Shipping & International Trade Law

Transcription

1 Shipping & International Trade Law This second edition of Shipping & International Law aims to provide a first port of call for clients and lawyers to start to appreciate the issues in numerous maritime jurisdictions. Each chapter is set out in such a way that readers can make quick comparisons between the litigation terrain in each country, determining the differences between, for example, the rights of cargo interests to claim for cargo loss or damage in Italy and England. A remarkable breadth of jurisdictions is covered, while the contributors are all leading lawyers in their countries and are ideally placed to provide practical, straightforward commentary on the inner workings of their respective legal systems. SECOND EDITION 2015 Shipping & International Trade Law General Editor: David Lucas, Hill Dickinson LLP Shipping & International Trade Law Jurisdictional comparisons Second edition 2015 Preface Norman Hay Cargill International SA Foreword David Lucas Hill Dickinson LLP Angola João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & Associados in association with Fátima Freitas Advogados Argentina Fernando Ramón Ray & Alejandro José Ray Edye, Roche, De La Vega & Ray Australia Geoff Farnsworth & Natalie Puchalka Holding Redlich Canada Douglas G Schmitt Alexander Holburn Beaudin + Lang LLP China Chen Xiangyong & Wang Hongyu Wang Jing & Co Cyprus Vassilis Psyrras, Andreas Christofides & Costas Stamatiou Andreas Neocleous & Co LLC Denmark Johannes Grove Nielsen Bech-Bruun England & Wales David Lucas, Jeff Isaacs & David Pitlarge Hill Dickinson LLP Finland Ulla von Weissenberg & Linda Ojanen Attorneys at Law Borenius Ltd LLP France Laurent Garrabos BCW & Associés Germany Jobst von Werder & Ingo Gercke REMÉ Rechtsanwälte Greece Maria Moisidou Hill Dickinson International Hong Kong Damien Laracy & Michael Ng Laracy & Co and Mike Mallin Hill Dickinson Hong Kong LLP India Prashant S Pratap Indonesia Juni Dani Budidjaja & Associates Israel Amir Cohen-Dor S Friedman & Co Italy Paolo Manica & Michele Mordiglia Studio Legale Mordiglia Japan Tetsuro Nakamura, Tomoi Sawaki & Minako Ikeda Yoshida & Partners Malta Dr Ann Fenech & Dr Adrian Attard Fenech and Fenech Advocates Mexico Enrique Garza, Roger Rodriguez & Ramiro Besil Garza Tello & Asociados SC Mozambique João Afonso Fialho & Sofia Paramés Miranda Correia Amendoeira & Associados in association with Pimenta Dionísio & Associados The Netherlands Wilbert ten Braak, Rene van Leeuwen, Hans Posthumus Meyjes & Elisabeth T A Naaykens Hampe Meyjes advocaten Nigeria Emmanuel Achukwu The Campbell Law Firm Panama Jorge Loaiza III Arias, Fabrega & Fabrega Peru Percy Urday Moncloa, Vigil, Del Rio & Urday Poland Sławomir Nowicki, Alina Łuczak, Katarzyna Bielarczyk & Agnieszka Nowicka Wybranowski Nowicki Law Office Portugal João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & Associados Russia Elena Popova Sokolov Maslov & Partners Singapore Raghunath Peter Doraisamy Selvam LLC South Africa Shane Dwyer & Jennifer Finnigan Shepstone & Wylie South Korea Byung-Suk Chung Kim & Chang Spain Verónica Meana Larrucea & Santiago López-Caravaca Boluda Meana Green Maura & Co Turkey Emre Ersoy & Zihni Bilgehan Ersoy Bilgehan Lawyers and Consultants Ukraine Alexander Kifak & Artyom Volkov ANK Law Office United Arab Emirates Adrian Chadwick & Raymond Kisswany Hadef & Partners United States John Kimball & Emma Jones Blank Rome LLP General Editor: David Lucas Hill Dickinson LLP

2 Shipping & International Trade Law Jurisdictional comparisons Second edition 2015 General Editor: David Lucas, Hill Dickinson LLP

3 General Editor David Lucas, Hill Dickinson LLP Commercial Director Katie Burrington Commissioning Editor Emily Kyriacou Senior Editor Callie Leamy Publishing Assistant Nicola Pender Publications Editor Dawn McGovern Published in 2014 by Thomson Reuters (Professional) UK Limited trading as Sweet & Maxwell Friars House, 160 Blackfriars Road, London SE1 8EZ (Registered in England & Wales, Company No Registered Office and address for service: 2nd floor, Aldgate House, 33 Aldgate High Street, London EC3N 1DL) Printed and bound in the UK by Polestar UK Print Limited, Wheaton A CIP catalogue record for this book is available from the British Library. ISBN: Thomson Reuters and the Thomson Reuters logo are trademarks of Thomson Reuters. Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen s Printer for Scotland. While all reasonable care has been taken to ensure the accuracy of the publication, the publishers cannot accept responsibility for any errors or omissions. This publication is protected by international copyright law. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, or stored in any retrieval system of any nature without prior written permission, except for permitted fair dealing under the Copyright, Designs and Patents Act 1988, or in accordance with the terms of a licence issued by the Copyright Licensing Agency in respect of photocopying and/or reprographic reproduction. Application for permission for other use of copyright material including permission to reproduce extracts in other published works shall be made to the publishers. Full acknowledgement of author, publisher and source must be given Thomson Reuters (Professional) UK Limited

4 Contents Contents Preface to the first edition Norman Hay Cargill International SA v Foreword to the first edition David Lucas Hill Dickinson LLP vii Foreword to the second edition David Lucas Hill Dickinson LLP xi Angola João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & 1 Associados in association with Fátima Freitas Advogados Argentina Fernando Ramón Ray & Alejandro José Ray 27 Edye, Roche, De La Vega & Ray Australia Geoff Farnsworth & Natalie Puchalka Holding Redlich 47 Canada Douglas G. Schmitt Alexander Holburn Beaudin + Lang LLP 65 China Chen Xiangyong and Wang Hongyu Wang Jing & Co 85 Cyprus Vassilis Psyrras, Andreas Christofides & Costas Stamatiou 105 Andreas Neocleous & Co LLC Denmark Johannes Grove Nielsen Bech-Bruun 127 England & Wales David Lucas, Jeff Isaacs & David Pitlarge Hill Dickinson LLP 145 Finland Ulla von Weissenberg & Linda Ojanen Attorneys at Law Borenius Ltd LLP 177 France Laurent Garrabos BCW & Associés 195 Germany Jobst von Werder & Ingo Gercke REMÉ Rechtsanwälte 219 Greece Maria Moisidou Hill Dickinson International 239 Hong Kong Damien Laracy & Michael Ng Laracy & Co and 271 Mike Mallin Hill Dickinson Hong Kong LLP India Prashant S. Pratap, Senior Advocate 307 Indonesia Juni Dani Budidjaja & Associates 321 Israel Amir Cohen-Dor S Friedman & Co 337 Italy Paolo Manica & Michele Mordiglia Studio Legale Mordiglia 357 Japan Tetsuro Nakamura, Tomoi Sawaki & Minako Ikeda Yoshida & Partners 371 Malta Dr Ann Fenech & Dr Adrian Attard Fenech and Fenech Advocates 385 Mexico Enrique Garza, Roger Rodriguez & Ramiro Besil 407 Garza Tello & Asociados SC Mozambique João Afonso Fialho & Sofia Paramés Miranda Correia Amendoeira 435 & Associados in association with Pimenta Dionísio & Associados The Netherlands Wilbert ten Braak, Rene van Leeuwen, Hans Posthumus Meyjes 463 & Elisabeth TA Naaykens Hampe Meyjes advocaten Nigeria Emmanuel Achukwu The Campbell Law Firm 477 EUROPEAN LAWYER REFERENCE SERIES iii

5 Contents Panama Jorge Loaiza III Arias, Fabrega & Fabrega 497 Peru Percy Urday Moncloa, Vigil, Del Rio & Urday 515 Poland Sławomir Nowicki, Alina Łuczak, Katarzyna Bielarczyk & 533 Agnieszka Nowicka Wybranowski Nowicki Law Office Portugal João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira 557 & Associados Russia Elena Popova Sokolov, Maslov & Partners 581 Singapore Raghunath Peter Doraisamy Selvam LLC 599 South Africa Shane Dwyer & Jennifer Finnigan Shepstone & Wylie 623 South Korea Byung-Suk Chung Kim & Chang 647 Spain Verónica Meana Larrucea & Santiago López-Caravaca Boluda 667 Meana Green Maura & Co Turkey Emre Ersoy & Zihni Bilgehan Ersoy Bilgehan Lawyers and Consultants 685 Ukraine Alexander Kifak & Artyom Volkov ANK Law Office 703 United Arab Emirates Adrian Chadwick & Raymond Kisswany Hadef & Partners 721 United States John Kimball & Emma Jones Blank Rome LLP 739 Contact details 755 iv EUROPEAN LAWYER REFERENCE SERIES

