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Issue 15 - November 2014

Welcome to the November 2014 edition of SEA Watch with more updates and commentary on what’s happening in the world of shipping and marine insurance.

Dear reader ,

First on offer this month is your editor’s review of the current surge in oil cargo piracy in SE Asia. A total of about 8 - 9 such incidents (euphemistically described as “siphoning” by Singapore’s MPA) have occurred since Jan 2014 and this has put the region back on top of the IMB’s piracy threat area list. So who’s behind the SE Asia piracy boom? Who pays for the losses? And what can be done to prevent such incidents? Read on to find out more.

Our next article from SEAsia’s GM/ Director, Captain Kunal, provides a summary of the methodologies now available to track vessels and their cargoes while at sea. The primary problem is that these systems can be switched off on board and pirates know this as well. So how do you find your ship in such a scenario? Kunal’s article tells you about the commercial availability of satellite radar imaging and its application in finding ‘lost’ maritime assets.

Oliver Rentzow, our Transport Claims specialist, has this month focused on reefer (refrigerated) cargo claims and the special techniques required to investigate, defend and settle such claims. If your company insures or handles reefer cargo during transport and storage, you need to take a look at Oliver’s review and suggestions.

Next on offer is Part 2 of the September article on the P&I Clubs ‘pay to be paid’ rule written by Tony Wong, our Master Mariner and lawyer at SEAsia’s Hong Kong office. Readers may recall that Tony explained an oddity of P&I insurance in that it provides indemnity cover that is conditional upon the insured shipowner settling any associated 3rd party claim first.  Tony now goes on to describe how the ‘pay to be paid rule’ has been ameliorated by the creation of IMO conventions which provide a 3rd party direct action entitlement against P&I insurers. Could this be the future and effectively the end of the ‘pay to be paid’ rule?  

Our fifth slot provides a review of the very successful 27-29 Oct Key Elements of Shipping course in Singapore. Sold out once again and planning for the 10th run in March 2015 is already underway. The only ‘complaint’ was from a number of maritime industry participants who wanted a longer course. Not to worry. BI/SeaProf are creating some specialist/intermediate courses for 2015 to encourage our KES ‘Certificate of Achievement’ grads to come back for more.

Finally, we have an article from Frank Xie who is a BSc in Maritime Transport student at NTU in Singapore and is now studying at BI in Oslo as an exchange student. Frank has been helping out at SEAsia as a work experience intern over the past few years and is now learning about the business of shipping in Norway. Sounds like he and his classmates are taking the opportunity to do some traveling in Europe as well.

Read on and don’t forget we would like to hear from you as well. Is there a maritime industry issue out there that’s puzzling or annoying you? Would you like to contribute an article to our now over 15,000 readers? Tell us about it by sending a note to robert@seasia-group.com

 

Ancient Mariner

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SE Asia Oil Cargo Piracy: insurance and loss prevention issues

Piracy is once again at the top of the martime risk list in SE Asia. During the period from January to September 2014, the IMB Piracy Reporting Centre in KL and ReCAAP in Singapore advise that a total of 129 ships have been attacked by pirates or ‘sea robbers’ in Asian waters. This is the highest reported piracy count in over eight years.

For those readers who may not be aware, ReCAAP is a multilateral anti-piracy institution established in Singapore. Its membership is made up of a number of states including China, India, Japan, South Korea, Australia and, most recently, the USA as the 20th member. Disappointingly, its membership does not include Malaysia and Indonesia; both of which are countries from where regional pirate attacks appear to be originating.

The pirates, whose focus is clearly on snatching high value and readily disposable marine fuel cargoes from small tankers, are becoming better organised and bolder. So what are the marine and cargo insurance implications? And what practical loss prevention/ security measures can be implemented by ship owners?

Piracy is provided with a legal definition by way of Article 101 of the UN Law of the Sea Convention (UNCLOS). In summary, piracy is considered to be an illegal act of violence, detention or depredation committed on the high seas by the crew of a ship that is directed against another ship, her crew and cargo for the purpose of private gain.

However, with respect to the law of marine insurance, the UNCLOS definition of piracy is not binding as confirmed by the Singapore Court in Bayswater Carriers v QBE Insurance [2006] which reviewed and applied a long list of English case authority on this point. Instead, a much broader and more commercial interpretation is applied such that if the act of violence and theft takes place in any location to be considered “at sea”, inclusive of a period when a vessel is lying at anchor, the losses caused by such an act will be considered as piracy.

