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IN THIS ISSUE
1. Rule B Update 15 Weeks After Jaldhi
2. New Spanish Law on Contracts of Carriage of Goods by Land
3. Alexandria Declaration 2010
4. Cosco Busan Owners solely Responsible for the Damage?
5. Force Majeure Clauses and the Right to Cancel
6. People and Places
1. Rule B Update 15 Weeks After Jaldhi
George Chalos writes:-
Fifteen (15) weeks after the Second Circuits decision in The
Shipping Corporation of India v. Jaldhi Overseas Pte. Ltd., a new issue
has arisen as to whether funds initially processed as EFTs by intermediary
banks in New York may validly be re-attached if the garnishee banks
transferred such funds into a holding account outside the Southern District
of New York and the Second Circuit.
Two (2) Rule B actions have recently been commenced in the United States
District Court for the District of Delaware, seeking to attach funds
belonging to defendants which were being held by a garnishee bank in
a maritime holdover account in Delaware. In each case, the Rule B plaintiffs
had initially commenced proceedings in the Southern District of New
York and restrained EFTs at a New York garnishee bank. Following Jaldhi,
the plaintiffs investigations revealed that the restrained funds
had been placed by the garnishee bank in a holding account outside of
the District. The plaintiffs then sought and obtained new Orders of
Attachment from the Delaware Court, allowing them to re-attach the physical
funds held in the respective accounts in Delaware. The District of Delaware,
which is located in the neighboring Third Circuit, is not bound by the
Second Circuits decision in Jaldhi.
Unlike New York, the local rules in the District of Delaware do not
require notice of the attachment to be provided to the defendant and,
as of the time of this writing, the Rule B defendants have not yet appeared
in the Delaware actions to challenge the re-attachment of the funds.
If the plaintiffs are ultimately successful in sustaining the re-attached
funds in the District of Delaware, this could become a Jaldhi
loophole which may allow Plaintiffs whose attachments have not
yet been vacated in New York to sustain their security despite Jaldhi.
We will, of course, continue to monitor any and all developments in
both of these actions (and their parallel actions in the Southern District
of New York).
Also this week, the Ninth Circuit Court of Appeals issued its decision
in ProShipLine Inc. and EP-Team Inc. v. Aspen Infrastructures Ltd.,
a Rule B matter related to an identically-captioned case decided by
the Second Circuit Court of Appeals in October. The plaintiffs-appellants
had appealed from two (2) decisions from the Western District of Washington,
in which the district court had (1) declined to compel the defendant
to post security in lieu of garnishment; and (2) vacated the plaintiff-appellants
writs of attachment on the grounds that there was no admiralty jurisdiction;
it was bound by res judicata; and that all of the parties were present
in the Southern District of Texas.
The Ninth Circuit ruled that the District Court had correctly concluded
that it lacked authority to order the defendant to post security in
lieu of garnishment. In addressing the plaintiff-appellants vacatur
arguments, the Ninth Circuit first concluded that the district court
had erred by finding that the underlying contract at issue was not maritime
in nature because it did not make reference to specific
vessels or voyages. Rather, the Court found that the U.S. Supreme
Courts decision in Norfolk S. Ry. Co. v. James N. Kirby, Pt. Ltd.
requires that a Court only look to whether the principal objective
of a contract is maritime commerce. The Ninth Circuit found that
the services provided by the plaintiffs under the contracts, even those
obligations that were performed on land, were to facilitate and
make possible Aspens international maritime obligations
and, accordingly, were properly within the courts federal maritime
Similarly, the Ninth Circuit found that the district court had erred
in finding that it was bound by res judicata to vacate the writ to conform
with the New York ruling. The Court concluded that application of res
judicata was erroneous because the New York action did not arise from
the same transactional nucleus as the action in the Western
District of Washington, since the two (2) actions involved the attachment
of different property located in the respective districts.
In addressing the district courts equitable vacatur of the writ
of attachment based on the presence of all three (3) parties in the
Southern District of Texas, however, the Ninth Circuit concluded that
although the District Court had properly vacated the writ of attachment
with respect to one (1) of the plaintiffs, it had abused its discretion
by vacating the writ as it pertained to the other plaintiff individually.