6 Preface to first edition Preface to the first edition Cargill International SA Norman Hay I am greatly honoured to be asked to write the preface to this timely worldwide review of shipping and trading law. Over the last 30 years, the volume and variety of international trade in and shipping of commodities has grown dramatically. Liberalisation of global markets, and the need for commodity inputs as those markets have developed, have promoted this growth. International shipping trade is central to the economy of the planet. Without it, there can be no increase in economic value which allows billions of people to raise themselves out of poverty. However, as with all such rapid growth, there comes a parallel increase in risk associated with the commodities being transported and the vessels undertaking such transport. The notion of risk in international trade goes back thousands of years and in each period of growth there has been the need for legal frameworks to handle disputes. The necessity for such legal systems is of utmost importance to the trade itself. Without such structures, an understanding of where risk occurs and how to mitigate it becomes clouded and there will be a drag on the growth of trade itself. This book represents a milestone in providing an international comparative survey of legal risks, issues and indeed opportunities pertaining to shipping and trading activities. The volume takes a pragmatic approach by setting out a series of answers to questions that confront market participants to illustrate the variety and types of legal dispute that can arise, and to help managers and practitioners navigate through the risk areas. The sheer size and complexity of the shipping and trading business would, on its own, lead to significant legal disputes. In addition, however, there has been a substantial increase in price volatility in the markets for the goods that these vessels carry. This volatility is increasing as the list of importing and exporting countries and the variety of the goods they trade also increases dramatically. While the companies and businesses involved in international trade have adopted a wide variety of methods to limit their risk (eg, stringent counterparty credit control, surveillance technologies and sophisticated trading instruments), such methods are insufficient to reduce to zero default risk and the inevitable legal disputes. This volume provides invaluable introductions to the diverse ways in EUROPEAN LAWYER REFERENCE SERIES v

7 Preface to the first edition which the various legal systems address common forms of default and the legal remedies which are available to the parties to resolve their differences. The majority of international trade and shipping contracts are governed by English Law. However, given the vast number of countries now engaged in trade, it is inevitable that other legal systems will impinge on the underlying contracts. This volume details and examines how such legal overlap can occur and presents new ideas on the implications and the methodologies that parties faced with legal disputes can adopt in such conflicting situations. Without a doubt, this volume provides a unique set of insights into this complicated but incredibly important area of global trade and its authors and editors are to be commended on the quality of the analysis. Norman Hay, President, Cargill International SA Geneva, 2011 vi EUROPEAN LAWYER REFERENCE SERIES

8 Foreword to the first edition Foreword to the first edition Hill Dickinson LLP David Lucas Until recently, shipping and commodities law was considered by the wider world to be a fairly esoteric specialism of restricted general relevance. Laymen hardly focused on vagaries of market movements (except during times of historic crisis such as the aftermath of the Yom Kippur War) let alone the transnational impact of those movements. Now, all that has changed. Everyone in the world who has to buy food, fuel, garments or who has access to the media is only too well aware of the impact of fluctuations in commodity prices. They have seen the prices of, say, wheat and sugar soar (roughly doubling in the six months from June 2010), cotton rocket (almost quadrupling in the two years from early 2009), crude oil rise inexorably (almost tripling in the same period), back nearly to the dizzy heights reached before the collapse in mid Similar rises have been experienced with non-ferrous metals, iron ore, coal, fertilisers and numerous other commodities. The list is almost endless. All these price movements are, virtually without exception, overshadowed by the quite spectacular boom and bust of Equally, freight rates have undergone even more spectacular convulsions with, for example, the Baltic Dry Index rising to well over 11,000 in mid- 2008, before collapsing to less than a mere tenth of that figure within the space of a very few months. The causes of this turmoil in the markets are too well known to merit repetition in this brief introductory Foreword. But what does merit consideration here is the stark way in which such turmoil illustrates the interconnectedness of the modern world. When China imports record quantities of crude oil, prices at the petrol pumps in Europe rise. When Russia suffers drought and bans wheat exports, the price of bread in Egypt soars. This would not happen if the modern world economy were not so inextricably wedded to international trade on a vast scale. The world as it has fashioned itself could not exist without it. Although trade between nations and regions goes back to the ancient Phoenicians and perhaps beyond, the present level of global interdependence is unprecedented. The rest of this volume will be devoid of statistics, so I hope I will be forgiven for offering just three sets of impressive figures which, I suggest, place in context the importance of the topics covered in this book: about 90 per cent of world trade is carried by the international shipping industry; EUROPEAN LAWYER REFERENCE SERIES vii

9 Foreword to the first edition according to the International Maritime Organisation, in 2008 (the last year for which figures are currently available) there were almost 53,000 cargo carrying ships with a total deadweight of almost 1.2 billion tonnes (almost double the figure for 1990). Cargo traffic exceeded 8 billion tonnes and almost 34 billion tonne miles were sailed; and seaborne trade in the main bulk cargoes (iron ore, grain, coal, bauxite/ alumina and phosphate) grew from 448 million tonnes in 1970 to 1,997 million tonnes in 2007 and other dry cargoes grew from 676 million tonnes to 3,344 million tonnes in the same period. The economic interdependence of the modern world economy is reflected in the interdependence of its diverse national legal systems. Legal practitioners in the field of international trade, whether in law firms or inhouse, will be only too familiar with the need, often the very urgent need, to seek advice, assistance or local intervention, whether in the courts or with local authorities, in jurisdictions worldwide. Although English law remains the most common choice of governing law in trade-related contracts and the English court or arbitral jurisdiction remains the most popular contractual forum, other legal systems and fora are frequently chosen (particularly with the burgeoning growth of international arbitration) and, irrespective of contractual choice, often become relevant to the challenges facing a party in crisis. Examples are boundless but include: a ship owner whose vessel faces arrest; a cargo owner whose goods face the exercise of a lien by the ship owner; a buyer who is seeking to prevent a bank from paying under a letter of credit against fraudulent documents; unexpectedly, a transaction suddenly involves dealings with a state or entity subject to UN, EU or US sanctions; an underwriter of cargo on board a vessel which has suffered a collision. Advice may be needed as a matter of extreme urgency in one or more relevant jurisdictions where the crisis is occurring. The purpose of this volume is to give those involved, or potentially involved, in such a crisis a brief and readily accessible guide as to how the relevant issues might be approached in the affected jurisdiction or jurisdictions. Needless to say, it cannot be a substitute for formal advice from a lawyer well versed in the relevant legal system after he has been fully briefed, but it is hoped that the short summaries of key legal issues will assist those seeking to manage a crisis by focusing expectations and enabling them to brief local lawyers with an awareness of the opportunities and pitfalls afforded by the relevant legal system. Within the constraints of the format of this volume it has only been possible to provide summaries of the law in a limited number of legal systems. To those states not represented, and to those who had hoped for guidance as to the law in any of those states, I extend my apologies. I could not have carried out my functions in the preparation of this book without the tireless efforts of many to whom my profuse thanks are gladly offered. Also thanks to the eminent lawyers in the various jurisdictions who had so unstintingly given their time and expertise in providing their respective chapters. My colleagues at Hill Dickinson LLP, Jeff Isaacs, Andrew Meads, Andrew Buchmann and David Pitlarge, provided enormous help viii EUROPEAN LAWYER REFERENCE SERIES

10 Foreword to the first edition both in formulating and refining the questionnaire for each chapter (which had to be thoughtfully composed to elicit the most helpful responses from our contributors) and in contributing the substantive content of the English chapter. Kay O Brien worked selflessly to coordinate the project and to keep it on track. Not least, my warm thanks are owed to Michele O Sullivan, the International Director, Emily Kyriacou, the Commissioning Editor, and the editorial team, for both inspiring me and my colleagues to undertake this project and tirelessly bringing it to fruition. David Lucas, Hill Dickinson General Editor London, 2011 EUROPEAN LAWYER REFERENCE SERIES ix

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12 Foreword to the second edition Foreword to the second edition Hill Dickinson LLP David Lucas When the publishers asked Hill Dickinson to work with them on a second edition of this volume, my immediate reaction was that it might be premature, given that the basic principles in the various legal systems covered in the first edition were perhaps unlikely to have changed that much, if at all; and this book never claimed to cover more than basic principles, given that in the first edition 25 jurisdictions were covered within the span of just 400 pages. However, it was pointed out to me that this would be an opportunity to expand the scope of the book to cover a number of jurisdictions which, for very good practical reasons, we had been unable to cover first time round. This opportunity has been seized with enthusiasm and I am delighted that this second edition has been expanded to cover some 36 jurisdictions, including many of considerable significance to the international trade and shipping community. In the Foreword to the first edition, I described the commercial and geopolitical trends and convulsions, natural catastrophes and conflicts which so often underlay and drove the issues which had confronted international trade and shipping lawyers every day in their work: Such events did not of course cease with the first edition: a mere list of names, acronyms and words suffices to make the point: Syria, Ukraine, sanctions, OFAC, Costa Concordia, Ebola This list could be expanded indefinitely. Market prices of commodities and freight rates have of course continued to fluctuate not as wildly, perhaps, as in some previous times, but sufficiently to drive defaults and thus to generate disputes between market participants. Meanwhile, statistics have continued to balloon. In the Forward to the first edition, I noted that in 2008 the world fleet of cargo carrying vessels accounted for a total deadweight of almost 1.2 billion tonnes; by January 2013 that figure had risen to 1.63 billion tonnes. Although the rate of growth of world GDP has slowed, nonetheless between 2008 and 2012 total cargo traffic increased from 8 to 9.2 billion tonnes. Just as trade continues to expand, so does the need for legal advice in multiple jurisdictions. As before, it is my pleasure to thank the numerous contributors to this book for their support and time-consuming work aimed at making it as useful as possible to its readers. My colleagues at Hill Dickinson LLP, Jeff Isaacs and David Pitlarge have greatly contributed to the review and EUROPEAN LAWYER REFERENCE SERIES xi