The latest incident reported concerns the boarding from speedboats by an armed pirate gang of the MT “Sunrise 689”. This occurred on 2 October when the vessel, a small tanker laden with 5,200 m tons of fuel oil, was about two hours outbound from Singapore to Vietnam. The crew were quickly overwhelmed and locked in a messroom while 2,000 m tons of the cargo was transferred to the pirate’s tanker that secured alongside shortly after the boarding. The crew were robbed of their cash and personal possessions and the cargo – worth well over USD 1.5 million – was ‘disappeared’ to an unknown port.

Was it an ‘inside job’ organised by a criminal gang?  Almost certainly, with the tip off to the pirates as to the cargo details coming from someone inside the loading terminal, the ship’s agents office or even a member of the ship’s crew.  Further, a small fully laden tanker with a low freeboard and proceeding at about 8 knots would have made an easy target.

On the facts reported, no special measures had been taken by the crew to post extra pirate lookouts or rig anti-boarding measures such as barbed wire or fire hose nozzles directed over the side. Nor does it seem there were any emergency VHF radio transmissions to shore stations. Further, there seems to be no advice that the vessel’s Ship Security Alarm System (SSAS) was activated prior to the pirates boarding in accordance with the ISPS Code. In fact, it all seems rather suspicious that the vessel could have been boarded only a very short distance out from Singapore’s territorial waters without any crew alert having first been transmitted by VHF or SSAS equipment.

So what about insurance cover? Some damage to the vessel’s radio equipment was suffered when it was smashed and destroyed by the pirates. On the assumption that hull cover was provided by way of ITC 1983 hull clauses or similar, then – subject to the amount of the deductible – an indemnity should be available to ship owners as ‘piracy’ is a named marine peril under Clause 6.1.5. Further, Clause 6.1.3 provides cover for loss or damage caused by violent theft from persons outside the vessel.

As a caveat to the above hull insurance advice, SEAsia has been advised by leading Singapore brokers that the piracy and violent theft cover usually listed as marine perils has now been excluded from most hull policies and has been moved to/replace by additional perils in the standard War and Strikes Policy. Why? Well the increased prevalence of piracy attack appears to be one reason. The other is that as piracy has been moved to War Risks cover, it is no longer necessary to prove that the pirates were acting for personal gain and were not politically motivated such that they were terrorists.

As to the cargo’s theft and it’s insurance cover, it should be noted that if the cargo insurance was in fact provided on ICC ‘A’ terms (‘All risks’) terms, then a loss due to piracy would be included in the terms of cover. However, if cover may have been provided on either ICC  ‘B’ or ‘C’ terms, then piracy is not included under the named perils in either of these two policies. So this is something for cargo shippers to watch out for.

Turning now to any potential for a subrogated recovery by cargo insurers against ship owners and their P&I Club, the vessel loaded in Singapore such that the HV Rules would have been incorporated into the B/L carriage contract by force of law. Arguably, the Rules would provide the shipowner and their P&I insurers with an exclusion from liability on the grounds that owners had met their Art III Para 1 obligations to make the vessel seaworthy before and at the beginning of the voyage. Accordingly, ship owners would be entitled to exempt their liability under Art IV Para 2 (f) Acts of public enemies.

Or was it instead the case that the ship’s crew had not been properly trained to implement proper anti-piracy measures as well as operate the SSAS equipment? If so, the seaworthiness of the vessel could be called into question along with the shipowner’s associated right to exclude liability for a cargo loss. It is therefore essential for owners to fully comply with their ISPS Code obligations so as to ensure they meet their HV Rules carrier responsibilities.

SEAsia’s advice to the owners of high piracy risk vessels such as small tankers and tug an barge units (which both suffer from the problem of low freeboard and relatively low speed) is as follows:

1. Ensure that the SSAS installations on board your vessels are functioning properly and that your Master and crew know how to operate them in an emergency situation.

2. Ensure that the transmission of an emergency SSAS signal can be received and detected immediately by shore staff/ the Company Security Officer (CSO) or a professional ship security service provider on a 24/7 basis.

3. Consider subscribing to a commercial AIS tracking service that can provide a 24/7 visual display of the position of your vessels within the AIS tracking zones. Further, as described in our “Tracking Lost Martime Assets” article below, consideration should be given to installing LRIT equipment and the use of satellite radar tracking services.

