WHAT IS NEW IN NEW YORK

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WHAT IS NEW IN NEW YORK?

• Singapore
• March 27, 2006
• William J. Honan
• Holland Knight LLP

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TRENDS IN NEW YORK

• 1. A few years ago, there were hardly any
  time charters being done. Rates were low and
  owners were disinclined to offer vessels for long
  terms at those low rates.

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• 2. The forms haven't changed very much. For
  example, ASBATANKVOY dates back to 1977 and its
  predecessor Essovoy dates back to 1969, the year
  I started practicing law. At some point,
  disputed issues have to diminish.

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• 3. Traders and other charterers have adopted
  special provisions which have been refined to
  reduce the risk of exposure and dispute.

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• 4. Judges and arbitrators have shown a greater
  willingness to exercise their discretion in an
  effort to reach a just result.

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S.M.A. RULE 30

• The Panel, in its award, shall grant any
  remedy or relief which it deems just and
  equitable. . . .

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ARBITRATORS POWER

• 1. Arbitrators, in many ways, have more power
  than courts of law.
• 2. Arbitrators have the power to fashion
  innovative remedies to resolve complex problems.

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ARBITRATORS DISCRETION IS BROAD AND DEEP

• 1. Require Security for Claim.
• 2. Dismiss Claim That Lacks Merit.
• 3. Require Adequate Assurance.
• 4. Impose Conditions re Ongoing Performance.
• 5. Order Specific Performance.
• 6. Provide Injunctive Relief.
• 7. Provide an Expedited Award.
• 8. Award Legal Fees and Costs.

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MARITIME CLAIM SECURITIZATION

• 1. Arbitrators
• Arbitrators have the power to require the
  defendant to post security in advance of the
  hearing(s) on the merits under circumstances
  they, in their discretion, deem just.

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PRACTICE TIPS

• A claimant in arbitration is more likely to
  obtain an arbitration panels order requiring the
  other side to post security if
• 1. The claim appears likely to succeed.
• 2. The claim is for an improper deduction or
  withholding of funds due to the claimant.
• 3. The defendant is not doing business in the
  U.S. and may be able to avoid paying an adverse
  award.
• 4. There are other circumstances that lead the
  arbitrators to believe that the defendant may not
  pay, e.g., a poor credit history or a pool of
  funds which may be disbursed to the defendant.

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• 2. U.S. Federal Courts
• Under the Supplemental Rules to the
  F.R.C.P., a federal court, at the request of a
  claimant, has the power, without prior notice to
  the debtor, to cause a vessel, monies or other of
  the debtors assets to be seized and held pending
  a resolution of the underlying disputes.

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RULE C ARREST

• Need only a common law, statutory or
  contractual maritime lien

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RULE B ATTACHMENT

• Two Requirements
• a) Plaintiff (i.e., the claimant) must have a
  maritime claim and
• b) Defendant (i.e., the debtor) must not be
  found within the district.

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RULE B FUNCTION

• a) To secure the plaintiffs claim and
• b) To obtain jurisdiction over the defendant.

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PREREQUISITES

• a) Is it a maritime claim?
• b) Can the defendant be found in the federal
  court district?
• c) Is the asset owned by the debtor?

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RULE E POST-ATTACHMENT/ARREST HEARING

• After the attachment or arrest, the defendant
  has the right to a prompt hearing
• At the prompt hearing the plaintiff shall be
  required to show why the arrest or attachment
  should not be vacated . . . .

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WINTER STORM SHIPPING LTD. V. TPI, 301 F.3d 263
(2nd Cir. 2002)

• Electronic funds transfers, in the hands of an
  intermediary bank, are subject to attachment.

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SEAPLUS LINE CO. LTD. V. BULKHANDLING HANDYMAX
AS, 2006 AMC 82 (S.D.N.Y. 2005)

• . . . Seaplus bears the burden of
  demonstrating, by a preponderance of the
  evidence, that the attachment is necessary to
  effectuate one of the two purposes of
  Supplemental Rule B
• 1) Is it necessary to obtain jurisdiction over
  Bulkhandling?
• 2) Is it necessary to receive any award
  Seaplus may obtain in the Hong Kong arbitration?

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PRACTICE TIP

• If you have a significant claim under a dollar
  denominated maritime contract and you desire
  security, you may wish to seek to attach assets
  owed by the other party to the contract even
  though the contract in question provides for
  arbitration elsewhere.

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SIX ASPECTS WORTH REMEMBERING

• a) You can commence a law suit in the U.S. to
  attach (or arrest) the defendants assets without
  waiving your right to arbitrate in accordance
  with the charter party arbitration provision.

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SIX ASPECTS WORTH REMEMBERING (continued)

• b) A foreign claimant can attach the property
  of a foreign defendant even if there is no
  connection with the U.S. except defendants
  asset(s) are located there.

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SIX ASPECTS WORTH REMEMBERING (continued)

• c) The funds or other assets that are attached
  need not be related to the transaction in which
  the breach occurred.

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SIX ASPECTS WORTH REMEMBERING (continued)

• d) You can seize the other partys assets
  without any prior notice.

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SIX ASPECTS WORTH REMEMBERING (continued)

• e) The court, in dealing with the attachment,
  almost never considers the merits of the
  underlying claim.

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SIX ASPECTS WORTH REMEMBERING (continued)

• f) Usually, no bond is necessary to obtain the
  attachment.