13 Foreword to the second edition updating of the English chapter. Not least, grateful thanks are due to the team at Thomson Reuters who have brought this second edition about: Emily Kyriacou, Katie Burrington, Dawn McGovern, Nicola Pender and Callie Leamy. David Lucas, Hill Dickinson General Editor London, 2014 xii EUROPEAN LAWYER REFERENCE SERIES

14 England & Wales England & Wales Hill Dickinson LLP David Lucas, Jeff Isaacs & David Pitlarge 1. CONTRACTS OF CARRIAGE 1.1 Jurisdiction/proper law In the absence of express provisions in a bill of lading (or charterparty), by what means will the proper law of the contract be determined? Until recently the applicable law of the contract was governed by the Rome Convention, which came into force on 1 April 1991 by virtue of the Contracts (Applicable Law) Act 1990, prior to which express choice of law was generally recognised. As far as contracts concluded after 17 December 2009 are concerned, the Rome Convention has been replaced by Regulation (EC) No 593/2008 ( Rome I ). The general rule under Rome I (which in this respect largely follows the Rome Convention) is that: (a) choice of law (express or implied) will be recognised; (b) the applicable law is that of the state of where the party required to effect the characteristic performance has his habitual residence, unless: (c)(i) it is clear that the laws of another country should apply, in which case they should do so, or (ii) the place of characteristic performance (or other prescribed criteria) cannot be determined, in which case the contract shall be governed by the law of the country with which it is most closely connected. Both the Rome Convention and Rome I have specific provisions dealing with contracts of carriage (which include voyage charterparties, but not time charterparties). There has been some slight adjustment in Rome I to the specific rules set out in the Rome Convention concerning contracts of carriage. These provide that the governing law should be that of the carrier s habitual residence provided that there is present one of three other connecting factors with that country. Those are (1) the place of receipt of the cargo; (2) the place of its delivery; or (3) the habitual residence of the consignor. If these requirements are met, the law of that country shall apply. However, if it is clear from all the circumstances that the contract, in the absence of the choice of law, is manifestly more closely connected with a country other than that which would govern the contract, following the application of these rules, then the law of that other country shall apply. The provisions for the carriage of goods are to be found in Article 6 of Rome I. The Rome Convention and Rome I do not apply to arbitration agreements and jurisdiction agreements. EUROPEAN LAWYER REFERENCE SERIES 145

15 England & Wales Will a foreign jurisdiction or arbitration clause necessarily be recognised? As a general rule, the English courts will not normally permit proceedings to be conducted in England in breach of the terms of an agreement conferring jurisdiction elsewhere. As with the applicable law, English law, as a general rule, will recognise the parties choice and the English courts are reluctant to interfere with the parties chosen jurisdiction and should generally grant a stay of any English proceedings in support of the parties chosen forum. English courts should only allow English proceedings to proceed in breach of such a provision if there is strong case for not allowing the foreign proceedings to ensue in the chosen forum. In considering whether there is strong case, the court should take into account all of the relevant factors, including such matters as: where the evidence on the relevant issues is situated or more readily available; whether the law of the foreign court applies and, if so, whether it differs from English law; the countries with which the parties are most closely connected; and whether the plaintiff seeking to proceed in the English courts will be prejudiced by litigating abroad. In weighing up the relevant factors, the court should not make comparisons between the merits of the competing legal systems. The court can, however, impose conditions, such as the provision of security or the obtaining of witnesses visas for the foreign trial when determining that the action should proceed in the foreign jurisdiction of choice. The United Kingdom ( UK ) is subject to Council Regulation (EU) No 44/2001 ( Brussels I ). Thus Article 23 of Brussels I, which confers exclusive jurisdiction on the courts of any member state to which the parties have agreed to give jurisdiction to settle any disputes which have arisen or which may arise in connection with the particular legal relationship should apply, and will thus govern cases involving the choice of a European Union jurisdiction. The provisions of Article 23 of Brussels I will be replaced by largely similar provisions in Article 25 of European Parliament and Council Regulation (EU) No 1215/ 2012 from 10 January 2015 but the basic rules are unchanged. Regulation 1215 clarifies the position of a party seeking to enforce an arbitration clause. It expressly permits an English court first seised to refer the dispute to arbitration, stay or dismiss the proceedings and/or examine the validity of the arbitration clause under its own national law and does not bind the English court to recognise other European Union courts rulings on the validity of the arbitration clause. Nevertheless, if another European Union court first seised rejects the arbitration clause and delivers a judgment on the substance, the English court is required by Regulation 1215 to recognise that judgment. The court s jurisdiction to recognise arbitral awards under the New York Convention is unaffected. 146 EUROPEAN LAWYER REFERENCE SERIES

16 England & Wales In the event that an injunction or order preventing proceedings is obtained in the agreed jurisdiction (whether court or arbitration), will this be recognised in your court? In light of what we say above, the question of recognition is probably academic as in all likelihood, the English courts will grant a stay simply on the basis of the jurisdiction clause or arbitration agreement providing for resolution of the dispute elsewhere. In the Brussels I context, if the court first seised assumes jurisdiction then that should not be capable of challenge in the English courts. As to arbitration awards, in principle, an award conferring jurisdiction on a contracting state to the New York Convention can be enforced, provided that the criteria of the convention are satisfied, in particular, that there is a written arbitration agreement between the parties and that there is no reason under public policy why the award should not be enforced Arbitration clauses Will an arbitration and/or a jurisdiction clause set out in an incorporated document (such as a charterparty referred to in a bill of lading) be recognised if its text is not set out in the contract in question? An arbitration or jurisdiction clause set out in a document such as a standard form or institutional rules which is incorporated into the principal contract should be recognised under English law, subject to certain particular rules and exceptions. If the arbitration agreement is identified with reasonable clarity, then it should be incorporated, even if the text is not set out in the principal/matrix contract. In the case of a bill of lading which refers to the terms of a charterparty, but not specifically the arbitration clause in that charterparty, then the arbitration clause will not be incorporated: hence, by way of example, the form of the Congenbill in 1978, which incorporated the terms of the charterparty, but did not specifically incorporate the arbitration clause, rendered the arbitration clause unenforceable; the 1994 Congenbill states specifically that the terms of the Law and Arbitration clause should be incorporated as well, which rectifies the problem Will the incorporation of an unsigned arbitration agreement into a contract be recognised? Provided the rules as to incorporation (including the specific rules for a bill of lading) are satisfied, then absence of a separate signature to the arbitration agreement does not preclude the incorporation of the arbitration agreement into the principal/matrix contract In any event, will all of the provisions of a charterparty incorporated into a bill of lading contract be recognised? Specifically, if a charterparty with an arbitration clause is incorporated into a bill of lading, is it necessary for the incorporating words to make express mention of the arbitration clause of the charter? Where general words of incorporation are used, the charterparty terms incorporated will be those which are directly relevant to the shipment, carriage and delivery of goods together with the payment of freight. EUROPEAN LAWYER REFERENCE SERIES 147

17 England & Wales The arbitration clause should be referred to in the incorporating words in the bill of lading see above If a bill of lading refers to the terms of a charterparty, but without identifying it (eg, by date): Will incorporation be recognised without such detail? Where the date of the charterparty referred to on the face of the bill of lading has not been completed, the English courts have been prepared to incorporate a charterparty specifying the date of the charterparty in the bill of lading is thus not critical If so, which charterparty will be incorporated? Where an undated charterparty has been referred to, a court or tribunal will refer to internal evidence which points to a particular charterparty. The courts are reluctant to reach the conclusion that no charterparty has been incorporated, even if identifying the relevant charterparty is a difficult exercise; if the court or tribunal can make any sense of the incorporation, it should do so. The head charterparty can be incorporated, as the owner will usually be the contracting carrier, (save where the vessel has been bareboat chartered) and the master, as the agent of his employer, will usually have executed the bill of lading. That said, it is also recognised that there is much to be said for incorporating a sub-charter, particularly a voyage charterparty: the shipper might well have entered into the voyage charterparty, the terms of which, including the provision for freight, are usually more apposite to a bill of lading. Accordingly, voyage charterparty terms are commonly incorporated. Thus, there is no absolute answer to the question: courts and tribunals will be inclined to favour the terms of the charterparty which are most appropriate to regulate the legal relations for the parties to the bill of lading contract. 1.2 Parties to the bill of lading contract How is the carrier identified? In particular, what is the relationship between statements on the face of the bill and/or the signature by or on behalf of the Master and demise clauses/identity of carrier clauses? It used to be a reasonable assumption that the issue was determined by the presence of a demise clause and/or an identity of carrier clause (or both) in the bill of lading: such terms would usually prevail. However, in The Starsin [2003] 1 Lloyd s Rep 571, the House of Lords found the charterer issuing the bill of lading to be the contractual carrier, notwithstanding the presence of an identity of carrier clause and a demise clause which, on their terms, suggested that the contract should be with the owner. Critically, the signature box on the bill was completed by agents of the charterers who were, themselves, described as the carrier. The House of Lords advocated an objective construction of a bill of lading, with reliance being placed on what appears on the face of the bill, rather than terms appearing on the reverse. In that case, it was significant that the bill of lading contained on its face an apparently clear and unambiguous 148 EUROPEAN LAWYER REFERENCE SERIES

