MARITIME LAW

BY

CHRISTOPHER HILL
MA(Oxon) FICS

SIXTH EDITION

LLP
LONDON HONG KONG
2003
 CONTENTS

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1 OVC'NERSHIP AND REGISTRATION 1

Owncrship 1
Co-ownership 2
Owncrship and registration 2
WTio can own a British ship? 3
Historical development 4
'Hie Mcrchant Shipping (Registration etc) Act 1993 7
Mcrchant Shipping Act 1995 9
Entitlemcnt 9
Port of registry 10
Central register of British ships 10
Marking requirements 12
Rcfusal to register 12
The certificatc of registry 13
Transmission of ovvnership 15
Transfer of ovvnership 16
Removal from the register 16
Registration in overseas territories 17
ßareboat Charter 18
Small ships register 19
Open registries 20
The International Transport Workers Federation 21
Registration 23

2 SHIP MORTGAGES 25
Mortgage of ship at common law 26
Modern form of statutory mortgage 26
How may an equitable mortgage be effected? 28
Registration of statutory mortgages 28
Legal mortgage of a registered ship (or share) 29
The vital significance of registration 29
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Priorities 30
What is a collateral deed? 31
Transfer of a registered mortgage 31
What is transferred under the mortgage? 32
Fishing nets on trawlers 32
What happens when a mortgage is discharged? 32
What are the rights of the mortgagor? 33
Insurance 33
Power of a mortgagor to seil the ship 34
To what extent has the mortgagor the right to redeem? 35
What are the rights of the mortgagee? 36
Default in mortgage repayments 36
Endangering the security 36
The mortgagee in possession 39
Actual possession 39
Constructive possession 39
The right of a mortgagee to foreclose on the mortgage 39
Power of sale of a mortgagee 40
The position of mortgagee when vessel removed from British registry 43
Improper exercise of a mortgagee's powers 43
What is a certificate of mortgage? 44
Contents of certificate 44
Convention 46

3 SALE OF S H I P A N D S H I P B U I L D I N G C O N T R A C T S 48

Sale of ship 48
What is a sale? 48
When is a binding agreement reached? 49
Representations 51
Innocent misrepresentations 51
The rule in Hedley Byrne 52
Economic loss under Hedley Byrne 52
Misrepresentation Act 1967 53
Fraudulent misrepresentations 55
Breaches of contract may be conditions, warranties or intermediate terms 56
What is a condition? 56
What is a warranty? 56
What is an intermediate term? 57
Implied conditions and warranties 57
Express conditions 58
Contract term implied by court to give 'business efficacy' 60
The ability of a seller to exclude his liability 60
What is a consumer sale? 61
What is an international sale? 61
When does property pass? 63
What are the seller's duties? 65
What are the buyer's duties? 65
What are the seller's remedies? 65
What are the buyer's remedies? 66
What is the position when the ship is under Charter at time of sale? 67
Sale and purchase practice 68
Norwegian Saleform 1993 70
Execution of bill of sale 73
The use of 'Mareva' jurisdiction 74
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Shipbuilding contracts 75
Formation of contract 76
Duties of a builder 79
Doctrine of frustration 79
Passing of risk 79
Destruction of ship being built 80
What are the builder's remedies? 80
What are the buyer's remedies? 83

4 ADMIRALTY JURISDICTION, MARITIME CLAIMS,

LIENS AND SOVEREIGN IMMUNITY 88
Admiralty jurisdiction 88
Supreme Court Act 1981 90
Supreme Court Act 1981, section 22 99
Exercise of jurisdiction 99
Nature of action in rem 100
Advantages of in rem action 100
Procedure for an action in rem 100
Renewal of validity of claim form 102
Arrest of a ship 103
'Alternative ship arrest' 105
Meaning of 'beneficially owning' 108
Procedural aspects of arrest of a ship 113
Wrongful arrest 118
What is a maritime lien? 119
Maritime liens and the conflict of laws 119
'Other Charge' 128
'Ship repairer's lien' 128
The Civil Jurisdiction and Judgments Act 1982 (The Brüssels Convention) 129
Stay or dismissal of proceedings 137
Position where there is a pre-existing arbitration clause 142
Section 34 of the Civil Jurisdictions and Judgments Act 145
What is the appropriate forum? 146
Jurisdiction clauses 158
Anti-suit injunctions 165
Immunity of State-owned vessels 167

