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1 Shipping in 36 jurisdictions worldwide 2013 Contributing editor: Jonathan Lux Published by Getting the Deal Through in association with: Adepetun Caxton-Martins Agbor & Segun Albors Galiano Portales Ali Budiardjo, Nugroho, Reksodiputro Andrade Dias & Associados Batini Traverso & Associati (BT & Associati) Bech-Bruun Chrysses Demetriades & Co LLC Consolato del Mare OÜ De Castro & Robles Dingli & Dingli Law Firm ENS (Edward Nathan Sonnenbergs) Garza Tello & Asociados Guzmán Escobar & Asociados Haridass Ho & Partners HWL Ebsworth Lawyers Ince & Co LLP Ince & Co Middle East LLP International Law Offices/Interlegal, Ukraine Jorquiera & Rozas Abogados Joseph & Partners K&L Gates LLP Law Offices Carl Kincaid Mendes Vianna Advogados Associados Logos Legal Services Marine Legal Bureau Norton Rose LLP Okabe & Yamaguchi Segelken & Suchopar Simonsen Advokatfirma DA Singhania & Co Solicitors & Advocates Sokolov, Maslov and Partners Straits Consulting Group Suh & Co Van Steenderen Mainport Lawyers BV Vukić & Partners Watson Farley & Williams Wintell & Co

2 contents Shipping 2013 Contributing editor: Jonathan Lux Ince & Co Business development managers Alan Lee George Ingledew Robyn Hetherington Dan White Marketing assistants Zosia Demkowicz Megan Friedman Marketing manager subscriptions Rachel Nurse gettingthedealthrough.com Assistant editor Adam Myers Editorial assistant Lydia Gerges Senior production editor Jonathan Cowie Chief subeditor Jonathan Allen Subeditors Anna Andreoli Charlotte Stretch Editor-in-chief Callum Campbell Publisher Richard Davey Shipping 2013 Published by Law Business Research Ltd 87 Lancaster Road, London, W11 1QQ, UK Tel: Fax: Law Business Research Ltd 2012 No photocopying: copyright licences do not apply. ISSN The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. This information is not intended to create, nor does receipt of it constitute, a lawyer client relationship. No legal advice is being given in the publication. The publishers and authors accept no responsibility for any acts or omissions contained herein. Although the information provided is accurate as of September 2012, be advised that this is a developing area. Printed and distributed by Encompass Print Solutions Tel: Law Business Research Australia Maurice J Thompson HWL Ebsworth Lawyers 3 Brazil Godofredo Mendes Vianna, Camila Mendes Vianna Cardoso and Lucas Leite Marques Law Offices Carl Kincaid Mendes Vianna Advogados Associados 12 Chile Ricardo Rozas and Max Morgan Jorquiera & Rozas Abogados 21 China James Hu, Mervyn Chen and Lawrence Chen Wintell & Co 30 Colombia José Vicente Guzmán and Javier Franco-Zárate Guzmán Escobar & Asociados 40 Croatia Gordan Stanković and Maja Dotlić Vukić & Partners 46 Cyprus Michael McBride, Yiannis Christodoulou and Michael Papadopoulos Chrysses Demetriades & Co LLC 53 Denmark Johannes Grove Nielsen and Camilla Søgaard Madsen Bech-Bruun 59 England & Wales Jonathan Lux, Reema Shour, Richard Hugg and Catherine Earnshaw Ince & Co LLP 66 Estonia Indra Kaunis and Taavi Rihvk Consolato del Mare OÜ 79 France Christine Ezcutari Norton Rose LLP 86 Germany Kathrin Janka Riehmer Segelken & Suchopar 93 Iceland Einar Baldvin Axelsson Logos Legal Services 100 India Krishan G Singhania, S N Verma, B Dimri and Olav Albuquerque Singhania & Co Solicitors & Advocates 108 Indonesia M Husseyn Umar and Sahat AM Siahaan Ali Budiardjo, Nugroho, Reksodiputro 115 Ireland Helen Noble and Ruth McKeon 120 Italy Alberto Batini Batini Traverso & Associati (BT & Associati) 128 Japan Shuji Yamaguchi Okabe & Yamaguchi 135 Korea Dong-Hee Suh Suh & Co 141 Latvia Edward Kuznetsov Marine Legal Bureau 148 Malaysia Primila Edward and Jeremy Joseph Straits Consulting Group/Joseph & Partners 154 Malta Kevin F Dingli and Suzanne Shaw Dingli & Dingli Law Firm 160 Mexico Enrique Garza, Fernando Escamilla and Anais Vivanco Garza Tello & Asociados 169 Netherlands Arnold J van Steenderen, Marieke G van den Dool and Charlotte J van Steenderen Van Steenderen MainportLawyers BV 175 Nigeria Funke Agbor and Chisa Uba Adepetun Caxton-Martins Agbor & Segun 187 Norway Lars Musæus Simonsen Advokatfirma DA 194 Panama Gabriel R Sosa, Eduardo A Real and Alberto Lopez Tom De Castro & Robles 201 Portugal Mateus Andrade Dias Andrade Dias & Associados 207 Russia Mikhail Sokolov, Anna Arkhipova and Sergey Seliverstov Sokolov, Maslov and Partners 219 Singapore Ajaib Haridass, Thomas Tan, V Hariharan and Eddy Teng Haridass Ho & Partners 226 South Africa Tony Norton, Mike Tucker and Kate Pitman ENS (Edward Nathan Sonnenbergs) 235 Spain Eduardo Albors, Javier Portales and Alfonso de Ochoa Albors Galiano Portales 243 Thailand Alan Polivnick and Tossaporn Sumpiputtanadacha Watson Farley & Williams 253 Ukraine Arthur Nitsevych and Nikolay Melnykov International Law Offices/Interlegal, Ukraine 260 United Arab Emirates Graham Crane, Jacqueline Wright and Anna Fomina Ince & Co Middle East LLP 268 United States Jeffrey S King, Robert M Kritzman and Jorge Romero K&L Gates LLP 274 Quick Reference Tables 281

3 ireland Ireland Helen Noble and Ruth McKeon Newbuilding contracts 1 When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass? There are very few, if any, ship building contracts that are governed by Irish law. Applying Irish contractual law, title of the ship will pass from the shipbuilder to the shipowner as per the terms and conditions provided for in the shipbuilding contract. The contract will generally contain detailed provisions surrounding payment and title. Although the parties are free to agree to the title of the ship transferring at any time prior to the delivery of the ship, such as upon the payment of the first instalment of the purchase price, it will generally pass on delivery. As a general rule, the final instalment payment will occur simultaneously upon delivery. 2 What formalities need to be complied with for the refund guarantee to be valid? Under Irish law there are a number of formalities to be complied with in order for a guarantee to be enforceable: it must be given for consideration; it must be in writing in accordance with the Statute of Frauds 1695; and it must be properly signed by someone who has the authority to sign on the bank s behalf. It is also vital to ensure that the company s constitutional documentation empowers it to enter into a guarantee. The shipbuilding contract will contain specified defaults for which the builder will become liable, such as prolonged delay. Such default provisions must not be overly restrictive or else the guarantee will not become accessible. 