18 England & Wales statement of who the carrier is and in such cases it is reasonable to assume that terms to the contrary appearing among detailed provisions on the reverse of the bill will not prevail Who is entitled to sue for loss or damage arising out of the carrier s alleged default? In particular, by what means, if at all, are rights under the contract of carriage transferred? The party to the contract of carriage can bring a claim for damages against the contractual carrier for loss of, or damage to or arising out of its cargo. Transfer of the shipper s contractual rights under a bill of lading contract is dealt with by the Carriage of Goods by Sea Act 1992 ( COGSA 1992 ). COGSA 1992 also covers sea waybills and ships delivery orders (see COGSA 1992 section 1(1)). The right to sue the carrier is now enjoyed by one of: the lawful holder of the bill of lading, the consignee identified in the sea waybill or the person entitled to delivery under a ship s delivery order, irrespective of whether they are not the owners of the goods covered by the document. The lawful holder of the bill of lading is the consignee or the party to whom the bill is endorsed, or someone who would have satisfied either of the foregoing if they had come into possession of the bill before it ceased to be a document of title. The latter case covers cases where goods are lost before they come into the hands of the party whom it was envisaged would have been the consignee or endorsee, although in such cases that party will only obtain title if it would become holder of the bill pursuant to the contractual or other arrangements made before the bill ceased to be a transferable document of title. Once rights are transferred under COGSA 1992 section 2(1), the rights of the original shipper, or intermediate holder, will be extinguished. It is not essential that the party enjoying rights of suit under COGSA 1992 section 2(1) enjoys property in the goods and might not have suffered loss or damage resulting from the carrier s breach. Accordingly, this does not preclude the person enjoying rights of suit from seeking damages from the carrier, although these would be held on account of the person who has suffered the loss. It is possible for the bill of lading holder to pursue an action in tort, although there would probably be little point in doing so against the contractual carrier; this alternative action might be of relevance where the owner of the vessel is not a party to the bill lading contract. Any claimant in tort would have to be the owner of the cargo at the time any damage was suffered. 1.3 Liability regimes Which cargo convention applies Hague Rules/Hague Visby Rules/ Hamburg Rules? If such convention does not apply, what, in summary, is the legal regime? The Hague Visby Rules ( HVR ) have been given the force of law in the UK by The Carriage of Goods by Sea Act 1971 ( COGSA 1971 ). The application EUROPEAN LAWYER REFERENCE SERIES 149

19 England & Wales of the relevant statutory provisions can be, however, a complex issue: for example, if the bill of lading chooses another regime for shipments unrelated to HVR contracting states then that other regime (say the Hague Rules) might apply Have the Rotterdam Rules been ratified? The UK (and therefore England and Wales) has not ratified the Rotterdam Rules Do the Hague/Hague Visby Rules apply to straight bills of lading? Under English law, a straight bill of lading is treated as a bill of lading for the purposes of the COGSA 1971 and the HVR, although it does not follow that a non-negotiable receipt should be so treated. It should not be assumed that in all cases a reference in a paramount clause to the Hague Rules as enacted in the country of shipment will automatically apply the Hague Visby Rules: the precise text of the clause paramount should be checked Are any such rules compulsorily applicable to shipments either from your jurisdiction or to it (or both)? The Hague Visby Rules are, inter alia, applicable as a matter of law to bills of lading issued in the United Kingdom, to bills of lading for goods carried from the UK and to bills of lading issued in, or for goods carried from, an HVR contracting state. 1.4 Lien rights To what extent will a lien on cargo be recognised? Specifically: Will liens arising out of obligations under the bill of lading contract be enforceable as against the receiver for, eg, freight, deadfreight, demurrage, general average and any shipper s liabilities in respect of the cargo? Under English common law, the owner has a right to exercise a lien to recover freight due on delivery of the cargo, for the recovery of any general average ( GA ) contribution due from cargo and for expenses incurred by the owner in protecting the cargo. No lien arises at common law for the recovery of other charges, such as deadfreight, demurrage or damages for detention. It is, however, possible to confer an enforceable contractual lien: a common example of such a contractual lien is clause 8 of the Gencon 1994 voyage charterparty, providing a lien over freight, deadfreight, demurrage, claims for damages and for all other amounts due under this charterparty Can the owner lien cargo for time charter hire? If so, is this limited to hire payable by the cargo owners? If the charterer owns the cargo, the owner has the right to lien the cargo in the event that it is expressly entitled to do so under the governing charterparty. The lien will not be enforceable against the third party bill of lading holder if no lien clause is incorporated in the bill of lading preserving the owner s right to lien the cargo. That said, the lien might be enforceable 150 EUROPEAN LAWYER REFERENCE SERIES

20 England & Wales as against the charterer in such circumstances, even if not against the consignee (the significance here being that the vessel would remain, in the case of a time charterparty lien, on hire and the charterer could not meet the owner s claim for hire by denying the right to lien the cargo). There are conflicting decisions on the point. In any event, the lien is not enforceable prior to arrival at the port of discharge Is it necessary for the owners to register its right to lien subfreights as a charge against a charterer incorporated in your jurisdiction for that lien to be recognised in the event of the charterer s insolvency? If a conventional lien on sub-freights (such as that to be found at clause 18 of the NYPE 1946) is granted by a charterer incorporated in England and Wales, then the owner must register the lien as a charge against the charterer or it will be void in the event that the charterer becomes insolvent and as against the insolvent charterer s creditors and administrators. It is likely that an English court will reach the same conclusion as to the enforceability of the lien if it were provided with evidence to the effect that the law of incorporation of another country in which any charterer might be incorporated has similar provisions. 2. COLLISIONS 2.1 Is the 1910 Collision Convention in force? The 1910 Collision Convention is in force in England. The Collision Convention was first legislated for by the Maritime Conventions Act 1911, the applicable provisions of which are now to be found at section 187 in the Merchant Shipping Act 1995 ( MSA 1995 ). Apportionment should be made according to the relative degrees of fault, and if these cannot be ascertained fault should be apportioned equally between the parties (see section 187 MSA 1995). 2.2 To what extent are the Collision Regulations used to determine liability? The International Regulations for Preventing Collisions at Sea 1972 are given effect in English law by the Merchant Shipping (Distress Signals and Prevention of Collisions) Regulations 1996, which apply to UK registered ships in any waters and to all other ships when they are within the UK or its territorial waters. Where a collision occurs in international waters, the English courts will apply English law, and therefore apply the collision regulations. Where the collision occurs in territorial waters of a foreign state, the English courts will apply the laws of that country. 2.3 On what grounds will jurisdiction be founded what essentially is the geographical reach? The English courts will have jurisdiction for any claims for damage done and received by a ship in rem (ie, the claim is against the vessel). However, a claim form for an action in rem may not be served outside the territorial EUROPEAN LAWYER REFERENCE SERIES 151

21 England & Wales jurisdiction of the English High Court, and the ability to serve the claim form is generally a critical factor to founding the jurisdiction: in rem proceedings are served physically on the vessel itself. An action against the owner can be brought in personam as well: in order to proceed in this way it will be necessary to show that the defendant has his habitual residence or place of business within England and Wales; or that the cause of action arose within its inland waters or ports; or, a related action is proceeding in the High Court; or that the defendant has submitted to the jurisdiction. 2.4 Can a party claim for pure economic loss in the event of a collision? A collision action gives rise to an action in tort, damages for which are generally only recoverable if loss is consequential upon the physical damage to, or interference with, the tangible property of the person making the claim. Pure economic losses are generally irrecoverable. So, for example, a time charterer is generally unable to recover its loss of profits following a collision. 3. SALVAGE 3.1 Has your country enacted any salvage conventions? If so, which one? England has enacted the International Salvage Convention 1989 ( the 1989 Convention ) (consolidated into Schedule 11 of the MSA 1995). 3.2 In any event, what are the principal rules for obtaining noncontractual salvage? In the event that a salvage contract is signed, will this clearly displace any general law on salvage liabilities? English law recognises non-contractual common law salvage and the provisions of the 1989 Convention will apply to the extent that the salvage contract does not provide otherwise or where there is no salvage contract. However, most salvage claims in England are pursued under the salvage contract, usually the Lloyd s Open Form ( LOF ), most recently updated by its 2011 edition. Detailed provisions regarding the operation of the LOF agreement, including as to security, maritime lien and right to arrest are set out in the accompanying Lloyd s Standard Salvage and Arbitration Clauses (the LSSA Clauses ). 3.3 What is the limitation period for enforcing salvage claims in your jurisdiction? The time bar for any action relating to salvage is two years from the day on which the salvage operations are terminated. 3.4 To what extent can the salvor enforce its lien prior to the redelivery of ship/cargo? In addition to any contractual lien and agreements relating to the retention of the property, salvage claims constitute maritime liens. Typically, security is obtained under the LOF, which provides that the salvor can demand security. The LOF adopts the provisions of Article 21(3) 152 EUROPEAN LAWYER REFERENCE SERIES