4.Review your ISPS Code SSA (Ship Security Assessment) and SSP (Ship Security Plan) in relation to the current piracy threat and both shipboard and shore side procedures using the document BMP 4 (Best Management Practice) as a guide. This should include the implementation of regular anti-piracy practice drills, the posting of additional look outs, the activation of searchlights, the rigging of fire hoses with nozzles projecting over the side, the  prospective use of barriers such as razor wire and the securing of accommodation and ER access doors.

5. Your CSO (Company Security Officer) should also ensure your Masters and crews are regularly alerted to reported piracy and robbery incidents in your region, as promulgated by the IMB and ReCAAP on their websites.

Finally, if SEAsia may be able to assist your company to avoid the risk of piracy attack when transiting SEA Asian waters, then please give us a call.

Capt Robert Gordon

robert@seasia-group.com

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Tracking ‘Lost’ Maritime Assets: using AIS, LRIT and Satellite RADAR imagery

Over the past few decades, the martime industry has witnessed a significant growth in the demand for a global maritime surveillance capability. In view of  the increase in piracy attacks and the potential for terrorism around the globe, it is not difficult to understand where this demand for maritime surveillance stems from. This article looks at some of the existing “cooperative” as well as “non- cooperative” systems in use for detection, identification and tracking of ships as floating maritime assets.

Our starting point is to understand the function of the base level Automatic Identification System (AIS). SOLAS Regulation 19, Chapter V (Safety of Navigation), requires all vessels of 300 GT and upwards engaged on international voyages, cargo ships of 500 GT and above not engaged on international voyages and all passenger ships irrespective of size, to be fitted with an AIS unit on board. The regulation for the carriage of AIS was adopted in 2000 and became effective for all vessels from 31 December 2004.

AIS is primarily a shipboard broadcast transponder which operates on two channels in the maritime VHF (Very High Frequency) band. The information transmitted using the AIS includes; vessel’s identity, position, heading, destination, ETA, cargo, draft and navigation status etc. Some information is static in nature while others are dynamic and allows the user to alter it, as and when necessary. The information pulse is transmitted every 2 -10 seconds covering a typical “line-of-sight” radius of 20 – 24 nautical miles for ship-to-ship or ship-to-shore communication. Figure 1, as taken from the IMO website, illustrates this function. 

AIS is categorised as a “cooperative” type of tracking system as it can be turned off by the shipboard user or an attacker. The other issue is that the range of communication depends on line-of-sight contact. Both of these features limit the AIS tracking and surveillance system and prevent it from being truly ‘global’ in terms of 24/7 vessel identification

Long Range Identification and Tracking (LRIT) compensates for the short range limitations of AIS by providing a system of global identification and tracking of ships.  As from 1st January 2009, all passenger ships, high speed craft, mobile offshore drilling units and cargo ships of 300 gross tonnage and upwards regulated by SOLAS Contracting Governments must be tracked by way of a Long-Range Identification and Tracking system. Details of the LRIT requirements are provided in regulation V/19-1 of the 1974 SOLAS Convention.

The data transmission functions of an LRIT are not very different from AIS, except that LRIT communicates the AIS type message through a designated satellite (SAT). The other key difference between AIS and LRIT is that, unlike AIS, LRIT is not a broadcast transponder that sends a signal to any person who may have AIS equipment available. Instead, vessels are required to transmit their LRIT information only to the LRIT Data Centre selected by their Flag State. The information transmission is mandatory, should not exceed 6 hourly intervals and must be sent automatically from the vessel. Furthermore, each LRIT data center should have a list of all the vessels registered with the Flag state to assist in tracking and surveillance. The flowchart below (figure 2) has been taken from the IMO webpage to assist in understanding the flow of the information in the LRIT system. 

While AIS and LRIT working together provide a robust surveillance system meeting the current requirement for Global coverage, both systems are classified as “co-operative”. In other words, the shipboard users must keep the system turned on. If the shipboard systems are turned off or if they malfunction, a ship’s surveillance system becomes defunct such that the vessel will ‘disappear’.  Accordingly, the user function in the AIS / LRIT can become a major handicap in circumstances where users have been known to deliberately switch off or even feed inaccurate information into the system to hide their vessel and its activities. 