The Court looked to the Second Circuits description in Aqua Stoli
Shipping Ltd. v. Gardner Smith Pty Ltd of circumstances in which equitable
vacatur of a writ of maritime attachment may be appropriate and, specifically,
focused on the second situation: the plaintiff could obtain in
personam jurisdiction over the defendant in the district where the plaintiff
is located. The Ninth Circuit concluded that this language, stressing
that the district must be the district where the plaintiff
is located, should be interpreted to allow for equitable vacatur only
in situations where the plaintiff could obtain in personam jurisdiction
over the defendant in the district where the plaintiff has its most
significant presence. The Court found that although one of the plaintiffs
was clearly located in the Southern District of Texas, there
was no support for the proposition that the other plaintiff maintained
a significant presence in the district. Accordingly, the Court re-instated
the writ as to that plaintiff only, finding that the individual plaintiff
had not been shown to be located in a district where it
had in personam jurisdiction over the defendant.
2. New Spanish Law on Contracts of carriage of goods by land
Guillem Permanyer of the firm of Blaz de Lezo in Vigo writes:-
Spain has passed a new legal instrument regarding the contract of carriage
of goods by land. The Law 15/2009, dated 11th of November, is currently
still in a vacation legis situation and will enter into
force on the 12th of February 2010.
The regulation which today is still applicable partially can be found
in the articles of the Spanish Commercial Code of 1885. It is obvious
that since 1885 industry has changed and that a more practical and updated
approach was desperately needed.
The Law on Contracts for the Land Transport of Goods by Land (15/2009)
will regulate the transport by road but also by rail, giving a very
similar perspective to that of international CMR Convention and the
1999 CIM Rules. The new law also includes an important amendment to
the 2003 law on the rail sector in Spain.
The new law is an interesting mixture of previous national regulation
and the current international regime of the legislative land transport
context. Nevertheless it is important to note that although the new
law (15/2009) aims to establish a new framework for ational road transport
contracts, the only direct derogation is the one of the Commercial Code,
affecting articles 349 379 (regarding the commercial contract
of road transport); 951 and 952 (regarding time limits of liability
which only affects road transport matters within these articles).
All other national legislation on road transport may still be applicable
insofar as it is not in conflict with the new text. For this reason
the Ley de Ordenación del Transporte Terrestre (LOTT)
and its development by the Reglamento de Ordenación del
Transporte Terrestre (ROTT) as well as several low profile ministerial
regulations, the so called Órdenes Ministeriales
will coexist with the Law (15/2009) entering into force on 12 February.
This state of affairs does not really fulfil the need for a solid regulation
and is yet another example of the vast number of legal instruments in
force in Spain, a situation that often leads to confusion.
The following new aspects can be highlighted:-
1. Auxiliary and complementary activities like agencies, distributors
and the forwarding industry finally have been regulated, albeit a less
laconic approach would have been desirable.
2. There are special regulations on multimodal transport and in particular
the rules governing liability.. This includes solutions for the cases
where it is impossible to determine in which phase the damage has occurred.
3. A presumption is made that transport is contracted personally by
the contractual carrier eg the freight forwarder.
4. Electronic documents are given legal validity.
5. The removals sector is also contemplated by the new rules and to
some extent courier transport is also regulated.
6. Successive transport is also regulated in articles 64 66.
7. Inland water transport will provisionally be regulated by this law,
albeit only until a specific legal framework is passed.
8. The law will apply to postal servics in some cases.
9. Limitation of liability increases from 4.5 €/Kg to 5.92 €/Kg
for the year 2010 and can be adjusted by the Government on a yearly
10. No limitation is possible in cases of wilful misconduct or gross
negligence or in cases where the value of goods or a special interest
has been declared.
11. There is a one year limitation period for claims in cases where
wilful misconduct or gross negligence does not ariset and a two year
period for incidents caused by wilful misconduct or gross negligence.
Without a doubt this new law is a step forward and helps to clarify
a legal framework that up until now was rather confusing and to some
extent open to vast interpretation. Nevertheless a more in depth regulation
of some aspects would have been desirable as well as using this opportunity
to unite in one unique legal text all regulation regarding contracts
of carriage of goods by road.
3. Alexandria Declaration 2010
Carsten Grau has forwarded this declaration from a recent meeting in
On 3rd February 2010, a two days workshop hosted by the Arab Academy
for Science,Technology and Maritime Transport in Alexandria/Egypt for
more than two hundred government and industry delegates and experts
from 15 Arab League countries (Djibouti, Egypt, lraq,Jordan, Kuwait,
Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria,
Tunisia and Yemen) ended with a joint declaration - the ALEXANDRIA DECLARATION
2Q10 -recommending to the Arab League transport and trade ministers
to jointly sign the UnitedNations Convention on Contracts for the lnternational
Carriage of Goods Wholly or Partly by
Sea - the Rotterdam Rules 2008.