22 England & Wales of the 1989 Convention to the effect that: The salved vessel and other property shall not, without the consent of the salvor, be removed from the port or place at which it first arrived after the completion of the salvage operations until satisfactory security has been put up for the salvor s claim against the vessel or property. Under article 20(2) of the 1989 Convention the salvor may not enforce his maritime lien once satisfactory security has been provided. It should be noted that under LOF 2000 terms (clause 4.6 of the LSSA Clauses) the shipowner is under an obligation to use best endeavours to ensure that the cargo interests provide security to the salvors before that cargo is released after a salvage operation. Under English law the best endeavours obligation is a demanding one, calling for the party obliged to use such endeavours to perform, effectively, as if it was acting on its own account. 4. GENERAL AVERAGE 4.1 Will any general average claim (whether under the contract, generally or GA securities) necessarily follow the contractual provisions in relation to general average, in particular, the chosen version of the York Antwerp Rules ( YAR )? Where there is contractual provision in the relevant contract pursuant to which the GA sacrifice has arisen dealing with GA, such provision will be followed. Typically, one or other versions of the York Antwerp Rules ( YAR ) will apply, albeit by the contracting parties choice; the YAR do not have statutory force under English law. 4.2 Time bars Will general average claims under the contract of carriage be governed by any contractual time bar in particular, any which might be set out in the YAR (eg, YAR 2004)? Contractual time bars will apply such as the time bar incorporated at Rule XXIII of YAR 2004, which purports to extinguish any rights to claim unless an action is brought within one year after the date on which the general adjustment is issued and in all cases after six years of the termination of the common maritime adventure In the event that claims should be pursued under general average securities in your jurisdiction, what is the applicable time bar for such claims? Will this be affected by the provision of YAR 2004 Rule XXIII if 2004 YAR is specified in the relevant contract? In the event that there is no contractual time bar, the general time bar for contractual claims is six years from the date of the breach. In the GA context, a distinction has to be made between the claims under the contract of carriage (where the six years run from the GA sacrifice) as distinct from claims under the GA securities, which run from the publication of the GA adjustment. It is likely that the time bar stipulated at Rule XXIII of the YAR EUROPEAN LAWYER REFERENCE SERIES 153

23 England & Wales 2004 will apply under English law, although it has yet to be determined whether the rights as against the third-party guarantor will be so limited, as it might be argued that the particular contractual time bar is derived from the principal contract/contract of carriage to which the guarantor is not a party. The practical advice must be to commence the claims within one year of the publication of the adjustment in any event To what extent is any general average adjustment binding In the absence of any agreement to the contrary, the GA adjustment is not legally binding on the parties. 5. LIMITATION 5.1 What is the tonnage limitation regime in respect of claims against the vessel? The Convention on Limitation of Liability for Maritime Claims, London 1976 and its Protocol of 1996 ( LLMC ) is applied in English Law (see MSA 1995, section 185 and Schedule VII). The claims against any charterer must be capable of limitation; it might not be able to limit liability for claims brought by an owner for damage to the latter s vessel. The Court of Appeal has recently decided that it is possible to constitute a limitation fund in England and Wales under the 1976 Limitation Convention by means of a guarantee in the form of a P&I club letter of undertaking. 5.2 Which parties can seek to limit? The LLMC provides that shipowners, salvors, persons for whose acts the owner or salvor is responsible and the insurers of particular liabilities have the right to limit liability charterers for these purposes include slot charterers. 5.3 What is the test for breaking the limitation? The test for breaking limitation is that set out in Article 4 of the LLMC, under which the party entitled to limit loses that right if damage is caused by personal act or omission, committed with intent to cause such loss, or recklessly and with knowledge that such loss would probably result. 5.4 To what degree do any limitation provisions found jurisdiction for the substantive claim? The limitation provision can be used as a defence to a claim, in which case the steps acknowledging the English court s jurisdiction prior to raising that defence will establish jurisdiction for the issue. Once a limitation fund is established then, as far as English law is concerned, the provisions of Article 13 of the LLMC should apply and any person having made a claim against the fund shall be barred from exercising any right in respect of such a claim against any other assets or if a person buying on behalf of whom the fund has been constituted. 154 EUROPEAN LAWYER REFERENCE SERIES

24 England & Wales 5.5 Which package limitation figure applies? The relevant package limitation figure will be that set out under the contract or carriage. Where the Hague Visby Rules apply (as to which see above) the limit set out in Article IV rule 5 should apply: Special Drawing Rights ( SDRs ) per package or unit, or 2 SDRs per kilogramme of gross weight of the goods lost or damage, whichever is the higher. The relevant package limitation figure is sensitive to the liability regime, necessarily so. The Hague Visby Rules can be adopted in part for non-negotiable receipts, but such partial adoption does not preclude lower agreed limitation figures. 6. POLLUTION AND THE ENVIRONMENT 6.1 Which Civil Liability Convention ( CLC ) applies? The International Convention on Civil Liability for Oil Pollution Damage and the 1992 Fund Convention protocol apply by virtue of sections 152 to 181 MSA SECURITY AND ARREST 7.1 Is your jurisdiction a party to any particular arrest convention? If so, which one? The UK is a signatory to the International Convention Relating to the Arrest of Sea-Going Ships, Brussels, 1 May 1965 ( Arrest Convention 1952 ). 7.2 Which claims afford a maritime lien in your jurisdiction? There is no statutory definition of claims affording a maritime lien under English law. The claims that do give rise to a maritime lien are the following: damage caused by a ship; salvage; seaman s wages; master s wages and disbursements; bottomry and respondentia (an old form of security against ship/cargo provided in return for a loan in cases of necessity). 7.3 In any event, to what extent does a mortgagee have priority over claims for loss and damage which are not maritime liens? A vessel s mortgage does not rank ahead of maritime liens; however, the mortgagee has priority over other claimants except those that enjoy a maritime lien. Mortgages rank in order of registration. 7.4 Is there any suggestion that an arrest claim might lead to the founding of substantive jurisdiction? An arrest claim may lead to the founding of substantive jurisdiction. Traditionally an arrest is a substantial step although if there is another agreed forum (including arbitration) then the in rem action can be stayed. 7.5 To what extent can sister/associated ships be arrested? Sister ships can be arrested; what might loosely be termed associated ships cannot. Under section 21(4) of the Senior Courts Act 1981 ( SCA 1981 ) an EUROPEAN LAWYER REFERENCE SERIES 155

25 England & Wales action can be brought against any other ship of which, at the same time when the action is brought, the relevant person is the beneficial owner as respects all the shares in [the ship against which the in rem action would lie]. The relevant person is the person who would be liable personally in the main action, being the owner or charterer of, or in possession or in control of the ship to which the original action relates. Beneficial owner means the owner of the sister ship the term is not intended to refer to the underlying shareholder of any owning company. 7.6 Is it possible to arrest ships for claims arising out of (a) MOAs; (b) ship repair; and (c) ship construction contracts? It is not possible to arrest a ship for claims arising out of any memorandum of agreement, although a freezing injunction might be available if the cause of action has accrued. It is possible to bring an in rem claim, and therefore arrest, a ship in relation to any claim in respect of the construction, repair or equipment of a ship (SCA 1981, section 20 (2)(n)). 7.7 To what degree can an arrest be anticipated/prevented by the lodging of security? Under part 61.7 of the Civil Procedure Rules, an arrest can be anticipated/ prevented by the filing of a caution against arrest, together with sufficient security to satisfy the claim, plus interest and costs. 7.8 If a vessel can be arrested, by what means can the claim be secured? Specifically: Can an arresting party insist on a cash deposit or a bail bond? Article 5 of the Arrest Convention refers to bail and other security. In the event the parties could not agree to a form of security then the courts will adopt an objective approach and provided the security is reasonable, it should normally be accepted. The courts will accept a letter of guarantee from a protection and indemnity club or domestic bank provided that the security is sufficient in form and extent Will the court accept a letter of guarantee from a protection and indemnity club? See above Does any guarantee have to be provided by a domestic bank or other acceptable guarantor? See above. 7.9 Briefly summarise the further security options: eg, freezing orders, attachment of debts due to the defendant, etc. The other principal pre-emptive relief to secure a claim is the freezing injunction (formerly known as a Mareva injunction). Certain conditions have to be established: a claimant has to have an accrued course of action; 156 EUROPEAN LAWYER REFERENCE SERIES

26 England & Wales the claimant must have a good arguable case; the claimant must make full and frank disclosure including matters adverse to its case; the claimant has to satisfy the court that the defendant has assets against which an injunction can be directed (these can be overseas); the court has to be satisfied that there is a risk that the assets will be dissipated; jurisdiction: traditionally such injunctions were obtained in support of proceedings in the English Court, but they can now be sought in support of foreign proceedings; and the court will require provision of substantial security for any losses that the defendant might suffer as a result of the injunction. 8. CONTRACTS OF SALE OF GOODS 8.1 Jurisdiction/proper law In the absence of express provision in a contract of sale, by what means will the proper law of the contract be determined? The rules relating to the law applying to the contract of sale fall into two groups which reflect the dual aspect of the contract of sale as both a contractual and a proprietary transaction. Contractual issues are referred to the proper law of the relevant contract, that is, the system of law by which the parties intended the contract to be governed. On the other hand, proprietary issues are generally referred to the law of the country where the goods are situated at the relevant time (lex situs). In determining the approach that is to be adopted in establishing the proper law (or, applicable law) under English law, consideration must be given to the date when the contract in question was entered into. For contracts concluded prior to 1 April 1991, in the absence of an express choice of law, common law principles will apply in determining the applicable choice of law. Under the common law the courts will look to infer from the circumstances of the particular case the system of law with which the transaction has its closest and most real connection. Over time, the aforementioned common law principles have become much less relevant to the subject of conflict of laws as it pertains to sale of goods contracts. Nonetheless, the note in this respect has been included for the sake of completeness and the possibility (however remote) that practitioners might be confronted with a conflict of law situation relating to a long-term contract concluded before 1 April As to the position after 1 April 1991, see above. The proprietary aspects of sales are generally untouched by the Rome Convention and Rome I as referred to above Will a foreign jurisdiction or arbitration clause necessarily be recognised? In the event that proceedings can be commenced before your court notwithstanding such provisions, can such proceedings be challenged? A foreign jurisdiction or arbitration clause will generally be recognised and EUROPEAN LAWYER REFERENCE SERIES 157

