- The Baltic Exchange Dispute Resolution Service
During 2017 the Baltic Exchange assisted members with the collection of more than US $1.4m – representing unpaid fees or commissions, arbitration awards and monies owed from other commercial disputes. Many of the cases brought before the dispute resolution team, headed by Mike Dunwell and reporting to the Baltic’s Membership Committee, represent relatively small amounts and often initial intervention by the Baltic is sufficient to encourage prompt payment and settlement of the case.
Ultimately, where a breach in the Baltic’s Code of Conduct has occurred and appropriate reparations have not been made, the threat of being posted by the Baltic as an unfit counterparty in front of the global membership, represents a final, highly undesirable penalty for those unwilling or unable to make good for the losses caused. This indicator can be recognised not just within the shipping community, but also by financial and commodity markets and across due diligence agencies operating across other related sectors.
Already this year, the Baltic has recovered in excess of $1million. This is due in part to wider take-up in the number of cases being reported by P&I clubs and members looking to the Baltic for help but also owing to an increase in resources made available by the Baltic to resolve cases and help to manage the increasing demand.
The dispute resolution service is free of charge to members and in the past we have extended this offering on the same basis to non-members via P&I clubs and legal firms acting for clients. To provide further resources for the service, non-member companies using the service will be charged 15% of the total recovered, capped at £15,000 maximum per case. Our goal is to increase the benefits of being a member, and this fee to non-members will enable the Baltic to pursue more cases and give better support to members seeking help while still providing a much relied on service to the industry at large.
Globally, membership numbers 650 companies and we are always looking to grow this number so that the Baltic remains truly representative of maritime markets. We hope that this greater offering will benefit the wider industry by encouraging non-members to join, saving them time and money individually as well as helping to reduce the number of outstanding debtors on the books across the industry.
If you are interested in finding out more about membership or the disputes service please contact:
Crispin Eccleston for membership details on +44 (0)20 7369 1654 / firstname.lastname@example.org
Mike Dunwell for the Dispute Resolution service on +44 (0) 20 7369 1631 / M +44 7860 902547 / email@example.com
- Freight & Commodities Forum: Singapore
On 25 April, the Baltic Exchange will be hosting its annual Freight and Commodities Forum during the Singapore Maritime Week 2018. The focus will be on the dry market and bulk commodity outlook, as well as announcing updates on Baltic member services and initiatives.
New speakers confirmed include Dr Martin Stopford, President of Clarksons Research and Ian Roper, General Manager of Shanghai Metals Market (SMM), Singapore. The Forum will also feature presentations and open discussions on new Baltic initiatives, market benchmarks and the impact of 2020 Sulphur Cap on the freight market.
- Baltic Exchange and ICS Lunchtime Lectures
The Baltic Exchange and Institute of Chartered Shipbrokers series of bi-monthly lectures returns to Shanghai, Singapore, Athens and London on 30 May.
Money Walks / Money Talks – A masterclass in the hedging and financial instruments used by shipping principals will be the theme in Singapore, London and Athens with guest speakers as followed:
Singapore: Raghu Raghunath,
Former Head of Noble Chartering Ltd
London: John Banaskiewicz, MD,
Freight Investor Services
Athens: Katerina Stathopoulou,
Executive Director, Investments & Finance
In Shanghai, the focus will be Shipping Supply-Demand Dynamics. The seminar, with guest speaker still to be confirmed, will examine the economic factors that have caused the major changes in shipping rates over the past 12 months and look into what is anticipated to cause the most impact on freight markets throughout the remainder of 2018.
The lectures are free to Baltic and Institute Members, with non-member prices as followed:
£100 London / SG$100 Singapore /
¥500 Shanghai / €100 Athens
Light lunch included
Attendees must register by email to firstname.lastname@example.org using the appropriate reference code below:
BXICS05L (London)/ BXICS05SG (Singapore)/ BXICS05SH (Shanghai)/
To view the flyer, click here.
- FINAL CALL: Greek Wine Tasting in London
A final call for those interested in attending the Greek wine tasting, hosted by the Baltic Exchange in London on 23 May.
“Gone are the days of average Retsina and heavy, oxidised wines” asserts David Hughes, host for the evening, who argues that a “new generation of young, visionary wine growers have breathed life back into old wineries with plantings of noble French varieties as well as resurrecting and perfecting stunning examples of the country’s great indigenous wines.”