3 Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so? Under Irish law, the court has discretion to make an order for specific performance of the shipbuilding contract, which will include delivery of the ship. In the High Court decision of Aranbel Limited v Darcy and Others (2010) IEHC 272, Mr Justice Clarke emphasised that an order of specific performance will not be made where there is no reasonable prospect of the order concerned being complied with. Thus, achieving a successful order will very much depend on which stage the ship build is at. Alternatively the court may make an order for damages. 4 Where the vessel is defective and damage results, would a claim lie in product liability against the shipbuilder at the suit of the shipowner; a purchaser from the original shipowner; or a third party that has sustained damage? A claim for product liability can be made under statute, contract or tort. Statute Section 2(1) of the Defective Products Act 1991 sets down a strict liability regime for damages caused by a defective product, although the onus of proving the damage, defect and causal relationship remains on the plaintiff by virtue of section 4 of the Act. Under section 2(2) of the 1991 Act, a producer is taken to mean: the producer of a raw material, the manufacturer of a finished product or of a component part; the importer of a product; any person putting their name, trademark or other distinguishing feature on the product; and any person supplying a product whose producer or importer cannot be identified. In this case, the person liable will be the shipbuilder or any manufacturer of component parts or raw materials. Section 7(1) provides for a three-year limitation term for the initiation of proceedings under the Act in addition, the producer will no longer be liable 10 years after the date on which the product was put into circulation. Contract Where the vessel is defective, the shipbuilder will also generally be liable for damages in respect of any loss sustained due to a breach of contract. The shipbuilding contract will generally set out the remedies for a damaged or defective vessel. It will also generally contain exclusion clauses, warranties or time limits outside of which no claims can be pursued. Tort A tortious action fills a void by providing relief for persons who either do not have the benefit of a contractual relationship with the shipbuilder, such as a third party that has sustained damage, or indeed any subsequent purchaser from the original shipowner. This will allow for a claim under the tort of negligence. In contrast to an action for breach of contract, the fundamental purpose of an award of damages in tort is to put the party concerned back into the position they would have been in had the wrongdoing not occurred. In decisions such as Ward v McMaster (1989) ILRM 400, the Irish courts have held that in order to succeed in a tortious claim, the claimant will need to show that the shipbuilder: owed a duty of care; breached that duty of care; and caused the claimant damage as a result of the breach. In order to establish the existence of a duty of care, the claimant will need to show a relationship of proximity between the parties such that the alleged wrongdoer would be aware that carelessness on its part is likely to cause damage to the claimant. However, it is always important to note that any such claim may be restricted by warranties provided in the original shipbuilding contract. 120 Getting the Deal Through Shipping 2013

4 ireland The limitation periods for initiating proceedings are discussed in detail in question 49. Ship registration and mortgages 5 What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under construction under the flag of your country? Section 18(1) of the Mercantile Marine Act 1955 and the Fisheries (Consolidation) Act 1959, as amended by the Fisheries (Amendment) Act 1962 and the Fisheries (Amendment) Act 1983 provide that the following categories of vessel are obliged to register: ships wholly owned by persons being citizens of Ireland or Irish bodies corporate and are not registered under the law of another country; and fishing vessels 35 feet and over in length wholly owned by qualified persons or bodies. The following categories of vessel are exempt from the obligation to register: ships not exceeding 15 net register tons weight (other than fishing vessels over 35 feet in length) provided they are used only in navigation on the rivers, canals, lakes or coasts of Ireland, Great Britain, the Channel Islands or the Isle of Man, or within the territorial waters off their coasts; ships acquired before the passing of the Principal Act in 1955; ships in respect of which the minister has, under section 21 of the Act, consented to registry under the law of another country; and ships owned by Irish citizens not ordinarily resident in the state. Where the delivery of a newly built ship to the purchasers does not take place until after completion of trials, an official number may be allocated on a provisional basis. 6 What are the requirements for company formation? Company formation in Ireland is principally governed by the Companies Acts, A limited company can be established for the purpose of registering a vessel. The main requirements to form a company in Ireland are: memorandum of association: this sets out the purpose for which the company is being established objects and powers of the company, the authorised share capital of the company, etc; articles of association: these highlight how the business of the company will be carried on. There are various model articles which may be tailored to suit any company. These articles form a contract between a company and its members and deal with the internal regulation of the company; and company registration form A1: a form A1 must be completed by the directors and the company secretary. The declarant must also state the classification of the activity of the company. The registration fees for incorporating the company must also be paid. When all the documents and fees have been lodged in the Companies Registration Office, a certificate of incorporation will be issued. All companies must have at least one company secretary and a minimum of two directors, one of whom is required to be a resident of the European Economic Area. An EEA resident director is not required where the company posts a bond in a prescribed form, to the value of e25,395. Once established, a company has a number of post-incorporation obligations including the maintenance of statutory registers, preparation of audited financial statements and the filing of an annual return. 7 Is dual registration and flagging out possible and what is the procedure? Under section 18(1) of the Mercantile Marine Act 1955, unless it is an exempted vessel, a vessel owned by an Irish citizen or company must register in Ireland. If the owner wishes to flag the vessel outside of Ireland, it must obtain permission of the minister to register the vessel under the law of another country, pursuant to section 21 of the 1955 Act. Dual flagging is not possible. 