27 England & Wales enforced. If the clause stipulates that proceedings are to be brought outside the European Union, any proceedings brought within our jurisdiction in breach of the clause can be challenged; as to clauses which stipulate that proceedings are to be brought within the European Union, see below In the event that an injunction or order preventing proceedings is obtained in the agreed jurisdiction (whether court or arbitration), will this be recognised by your court? In respect of European Union member states, it has been determined by the European Court of Justice that a court of a member state of the EU may not issue an anti-suit injunction in respect of proceedings before a court of another EU member. This applies even where such proceedings would be contrary to the choice of law expressed in an arbitration agreement. Thus, for example, it is prohibited under EU law for an Italian court to issue an anti-suit injunction against proceedings before an English court. See also sections 1.1 and 1.2 above. 8.2 Arbitration clauses What are the essential elements for the recognition of an arbitration agreement? The English Arbitration Act 1996 ( the Act ) lies at the heart of arbitration in England and sets out the rights, obligations and duties of the parties to the arbitration and of the arbitrators and also deals with the powers of the English Court to supervise English arbitration proceedings. However, in keeping with a requirement dating back to at least 1698, the provisions of the Act apply only to arbitration agreements that are in writing (section 5(1)). The definition of an agreement in writing is set out in the Act (section 5 (2)) in relatively broad terms with the result that, under English law, an arbitration agreement will be regarded as being in writing (and, thus, subject to the provisions of the Arbitration Act 1996) in the following circumstances: where the agreement is made in writing. It is enough that the salient features of the agreement have been set out in a written document. The agreement will be regarded as having been made in writing if it has been recorded by any means by one of the parties with the permission of the other, or by a third party (such as a broker) with the permission of both parties. This would include magnetic and electronic recordings such as tape or or other forms of computerised record; where the agreement is made by an exchange of written communications, such as s or facsimiles, between the parties; where the agreement was made by some means other than in writing but is then evidenced in writing in some way. Plainly, this includes agreements that are made orally rather than being committed to writing but for which there is some evidence in other written documentation. Again, evidence in written documentation includes evidence in a recording made by one of the parties with the permission of the other, or by a third party with the permission of both parties. Such a recording 158 EUROPEAN LAWYER REFERENCE SERIES

28 England & Wales may be made by magnetic or electronic or computerised means and also in more traditional forms such as a handwritten or typewritten note of an oral conversation between the parties; where the parties agree otherwise than in writing by reference to the terms of an arbitration agreement that are in writing. An example would be where the parties agree orally to arbitrate in accordance with the written arbitration rules of a trade association or of an arbitral institution such as the London Court of International Arbitration; where there is an exchange of written submissions during arbitration or court proceedings in which the existence of an arbitration agreement that is not in writing is alleged by one party and not denied by the other party in his response. The lack of a denial must be apparent from the other party s response and so this provision will not apply where the other party takes no part in the arbitration or court proceedings in which the existence of the arbitration agreement has been alleged. There is no need for an arbitration agreement to be signed by the parties and if the arbitration agreement is included as a clause in a wider contract, there is no need for the wider contract to be signed or for the clause to be separately signed. Nor is there a requirement that the full terms of the arbitration agreement be set out; it would be sufficient for the parties simply to agree London arbitration. 8.3 Passing of title/property/risk What terms if any are implied by your rules as to the passing of: title (property) to the goods? Under English law, the passing of title (property) to goods sold is dependent on the intention of the buyer and seller; title passes to the buyer at the time when the parties so intended. Such intention can be ascertained from the express terms of the contract or can be implied from the parties conduct or from the surrounding circumstances. However, the parties may not always turn their minds to the point, or their intention may not be apparent from their contract or conduct, and the English Sale of Goods Act 1979 ( SoGA ) therefore lays down a series of presumptions that apply where there appears to be no different intention on the part of the parties. Specific and unascertained goods The presumptions can be split into two groups, one relevant to specific goods and the other relevant to unascertained goods. Specific goods means goods identified and agreed on at the time the contract is concluded, such as a cargo of 12,500 tonnes of coal on board a named vessel. Unascertained goods are generic goods without specific identification, such as 30,000 tonnes of Russian gasoil, future goods, such as crops that have not yet been grown, and an unascertained part of a larger quantity of ascertained goods, such as 500 tonnes of raw sugar out of a cargo of 12,500 tonnes on board a certain ship. The common characteristic of unascertained goods is that they cannot presently be identified and can be referred to by description only. Title to specific goods is presumed to pass to the buyer at the time the EUROPEAN LAWYER REFERENCE SERIES 159

29 England & Wales contract is made provided that the goods are in a deliverable state, in other words in a condition in which the buyer would be contractually bound to take delivery (where they are not in a deliverable state at the time the contract is made, title is presumed to pass as soon as the seller has put them into a deliverable state). Title to unascertained goods cannot be transferred until the goods have become ascertained, in other words until they have been identified as the actual goods to be sold under the terms of the contract. The presumptions as to the time of passing of property in such goods apply according to the ways in which the goods become ascertained. So, where either party with the assent of the other unconditionally appropriates unascertained goods to the contract, property passes at that point. Where the seller delivers goods directly to the buyer or to a carrier for the purpose of transmission to the buyer, and does not reserve the right of disposal, title passes at that point. Where the unascertained goods are a specific quantity forming part of an identified bulk, property passes when the bulk is reduced to (or to less than) the quantity sold to the buyer. These presumptions apply to all contracts for the international sale of goods that are governed by English law, such as contracts made on CIF or FOB terms. The presumptions are, however, subject to the express or implied contrary intention of the parties. Such contrary intention is readily implied by the English Courts and the presumptions are often thus eclipsed in international sales that are subject to English law. CIF/C&F contracts In CIF (and C&F) contracts for the sale of specific goods, the presumption that property will pass as soon as the contract is made duly applies but is normally negatived by an implied intention (usually implied from the terms of the contract) on the part of the seller to retain title to the goods until such time as the purchase price has been paid. The more usual situation under CIF contracts is that they are contracts for the sale of unascertained goods rather than specific goods. Once the goods become ascertained, title in theory passes according to the presumptions that apply in the absence of intention by the parties as set out above (most commonly, once the seller loads the goods on board the carrying vessel) but in practice the English courts readily look for evidence from which to imply such intention. A common way in which such implication arises is where the seller is regarded as having reserved the right of disposal of the goods, in other words to reserve title to himself until certain conditions (most commonly, payment of the purchase price) have been fulfilled. In such a case, title will pass once the conditions have been met. A right of disposal can be expressed in the contract or can be implied from the way in which the shipping documents are made out (for example, if the goods are consigned to the seller s order in the bill of lading) or from the way in which the parties have agreed that the shipping documents (and, in particular, the bill of lading, which gives the buyer the right to possession of the goods) will only be delivered to the buyer against payment of the purchase price. 160 EUROPEAN LAWYER REFERENCE SERIES

30 England & Wales If the contract is on credit terms (for example, payment 90 days after the bill of lading date), usually title will pass when the shipping documents are negotiated (ie, presented by the seller and accepted by the buyer). FOB contracts Similar considerations apply to the passing of property in FOB contracts that are subject to English law. Specifically in relation to unascertained goods, the presumptions apply but the general rule is that title cannot pass before shipment because it is generally only at that point that the goods are unconditionally appropriated to the contract. Otherwise, rules similar to those that apply to CIF contracts are applied in the FOB context in relation to implying the intention of the parties and the reservation of the right of disposal by the seller risk? The general rule under English law is that risk passes to the buyer at the same time as property in the goods. However, the time at which property and risk pass may be separated by agreement between the parties, as is common in the case in contracts for the international sale of goods. Indeed, it is now regarded as a general rule that in CIF and C&F contracts, risk passes when the goods are shipped (ie, pass the ship s rail or, in the case of liquid cargoes, the ship to shore manifold connection). The general rule is subject to contrary agreement by the parties who may, for example, agree that, notwithstanding the loading of the goods on board the carrying vessel, they are to remain at the seller s risk until their actual delivery to the buyer at the CIF destination. Common examples are where the contract provides that the purchase price payable by the buyer is to be calculated according to the outturn quantity or that the condition and quality of the goods is to be assessed by reference to the condition and quality of the goods at destination. Such contracts are not classic CIF contracts at all, but what are generally termed hybrid CIF contracts. It is also possible for a CIF contract expressly to provide that risk is to pass before shipment. Similar rules apply in the case of FOB contracts. The general rule is that risk under an FOB contract does not pass before shipment so that, until shipment, it is with the seller and, upon shipment, it passes to the buyer. Again, the general rule as to the passing of risk under FOB contracts can be varied by the terms of the parties contract. These rules as to the passing of risk in FOB contracts apply to specific goods and also to goods which were originally unascertained but which were then appropriated to the contract on or before shipment (thus becoming ascertained) In relation to the passing of title and risk, do your rules apply even if the underlying contract applies another law? The rules set out above apply only where the contract in question is governed by English law. The approach of the English courts is to ascertain EUROPEAN LAWYER REFERENCE SERIES 161