The workshop was supported by an expert team sent by UNCITRAL and
led by DLA Piper partner Mr. Carsten Grau (Hamburg). The organizations
(NGOs) participating in the workshop included: Arab Federation for Sea
Carriers, Arab Federation for Freight Forwarding and Logistics, Arab
Federation for Sea Ports, Arab Federation of Chambers of Shipping, Arab
Federation of Ghambers of Commerce and Arab Society for Commercial and
Until now, the Rotterdam Rules have been signed by 21 countries: Armenia,
Cameroon, Congo, Denmark, France, Gabon, Ghana, Greece, Guinea, Madagascar,
Mali, Netherlands, Niger, Nigeria, Norway, Poland, Senegal, Spain, Switzerland,
Togo and United States.
A joint signing of the 21 Arab League countries would be a clear signal
that the Arab region is dedicated to the developments of globalization
and modernization in international maritime transport which comprise
the future necessity of electronic transport documents, multimodalism,clarification
of roles, responsibilities, duties and rights of all parties involved
in international transport of goods, provisions to prevent fraudulent
use of bills of lading, revision of liability regime and limitations.
Within the workshop, only one representative from Sudan and the Arab
Federation for Freight Forwarding and Logistics expressed reservations
against signing the Rotterdam Rules. ln order to become binding international
law, the Rotterdam Rules need to be signed and ratified by at leasi
20 UN member states.
Contact: Prof. Khaled Hanafy, Dean of the College of lnternational Transport
and Logistics at the Arab Academy for Science, Technology and Maritime
4. Cosco Busan Owners solely Responsible for the Damage?
Readers ,may recall when in 2007 the Cosco Busan slammed into the Bay
Bridge and spilled 53,000 gallons of fuel oil into San Francisco Bay.
Vessel owners, required by state law to hire licensed pilots to navigate
the bay, are also bound by another California law that makes them liable
for any harm caused by the pilot's negligence, U.S. District Judge Samuel
Conti said in a Jan. 27 ruling. The case involved a dispute more than
$315,000 in legal defense costs for the pilot, Capt. John Cota, who
pleaded guilty to federal pollution charges and was sentenced to 10
months in prison. But the law Conti upheld also applies to multiple
lawsuits for damage caused by the Cosco Busan.
The 901-foot container ship struck a tower of the bridge west of Yerba
Buena Island in a thick morning fog on Nov. 7, 2007. The oil reached
the bay shoreline and ocean beaches in Marin and San Mateo counties
and killed more than 2,400 birds.Government agencies have estimated
the cleanup cost at $70 million. Damage suits have been filed by the
federal and state governments, the city of San Francisco, and private
fishers, crabbers and others claiming business losses.
The ship's operating company, Fleet Management Ltd., pleaded guilty
in August to criminal charges of water pollution and filing false documents,
and agreed to pay $10 million in fines and penalties. Sentencing is
scheduled Feb. 19. Federal prosecutors have blamed both Cota and the
ship's owners for the accident - Cota for deciding to sail in the fog
and ignoring danger signals, the owners for failing to train the crew
or notify the pilot when the ship went off course. Conti's ruling, applied
to the other suits, would require the owners to pay for all damage attributed
to Cota, unless they could show that the pilot acted "willfully"
and not just negligently. Fleet Management and Regal Stone Ltd., the
Cosco Busan's owner, argued that the California law conflicted with
federal law that limits a ship owner's liability for actions by a pilot
whom the owner was required to hire. But Conti said Congress has allowed
states to regulate piloting of ships in their waters and ports. David
Schack, a lawyer for Cota, said the ruling, if upheld on appeal, would
help all Bay Area ship's pilots. "If every time you went out there
you were putting your personal net worth on the line for any mishap,
I don't think you'd have
many volunteers," Schack said. Joseph Walsh, a lawyer for the owners,
said they had no comment at this stage of the case. Source ( San Francisco
5. Force Majeure Clauses and the Right to Cancel
The current edition of the Arbitrator (January), the quarterly webzine
of the Society for Maritime Arbitration Inc contains the closely reported
case Agrifos Fertilizer, Inc. v Transammonia, Inc., S.M.A. 4049 (2009)
by David Martowski. The recent award in the case addressed the issue
of whether a buyer had the right to cancel a sales contract under a
force majeure clause arising from damage to its fertilizer plant caused
by Hurricane Ike on September 13, 2008.