The evening will feature six wines and some accompanying Greek meze.
Tickets are priced £10 for members, £15 for non-members.
- Book Now For Baltic Risk Forum At Posidonia
Bookings are now being taken for the Baltic Exchange’s Risk Forum at Posidonia.
Focusing on the issue of risk in the freight and shipping markets, the challenges and opportunities that these can present and what is available to help members manage their exposure, the programme will include:
- An A, B, C (and D & E) of how the Baltic helps members manage risk – Mark Jackson, CEO, Baltic Exchange
- A Perfect Match? Physical Indexation and the FFA Market – Duncan Dunn, Director, SSY Futures
- BDRY ETF: Democratizing Investing in Shipping – John Kartsonas, Managing Partner, Breakwave Advisors
- What are the Commercial Implications of the 2020 Sulphur Cap? – Mark Jackson, CEO,
Baltic Exchange, Brian Nixon, Managing Director, Lavinia Bulk Ltd. and Angelica Kemene, Head of Market Analysis &
Intelligence, Optima Shipbrokers
The event takes place at the Yacht Club of Greece, 4 June (Forum 1100-1330, followed by lunch).
For full details and to register, click here
- Bulk cargo exempt from package limitation
The Court of Appeal has recently unanimously upheld the Commercial Court decision handed down at the end of 2016, confirming that package limitation under the Hague Rules does not apply to bulk cargo. This decision provides further clarity in the long-standing debate as to whether “unit” in Article IV Rule 5 of the Hague Rules refers to a physical item of cargo or a shipping unit, or is a reference to a unit of measurement used to denominate or quantify the cargo in the contract of carriage and is thus capable of applying to bulk cargo.
The charterparty for the carriage of fish oil in bulk on board MT Aqasia (the “Vessel”) between the Disponent Owner (the “Owner”) and the Charterer incorporated, among other things, the privileges and rights and immunities as contained in Sections 2 and 5 of the Carriage of Goods by Sea Act 1924 and Article IV of the Hague Rules.
When the Vessel arrived at the discharge port, approximately a quarter of the cargo was found damaged. The Charterer brought a claim against the Owner under the charterparty in order to recover its losses of US$367,836.
The Owner accepted liability in principle, but sought to limit its liability to £54,730.90 under Article IV Rule 5 of the Hague Rules, which provides as follows: “Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding 100.l per package or unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.”
It should always be remembered that this is merely the default position
In the Commercial Court, the Charterer contended that the Owner was not entitled to limit its liability under Article IV rule 5 because that provision does not apply to bulk cargoes. A bulk cargo could not form a “unit” or “package” pursuant to Article IV Rule 5. It was common ground that “package” could not apply to bulk cargoes, but it was unclear whether “unit” could do so.
The Owner argued that, on its true construction, the charterparty demonstrated a clear intention of the parties to apply limitation under the Hague Rules to bulk cargoes because that was the only type of cargo subject to this contract of carriage.
The Commercial Court was asked to rule on the limitation question as a preliminary issue and concluded that a “unit” does not apply to bulk cargoes. The Commercial Court held that “unit” in this context meant a physical unit for shipment and not a unit of measurement. Among other factors that the Commercial Court took into consideration was that “package” and “unit” were used together and in the same context in Article IV Rule 5, suggesting that they both meant physical item or items, rather than a unit of measurement.
At the Court of Appeal
The Owner appealed to the Court of Appeal on essentially two grounds. Firstly, that the judge erred in concluding that the limitation of liability in Article IV rule 5 of the Hague Rules did not apply to bulk cargo. Secondly, that the Commercial Court failed to give effect to the intention of the parties to the charterparty that the Owner should be entitled to limit its liability in respect of bulk cargo.
The Charterer submitted, among other things, that the judge’s analysis of the meaning of “unit” was entirely correct and that the Owner’s alternative argument was misconceived, as there was no basis for concluding that Article IV rule 5 had a different meaning under the charterparty than in the Hague Rules themselves.
The Court of Appeal confirmed that in the context of the Hague Rules, “unit” refers to a physical item of cargo and not to a unit of measurement. In his reasoning, Lord Justice Flaux stated that the word “package” clearly refers to a physical item and as the words are used together in the same context, that points strongly to both words being concerned with the physical items rather than units of measurement. Further reference was also made to other provisions of the Hague Rules, which again point towards the conclusion that the word “unit” is concerned with physical items, rather than measurements.