31 England & Wales the governing law of the contract by applying applicable English conflict of law principles. The courts will then apply the rules as to the passing of title and risk as determined by that governing law. 8.4 Description and quality Do your rules imply terms on (a) the description of the goods and/ or (b) their quality? By virtue of section 13(1) of SoGA, where a contract provides for the sale of goods by reference to their description, there is an implied term in that contract that the goods will correspond with that description. A sale of goods by description covers sales of specific goods that have been purchased by the buyer in reliance, at least in part, on their description in the contract as given by the seller (normally, where the goods have not been seen by the buyer). An example would be a cargo of 12,500 tonnes of white Thai refined sugar of fair average quality of the current crop currently on board M/V European Law. It also covers all sales of unascertained or future goods which are of a certain kind or class or to which otherwise a description is applied in the contract, such as 14,000 tonnes of USA solvent extracted toasted soya bean meal maximum 7.5 per cent fibre. English law differentiates between descriptive words in a contract that identify the goods themselves and descriptive words that merely specify the quality of the goods. Generally, descriptive words are regarded as constituting a description for the purposes of section 13(1) of SoGA if they were intended by the parties to identify the kind of goods that were to be supplied as opposed to merely describing the quality of the kind of goods that have been sold. In the examples given above, the words fair average quality of the current crop were held to be words relating only to quality and the words maximum 7.5 per cent fibre were held to be words of description. The distinction is important because the term implied by section 13(1) of SoGA is a condition of the contract, which means that if the goods fail to comply with contractual words of description falling within section 13(1), the buyer is entitled to reject the goods and terminate the contract, however trivial the non-compliance. Thus, in the example given above of 14,000 tonnes of USA solvent extracted toasted soya bean meal maximum 7.5 per cent fibre, if the goods are 7.49 per cent fibre, they can be rejected. The term implied by section 13(1) can be excluded by agreement in the contract but, in situations outside the context of a consumer sale (such as virtually all contracts for the international sale of goods), only in so far as the excluding provision satisfies the requirement of reasonableness (see section 6 of the Unfair Contract Terms Act 1977). However, the requirement of reasonableness is unlikely to be relevant to readers of the present volume as international supply contracts (as defined in section 26 of the Unfair Contract Terms Act) are exempt from the limitations laid down by the Act. Quality The general position under English law so far as concerns the quality of 162 EUROPEAN LAWYER REFERENCE SERIES

32 England & Wales goods sold is caveat emptor, in other words the buyer must accept the goods as they are except in so far as there are express contractual quality provisions or the goods do not comply with their description (see above). However, the general position has been significantly eroded by section 14 of SoGA, which provides that, where the seller sells goods in the course of a business (which will be the case in virtually all contracts for the international sale of goods), there are implied terms in the sale contract that the goods are to be of satisfactory quality and, in many circumstances, reasonably fit for their purpose. Section 14(2) of SoGA deals with the implied term as to satisfactory quality, defined as the standard that a reasonable person would regard as satisfactory taking account of the description of the goods, the price and all other relevant circumstances. Factors to be taken into account include the state and condition of the goods, their fitness for all purposes for which goods of the kind in question are commonly supplied, their appearance and finish, the absence of minor defects, their safety and their durability. The implied term does not extend to matters making the goods of unsatisfactory quality that are drawn to the buyer s attention before the contract is concluded or, where the buyer examines the goods before the contract is made, which ought to have been revealed by the examination. Section 14(3) of SoGA deals with the implied term as to fitness for purpose and provides for the implication of a term that where the buyer expressly or impliedly makes known to the seller any particular purpose for which the goods are being purchased, the goods must be reasonably fit for that purpose, whether or not that purpose is one for which such goods are commonly supplied. The implied term covers not only a special purpose for which the goods are bought as made known by the buyer but also, where no special purpose is indicated, the normal purpose for which such goods are purchased and/ or for any purpose that is reasonably foreseeable. For example, it has been held by the English courts that the seller of herring meal which was sold for compounding into feedstuffs for animals and which proved poisonous to minks, was in breach of the implied term because he could reasonably have foreseen that the meal might be fed to minks, even though this was not a purpose expressly drawn to his attention before the contract was made. The implied term will not apply where it is shown that the buyer does not rely, or where it is unreasonable for him to rely, on the skill or judgment of the seller. Such lack of reliance might arise where, for example, the buyer has the opportunity to examine the goods before delivery but declines that opportunity. The terms implied by sections 14(2) and (3) of SoGA are conditions of the contract, which means that the buyer is entitled to reject goods that are not of satisfactory quality or which are not fit for their purpose. The seller s duty to deliver satisfactory goods is, therefore, a strict one under English law and will be breached notwithstanding the fact that the seller has taken all possible care to ensure the quality and/or did not himself know of the defect EUROPEAN LAWYER REFERENCE SERIES 163

33 England & Wales rendering the goods unsatisfactory or unfit. As in the case of the implied term as to compliance with description, both implied terms as to quality and fitness for purpose can be excluded by contractual agreement but, outside the consumer sale context, only in so far as the excluding provision satisfies the requirement of reasonableness (see section 6 of the Unfair Contract Terms Act 1977). However, see the qualification to this expressed above. Reasonableness is judged generally according to the circumstances known, or which ought to have been known, to the seller and buyer at the time was contract was concluded. Specific relevant factors to be taken into account include the parties relative bargaining strength, the availability of other sources for the goods where the exclusion would not apply, inducements to the buyer and whether or not the goods were manufactured, processed or adapted to the buyer s special order. 8.5 Performance In contracts for the international sale of goods, the obligations on the seller and the buyer respectively to effect and accept delivery differ depending on the type of contract and its specific terms. This is reflected in section 29(1) of SoGA, which states: Whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer is a question depending in each case on the contract, express or implied, between the parties. In the absence of any stipulation as to the time of delivery in the contract, where the seller is to send the goods to the buyer he is to do so within a reasonable time : section 29(3) of SoGA. In outline, the seller must ensure that he delivers the correct quantity of goods. He must also ensure that the goods meet any contractual description and that they are of satisfactory quality. These aspects have been addressed above. For present purposes, it is sufficient to say that the goods delivered must conform to the contract terms. This chapter is primarily concerned with international contracts for the sale of goods. It is beyond the scope of this work to analyse the obligations that might arise under every contractual scheme commonly used in international trade. The main principles can be illustrated by two of the best known structures: Cost, Insurance and Freight ( CIF ) and Free On Board ( FOB ) contracts. CIF contracts CIF is one of the ICC s Incoterms (ICC Publication 715E Incoterms 2010, effective from 1 January 2011), although it should be appreciated that Incoterms are not automatically incorporated into sale contracts: they are only so incorporated by express provision in the relevant contract. The acronym signifies a contract for the sale of goods for a price that includes their cost, insurance and freight. CIF contracts are characterised by the importance of the shipping documents that must be presented to the buyer and these form part of the seller s delivery obligations. At the least, the shipping documents will comprise a negotiable bill of lading representing 164 EUROPEAN LAWYER REFERENCE SERIES

34 England & Wales the goods, a commercial invoice and a policy or certificate of insurance covering the goods for their ocean carriage. The seller is required to procure a reasonable contract of carriage for the goods to the destination stated in the contract and to insure them during their carriage. The price will reflect these obligations Delivery: What provisions does your law make as to delivery of the goods (eg, on timing and method of delivery)? In broad terms, there are three stages to delivery under a CIF contract. The first of these is the placement of the goods into the carrying vessel. The second stage is the presentation to the buyer of the shipping documents, which represent the goods and by virtue of the transfer of the bill of lading will permit the buyer to complete the third stage of delivery. That third stage is delivery of the goods from the vessel at the end destination against the bill of lading presented to the vessel. Since risk passes on shipment, the seller is under no positive obligations with regard to delivery at the final destination he is merely under an obligation not to interfere in that delivery by, for example, ordering the vessel to deviate to another port. FOB contracts FOB (which is another of the Incoterms which may be incorporated into a contract) signifies the obligation of the seller to deliver the goods Free On Board the carrying vessel. In one sense, the seller, who may also be the shipper of the goods, enters into the contract of carriage with the carrier and that contact of carriage is evidenced by the bill of lading that the vessel will present to the shipper after loading. However, the normal position is that the buyer will arrange for a vessel to call at the loading port and will, in most cases, be the charterer of that vessel. The seller is obliged to place conforming goods into the carrying vessel presented under the contract and will bear the costs of doing so, which are typically reflected in the contract price. From that point, risk in the goods passes and the seller will have no further physical delivery obligations. He will, however, remain obliged to present conforming shipping documents to the buyer and these will typically comprise, at least, a negotiable bill of lading and a commercial invoice. The obligation to insure the goods, if any, rests on the buyer. In the case of a CIF contract, there is normally an express obligation on the seller to ensure shipment of the goods within a particular period the shipment period. Failure to do so is grounds for rejection by the buyer. Under FOB contracts, a delivery period is normally specified, requiring the buyer to present a vessel in readiness to load within a particular range of dates and the seller to load such a vessel either within the same period or continuing after its expiry. It will be seen that delivery obligations vary considerably depending on the type of contract under consideration and its specific terms; the key, as always, is to consider those terms carefully before moving to the principles discussed above. EUROPEAN LAWYER REFERENCE SERIES 165