The Panel reasoned that "cancellation of a contract is an extreme
measure-for there is no more serious a step a contracting party might
take, and our courts have rightfully placed the burden on the party
cancelling a contract to prove by a preponderance of evidence that it
was entitled to do so." The cancelling party in the event failed
to meet this burden and the sellers made a substanial recovery. Martowski's
note commends the parties for their exceptionally fine briefs which
set forth the..contentions, arguments and supporting authorities.
As ever the Aribtrator is worth the time of anyone interested in the
subject of NY arbitration. Martowski's note and much more can be accessed
by following the link below:-
Do you have an insurance matter which is hard to place or hard to deal
with? Reinvention Ltd--Our motto is happy to help. Click on the banner
below. We may not know the answer but we know a person who does.
6. People and Places
Shipping, transport and insurance lawyers Scott Yates and John Habergham
have launched a new niche law firm in the city of Hull.
Myton Law, the first specialist shipping, goods in transit and insurance
law firm in the Humber region, will provide wet shipping, dry shipping,
insurance and technical shipping advice from offices at The Deep Business
Centre on the citys Humber river front with 24/7 call out service.
Formerly, a partner and head of the wet shipping unit at Hull firm
Andrew Jackson, Scott Yates specialises in claims arising out of shipping
and transport incidents undertaking a range of matters, including collisions,
salvage and damage to fixed & floating objects. He is a seasoned
investigator of marine incidents and is known, in particular, for personal
injury claims acting on behalf of ship owners and leading marine liability
John Habergham focuses on disputes arising out of the carriage of goods
by road, sea and rail. He is rated as one of the leading practitioners
in the transport law sector by Chambers Legal Directory, is a former
chairman of Leeds Marine Insurance Association and currently sits on
its Technical & Advisory Committee. He is also a member of the London
Maritime Arbitrators Association. John was also previously a partner
at Andrew Jackson and headed their dry shipping unit.
How to speak Essex !
This is an invaluable guide......for those of you that are planning
to venture into Essex, the well known county in England.
alma chizzit - A request to find the cost of an item
amant - Quantity; sum total ("Thez a yuge amant of mud in Saffend")
assband - Unable to leave the house because of illness, disability
awss - A four legged animal, on which money is won, or more likely
lost ("That awss ya tipped cost me a fiver t'day")
branna - More brown than on a previous occasion ("Ere, Trace,
ya look branna today, ave you been on sunbed?")
cort a panda - A rather large hamburger
Dan in the maff - Unhappy ("Wossmatta, Trace, ya look a bit Dan
in the maff")
eye-eels - Women's shoes
Furrock - The location of Lakeside Shopping Centre
garrij - A building where a car is kept or repaired(Trace: "Oi,
Darren, I fink the motah needs at go in the garrij cos it aint working
Ibeefa - Balaeric holiday island
lafarjik - Lacking in energy ("I feel all lafarjik")
Oi Oi! - Traditional greeting. Often heard from the doorway of pubs
or during banging dance tunes at clubs
paipa - The Sun, The Mirror or The Sport
reband - The period of recovery and emotional turmoil after rejection
by a lover ("I couldn't elp it, I wuz on the reband from Craig")
Saffend - Essex coastal resort boasting the longest pleasure pier in
the world. The place where the characters from TV's, popular soap opera,
Eastenders go on holiday
tan - The city of London , the big smoke
webbats - Querying the location something or someone is. ("Webbats
is me dole card Trace? I've gotta sign on in arf hour")
wonnid - 1. Desired, needed. 2. Wanted by the police
zaggerate - To suggest that something is bigger or better than it actually
is. ("I told ya a fazzand times already")
The social networkers amongst our readers may find these of help for
use in text messages on mobile phones or chat rooms
- Go play in traffic
- You've got a face like a squeezed tea-bag
- If you had a brain you'd be dangerous
- If you went to a mind reader there would be no charge
- I know when you are lying, Your lips move
- The lights are on, but no one is home
- You are as much use as mud guards on a tortoise
- The Wheel's moving but the hamster's dead
- You are as much use as a chocolate teapot
- You are one sandwich short of a picnic
- A pity your brain isn't as big as your bottom
Thanks for Reading the Maritime Advocate online
Maritime Advocate Online is a weekly digest of news and views on the
maritime industries, with particular reference to dispute resolution.