The Court also considered the travaux preparatoires, authorities from the UK and other countries and commentaries. The Court concluded its analysis by stating that all of the sources referred to, supported the conclusion that it is clear that the word “unit” means a physical item of cargo or shipping unit and neither a unit of measurement nor a freight unit.
Agreeing with the Commercial Court, the Court of Appeal also rejected the notion that the United States Carriage of Goods by Sea Act 1936 and the Hague-Visby Rules can assist with determining the meaning of “unit” under the Hague Rules, simply because the wording used in these two instruments differs from the wording used in the Hague Rules.
The Court also dismissed the Owner’s second argument and found that, on the proper construction of the charterparty, the Owner is able to rely on the protection afforded by Article IV and no more than that.
Accordingly, the Court concluded that the Owner did not have the protection of the limit of liability in Article IV rule 5 under the charterparty.
Regardless of the fact that it affirms what seems to have been a widely held view, whether this decision is well received by the industry depends on whether you look at it from the position of a shipowner or a cargo interest. In any event, decisions which provide certainty and clarity are always welcome. It should always be remembered that this is merely the default position and that there is nothing preventing shipowners from amending the charterparty to incorporate a deeming provision giving the word “unit” a different meaning or extending the ambit of any limitation of liability clause.
Rania Tadros and Monika Humphreys-Davies are Managing Partner and Associate respectively at Ince & Co, an international commercial law firm. To contact Ms Tadros, call +971 4 307 6000 or email email@example.com. To contact Ms Humphreys-Davies, call +971 4 307 6000 or email firstname.lastname@example.org.
- Book now: Chairman’s Cocktail Party
Tickets are now available for the Baltic Exchange Chairman’s Cocktail Party on 9 May.
This spectacular event, attended last year by over 600 people, is the highlight of the Baltic’s social calendar and will once again take place at London’s Christ Church, Spitalfields.
Members are invited to buy tickets for their guests via this link.
- Member update
The following companies have applied for Corporate Membership:
Company Individual Engelhart CTP (Switzerland) SA Mr F Garvin Hellaschart Ltd Ms L Bachas Mrs I Theotoka Mr T Zafeiratos Mrs E Kampa Kuwait Petroleum Corporation Mr D Al-Sabah Mr B Nijem Mr Al Haidar
The following individuals have applied for Membership of an existing member company:
Individual Company Miss A Crowley Affinity (Shipping) LLP Mr K Kanellopoulos Braemar ACM Shipbroking Ltd Mr C Briere Japan Shipping Services Co Ltd Mr B D Jung Clarksons Platou
Any comments should be passed to Karen Karanicholas by 25 April 2018.
- Ship Finance Executive – places available
There are still places available on the Baltic Exchange’s Ship Finance Executive training course (London 14-15 May).
Led by Professor Nikos Nomikos and Dr Nikos Papapostolou of Cass Business School, course participants will learn how an IPO is made, what to look for when choosing an underwriter, how to identify an underpriced IPO before it is made public using only publicly available information, how to issue a high yield bond and how to calculate the probability of a high yield bond default. The course also provides practical analysis of company valuations using different methodologies.
See www.balticexchange.com/other-services/training-2/ship-finance-executive for full details, including booking.
- Baltic-RNLI Salcombe Lunch
On 12 April the Baltic Exchange hosted its annual lunch with the Royal National Lifeboat Institution (RNLI) Salcombe.
The Royal National Lifeboat Institution is the largest charity that saves lives at sea around the coasts of the UK, the Republic of Ireland, the Channel Islands and the Isle of Man as well as on some inland waterways.
The Baltic Exchange has been providing support to lifeboats at Salcombe, a popular resort town in the South Hampshire district of Devon, South-West England. for over 150 years. Most recently, the 25 knot Tamar Class All Weather Lifeboat ‘The Baltic Exchange III’, which Baltic members raised over half a million pounds towards and has saved countless lives since its launch.
Baltic Exchange Chairman, Duncan Dunn, gave a short speech in which he praised RNLI Salcombe’s work at sea, stating:
‘As shipbrokers, freight traders and chartering managers sat in safe offices, the perils of the sea can seem remote. It is all too easy to forget that behind every fixture lies a potentially dangerous journey across the oceans and seas. The brave men and women of the RNLI help to keep seafarers safe off British shores’.