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12 February 2010 12:37

Latest Edition of the Avo

AVO 423

Issue 423

February 7th, 2010

SUBSCRIBE click here | UNSUBSCRIBE click here | Read Archives here |

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

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1. Rule B Update – 15 Weeks After Jaldhi

George Chalos writes:-

Fifteen (15) weeks after the Second Circuit’s 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 Circuit’s 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 Court’s 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 Aspen’s international maritime obligations” and, accordingly, were properly within the court’s federal maritime jurisdiction.

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 court’s 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 Circuit’s 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.

gmc@chaloslaw.com

http://www.chaloslaw.com

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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 basis.

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.

gpermanyer@bdlezo.com

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3. Alexandria Declaration 2010

Carsten Grau has forwarded this declaration from a recent meeting in Eygpt:

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 Maritime Law.

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 Transport at:

kmhanafy@aast.edu

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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 a
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 Chronicle)

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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:-

http://www.smany.org

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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 city’s 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 insurers.

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.

http://www.mytonlaw.co.uk

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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 etc

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 proper")

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")

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.

Abbreviated Insults

The social networkers amongst our readers may find these of help for use in text messages on mobile phones or chat rooms

GOPlAinTraFk

- Go play in traffic

UvGotAFAcLikASqEzdTBag

- You've got a face like a squeezed tea-bag

IfUHdABrAnUdBDAjrus

- If you had a brain you'd be dangerous

IfUWnt2AMndREdrTherWldBNoChrge

- If you went to a mind reader there would be no charge

INoWenURLIinYaLpsMov

- I know when you are lying, Your lips move

TLItsROnBtNo1isHOm

- The lights are on, but no one is home

URAsMchUsAsMdGrdsOnATortus

- You are as much use as mud guards on a tortoise

TWhElsMvnBtTHmstrsDEd

- The Wheel's moving but the hamster's dead

URAsUsfLAsAChocl8Tpot

- You are as much use as a chocolate teapot

UR1SndwchShrtOfAPiKnk

- You are one sandwich short of a picnic

:-(YaBrAnIsntAsBgAsYa(_,_)

- A pity your brain isn't as big as your bottom

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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.



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