8 Who maintains the register of mortgages and what information does it contain? The register of mortgages is maintained by the revenue commissioners. The following particulars are registered in the register book: name of the ship and her port of registry; details of tonnage and build outlined in the certificate of survey; particulars of the ship s origin as stated in the declaration of ownership; name and description of the registered owner or owners as stated in the declaration of ownership, and if there are more owners than one, the share proportions that they hold. In respect of individuals the description should included details of occupation and the place of residence, while the principal place of business should be specified where bodies corporate are concerned; and the registrar s name and the date in full as shown in the fees and deeds book. The following details are also to be entered by the registrar in the relevant columns of the register book: the transaction number; the reference letter in the case of a mortgage; the full name of the owner/owners as they appear on the declaration of ownership, or the mortgagor; the number of shares held by each owner; the date and time of registry; the type of transaction and date; and the name, address and occupation of the owner, mortgagor, mortgagee or transferee. Limitation of liability 9 What limitation regime applies? What claims can be limited? Which parties can limit their liability? Ireland is party to the International Limitation of Liability for Maritime Claims Convention 1976 (the Convention) as enacted in Ireland by the Merchant Shipping (Liability of Shipowners and Others) Act 1996 (the 1996 Act). The Sea Pollution (Hazardous Substances) Compensation Act 2005 gives effect to the 1996 Protocol to the Convention. The Convention applies to seagoing ships (article 1(2) section 9 of the 1996 Act extends the application of the 1976 Convention to any structure (whether completed or in the course of completion) launched and intended for use in navigation as a ship or a part of a ship and also extends to non-seagoing ships (section 10 of the 1996 Act)). Article 2 of the 1976 Convention lists the claims which are subject to limitation. Clause 11 qualifies article 2 by stating that notwithstanding paragraph 1(d) or 1(e) of article 2 of the Convention, the right to limit liability under that Convention shall not apply to claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such a ship and article 3 (claims excepted from limitation) of that Convention shall be construed accordingly. The party entitled to limit liability under the Convention is the shipowner, as defined in articles 1(2) as owner, charter, 121

5 ireland manager and operator of a seagoing ship. The question as to whether a charter has the right to limit liability has not come before the Irish Courts. The Irish Courts would, however, find the judgment of the UK Courts in CGM v Classica Shipping (2004) EWCA Civ 2004 to be persuasive authority. 10 What is the procedure for establishing limitation? Under the Convention, limitation can be sought by a party pleading a right to limit as a defence to a claim made against it. Alternatively, a party anticipating a claim being made against it may take the initiative and itself commence limitation proceedings seeking that the court determine its right to limit its liability under the Convention. If successfully pleaded as a defence, liability will be limited to the Convention amount per claim. A limitation funds does not need to be constituted in order to avail of the benefit of limitation. Article 6 of the Convention sets out the basis upon which the limitation fund is calculated. Broadly, the fund is calculated by multiplying the gross tonnage of the vessel, multiplied by a specified number of special drawing rights. Section 13 provides that the value in the currency of the state of the unit of account specified in that Convention shall be taken to be the value, ascertained in accordance with article 8 of that Convention, in that currency of such a unit of account on the relevant day specified in the said article or, if its value on that day cannot be so ascertained, its value in that currency on the latest day before such day on which it can be so ascertained. Interest on the limitation fund runs from the date of the accident to the date of payment into court. However, under section 14 of the 1996 Act, the minister may prescribe by order the rate of interest to be applied for the purposes of paragraph 1 of article 11 of the 1976 Convention. Where a fund has been established with a court in accordance with article 11 of the Convention for the payment of claims, the court may stay any proceedings relating to any claim arising out of that occurrence which are pending in that court, or any court of lower jurisdiction to that court, against the person by whom the fund has been constituted. 11 In what circumstances can the limit be broken? The Convention provides for a virtually unbreakable system of limiting liability. However, Article 4 does provide that a person shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result. It will therefore be extremely difficult for the limit to be broken. Port state control 12 Which body is the port state control agency? Under what authority does it operate? The port state control agency in Ireland is the Marine Survey Office which is part of the Maritime Safety Directorate, which in turn, is an executive agency of the Department of Transport, Tourism and Trade. It operates under S.I. No 656 of 2010, the European Communities (Port State Control) Regulations If, after an initial inspection, the inspector confirms or reveals deficiencies in a ship which are clearly hazardous to safety, health or the environment, the Marine Survey Office shall ensure that the ship is detained or that the operation in the course of which the deficiencies were revealed is stopped. The competent authority may cause a direction to be given to the owner or master of a ship and the owner or master shall comply with the direction. Failing to do so is an offence. In exceptional circumstances, where the overall condition of a ship is obviously substandard, the competent authority may suspend the inspection of that ship until the responsible parties take the steps necessary to ensure that it complies with the relevant requirements of the Conventions. Under Regulation 24, proceedings for an offence under these Regulations may be brought and prosecuted by the minister. A person