NEWS

The decision of The Supreme Court of the UK in the case of The LONGCHAMP

On 25 October 2017 the Supreme Court handed down its judgment in the Longchamp case. 

This case concerned the application of Rule F of the York-Antwerp Rules in relation to vessel operating expenses incurred by the shipowners while a ransom payment was being negotiated with pirates. The allowance of these expenses as general average was generally considered to be controversial and the judgment may have an impact on issued, pending and future general average adjustments. 

A paper prepared by Michael Harvey reviewing the judgment and considering its possible impact can be downloaded here.


Just published - The York-Antwerp Rules: The Principles and Practice of General Average Adjustment

We are pleased to announce that the 4th Edition of this book, authored by Geoffrey Hudson and Michael Harvey, has now been published by Informa Law from Routledge as part of the Lloyd’s Shipping Law Library series.

The objective of the book is to provide a guide to the principles and practice of general average adjustment which will be of practical use both to those whose business depends upon a good understanding of such matters as well as those who may have only a passing interest in the subject but require the assurance of understanding this unique aspect of maritime law.

In addition to a detailed analysis of the 2016 Rules, the book contains chapters concerning general average & salvage security, general average absorption clauses and the insurance of average disbursements. The Appendices include the 2016 Rules contrasted with those of 1994, comparative texts of Rules from 1864 to 2016 and other useful reference materials.

The book is available by mail order at routledge.com

Comparative Maritime Law

A friend of ours, Prof. Hassania Cherkaoui of Morocco, has recently published a most useful study of comparative maritime laws. She has advised as follows:


"I created a website specially for my book in order to make it known by the English-speaking countries.

This is the first book in the world engaged in the unexplored study of comparative maritime law.

Analyses undertaken in this book delve into many foreign maritime laws, in particular English, French and American laws. Those chapters devoted to the comparison of Moroccan maritime law with that of 19 other countries yields differences more of detail than of principle. Each study was written by a renowned maritime legal expert from the country concerned.

You will definitely want to read it, after visiting its website which presents it sufficiently:   www.comparativemaritimelaw.com"

The York-Antwerp Rules 2016 from the perspective of the average adjuster

An article written by Michael Harvey has recently been published in The Journal of International Maritime Law in which he explores the affect of the changes of the 2016 York-Antwerp Rules on the work of the average adjuster. A copy of the article can be downloaded below.

Download here:

MDH - JIML Article

Change in Limitation Amounts under English Law

From today (30 November 2016) the following limitation amounts will apply to incidents occurring on or after that date.

For property claims for ships not exceeding 2,000GT the new limit is 1.51 million SDRs (up from 1 million SDRs) with the following additional amounts for larger vessels:

  • For each ton from 2,001 to 30,000 tons, 604 SDR’s (up from 400 SDRs).
  • For each ton from 30,001 to 70,000 tons, 453 SDR’s (up from 300 SDRs).
  • For each ton in excess of 70,000 tons, 302 SDR’s (up from 200 SDRs).


For loss of life or personal injury claims the new limit for a ship not larger than 2,000GT is 3.02 million SDRs (up from 2 million SDRs), with the following additional amounts for larger vessels:

  • For each ton from 2,001 to 30,000 tons, 1,208 SDR’s (up from 800 SDRs).
  • For each ton from 30,001 to 70,000 tons, 906 SDR’s (up from 600 SDRs).
  • For each ton in excess of 70,000 tons, 604 SDR’s (up from 400 SDRs).

 
One SDR is currently worth GBP 1.0838 or USD 1.3521.

YORK-ANTWERP RULES 2016

At their Conference in New York on Friday 6 May, the Assembly of the CMI adopted the York-Antwerp Rules 2016. These Rules have been agreed by the commercial interests (International Chamber of Shipping & International Union of Marine Insurance) so the expectation is that they will be used in preference to YAR 1994 and, more particularly, YAR 2004. Indeed, BIMCO have already indicated that their documents will be amended to reflect these new rules.