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• TIME BAR CLAUSES

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6 OF COGSA, 46 U.S.C. 1303

• In any event the carrier and the ship shall be
  discharged from all liability in respect of loss
  or damage unless suit is brought within one year
  after delivery of the goods or the date when the
  goods should have been delivered . . . .

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SCANPORTS 1990

• 20. Demurrage Claims. Charterer shall be
  discharged and released from all liability in
  respect of any claim for demurrage owner may have
  under this charter party unless a written invoice
  for the claimed demurrage and copies of ETA
  notices sent in compliance with voyage orders,
  notices of readiness at each port, pumping logs,
  and port logs/statements of fact for each port as
  well as all other supporting documents have been
  received by charterer within ninety (90) days
  after completion of discharge of the cargo
  covered buy this charter party or after other
  termination of the voyage, whichever first
  occurs. . . .

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BPVOY 4

• 20.2 Any other claim against charterers for any
  and all other amounts which are alleged to be for
  charterers' account under this charter shall be
  extinguished, and charterers shall be discharged
  from all liability whatsoever in respect thereof,
  unless such claim is presented to charterers,
  together with full supporting documentation
  substantiating each and every constituent part of
  the claim, within one hundred and eighty (180)
  days of the completion of discharge of the cargo
  carried hereunder.

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PRACTICE TIPS
1. If the Owner a) seek to eliminate
altogether b) make the clauses mutually
applicable c) provide as long a period as
possible d) provide training to the persons
handling claims 2. If the Charter a) include
all claims not just demurrage and detention b)
draft the clause so as to avoid obvious loopholes
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• BACK-LOADING CLAUSES

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EXXON MOBILVOY 2000

• 19. BACK LOADING. Charterer shall have the
  option of loading Vessel with a part cargo at any
  discharging port or place to which Vessel may
  have been ordered,. . . . Owner shall discharge
  such part cargo at any other discharging port(s)
  or place(s) previously nominated, provided such
  port(s) or place(s) lie within the rotation of
  the discharging ports or places previously
  nominated. If this option is exercised,
  additional time consumed awaiting berth and/or
  cargo and/or tank preparation and/or loading and
  discharging such part cargo shall count as
  laytime or, if Vessel is on demurrage, as time on
  demurrage. . . .

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SHELLVOY 5

• Back Loading
• 38. Charterers may order the vessel to load a
  part cargo at any nominated discharging port, and
  to discharge such part cargo at a port(s) to be
  nominated by Charterers within the range
  specified in Part I(E) and within the rotation of
  the discharging ports previously nominated,
  provided that such part cargo is of the
  description specified in Part I(F) and that the
  master in his absolute discretion determines that
  this cargo can be loaded, segregated and
  discharged without risk of contamination by, or
  of, any other cargo remaining on board.
• Charterers shall pay a lump sum freight in
  respect of such part cargo calculated at the
  demurrage rate specified in Part I(J) on any
  additional time used by the vessel as a result of
  loading, carrying or discharging such part cargo.

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27. KOCH DISCHARGE/RELOAD

• 27.1 Charterer has the option to discharge all
  or part cargo at one safe port or lighterage
  location and reload same or different cargo in
  same or different port or place for final
  discharge on the same voyage within agreed ranges
  as specified in Part I of this Charter Party.

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PRACTICE TIPS

• If Owner
• Exclude if possible
• Make sure the new discharge port is in the same
  rotation
• Make sure WS is the applicable freight
• Insert deadline for exercise of charterers
  right to reload
• If Charterer
• Include if possible
• Draft as widely as possible (see Koch clause)
• Use demurrage rate as the measure of
  compensation

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• ARREST OFF-HIRE CLAUSE

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RIDER CLAUSE 94

• SCM Mexico S.M.A. 3885 (2005)
• Should the vessel be delayed, detained or
  arrested during the currency of this charter at
  the suit of any party having or purporting to
  have a claim against or any interest in the
  vessel, Master, crew or owners, hire under this
  charter party shall not be payable in respect of
  any period during which the vessel is not at
  charterers full disposal and the consequential
  time and expenses resulting from same which the
  charterers incur are to be for owners account.

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CAPTURE, SEIZURE, ARREST CLAUSE

• The Doric Pride 2006 All ER(D) 173
• Should the vessel be captured or seized or
  detained or arrested by any authority or by any
  legal process . . . the payment of hire shall be
  suspended until the time of her release, . . . ,
  unless such capture or seizure or detention or
  arrest is occasioned by any personal act or
  omission or default of the charterers or their
  agents or by reason of cargo carried or calling
  port of trading under this charter.

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• DEADFREIGHT OFFSETS

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(2006) LLOYDS MARITIME NEWS LETTER 685 (Feb.
23, 2006)

• Arbitrators Checklist
• 1. Charterer is to pay full dead freight.
• 2. Laytime is calculated on bill of lading
  cargo.
• 3. A separate laytime calculation is performed
  for bill of lading cargo plus deadfreight.
• 4. Owner is to concede any benefits.
• 5. Charterer is to concede any benefits.
• 6. A deadfreight balance is produced and
  incorporated into the final freight account.

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OWNERS BENEFITS

• 1. Savings in Time
• - demurrage rate
• - market rate
• 2. Bunkers
• - bunkers in port
• 3. Port Charges

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WHAT IS NEW IN NEW YORK?

• Singapore
• March 27, 2006
• William J. Honan
• Holland Knight LLP