The question is then as to what can be done when all AIS/LRIT surveillance transmissions from a vessel are blocked or altered? This is not a ‘one off’ scenario as it will be a certainty when pirates board a vessel and destroy all communications equipment. This is the time when flag states and shipowners need urgent access to a “non-cooperative” system that allows a vessel’s position to be monitored even during a total communications shutdown.

Hollywood has been a forerunner in highlighting  “non-cooperative” surveillance through ‘action movies’ depicting the precision with which the US armed forces can detect potential targets by the use of satellite optical and radar imagery. The precision of this satellite imagery appears to be so accurate that it can identify and track US soldiers who are stuck behind enemy lines. It can therefore be readily imagined how such technology could be used to detect ships at sea which have been lost from AIS and LRIT surveillance due to pirate attack or a sudden casualty and sinking.

The CLS (Collecte Localisation Satellite) group ran a small conference in Singapore in October 2014 in which SAT Radar Search and Rescue facilities were described in detail. Satellites such as Radarsat-2, TerraSAR-X, COSMO SkyMed, and Sentinel-1, provide global coverage extending beyond the orbit of geostationary satellites such that they even cover the Polar Regions. These satellites are equipped with synthetic aperture radar imagers that can cover a large area of several hundred kilometers, with up to 1-metre resolution on a ‘24/7’ and ‘any weather’ basis. The data available can be provided to interested parties on a commercial basis through CLS.

The first step is to agree an “Area of Interest” (AOI) so that the Satellite can be tasked before image acquisition. Once an image is acquired, the delivery time is less than 30 minutes making the surveillance almost real time. The photographs below have been taken from CLS’s presentation slides showing the clarity of the images received from the satellites. Once these images are acquired, the next objective is to intercept the vessel to establish positive visual identification. 

In summary, it can be seen that none of the technologies described above are capable of providing a fail-proof maritime surveillance system by themselves. However, if these technologies are used selectively and in parallel with each other, they can provide martime surveillance and ‘lost ship’ detection for effectively the entire globe: even in circumstances where a vessel’s communications systems have been deliberately shut down. As such, the potential for the recovery of pirated ships and their cargoes as well as the provision of precise positioning to aid search and rescue teams in vessel casualty scenarios has increased dramatically. Good news for all in the maritime industry, including ship’s crews as well as shipowners and their insurers.

Capt Kunal Pathak

kunal@seasia-group.com

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Reefer Cargo Damage: a concise guide to transport claims handling and resolution

SEAsia recently had the pleasure of attending the 29th Maritime Networking Shipping Session conducted by the Singapore Maritime Foundation in association with the General Insurance Association and insurance brokers LCH (S) Pte Ltd. The topic under discussion was the handling of claims for damage or loss suffered by refrigerated (reefer) cargo. Our article provides a recap of how such claims are handled by SEAsia with respect to their investigation, assessment, defence and ultimate resolution.

SEAsia’s clients include a number of transport liability insurers who insure the activities of freight forwarders, NVOC’s (Non Vessel Operating carriers who issue B/L’s), as well as warehouse operators and cargo distributors. When reefer cargoes are involved the value of the cargo and the related risks of damage and loss increase very quickly and the ‘transport operators’ referred to above may be faced with a significant claim. Prompt and specialist advice and action is therefore essential to minimising the loss and avoiding the transport operator’s end customer’s/consignee’s unhappiness.

In our own claims handling practice, we are often faced with claims for damage to reefer cargo. Such claims predominately consist of deep frozen fish or meat shipped in refrigerated containers. There are of course other cargos that may require refrigeration such as fruit, vegetables or even pharmaceuticals due to SE Asia’s warm and humid climate.

The basic process of investigation, control and claims management is almost identical for all such cargos. However, the pre- and post processing of the reefer cargo and its shipping container will vary in relation to the cargo’s particular nature and ambient temperature conditions.

There are ample opportunities for mistakes to be made throughout the entire journey of a reefer container that may have catastrophic consequences in relation to the condition of the cargo. One of the most common mistakes is the miscommunication of the required set temperature at which the cargo is to be maintained throughout the entire transit. The margin for error is very small and the difference between Fahrenheit and Celsius settings or between “-“ and “+” signs can be easily confused. If the setting is wrong, then this will result in the cargo being badly damaged or even completely lost.