5 CHARTERPARTIES 168
Demise charterparties 168
Trip Charters 169
Slot charterparties 171
Time charterparties 171
Subject details (charterparties generally) 172
Obligations of seaworthiness (time or voyage charterparties) 172
Time Charters 173
Performance—speed and consumption 174
Bottom fouling 175
How should speed and consumption Claims be calculated? 175
Method (a) 176
Method (b) 177
Charterparty bunkering disputes 178
Safeports 179
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Off-hire 181
Net loss of time 181
Events preventing the füll working of the vessel 182
Deficiency of men 183
Detention by average acts 183
What is meant by the words 'any other cause preventing the füll working
of the vessel'? 183
A right to make deductions from hire 184
Express deductions 185
Equitable deductions 185
Equitable set off 185
Delivery of cargo without production of original bills of lading 186
Deck cargo 188
Liens 189
Where and when should a possessory lien on cargo be exercised? 190
Lien on sub-freights 191
Right to lien sub-sub-freights 192
Authority to sign bills of lading 192
What are the duties of a Master re signing bills? 193
To what extent may the Master delegate his authority to sign 195
How far down a charterparty 'chain' may this authority extend? 195
Indemnity provisions 196
Shipowner's implied right of indemnity 196
How does an implied indemnity differ from the right to damages for
breach of contract? 197
To what extent can the question of identity of the carrier be resolved when
the vessel is under time Charter? 197
The Inter-Club agreement 199
General description 199
Is the Inter-Club agreement legally binding? 200
What is meant by a 'properly settled' claim? 201
What happens about recoverability of legal costs under the agreement? 202
Inter-Club agreement—1996 version 203
Obligation to pay hire and the right of withdrawal of vessel for non-payment 205
Payment to be made in cash 205
Withdrawal must be permanent, not temporary 205
Anti-technicality clauses • 206
Redelivery 207
What is meant by the 'illegitimate last voyage'? 207
NYPE '93 209
Voyage charterparties 214
The charterer's right to cancel 215
Arrival at loading port 216
Where must a vessel have reached before it can be said to have arrived
in the legal sense? 216
Notice of readiness 216
Can an invalid NOR become validated when a ship does become ultimately
in all respects ready? 217
Laytime 218
When does laytime commence? 218
Does laytime commence immediately all three of diese conditions are met? 219
Who pays for waiting time? 219
How is laytime calculated? 220
Excepted periods from laytime 222
Used laytime 224
What is demurrage? 224
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Despatch money 224
'Füll and complete' cargo 225
Freight 227
How is freight calculated? 227
Quantity/quality determination 227
Can deduction be made from freight by way of equitable set-off? 228
Deadfreight 228
Clause 2 of the Gencon charterparty 228
What is meant by the word 'personal' in the context of Clause 2? 229
What is meant by repudiation? 229
Lack of clarity in Charterparty text itself 230
How is a repudiatory breach to be analysed? 230
The innocent party may choose to affirm 232
Maritime arbitration (commentary on significant aspects of London's
arbitration service) 232
General comments 232
Private sector litigation 232
Commercial service 233
Pre-1996 Right of appeal 234
Arbitrator's powers including power to dismiss cases for want of
prosecution 235
Time limits 236
Extension of time 236
The Arbitration Act 1996 236
The award 240
Right of appeal 240
Can parties exclude judicial review? 240
Costs 241
What is meant by a 'sealed offer'? 241
Doctrine of precedent does not apply 241

6 BILLS OF LADING 243

Three-role function 243
What happens when the Bill is endorsed over to an innocent third party
for value? 244
The passing of property in the goods 245
Straight bills and Seaway bills 246
Who is the carrier? 249
Identity of carrier clause (33) 250
Demise clause (35) 250
What is or was UCP 500? 252
Non-production of Bills of Lading at the time of delivery of cargo 253
Clean Bills of Lading 256
The nature and extent of the Master's authority to sign 258
Transfer of the title to sue 260
The Himalaya Clause 264
The Hague and Hague-Visby Rules 269
Deviation (in the geographical sense) 273
To what extent does the commission of a fundamental breach deprive a
carrier of his contractual exceptions or limitations? 274
The Hague-Visby Rules 276
Incorporation of Charterparty into Bill of Lading 278
Electronic Bills of Lading 281
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7 COLLISIONS 283
Loss or damage caused without actual contact 284
The 'agony of the moment' defence 286
International regulations for the prevention of collisions at sea 287
Causative potency 307
The 'last opportunity' rule 308
Presumption of fault 310
The 1910 Collision Convention and the Maritime Conventions Act 1911 311
Loss of life/personal injury Claims 313
Multiple collision situations 313
Eider Brethren and Nautical Assessors 315
Limitation period 316
Brief summary of legal procedure in pursuit of a collision claim 317
'Tug and tow' situations 318
The divided damages rule 320
Division of loss 320
(1) Collision involving damage to ship only 320
(2) Collision involving ship and cargo damage only 321
(3) Collision involving ship and cargo damage and loss of life and
personal injury to crew 322
Differences of United States law 323
Measure of damages after collision 324
Measure of damages where ship is damaged but not lost 326
Ascertaining the remoteness of damage 328
Should losses following a breach of contract be treated differently
from losses resulting from a tort? 330