guilty of an offence under Regulations 5(7), 8(2), 11(9), 16(11), 18(9) or (10), 19(5) or (6), 20(4) or 21(3) is liable on summary conviction, to a fine not exceeding e5, What is the appeal process against detention orders or fines? Regulation 17 of the 2010 Regulations outlines the right of appeal. The owner or operator of a ship, or his or her representative in the state, shall have a right of appeal against a detention or refusal of access by the competent authority but the lodging of such an appeal shall not cause the detention or refusal of access to be suspended. The competent authority shall notify the master of a ship so detained, or refused access, of the practical arrangements for lodging an appeal. An appeal under this Regulation shall be made to a judge of the Circuit Court in whose circuit the port in which the ship is, or has been, detained is located and shall be made within seven working days of the commencement of the detention or refusal of access, unless the court considers that there is good and sufficient reason for extending that period. On hearing an appeal, the court may confirm or vary the detention, or refusal of access, or allow the appeal. A decision of the Circuit Court on an appeal shall be final, save that, by leave of the court, an appeal from its decision shall lie with the High Court on a specified question of law. Classification societies 15 Which are the approved classification societies? The approved classification societies depend on the type of vessel. However, the main approved classification societies are: American Bureau of Shipping, Bureau Veritas, Det Norske Veritas, Germanischer Lloyd, Nippon Kaiji Kyokai, Lloyds Register, Registro Italiano Navale and Russian Maritime Register of Shipping. 16 In what circumstances can a classification society be held liable, if at all? While a classification society can technically be held liable in both contract and tort for breaches of contract or breach of its duty of care, the society will generally have excluded their liability in contract. Any claim under tort will require the claimant to establish that the classification society owed a duty of care, that the duty of care was breached and that such breach resulted in loss or damage to the claimant. EU Directive 2009/15/EC on common rules and standards for ship inspection and survey organisations and for the relevant activities of maritime administrations contains articles relating to the financial liability of recognised organisations for any marine casualty caused by a wilful act, omission or gross negligence. The EU Directive was transposed into Irish law by the European Communities (Ship Inspection and Survey Organisations) Regulations What sanctions may the port state control inspector impose? Collision, salvage, wreck removal and pollution 17 Can the state or local authority order wreck removal? Under section 40 of the Merchant Shipping (Salvage and Wreck) Act 1993, which enacts the International Convention on Salvage 1989 (the 1989 Salvage Convention), the minister for transport shall have the general superintendence throughout the state of all matters 122 Getting the Deal Through Shipping 2013

6 ireland relating to every wrecked or stranded vessel or other wreck. Under section 41, the minister has the power to appoint a designated receiver of the wreck if it is considered appropriate to do so. The minister shall indemnify each receiver against all and any actions, expenses, costs, claims, demands and other liabilities in respect of any action by or omission or negligence on the part of the receiver. Although Ireland is a party to the Nairobi International Convention on the Removal of Wrecks, 2007, it has yet to be enacted into Irish legislation. 18 Which international conventions or protocols are in force in relation to collision, salvage and pollution? As per above, the 1989 Salvage Convention is in force in Ireland and has been incorporated into Irish law through the Merchant Shipping (Salvage and Wreck) Act Also in force is the International Collision Convention 1952 enacted in Ireland by the Jurisdiction of Courts (Maritime Conventions) Act The International Civil Liability for Oil Pollution 1969 and also the International Carriage of Hazardous and Noxious Substances by Sea (HNS) Convention 1996 have been implemented into Irish law. 19 Is there a mandatory local form of salvage agreement or is Lloyd s standard form of salvage agreement acceptable? Who may carry out salvage operations? There is no mandatory form of salvage agreement, with the Lloyd s open form in common usage. There are no restrictions on who may carry out salvage operations and the parties involved may agree on whatever salvage agreement, or terms and conditions, they deem to be appropriate given the circumstances. Under section 22 of the Merchant Shipping (Salvage and Wreck) Act 1993, the minister for transport has the right to give directions in relation to salvage operations if it is felt necessary. Ship arrest 20 Which international convention regarding the arrest of ships is in force in your jurisdiction? Ireland is a party to the International Convention Relating to the Arrest of Seagoing Ships 1952 (1952 Arrest Convention). The Jurisdiction (Maritime Conventions) Act, 1989 was passed for the purposes of adopting the 1952 Arrest Convention. To date, Ireland has not ratified the International Convention on the Arrest of Ships In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? The initial claims for which a vessel could be arrested are set out in sections 27 to 37 of the Court of Admiralty (Ireland) Act These are: all claims whatsoever relating to salvage and to enforce the payment thereof; all claims in the nature of towage and to enforce payment thereof; any claims for damage received or done by any ship; any claim for the building, equipping or repairing of any ships; any claim by a seaman of any ship for wages earned by him on board the ship; any claim in respect of a registered mortgage, and any claim by the owner of any bill of lading of any goods carried into any port in Ireland in any ship for damage done to the goods by the negligence or misconduct of or for any breach of duty or breach of contract on the part of the owner, master or crew of the ship. The claims for which a vessel can be arrested were extended as per article 1 of the 1952 Arrest Convention. It is only possible to arrest a vessel in Ireland which is flying the flag of one of the contracting states. It is not possible to arrest associated ships. However, it is possible to arrest a sister ship of Convention countries under which the original claim is actually founded. This was upheld in the High Court case, the MV Kapitan Labunets (1995) 1 I.L.R.M What is the test for wrongful arrest? The test for wrongful arrest is usually bad faith or gross negligence. There is very little Irish case law relating to wrongful arrest and what amounts to a good and sufficient reason. However, in the 1997 case of MV Blue Ice (1997) IEHC 56, reference was made to the need to establish a fair and statable case and sufficient grounds for the arrest of the vessel. 