If decay, thawing, freezer damage, over ripening, bruising, off-size and or discoloration has been noted upon de-vanning of the cargo, time is of the essence given that perishables deteriorate very quickly. As a general rule, SEAsia will need to appoint an experienced reefer cargo surveyor to conduct a survey of perishable items no later than 24 hours after delivery and much earlier if possible. This is best done by way of agreeing a ‘without prejudice’ joint survey, to be conducted together with the claimant’s surveyor, so as to avoid any future disagreement as to the nature, cause and extent of the claim.

Concurrently, receipt of any claim notification made by cargo consignees should be formally acknowledged. SEAsia can accomplish this on behalf of the transport operator/insured by way of our standard form letter which contains the disclaimer, “Any and all rights and defences of [the insured’s company] under any relevant agreement or in law are herewith expressly reserved; liability is not admitted.” The bottom line here is that liability must not be admitted at this point in time as this could impact negatively on the insured’s liability cover. Accordingly, it is also appropriate to direct the cargo claimant to notify their own cargo insurer of their claim. This should  avoid any direct transport operator and customer ill feeling in respect of the provision of  a ‘liability is not admitted’ notice.

The next step for SEAsia will be to collect and collate all commercial documentary evidence including the original bill of lading (the one used to effect delivery), the commercial invoice and packing lists, delivery receipts and de-vanning tally sheets, paid customs entry form as well as cargo reconditioning or repair invoices.

The technical documentation required will include the pre-trip inspection report, reefer container micro-processor (data-logger) download covering entire transit with temperature records, alarms records, event log and computerized pre-trip, partlow/temperature charts covering entire transit, load and discharge port yard monitoring records, controlled atmosphere, modified atmosphere or fresh air exchange records, Equipment Interchange Receipt (EIR) full in and full out plus the salvage sale invoice/receipt, if applicable.

As to the use of the aforementioned documents, SEAsia’s  review of the delivery bill of lading (B/L) will allow us to assess terms of carriage and the window within which the cargo remained in the care and custody of the insured and their resultant exposure to liability. The B/L will also provide the  transport operator’s/carrier’s entitlements to both exemption and limitation of liability  as incorporated by law (e.g. the Hague Visby Rules).

The technical/temperature related documents will allow us to evaluate whether the reefer container displayed any performance problems including a the cargo shipper’s requested set point temperature from the beginning of the trip through delivery to the receiver. Another critical issue will be the temperature at which the cargo was actually loaded as refrigerated containers are not designed to reduce the cargo temperature; only to maintain it. Analysing the microprocessor data loggers built into any reefer container is another crucial step, as any alarms or other evidence of any failure of  the container and its reefer unit will be stored there.

If it is also determined that a third party such as a terminal, rail carrier, trucker and/or controlled atmosphere provider may be responsible for the loss, this party should be held liable by the transport operator way of a formal notice. Again, this is something that SEAsia can assist with so as to ensure that a right of recovery is established for both the transport operator and their own insurer in relation to the claim brought by cargo interests. It is not required to quantify the claim at this point in time 

If carrying temperatures while in a transport operator’s care and custody show substantive fluctuation, our surveyors will determine whether such fluctuations could have contributed to the cargo damage/loss. If the evidence is that the fluctuations and the resulting damage were due to fault or negligence on the part of the transport operator and that the B/L terms provide no exemption or limitation of liability, then SEAsia – after first conferring together with the insured and their liability insurers -  will normally suggest a ‘Without Prejudice’ settlement offer to cargo interests. Such a ‘WP’ offer would be subject to cargo interests having first substantiated their claim and then properly mitigating their loss by way of cargo reconditioning or salvage sale.  Recovery actions against 3rd party service providers, such as terminals and ocean carriers, would also be considered at the same time in a effort to reduce the ultimate loss exposure for both the transport operator and their insurer and SEAsia can also assist with this important process.

In summary and by way of this brief article, we hope we have provided a useful overview of the challenges that are faced when dealing with claims for damage or loss to reefer cargo as well as some of the solutions. If you may be faced with  a specific problem in relation to reefer cargo or wish to explore the topic further with respect to loss prevention, then SEAsia’s claims handling experts are always happy to answer your queries and render assistance. 