IMG 2522


The major changes from the YAR 1994 relate to the following:

  • Rule B - Sub-rules 2 & 3 relating to tug and tow.
  • Rule E - Changes concerning notification and the provision of details of value and claims in GA.
  • Rule G - Amendment to sub-clause 4 intended to achieve uniformity of adjusting practice.
  • Rule VI - Major changes re the treatment of salvage.
  • Rule XI - ‘Definition’ of port charges added.
  • Rule XVI - Wording added to deal with issue arising from place of final delivery not being port of discharge. Also recognition that low value cargos may be excluded.
  • Rule XX - Exclusion of commission.
  • Rule XXI - Formula for calculating interest (ICE LIBOR + 4%).
  • Rule XXII - Very significant changes to the treatment of cash deposits. 


The Assembly also adopted “CMI Guidelines relating to General Average”.

The main purpose of this document is to inform those not used to dealing with GA; claims examiners, shippers and forwarders and the like.

You will note from section A)3. that it is envisaged that the Guidelines will be updated from time to time upon the recommendation of a Standing Committee. Michael Harvey was elected to this Standing Committee.

It is envisaged that the first job for the Standing Committee will be to consider the possibility of standard wordings for GA security documentation.

We are happy to answer any questions that you may have concerning the new Rules or Guidelines.


Download here:

York-Antwerp Rules 2016
CMI Guidelines relating to General Average

Lloyd’s Maritime Academy - G A Seminar

LMA image

Michael Harvey is a speaker at this Seminar to be held in London on 26/27 October 2015. The Seminar is focused on understanding the fundamentals of general average and will therefore be of interest to those not well versed on the subject as well as those who would benefit from a ‘refresher’.

 

Full details are available for download HERE. Please note the incentives available by using this form – 50% discount if registering before 14 August and 20% thereafter.

Queen gives assent to Insurance Act 2015

The Queen gave her assent to the UK Insurance Act 2015 on 12 February although it will only come into force in August 2016. The Act, which only applies to non-consumer insurances, is intended to deal with three main areas which are perceived to be unfair in a modern world. These three areas concern disclosure and misrepresentation, warranties and remedies for the fraudulent acts of the assured.

Under the new Act the insured is required to make a “fair presentation of the risk” to the insurer. In particular, he is required to disclose every material circumstance which he knows or ought to know or to give the insurer sufficient information to put the insurer on notice that he needs to make further enquiries. The insured is taken to know what is known to its’ senior management or persons responsible for dealing with the insureds’ insurances. The duty of fair presentation also requires the insured not to make misrepresentations.

Under the Marine Insurance Act [1906] the insurers’ remedy in the event of non-disclosure or misrepresentation of the risk prior to inception, was an entitlement to avoid the policy from inception, retaining the premium and refusing to pay any claims. Although this remedy is still available under the new Act, it will only apply if the non-disclosure or misrepresentation was deliberate or reckless. The insurer will also have this remedy if it can show that had it received a fair presentation of the risk it would not have entered into the insurance contract. However, if the insurer can show that it would have entered into the contract but on different terms, the policy may be interpreted as including those different terms; say exclusions or warranties. Similarly, if the insurer can show that had he received a fair presentation, he would have charged a higher premium, any claim may be reduced in the proportion that the premium actually charged bears to the premium that would have been charged.

Under the new Act (Section 10) warranties, still defined as per the Marine Insurance Act [1906], become suspensive conditions. Thus in the event of a breach of warranty the insurer is not entitled to avoid the policy from the date of the breach but rather cover will be suspended at that time and will be reinstated if the breach is remedied or is no longer applicable.

Notwithstanding the above, Section 11 provides that where a warranty relates to a particular type of loss, or the risk of loss at a particular time or location, and does not define the risk as a whole, the insurer will not be able to rely on that non-compliance to escape liability if the insured can show that the breach could not have increased the risk of the loss which actually occurred.

We find the relationship between Sections 10 and 11 to be a little confusing and will be seeking clarification which we will post here.

With regard to fraudulent acts of the insured, the new Act provides that the insurer is not liable for fraudulent claims and may avoid the payment of any claims arising after the fraudulent act but will remain liable for insured losses occurring before the fraudulent act.