23 Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel? This issue has not been addressed in Irish legislation or case law. It seems likely that the Irish courts will be guided by English law, which adopts the view that as the charterers are supplying and paying for the bunkers for the duration of the charter period, the time charterer will be regarded as owner of the bunker with all the disadvantages that that implies (eg, the risk of an attachment of bunkers to secure some claim against the charterer possibly wholly unconnected with the ship upon which the bunkers are or with the owner of that same ship). 24 Will the arresting party have to provide security and in what form and amount? The arresting party is not required to provide security. However, the solicitor for the arresting party must give an undertaking to the ddmiralty marshall to indemnify the admiralty marshall for all losses and expenses incurred in arresting a vessel. 25 Who is responsible for the maintenance of the vessel while under arrest? The admiralty marshall is responsible for the maintenance of an arrested vessel. 26 Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere? Court proceedings can be pursued in another jurisdiction where both parties agree or where there is a binding arbitration clause. Judicial sale of vessels 27 Who can apply for judicial sale of an arrested vessel? The arresting party can apply for the judicial sale of an arrested vessel. 28 What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale? How are these costs calculated? An application can be made to the Admiralty Court for the judicial sale of an arrested vessel by an arresting party where no security or insufficient security is put forward by the shipowner or where the parties have failed to reach an agreement. In default of appearance the admiralty judge can also, under Rule 35 of Order 64 of RSC, if satisfied the arresting party s claim is well 123

7 ireland founded, pronounce the claim and at the same time order the vessel to be appraised and sold. On application for sale of the vessel the appraisal and sale is carried out by the admiralty marshall who appoints an auctioneer to carry out the sale. An order for sale can be obtained relatively quickly within the time of arrest when it becomes clear no security or insufficient security is posted or the owners fail to come on record. The sale itself will then usually also take place relatively quickly (ie, within four to eight weeks. The net proceeds are paid into court and, after payment of the sale or appraisal expenses and other expenses of the admiralty marshall, the various interested parties may agree distribution/priority or an application can be made to court for determination of order of priorities in circumstances where judgment has been given. Adjudication of priorities can take some time. The court costs associated with a judicial sale are usually 5 per cent of the sale price. There is also duty payable to the court of 10 per cent of the sale proceeds. Both of these amounts come out of the sale proceeds. 29 What is the order of priority of claims against the proceeds of sale? In Ireland the determination of priorities is decided by judgment of the admiralty judge after hearing arguments from the competing claimants on priority. As a rule of thumb, wages of seamen and the admiralty marshal s expenses will be afforded priority over a mortgagee. 30 What are the legal effects or consequences of judicial sale of a vessel? The buyer will get clean title and the claims that existed presale against the vessel are transferred to a claim against the sale proceeds. 31 Will judicial sale of a vessel in a foreign jurisdiction be recognised? Yes, the Irish courts will recognise the judicial sale of a foreign registered vessel. 32 Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993? Ireland is not a signatory to the International Convention on Maritime Liens and Mortgages, Carriage of goods by sea and bills of lading 33 Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules? Section 31 of the Merchant Shipping (Liability of Shipowners and Others) Act 1996 gives the Hague-Visby Rules force of law in Ireland. The Rules are set out in full in the third schedule of the Act. Ireland has neither signed nor ratified the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea. 34 Are there conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading? Road The Convention on the International Carriage of Goods by Road 1956 was implemented in Ireland by the International Carriage of Goods by Road Act 1990 and given force of law in the state by section 2 of that Act. Rail The Convention Concerning the International Carriage of Goods by Rail 1980 (COTIF) has been ratified in Ireland. Air The relevant conventions are the Warsaw Convention 1929, and the Hague Protocol of Also, the Convention for the Unification of Certain Rules for International Carriage by Air 1999 (the Montreal Convention) was ratified and given force of law in Ireland through the Air Navigation (International Conventions) Act Who has title to sue on a bill of lading? The applicable law in this regard is section 1 of the Bills of Lading Act 1855 which provides that every consigner of goods named in a bill of lading, and every endorsee of it to whom the ownership of the goods described in it shall pass, will have transferred to them all rights of action, and be subject to the same liabilities, in respect of such goods as if the contract contained in the bill of lading had been made with them. The law in relation to bills of lading in Ireland has not been updated since the 1855 Act which has been criticised on a number of grounds. Firstly, it only transfers rights of suit where the property passes to a consignee or endorsee. A pledgee of goods would not acquire the property. Furthermore, the wording of section 1 of the 1855 Act is such that a property must pass by reason of consignment or endorsement. It does not apply to waybills, multimodal transport documents or delivery orders. The limitations in section 1 of the 1855 Act have, to some extent, been overcome by the long-established principle in the UK and Ireland that where a consignee takes delivery of goods from the carrier by presenting the bill of lading and paying outstanding charges, a contract on the terms of the bill of lading may