Oliver Rentzow

oliver@seasia-group.com

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P&I Insurance and 3rd Party Claimant Rights of Direct Action Against a P&I Club

As explained in our article on the “Pay to be Paid Rule” in the September edition of SEA Watch, the peculiarity of P&I insurance is that it is a policy of conditional indemnity. The underlying premise is that the Club will only indemnify a shipowner member/insured provided they have first settled the claim. Despite this, the IG Clubs have usually been quite flexible in this regard and will often settle claims directly with 3rd party claimants. However, as confirmed by the House of Lords’ decisions in both The Fanti and The Padre Island cases, P&I insurers are not obligated in law or under the terms of the P&I insurance contract to do so.

Problems can sometimes occur on the ‘pay to be paid’ rule front if a shipowner becomes bankrupt or goes into liquidation as a consequence of a casualty. It might also be the case that a shipowner has not paid his outstanding P&I ‘calls’ or premiums and is unable to do so. Worse, the P&I Club may have placed a reservation on the claim due to a breach of warranty under the Rules of Entry/P&I policy. If any of these scenarios should occur, then a shipowner insured may not be able to settle 3rd party liability claims directly such that the P&I insurance cannot then respond to provide an indemnity.

As mentioned in our previous article, the potential problem for 3rd party claimants has been partially overcome by the creation of the Third Party (Rights Against Insurers) Act 2010 in the UK. However, this legislation only appears to extend a right of direct action to P&I policies with respect to claims brought for personal injury or death. Our internet research shows that this Act does not yet have the force of law in the UK but that it will come into force when the UK’s new Insurance Contracts Bill is enacted into law in 2016. The P&I ‘pay to be paid’ rule therefore still prevails for the time being but it will interesting to see future developments under English law.  

What has happened however is that the P&I ‘pay to be paid’ rule has been effectively curtailed in relation to ship owner public interest liabilities that arise in relation to certain IMO Conventions as enacted into national maritime law. The purpose and background to this deliberate and sensible modification of a long established P&I principal first appeared under the terms of the original International Convention on Civil Liability for Oil Pollution Damage (CLC) 1969 as described below.

The CLC 1969 has since been updated to the CLC 1992. The current version still contains a mandatory requirement for all vessels carrying more than 2000 tons of persistent oil to be insured for their strict liability in respect of any loss or damage caused by oil spills from both their cargo and bunker tanks. The Convention also provides a right of direct action against P&I insurers but this exposure is regulated and diminished by the shipowner’s and insurer’s entitlement to limit liability in accordance with a formula based on the vessel’s Gross Tonnage (GT). Finally, a vessel must carry evidence of liability cover by way of a confirming flag state certificate and a P&I ‘blue card’.

It can therefore be seen that the CLC 1992 represents a pragmatic liability and compensation arrangement that effectively guarantees compensation to 3rd party claimants who may bring their oil pollution damage claims directly against the P&I Club or insurer involved. As such, claimants are protected from possible exclusion from compensation by the imposition of the P&I “pay to be pay” rule in circumstances which would normally be beyond their control.

Following on from the international success of the CLC liability and compensation regime, other IMO Conventions have been created which create similar rights and obligations in relation to all of the parties involved, including ship owners, P&I insurers and 3rd part claimants. Examples include the Bunker Convention 2009 as well as the Maritime Labour Convention (MLC) 2006 which are now both in force and have been ratified by a large number of flag states.

In regards to the future, other IMO Conventions have been created which operate on similar principles that include mandatory liability cover, a right of direct action against the insurer and the necessity to carry evidence of cover. These conventions are not yet in force but they are open for ratification and it seems likely that some of them will become active in the near future. Examples include the 2002 Protocol of the Athens Convention (which relates to passenger liability and is already in force in the EU) as well as the Nairobi Wreck Removal Convention 2007 which is scheduled to come into force on 14 April 2015.

Other “direct action” examples are contained in the International Convention on Liability and Compensation in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 (now replaced by the 2010 Protocol)  as well as the Civil Liability for Oil Pollution Damage Resulting from Exploration for and Exploitation of Seabed Mineral Resources Convention 1977. However, it is unknown whether these particular conventions will ever in fact come into force.

In summary, it can be seen that the prospective harshness of the ‘pay to be paid’ rule has been ameliorated by the creation of a number of IMO conventions that are concerned with liability and compensation. These conventions provide a right of direct action against a P&I insurer if for some reason the ship owner insured may not be able to meet his obligations to 3rd party claimants. It will also be noted that there are other similar ‘right of direct action’ IMO conventions on the way. As to the position of the IG Clubs on this issue, there seems little doubt that all of this has been accomplished with the positive assistance of the IG Clubs so as to provide equitable solutions to what might otherwise turn into high profile and politically controversial situations.