The above is only a summary of the main elements of the new Act. For full details of all provisions the new Act should be consulted; copy of which can be downloaded HERE 

Towards the York Antwerp Rules 2016

Hamburg

The Comité Maritime International (CMI) are the custodians of the York-Antwerp Rules and are responsible for all revisions. When changes are considered desirable the CMI will appoint an International Working Group (IWG) to be responsible for seeking the views of the National Maritime Law Associations (MLA) and other stakeholders such as the International Chamber of Shipping and IUMI. This IWG reports to an International Sub-Committee (ISC) which includes representatives of every National MLA. This ISC, if it considers changes are warranted, will make recommendations to the Plenary Session of the main CMI conference which is held every 4 years.

At the CMI Conference in Vancouver in 2004, the ISC presented recommendations which were debated but without consensus being achieved between the main stakeholders, namely the shipowners and the cargo insurers. Despite this lack of agreement revised rules were pushed through; these rules became the YAR 2004.

The very limited use of the YAR 2004, due to the lack of consensus, caused the CMI some embarrassment; for the first time a set of YARs promoted by them were not being used. In 2012 they decided to do something about it.

An attempt was made to amend these rules at the CMI Conference in Beijing in 2012 but there was no enthusiasm for the rather half-hearted proposals made at that time. However, it was agreed that the YARs in their entirety should be considered by a IWG and ISC with a view to a possible revision at the next CMI Conference at New York in 2016.

Thus charged, the IWG, of which Michael Harvey is a member, prepared a detailed questionnaire which was submitted to all of the National MLAs and other stakeholders to gather their views on all aspects of GA and the YARs. The response to this questionnaire was most encouraging and the results were considered in detail by the IWG and ISC at a meeting in Dublin in October 2013. At this meeting, issues that required further detailed consideration were identified and allocated to five sub-groups. The reports of these sub-groups were considered at a further meeting of the IWG and ISC in Hamburg in June 2014.

The main areas of contention between the stakeholders are:

1.     The allowance of salvage in GA where each party has already paid its proportion – RULE VI

2.     The allowance of wages and maintenance of crew during detention at a port of refuge – RULE XI(a)

3.     The allowance of commission on GA disbursements – RULE XX

4.     The rate of interest to be allowed on GA disbursements – RULE XXI

These are the principal issues, there are many less contentious issues that are also being considered. The work of the IWG continues to achieve consensus and to revise the rules to reflect agreed positions.

UK Insurance Law Reform

In 2006 the law commissions of England & Wales and Scotland embarked on a project to consider the reform of insurance contract law. The project was scoped following a consultation process which resulted in the separation of issues.

The joint Law Commission’s first report concerned Consumer Insurance Law and led to the Consumer Insurance (Disclosure & Representation) Act, 2012 which came into force in April 2013.

A further report concerning business insurance and warranties was published in June 2012. This has been through a consultative process which has now resulted in the publication of a draft Bill which was presented to Parliament earlier this month (July 2014). A full copy of the final report, which includes the draft Bill together with explanatory notes as Appendix A (page 347) can be downloaded at http://lawcommission.justice.gov.uk/docs/lc353_insurance-contract-law.pdf

The preamble to the Bill reads as follows:

Draft of a BILL to: Make provision for a duty of fair presentation in relation to non-consumer insurance contracts and for remedies for breach of that duty; to amend the law relating to representations and warranties in connection with non-consumer insurance contracts, and relating to breach of warranty and certain other terms in contracts of insurance; to make provision in connection with remedies for fraudulent insurance claims and late payment of insurance claims; to amend the law relating to the remedies for a breach of the duty of good faith in connection with contracts of insurance; and for connected purposes.

Of principal interest to claims practitioners are the proposed changes to the law in relation to warranties. As a reminder, under Section 33(3) of the Marine Insurance Act, 1906 a warranty is a condition which must be exactly complied with, whether it be material to the risk or not. In the event of non-compliance with a warranty, the insurer is discharged from liability under the insurance as from the date of the breach even if it is subsequently remedied. These provisions are generally regarded as unreasonably onerous and out of kilter with modern thinking.

The draft Bill provides for the suspension of the cover from the time that the warranty is breached until it is remedied; during this period the insurer is not liable for any loss which may arise. It remains irrelevant whether or not the breach of warranty plays any part in the cause of any loss during the period of suspension.

It should be noted that the Bill may be amended during its course through Parliament.


© Harvey Ashby Limited 2017