blue, while new conventions tend to deal only in black and white.

Lost at sea

THE draft arrest convention has already gone too far on one point for my liking. It has been decided, quite unilaterally, to omit from the new convention any reference to bottomry. This is a dreadful step forwards. Never mind that masters these days rarely flog their ships or cargoes to generate ready tin for the voyage. History is condemned to repeat itself, and when it does, what words will we use to describe what has happened? It is time to protest the loss of our language. If we don't, we will lose our bottomry and our barratry and our bumbershoots without a fight.

Using initiative

IN the highly specialised world of maritime arbitration, there are those who advocate the use of administered arbitration, such as the ICC and the AAA, and those, including the LMAA and the SMA, who are firm believers that the ad hoc system is the more advantageous and less expensive approach to commercial arbitration. Which is right?

Those of our readers who have questions about the viability of the ad hoc system might be interested in a recent maritime arbitration where a three-man panel had been constituted and had made interlocutory rulings on discovery and the production of witnesses. A first hearing was scheduled, with about three months' lead time, to hear four witnesses who had to travel to attend the session. When the hearing was about to begin, the arbitrator appointed by counsel who was travelling with his witnesses had not shown. Rather than cancelling the hearing or proceeding by consent in the absence of one panel member, counsel decided to find a substitute arbitrator who would be available to attend the hearing. Counsel was successful in finding someone who could attend, and the hearing was completed with only an hour's delay.

This choice and result would not have been possible under the auspices governing arbitrators in administered arbitrations, given the nature of their selection and approval procedures. It is somehow cheering that, in arbitration, for all its supposed faults, initiative and co-operation can still save the day.

Settling differences

SHIPPING'S continued interest in alternative dispute resolution and in various forms of mediation and conciliation is, encouragingly, being fuelled by the courts. This is not as incongruous as it might seem, since there will always be work for good legal minds, no matter how the parties to a dispute decide to settle their differences.

Coincidentally, I was reading an article by a Japanese commentator about the new code of civil procedure in Japan, which came into effect at the beginning of this year. (They tend not to tinker with the law in Japan, this being the first major reform of the code since 1890). In noting the growing interest in amicable settlement of disputes in western countries in the interests of saving time and money, the author of the article remarked that the predilection of the Japanese for amicable settlement has nothing to do with time and money but is motivated instead by the desire to save face.

A study recently undertaken by a Japanese sociologist showed that most Japanese people were reluctant to show feelings of hatred, anger, fear and sorrow, in that order. For Americans, the order was sorrow, anger, fear and hatred. The UK wasn't included in the study, but a fair guess at the order of things in its case might be fear, hatred, anger and sorrow. If all this is true, it is a wonder on two counts. Firstly, it is a wonder that international shipping ever gets its disputes resolved, amicably or otherwise. Secondly, it is a wonder that disputes ever get as far as the courts in the first place.

Liquid liability

BUNKERS are not the first thing that lawyers and arbitrators think about when they wake up in the morning. Very often, they are not even the last. But, ever so quietly, a phenomenon has grown up around bunker spill liability.

While there are special conventions and liability regimes, and even stricter liability insurance limits, for oil cargoes carried on tankers, there is nothing specifically for bunkers. No liability regime, no cap on insurance and no requirement to be insured in the first place. Why, particularly since the oil which is being carried as cargo is very often the same sort that is being burnt in the engineroom?

The reason is that, until recently, ships carried comparatively small amounts of bunkers compared to the quantity of oil carried as cargo, and the big spills were all from tankers. Big spills make big headlines, which is one step on the road to big conventions. Bunkers, meanwhile, are responsible for only a small number of spills, damage and payouts, so shipping has tended to ignore the issue of liability. Well, almost.

Australia, the Netherlands, Norway, Sweden and the UK - all countries with a talent for producing international paperwork in shipping - have now put forward to IMO's Legal Committee a draft document setting out the text for a new compulsory international regime covering liability and compensation for pollution damage caused by ships' bunkers.

Shipowners and their underwriters have always maintained that there is no evidence of any need for a special bunker spill regime. The P&I clubs, too, seem happy with things as they are. But the draft was the subject of three meetings last year, and has since acquired a momentum of its own which will keep it alive for some time.

IMO's Legal Committee seems to be divided on the issue. Those who want the convention point out that IMO's Environmental Protection Committee has already identified the need for an international instrument to regulate bunker spill compensation. Those who don't say that P&I cover is adequate, and that to require separate cover would lead to chaos.

The draft instrument on the table could be a new convention or a protocol to MARPOL. It is based on strict liability for the shipowner, with limited defences and strict limitation of liability. The five nations pushing it want to see action on the narrow front of pollution damage only, while others want to load the same instrument with a host of other liabilities.

Even if there are no major casualties with attendant bunker spills causing widespread pollution in the next couple of years, the draft instrument is set to proceed anyway to become a full working item at IMO, with convention status a possibility within five years. If, on the other hand, there is a big spill in the meantime, do your sums again.

Needing expertise

EXPERT witnesses think lawyers should pay more attention to them. They think they have a role to play in dispute mediation. They think facts are more important than perceptions and advocacy. They think disputes should be resolved on facts, not on pernickety legal points.

What do lawyers think of all that? Not much, if the turn-out at the recent Royal Institute of Naval Architects' Marine Experts in the Legal Process conference in London was anything to go by. The odd lawyer showed up on the first day, when lawyers were speaking. On the second day, when the experts were speaking, there were no lawyers to be seen.