Finally, it must be mentioned that the ‘pay to be paid’ rule has not been upheld in favour of the P&I Clubs in a number of countries, including the state of Louisiana in the USA. It has also been impacted in a number of Nordic countries by way of their Insurance Contracts Act legislation that may be considered as being similar in effect to America’s ‘direct action’ statutes. For those readers who may be interested, we would suggest they might like to look at the text of a doctoral theses prepared by Dr. Christian Finnern on the ‘Pay to Paid Rule’ which offers a fascinating comparative assessment of the acceptance of this concept and the law which has been created in a number of countries to ameliorate its impact in relation to private claims.

Capt Tony Wong Chai Yu

tonywong@seasia-group.com

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Key Elements of Shipping: sold out again for 9th Run!

The twice yearly appetite for the BI/SeaProf Key Elements of Shipping course in Singapore appears to be insatiable with the October course being filled to overflowing with 47 participants. We try to stop at 40 seat bookings but we are invariably met with last minute ‘special pleadings’ to get on board. For those who missed out, the dates for the KES March 2015 course are now being firmed up and will be announced very soon.

Once again, the course was led by Assoc Prof Cathrine Bjune from the BI Norwegian Business School. Academic support was also provided by NTU Asst. Professor, Dr Jasmine Lam, with Capt Robert Gordon of SeaProf Executive Education heading up course production and management.  

Course presenters from industry included Raja Swaminathan from well known shipbrokers Fearnleys, Michael Elwert from Thome Ship Management, Tom Zachariassen from DVB bank and Lewis Hart from insurance brokers Willis. Other speakers came from Class DNV, ship designers Ulstein, lawyers Hill Dickinson, hull coating specialists Jotun and offshore vessel operators Swire Pacific who all provided shorter but very topical presentations on Green Ships and Offshore Shipping. The enthusiastic participation of all of these speakers and their companies is one of the ingredients that ensure the KES course is a winner every time.

Course participants included executives and managers from major shipping companies and service providers in Singapore. Most of these companies have supported the KES course in the past such that much of the course participant intake is now driven by referrals from previous attendees. Some of the well known Singapore companies who sent representatives to the October course included Willhelmsen, NOL, Western Bulk, Odfjell, Norden, Skuld P&I, Univan and M3 with several participants coming from Hong Kong and the Philippines.

The venue for the course for the past few years has been the Klapsons Hotel in the Tanjong Pagar shipping district. The Klapsons 18th storey conference rooms provides terrific views over the container port and out into the Singapore Straits. As usual, the managers did a great job in ensuring a positive experience for both speakers and course participants. Lots of quality coffee, tea and tasty snacks were available as well as a top notch salad bar and lunch menu to set the scene for some excellent marine industry networking during the breaks.

Feedback was very positive with an overall rating of 9.2 out of 10. A number of the participants who would have liked a longer course, perhaps over 4-5 days, so as to provide more time for presentations and casework learning. We have considered a longer course before but our experience is that employers are not keen to have their people away from their desks for too long. To meet this challenge, we are intending to do some restructuring of the KES course content for next year by offering a separate Key Elements of Offshore course. The other solution will be to offer some intermediate courses on Chartering and Marine Insurance along with CPD points for  the benefit of brokers. These intermediate courses would of course be more focused in terms of scope and content. If you may have some course topic ideas to help us meet course participant needs and CPD requirements, then please let us know.

We were also delighted to welcome Mr Kristian Jul Røsjø, First Secretary at the Norwegian Embassy in Jakarta, as a guest to the KES course. Readers will no doubt be aware that Indonesia’s new President, Mr Joko Widodo, is keen to upgrade his country’s transport infrastructure by creating an upgraded ship and port transport corridor to connect the world’s largest island archipelago consisting of over 17,000 islands. The Norwegian government wishes to help by providing maritime knowledge empowerment and discussions are now taking place that would include taking the KES course to Jakarta and other major seaport cities in Indonesia.

In summary, another great KES course has been completed as demonstrated by the smiles in the class group photo above. Smiles because participants had just finished creating and presenting their own learning assessment summaries and had all been presented with a well deserved BI Certificate of Achievement by Assoc Prof Cathrine Bjune. Photos of course participants, speakers and the post course Fabrika reception are posted on the SeaProf Facebook site. We hope to see you at KES in March 2015 as well as at some of the other courses we have planned for the coming year.