be implied between the consignee and carrier. The Irish courts would follow the leading UK case Brandt v Liverpool, Brazil and River Stream Navigation Co Ltd (1924) 1 K.B 575 where the preconditions for implying a contract were held to be: the holder of the bill must have some interest in the property; the actions of the parties must be construed as offer and acceptance and sufficient consideration must be provided. However, there are still situations where it is impossible to establish an implied contract bringing parties back to the section 1 of the 1855 Act difficulties. The UK sought to lessen difficulties arising from privity of contract issues by the Contract (Rights of Third Parties) Act In Ireland there has been no reform to section 1 of the Bills of Lading Act 1855 or any introduction of legislation similar to the Contracts (Rights of Third Parties) Act The Law Reform Commission of Ireland published a report in 2008 on Privity of Contract and Third Party Rights in which it recognised the short comings with section 1 of the 1855 Act and recommended statutory reform. 36 To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a thirdparty holder or endorsee of the bill? Any term of the charter party can be incorporated by reference into a bill of lading. While there has not been a decided case in Ireland specifically on this point, it seems extremely likely that the Irish courts would follow the position in the UK and Australia whereby arbitration clauses, as collateral clauses, will not be incorporated into a bill of lading unless they are specifically referred to in the incorporation clause. 124 Getting the Deal Through Shipping 2013

8 ireland 37 Is the demise clause or identity of carrier clause recognised and binding? This issue has not been addressed by the Irish legislature or courts to date. However, the Irish courts have traditionally demonstrated a reluctance to interfere with contractual terms agreed at arm s length by commercial entities. In such circumstances, it seems highly likely that such clauses would be accepted as valid. 38 Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers? The shipowner may be liable in tort for damage caused even where it is not the contractual carrier, depending on the cause of the damage. In such circumstances, the shipowner would be able to rely on any of the defences available at common law. In addition, the shipowner may have incorporated a Himalaya clause into the contract such a contract allows for any servant, agent or contractor to be entitled to the protection of exemptions within the contract itself as the carrier is not only acting on behalf of himself but also on behalf of those parties named. However, it will be vital for shipowners to bear in mind that the Hague-Visby Rules provide for limits on the types of exclusion clause utilised by shipowners. It should also be noted that the Merchant Shipping (Liability of Shipowners and Others) Act 1996 expressly excludes shipowner s liability where any: property on board the ship is lost or damaged by reason of fire on board the ship; or precious materials (eg, precious stones) are lost or damaged by reason of larceny etc, and the nature and value of these items has not been described to the owner or master of the ship in the bill of lading or otherwise in writing. 39 What is the effect of deviation from a vessel s route on contractual defences? This will depend largely on the terms of the contract agreed between the parties. As the vessel s route will normally constitute a key term of the charter party, deviation therefrom will constitute a breach of that contract rendering the carrier liable for the losses caused by the deviation. Of course, the carrier will have a defence at both at common law and under Rule 4(4) of the Hague-Visby Rules if the deviation was undertaken to avoid damage to the ship or a risk to human life. 40 What liens can be exercised? All liens that arise by operation of law or by prior agreement between the parties can be exercised. However, it is important to note that section 16 of the Merchant Shipping (Liability of Shipowners and Others) Act 1996 provides that no lien or other right in respect of any ship or property shall affect the proportions in which a fund, as provided for in article 12 of the Convention on Limitation of Liability for Maritime Claims 1976, is distributed among the several claimants concerned. 41 What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability? This will amount to a breach of the carrier contract unless express provision for the exclusion of liability has been made in the contract. Section 3 of the Bills of Lading Act 1855 provides that a bill of lading in the hands of a consignee or endorsee is conclusive evidence, against the master or other person signing it, that the goods representing to have been shipped on board a vessel have been shipped. In such circumstances, it is advisable that goods should not be surrendered without presentation of the original bill. This gives rise to difficulties in circumstances where the bill of lading will not always reach the endorsee before the ship reaches the port of discharge. This difficulty can be avoided by substituting the bill of lading with a sea waybill for the purposes of obtaining delivery of the goods however, it is vital to note in this context that while a waybill can act as a receipt for the goods and provides evidence of the contract of carriage, it is different from a bill of lading in that it is not a negotiable document of title. 42 What are the responsibilities and liabilities of the shipper? The shipper is bound by the terms of the Hague-Visby Rules and its rights and responsibilities are set out in those Rules. The holder of the bill of lading will also be bound by those Rules. The other key obligation owed by a shipper is to refrain from shipping dangerous goods without the consent of the carrier. Jurisdiction and dispute resolution 43 Which courts exercise jurisdiction over maritime disputes? Section 5(1) of the Jurisdiction of Courts (Maritime Conventions) Act 1989 confers jurisdiction on the High Court to hear and determine proceedings in relation to maritime claims. It includes all maritime claims listed in article 1 of International Convention relating to the Arrest of Seagoing Ships. Order 64 of the Rules of the Superior Courts deals with admiralty claims. The Admiralty Court, which is a specialist division of the High Court, has jurisdiction to hear maritime disputes in Ireland. Pursuant to Order 63A of the Rules of the Superior Court, the Commercial Court has jurisdiction to hear claims arising from the carriage of goods by sea where the value of the claim exceeds e1 million. 