8 SALVAGE 335

Maritime property 336

Life salvage 336
Voluntariness 337
Instances where the crew of a ship in distress can claim salvage 338
The position of a passenger claiming as salvor 340
Real danger 340
Part II 342
The salvage service must be successful if only partially 343
When may a charterer be entitled to claim salvage? 343
When may a cargo-owner be entitled to claim salvage? 344
Lloyd's form of salvage agreement (LOF 80) 345
The Master's ostensible authority 348
The International Convention of Salvage 1989 351
Special compensation for preventing or minimising damage to the environment 355
Lloyd's form of salvage agreement (LOF 90) 355
Lloyd's form of salvage agreement (LOF 95) 361
Nagasaki Spirit 362
LOF 2000 366
Who contributes to a salvage award? 367
How are values assessed? 368
Ships 368
Cargo 368
Freight at risk 369
Pro rata payment of the salvage award 370
Apportionment as between owners, master and crew of salving vessel 371
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Apportionment amongst various sets of salvors or salving ships 373
Wrongful dispossession of earlier salvors by later salvors 374
Possessory rights of a salvor 375
To what extent may a salvor be held legally responsible for the consequences of
his negligence? 376
A salvor's ability to limit liability 377
What happens if and when a wrongdoer 'turns salvor'? 378
Circuity of action in the context of salvage actions 379
Time limit 380
When does towage become salvage? 381

9 TOWAGE 383
Tug-owner's right to limit liability 391
In what circumstances may towage be converted into a salvage service? 392

10 LIMITATIONOF LIABILITY 394

Historical development 394
The limitation fund 395
Application of limitation after maritime collision between two vessels at fault 398
Tug and tow situations 399
The Convention on Limitation of Liability for Maritime Claims 1976 401
Article 1: Persons entitled to limit liability 401
Article 2.1: Claims subject to limitation 403
Article 2.2 404
Article 3: Claims excepted from limitation 405
Article 4: Conduct barring limitation 406
Article 5: Counterclaims 410
Article 6: The general limits 410
Article 7: The limit for passenger claims 412
Article 9: Aggregation of claims 413
Article 10: Limitation of liability without constitution of a limitation fund 414
Article 11: Constitution of the fund 414
Article 12: Distribution of the fund 416
Article 13: Bar to other actions 417
Article 14: Governing law 419
Time limitations 419
Protocol of 1996 421

11 OIL POLLUTION 424

International Convention on Civil Liability for Oil Pollution 1969 426
Compulsory insurance 428
International Convention on the Establishment of an International Fund
for Compensation 1971 428
Where does fund incur no Obligation? 429
How much in total is the fund obliged to pay out? 429
'Roll-back relief' (Article 5) 429
How pollution damage is variously defined 430
Difference between preventive measures and threat removal measures 431
Environmental damage 431
1992 Civil Liability Convention 433
Liability 434
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Limitation of liability 434

Compulsory insurance 436
The Fund Convention 1992 437
What are the exceptions to the obligations of the fund to pay compensation? 438
What is the maximum amount of compensation the fund must pay out? 438
Conversion of units of account 439
There should be a fair distribution of compensation 439
Who contributes to the fund? 439
Can complete uniformity and reciprocity ever be truly achieved? 439
International Convention on Civil Liability for Bunker Oil Pollution 2001 440
New development by the IMO of an extra (third) tier of funding 441
US Oil Pollution legislation 441
Who can be liable? 442
Circumstances creating liability 442
Are there any exceptions to liability? 442
Can a responsible party limit his liability? 442
What will 'break' limitation? 442
Financial responsibility under OPA 1990 444
Do victims fare better under OPA 90 or 1992 Convention? 444
Insurance for oil pollution liabilities 444

12 P A S S E N G E R S 446
Athens Convention 450
Basis of liability 451
Limit of liability 451
Loss of right to limit 453
Time bar for legal action 454
Compulsory insurance 457
Luggage and vehicles 457

13 P I L O T A G E 459
What is a pilot? 459
What is compulsory pilotage? 463
Defence of compulsory pilotage 466
Geographical application of Pilotage Act 466
Obligations under the compulsory pilotage provisions 467
Right of authorized pilot to supersede unauthorized pilot 468
What constitutes an offer of pilotage Services? 469
Misconduct of pilot 470
Limitation of a pilot's liability 470
A pilot authority's right to limit 471
Pilotage charges 472

APPENDICES 473
Appendix 1 Merchant Shipping Act 1995 473
Appendix 2 Memorandum of Agreement (Norwegian Saleform 1993) 476
Appendix 3 New York Produce Exchange Form 1946 484
Appendix 4 Inter-Club New York Produce Exchange Agreement (1996) 487
Appendix 5 GENCON 490
Appendix 6 Lloyd's Standard Form of Salvage Agreement (1995 revision) and
Salvage Agreement Procedural Rules 494
Appendix 7 United Kingdom Standard Conditions for Towage and Other
Services (revised 1986) 503
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Appendix 8 International Convention on Civil Liability for Oil Pollution
Damage 1992 507
Appendix 9 International Convention on the Establishment of an International
Fund for Compensation for Oil Pollution Damage 1992 518
Appendix 10 SCOPIC 2000 clause, supplementary to any Lloyd's Form
Salvage Agreement 'No Cure—No Pay' (Main Agreement) 535
Appendix 11 LOF 2000 Lloyd's Standard Form of Salvage Agreement 540
Appendix 12 Protocol of 2002 to the Athens Convention relating to the Carriage
of Passengers and their Luggage by Sea, 1974, Articles 1-25 543
Appendix 13 Protocol of 1996 to amend the Convention on Limitation of Liability
for Maritime Claims of 19 November 1976, Articles 1-15 557

Index 563

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