Capt Robert Gordon

robert@seasia-group.com

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NTU’s BSc in Maritime Studies: notes from an exchange student at BI in Norway

Introduction

Singapore’s Nanyang Technological University (NTU) and the BI Norwegian Buisness School in Oslo have been collaborating for many years in the provision of maritime business studies courses leading to BSc and MSc degrees. They are in fact so good at it that NTU and BI were awarded the NBAS prize in Singapore earlier this year for their outstanding efforts in supporting the provision of excellence in the maritime industries of their respective countries.

Your editor has contributed, as a Visiting Lecturer, to both NTU and BI maritime courses for many years at both BSc and MSc level. It’s always been great to exchange views in class with experienced maritime managers in the MSc classes. However, the real joy often comes from working with young undergraduates who are always loaded with enthusiasm and infectious optimism. The note and photos below come from Frank Xie Chentao, an NTU 3rd year BSc maritime studies student and a citizen of the PRC. Frank is  currently attending BI in Olso as an NTU 3rd year BSc exchange student

The NTU/BI student exchange programme

Every student from the BSc Maritime Studies course is provided an opportunity to study at the BI Norwegian Business School in his/her third year for one semester. I have been looking forward to this semester since I was in the first year! Why? Well to me, the exchange programme is invaluable because it not only exposes me to the knowledge of two of the world’s most important maritime nations, Singapore and Norway, but also because it  allows me to experience the western world and gain a more international view of the business of  shipping.

My third year maritime courses at BI include Marine Insurance, International Maritime Law, Shipping Management, and Organizing a Ship-owning Entity. All of them are highly practical and are taught by professors with extensive industry experience. I can therefore dive into the details of the mechanisms of different types of marine insurance such as Hull and Machinery, Loss of Hire, and Protection and Indemnity. I can also learn the causes and consequences of performing or missing an action required under the maritime code. Further, I can see how a small change in contract wordings can lead to a big and sometimes unhappy difference in an outcome. Additionally, the reading materials and case studies make the courses even more interesting and practical. And I am very excited when I can apply the knowledge gained from my Minor in Risk Management and Insurance to my other maritime courses.

I think the best thing about my exchange experience is that I am able to learn from some of the best experts in the field. Not only from knowledgeable professors during our regular classes, but also from experienced guest lecturers speaking on specialised topics such as Hull and Machinery Insurance, Ship Sale and Purchase and Financial Derivatives. In addition to classes, BI organized a number of field trips to different maritime companies, including DNV GL, DNB, and Wilh Wilhelmsen. Here I met people directly from industry who provided updates on the latest market developments and trends.

As an exchange student from Asia, I have been keen to share my culture with people in Norway. With assistance from BI, my class friends and I organised an Asian Culture Exchange event at BI last month. We showcased Asian costumes, Chinese calligraphy, dim sum, tea, paper cutting, and Chinese chess at six booths. Participants particularly enjoyed the ‘hands-on’ craft  experiences being demonstrated and were eager to have their names written in Chinese calligraphy.

Travel in Europe

As for European travel opportunities, BI have encouraged us by arranging classes on Mondays, Tuesdays, and Wednesdays. So we have the benefit of four-day-long weekends that provide excellent opportunities for myself and my classmates to travel around Norway and other countries in Europe.

Last month, I went on a trip with my friends to Iceland; a country so special, so different from any other country I have seen in the world that I was shocked by my first glance from the plane as we came in to land. Instead of soil and trees, the ground in Iceland was full of rocks and mosses. The houses were surprisingly far from one another and the towns were extremely small. Its people are outnumbered by sheep but they are very friendly to tourists. [The people or the sheep? Ed.] 

All in all, the landscape of Iceland never failed to impress me with numerous gorgeous waterfalls, magnificent glaciers and icebergs, and beautiful starry nights with northern lights and shooting stars. I even got to see the red glow of a volcano eruption at night from afar. Oh yes, and we spotted a reefer ship aground and listed heavily to starboard in shallow waters with its lifeboat deployed. We understood that the crew were safe and there was no pollution and we got to practice some of our martime law and insurance knowledge!

Time flies. I am already half way through my exchange programme at BI. I am really enjoying my time at BI in Oslo and I am sure it will be the most memorable semester of my university life.

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