44 In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction? The rules and procedures that govern service of court proceedings, within EU member states, are set out in Council Regulation (EC) 1348/2000 on the service of member states of judicial and extra judicial documents in civil and commercial matters. This Regulation came into force on 31 May 2001 and has direct effect. The County Registrar is responsible for transmitting the documents to be served and receiving the documents from another state for service. Order 11D of the Rules of the Superior Courts provides for service of judicial documents within the EU in accordance with this regulation. The Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965 governs service of judicial documents within signatory countries. The Rules of the Superior Courts implement this Convention. The Convention requires each signatory to set up a central authority that can receive requests for service of documents within that country from judicial officers of another contracting country. Service can be effected through the master of the High Court or by forwarding the judicial documents directly to the central authority of the country in which the defendant is to be served. 45 Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration? There is no domestic arbitral institution established with a panel of arbitrators specialising in maritime arbitration in Ireland. 125

9 ireland Update and trends Ocean wealth The Irish government announced its plans to double the value of the Irish state s ocean wealth by 2030 at the Marine Institute in Galway on 1 August Ireland has the EU s third largest sea area. The government aims to increase turnover from the ocean economy to more than e6.4 billion within eight years mainly through aquaculture, renewable energy, marine and coastal tourism and marine biotechnology. SPV Sam Dragon A recent noteworthy High Court decision is that of SPV SAM Dragon v GE Transportation Finance (Ireland) Limited (2012) IEHC 240. The case involved a claim brought by SPV SAM Dragon Inc, who purchased a vessel at a judicial sale in Belgium, against the defendant mortgagee who had security over the vessel in respect of a mortgage created by the previous owners, and who refused to sign the necessary forms required by the Korean Registry to delete the mortgage entry on the Korean Shipping Registry upon request from the new owners until the sale proceeds of judicial sale had been distributed. The plaintiff was alleging two separate wrongful acts namely: that the defendant failed to disclose, prior to the holding of the judicial auction, that it did not intend to delete the entry of its mortgage on the Korean Shipping Registry; and that the defendant failed to delete the entry of its mortgage on the Korean Shipping Registry after it was requested by the plaintiff to do so. The parties had agreed that Belgian law applied to the first issue. The judge held that Korean law applied to the second issue on the basis that it seemed to the judge that Korea was the country most connected with the alleged wrong arising out of the failure by the defendant to delete the entry of the mortgage from the Korean Register. The judge further held that under Belgian law, which the judge held applied to the judicial sale, the mortgage or charge on the vessel ceased once the judicial sale took place and the rights of the inscribed creditors transferred to the proceeds of sale. The judge further held that clause 10 of the terms and conditions of the judicial sale in Belgium required the purchaser of the vessel to delete the registration of the mortgage and there was no representation made by the defendants under Belgian law prior to the sale in these terms and conditions. The judge made this decision notwithstanding that clause 10 of the conditions makes no reference to deregistration and is confined to providing that the purchaser fulfils formalities with regard to registration. With regard to Korean law the judge held that there was no obligation under Korean law on the defendant to voluntarily remove the entry on the Korean Register and that the continued entry of the mortgage on the Korean Register was not an inaccurate or false statement made by the mortgagee. In deciding Korean law applied to the second issue the judge went on to state that even if Belgian law were to apply to the second of the alleged wrongs, there was no abuse of right by the defendant, in that the defendant had not exercised any right in a way that was manifestly beyond the normal exercise of rights by a prudent and concerned person. One of the most significant implications for the shipping industry following the High Court judgment is that there will be no guarantee that where a vessel is purchased at a judicial sale held outside its flag state, and/or where there are insolvency proceedings in existence, the entry of a mortgage will be deleted at the time of purchase. However, the Comite Maritime International is in the process of drafting a convention on the judicial sale of vessels which should protect the shipping industry from such an unfavourable High Court decision. The case is being appealed to the Irish Supreme Court. Ship registration In relation to ship registration, the Irish government announced plans to publish two bills designed to substantially reform the current legislative regime for shipping; the Merchant Shipping (Registration of Ships) Bill and the Merchant Shipping Consolidation Bill. It seems likely that the Bills will focus on reform of the sector to simplify the legislative regime and to introduce other changes designed to increase the international appeal of Ireland as a shipping hub. 46 What rules govern recognition and enforcement of foreign judgments and awards? The rules as to recognition and enforcement of foreign judgments and awards are set out in Council Regulation (EC) 444/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (also known as Brussels 1 Regulation). In Ireland the European Communities (Civil and Commercial Judgments) Regulations 2002 (SI 52/2002) give effect to the Brussels 1 Regulation. Arbitration The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, was given effect in Irish law by part III of the Arbitration Act Ireland has made the reciprocity reservation under article 1(3) of the Convention, which means that under the Convention one can only enforce awards that were made in a state that is a party to the Convention. In practical terms, the New York Convention has been overtaken in Irish law by the UNCITRAL Model Law on International Commercial Arbitration which was given the force of law by the Arbitration (International Commercial) Act A party may now seek recognition and enforcement of an arbitration award under articles 35 and 36 of the Model Law. Unlike the New York Convention, the Model Law, as implemented by the 1998 Act, allows enforcement of an arbitration award irrespective of where it was made. It does not need to be a foreign award, nor is there a requirement that it be given in a state which is a party to any particular convention. Helen Noble Ruth McKeon 70 Sir John Rogerson s Quay Tel: Dublin 2 Fax: Ireland 126 Getting the Deal Through Shipping 2013