Maybe lawyers care deeply about experts but were too busy to show up on this occasion. Maybe they knew what was coming. No-one should have to sit through a sales pitch for David Doust's book. Or maybe it was just that the down-at-heel surroundings of the institute weren't to their taste. If experts want to be taken seriously, they need to take themselves seriously. Serious does not mean pompous.

Age concern

AGE is relative, but it is also disconcerting. These days, I am being disconcerted on an almost hourly basis. Colleagues ask me for good contacts on a variety of subjects. I give them blue-chip names from my extensive business card files, or from my head. They ring the contacts, only to be told, "He retired in 1972", or "I'm sorry, he fell at Ypres". How long before I start buying velcro bootees, size 8, to shuffle around the house in?

My comments in the last issue about the escalating age of arbitrators has struck a chord with one reader in the US, who prefers to remain nameless, and ageless. He tells me that, in March 1988, the average age of members on the roster of the Society of Maritime Arbitrators in New York was 60.66 years. The oldest arbitrator was born in 1901, and the youngest in 1948. Today, apparently, the oldest member is 94 and the youngest is 45, and the average age of SMA members is now 63.8 years.

Since the average age is going up, this must be regarded as bad news. What worries my correspondent, though, is the realisation that he is getting progressively closer to the average. And what worries me is what happened to the arbitrator who was 87 in 1988, and who is clearly no longer practising. Surely he wasn't excluded on the grounds of age alone?

What's in a name?

DAVID Angus, whose unusual blend of politics and maritime law interests you can read about elsewhere in this issue, is known to his friends as Goose'. The question is, why? The answer is ice-hockey, which is also the answer to lots of other questions involving Canada.

Angus's extra-curricular activities as a young man included ice-hockey. The most common rendition of Angus naturally shortens to Gus, which in French turns naturally into Goose. Given that there was a well-known player on the Montreal ice-hockey team called Goose McCormack, the name stuck. ('Dave' might have been simpler, but not as much fun.)

Angus took a summer job as a reporter on the Montreal Gazette. His appointment as a police reporter led him to befriend the local homicide squad, and he drove downtown in a battered blue Renault with 'Press' emblazed on its sides. Goose convinced himself that he would become Canada's very own Walter Lippmann. He didn't, but when injury put an end to his hockey career he rechannelled his energies into writing a sports gossip column at Princeton. It was called, naturally enough, 'The Goose takes a Gander'. Puckish.

Dangerous liaison

GOOD to see that Richards Butler is continuing to put its Dome Room to good industrywide use, and not just hogging it for itself. (Why do Richards get all the good things in life, i.e., butlers, hogs, bays, long staffs etc).

The latest extravaganza to hit the Dome Room is a seminar entitled Dangerous Cargo - are shippers an easy target? This came too late to beat our deadline for this issue, but it looks like being a good debate, with an analysis of the Giannis NK case and a lament on behalf of merchants. I am outraged, though, to see that the Thai curry lunch is listed as "optional". Since when has curry been optional? My own plan is to go for the lunch and to rely entirely on hearsay for the seminar. That way I avoid having to exaggerate on an empty stomach, something I never like to do.

Plain English

HURRAH. I am indebted to US law firm Winthrop, Stimson, Putnam & Roberts for information that the Securities and Exchange Commission in the United States has recently adopted rules requiring issuers to write the cover page, summary and risk factor sections of prospectuses in plain English. This is promising. But despite a projected start date of October 1, ludicrous concern about whether simplification will lead to increased liability has already led to pleas from lawyers to make the rules optional.

The SEC has amended its regulations, and Winthrop Stimson reports, "Amended item 503 requires that (I) if a summary section is included, it must be brief and in plain English, (ii) the risk factors must be written in plain English and must describe risks particular to the issuer rather than boilerplate risk factors, and (iii) if the issuer is offering debt securities or preferred stock and is including a summary section, that section must include disclosure of the ratio of earnings to fixed charges". At 75 words, this sentence is 60 words too long. Any sixty.

Ball court

THANK goodness for the internet. Without it I would never have known of a recent study which showed that trial lawyers have significantly higher levels of testosterone than their counterparts in other areas of the law. Apparently, lawyers as a group don't have especially high levels of testosterone, but trial lawyers do - about thirty per cent more than those who stay out of the courtroom. Personally, I have never found the presence of this hormone in lawyers to be dependent on place of work, or on anything else for that matter. And if there really are two types of lawyer, why would anybody hire one without - well - testosterone?

Not forgotten

I WAS saddened to hear recently of the death of Hammond Cederholm, who spent something like forty years of his life arbitrating shipping disputes. The Society of Maritime Arbitrators mourns his passing in the latest issue of its newsletter, saying, "Ham...left his imprint on the process". It is hard to think of a nicer epitaph for an arbitrator.

I never knew the man personally but, after twenty years of reading the SMA award service, and so many of his passionate dissents, I felt as if I did. Rest in peace.

Name change

I SEE that Marie-Louise Rossi, the newly created chief executive of the soon-to-be-merged London International Insurance and Reinsurance Market Association/Institute of London Underwriters, is preparing to spend ready money on the services of marketing consultants to come up with a name for the new merged organisation.

The consultants have been briefed to "survey the brand values and evaluate the concepts behind the various elements of the name, such as 'London' and 'international' ". This sounds like pompous nonsense to me, guaranteed to part the new organisation from a lot of its money before it has even put up the nameplate.

There are better ways of choosing a name, such as building on an established track record and a good reputation. My own suggestion is The Institute of London Underwriters. No charge, Marie-Louise.