10 ireland Ireland is a party to the Washington Convention on the Settlement of Investment Disputes between States and Nationals of other States, 1965 (the ICSID Convention). Part IV of the Arbitration Act 1980 makes provision for enforcement under this Convention. The procedure entails an application for permission for enforcement under the provisions of section 16(1) of the 1980 Act. 47 What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere? The Irish courts can issue an anti-suit injunction preventing proceedings being commenced in a foreign court where it would be in breach of an exclusive jurisdiction or arbitration clause. However, in Turner v Grovit C-159/02, the European Court of Justice (ECJ) ruled that the Brussels Convention is to be interpreted to preclude the grant of an injunction whereby a court of a contracting state prohibits a party to proceedings pending before it from commencing or continuing legal proceedings before a court of another contracting state even where that party is acting in bad faith with a view to frustrating the existing proceedings. The ECJ more recently determined in West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA (2007) UKHL 4 that courts of an EU member state cannot issue anti-suit injunctions against the court of another member state. The ECJ went as far as determining, that anti-suit injunctions which are granted by the court of a member state to prevent proceedings commenced before the court of another member state, on the grounds that the parties are subject to an existing arbitration agreement, is contrary to existing EC Law. 48 What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction? Where there is an exclusive jurisdiction clause or arbitration clause in place, the Irish courts have the power to stay or decline jurisdiction on the grounds of forum non conveniens (ie, there is a more appropriate forum for the trial of action). In order for the defendant to obtain a stay on domestic proceedings, the defendant must demonstrate that there is a more appropriate forum than the Irish courts for the trial of action and that it is in the interest of justice. However, where the Brussels Convention/Brussels Regulations apply to the proceedings, the Irish courts cannot decline jurisdiction conferred on it by the Convention/Regulations. Limitation periods for liability 49 What time limits apply to claims? Is it possible to extend the time limit by agreement? Breach of contract section 11(1)(a) of the Statute of Limitations Act 1957 provides that actions founded on simple or quasi-contract will be statute-barred where they are taken more than six years from accrual of the cause of action.tortious liability section 11(2) of the Statute of Limitations Act 1957 provides for a general rule that tortious claims must be brought within six years of the accrual of the cause of action. However, it is vital to note that a limitation period of two years will apply for actions in respect of personal injuries based on negligence, nuisance, or breach of duty. Furthermore, special provisions apply in respect of maritime cases. Under section 46(2) of the Civil Liability Act 1961, a claim against the owners or operators of a vessel for personal injury or fatal injury or property damage suffered by a passenger on that vessel or for damage to another vessel or cargo must be initiated within two years of the accrual of the action. It should be noted that section 46(3) confers a discretion on the court to extend this period subject to such conditions as it sees fit. It is not possible to extend the statutory limitation periods by agreement. 50 May courts or arbitral tribunals extend the time limits? The court has discretion under section 46(3) of the Civil Liability Act 1961 to extend this period subject to certain conditions as it deems fit. In Lawless v Dublin Port and Docks Board (1998) 1 ILRM 514 the court held that the plaintiff must show special circumstances before an extension of time would be granted. The court will consider the degree of blameworthiness of the defendant and the length of the delay. Miscellaneous 51 Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers? As set out in the response to question 23, this issue has not been addressed in Irish legislation or case law. As such, it seems likely that the Irish courts will be guided by the law of England and Wales, which holds that while bunkers cannot be arrested, they can be the subject of a freezing order. 52 Can external factors, such as the recent global restriction on the availability of credit, affect the legal rights and liabilities of the parties to a shipping contract? There is no Irish case law to suggest that the global restrictions on the availability of credit will affect the legal rights and liabilities of the parties to a shipping contract. The shipping contract is freelynegotiated between the parties and therefore it is up to the parties of the contract to include protective provisions in their contracts. 53 Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above? See Update and trends. 127

11 Annual volumes published on: Annual volumes published on: Air Transport Anti-Corruption Regulation Anti-Money Laundering Arbitration Banking Regulation Cartel Regulation Climate Regulation Construction Copyright Corporate Governance Corporate Immigration Dispute Resolution Dominance e-commerce Electricity Regulation Enforcement of Foreign Judgments Environment Foreign Investment Review Franchise Gas Regulation Insurance & Reinsurance Intellectual Property & Antitrust Labour & Employment Licensing Life Sciences Merger Control Mergers & Acquisitions Mining Oil Regulation Patents Pharmaceutical Antitrust Private Antitrust Litigation Private Equity Product Liability Product Recall Project Finance Public Procurement Real Estate Restructuring & Insolvency Right of Publicity Securities Finance Shipbuilding Shipping Tax on Inbound Investment Telecoms and Media Trademarks Vertical Agreements For more information or to purchase For more books, information please or visit: to purchase books, please visit: Strategic research partners of the ABA International section The Official Research Partner of the International Bar Association shipping 2013 issn

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