35 England & Wales Acceptance: When is the buyer deemed to have accepted the goods? In most cases, it will be obvious that the buyer has either accepted or rejected the goods delivered to him. In some cases, however, it is necessary to consider whether the buyer is deemed to have accepted the goods or, to put it another way, whether he has lost the right to reject them. Section 35(1) of SoGA states that the buyer is deemed to have accepted goods: when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller. Section 35(2) sets out an exception to the rule above: a buyer is not deemed to have accepted goods until he has had a reasonable opportunity of examining them to ascertain whether they conform to the contract or any sample where the sale is one by sample. The effect of the above provisions will be clear: where the buyer gives an indication that he has accepted goods, he will not later be able to reject them. The provision is analogous to the doctrines of waiver or estoppel. Similarly, where the buyer has done anything with or to the goods that is inconsistent with the seller s ownership of them, the buyer will lose the right to reject as a result. Examples would be the use of the goods to manufacture another product or their commingling with other similar goods not under the ownership of the seller. Section 35(4) of SoGA provides that the buyer is also deemed to have accepted the goods where after the lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them. What is a reasonable time will depend on the facts of each case. This sub-section underlines what should in any case be good practice: if a buyer intends to reject goods, he should do so promptly Payment: In the absence of express provision, by when must a buyer pay for the goods? Contracts for the international sale of goods normally have provisions governing payment, whether in cash (normally against presentation of shipping documents) or via a payment instrument through the intervention of banks, such as a documentary credit. The law governing the operation of payment schemes is detailed and complex; it is beyond the scope of this work to examine it fully. Generally, however, where a contract calls for payment against specified documents, the documents that the seller presents to the buyer must comply strictly with the documentary requirements of the contract. In the absence of any specified time for payment in a contract, the delivery of the goods and the payment of the price are concurrent conditions : section 28 of SoGA. As section 28 goes on to explain, the seller must be ready to give possession of the goods in exchange for payment of the price and the buyer must be ready to pay the price in exchange for possession of the goods. 166 EUROPEAN LAWYER REFERENCE SERIES

36 England & Wales Unless the contract says otherwise, the timing of the obligation to make payment is not generally of the essence : section 10(1) of SoGA. That is to say that late payment will not normally entitle the seller to terminate the contract. However, persistent refusal to make payment will give the seller that right, along with the ability to make a claim for the price where appropriate and possibly to claim further damages. Furthermore, certain failures to adhere to contractual requirements as to payment in an international sale contract may amount to a breach of condition entitling the buyer to terminate the contract. For example, failure to open a documentary credit by the date specified in the contract will entitle the buyer to terminate, unless the contract says otherwise. 8.6 Other terms Classification of terms Do your rules differentiate between warranties (breach of which only entitles the innocent party to damages) and conditions (breach of which also entitles him to terminate the contract), and if so what is the effect? English law recognises three main classes of contract term. The first is a condition, breach of which entitles the innocent party to terminate the contract and to claim damages, subject to the rules governing damages generally. The second class of term is the warranty, the breach of which entitles the party not in breach to claim damages, but not to terminate the contract In English law, we also have the concept of intermediate (or innominate) terms. Breach of such terms may have differing effects depending on the gravity of the consequences of the breach. Do you have a similar concept under your system? The third class of term is the intermediate or innominate term. The consequences of a breach of an intermediate or innominate term depend on the severity of the breach. If the breach strikes at the root of the contract, it will entitle the innocent party to terminate the contract and to claim damages, as if it had been a breach of condition. In other cases, the party not in breach will have a claim for damages alone Exemption clauses Do your courts recognise exemption (ie, exclusion) clauses, such as force majeure? English law does not have a stand-alone concept of force majeure in order to excuse failure in performance. Instead, the doctrine of frustration of contract will intervene to excuse the parties to a contract where a supervening event prevents performance without fault of the party whose performance is prevented. The chief consequence of frustration is that the contract is discharged without liability falling on either party. The law then goes into some detail as to the financial consequences, which are mainly directed at ensuring that partial performance is compensated and that monies paid EUROPEAN LAWYER REFERENCE SERIES 167

37 England & Wales against failed performance are returned to, or recoverable by, the paying party. Having said the above, English law will give effect to a force majeure clause or similar provision, such as a prohibition of export clause, where the parties have agreed such terms in their contract. Normally, one effect of these terms will be to exclude the doctrine of frustration discussed above, although that exclusion is not always total. The operation of force majeure clauses and similar exemption provisions will depend on their terms and on the facts of a particular case. Under English law, the party seeking to rely on an exemption term to excuse non-performance carries the burden of proving that he is entitled to rely upon it. Many clauses contain express terms stating that the party relying on the clause must give express notice of such reliance and/or provide documentary evidence to the other party in order to demonstrate that the clause is operable. Both steps are often expressly required to be taken within (often short) timescales. English law will intervene to prevent a contract party from relying on exemption terms that are unfair or unreasonable. In particular, such matters are governed by the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations However, as stated above these statutes have no application to international sale contracts between commercial parties. English law will interpret exemption terms strictly and they are normally to be construed against the party seeking to rely on them What are the key requirements for relying on an exemption clause? As discussed, exemption clauses are recognised under English law, but the burden of proving that the clause is applicable in any particular case rests on the party seeking to rely on the clause. In outline, in order to discharge the burden of proof, the affected party will need to show that events falling within the terms of the clause have occurred and that they have prevented performance. A non-performing party will not be excused by an exemption clause if the events in question allowed contractual performance by alternative means. For example, where a contract allows a seller to ship a commodity from one of two origins and shipment from one origin becomes impossible, the seller is required to ship from the other origin and will not be excused from performance if he fails to do so unless an option to choose between the two origins has already been exercised before the events falling within the terms of the clause have occurred and it is clear from the terms of the contract that the chosen option has become the only means of performance. Likewise, the fact that an event has prevented the seller from performing in the manner he intended does not normally excuse performance if performance by other means remains possible. Furthermore, the fact that performance has become more expensive will not excuse performance: the seller must perform if performance is possible, even at a loss. The fact that the seller s supplier has been prevented from supplying the contract goods to the seller will not excuse the seller from supplying to his 168 EUROPEAN LAWYER REFERENCE SERIES

38 England & Wales own purchaser where other means of performance are open to the seller. In each case, the terms of the particular clause will be closely examined alongside the facts in order to determine whether the clause may be relied upon. The same is true where a party seeks to prove that a contract is frustrated. 8.7 Remedies What are the seller s remedies where the buyer is in breach of contract? The seller s remedies will depend on the nature of the buyer s breach: has the buyer failed to pay the sale price of the goods or has the buyer refused to accept delivery of the goods? In the case of non-payment by the buyer, the unpaid seller s primary remedy is to sue the buyer for the price of the goods. Usually property must have passed to the buyer in order for the buyer to sue for the price (section 49 of SoGA). In addition to recovering the price itself, the unpaid seller may bring a claim for interest on the price of the goods or a claim for consequential losses. Where property in the goods has not passed to the buyer, the unpaid seller s remedy is an action for damages for non-acceptance. The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer s breach of contract (section 50 of SoGA). This is usually, where there is an available market for the goods in question, the difference between the contract price and any resale price achieved by the seller in respect of the goods not accepted. In addition to damages for non-acceptance, the unpaid seller may bring an action for consequential losses or wasted expenses (refer below). Additionally, English law gives an unpaid seller remedies in respect of the goods themselves. Section 39(1) of SoGA provides that, where the property in the goods may have passed to the buyer, the unpaid seller has by implication of law: (a) a lien on the goods or a right to retain them for the price while he is in possession of them; (b) in case of insolvency of the buyer, a right to stop the goods in transit after he has parted with possession of them; and (c) a right of resale in accordance with the provisions of SoGA. In instances where the property in the goods has not yet passed to the buyer, the unpaid seller has a right to withhold delivery of the goods to the buyer. The remedies in respect of the goods themselves arise by implication of law under section 39(1) of SoGA and can be excluded or varied by express agreement What are the buyer s remedies where the seller is in breach of contract? Essentially, there are three instances of seller s breach that fall for consideration. These relate to (i) non-delivery; (ii) delay in delivery; and (iii) breach of a contractual term as to quality, condition, quantity or description. First, in considering the buyer s remedies against the seller for nondelivery, section 51 of SoGA provides that when the seller wrongfully EUROPEAN LAWYER REFERENCE SERIES 169

39 England & Wales neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery. The measure of the buyer s damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller s breach of contract. Where there is an available market for the goods in question, the measure of damages is ordinarily to be ascertained by reference to the difference between the contract price and the market or current price of the goods at the time when they ought to have been delivered or, if no time was fixed, at the time of the refusal to deliver. In addition to the above, by section 54 of SoGA, the buyer has the right to recover interest and consequential losses, such as extra expenses incurred by him as a result of the seller s breach. A loss of profit under a resale is recoverable in limited circumstances: the buyer can recover such loss only when the seller should have contemplated, at the time the contract was made, both that the buyer was, or was probably, buying for resale, and that the buyer could perform his obligations under a contract of resale only by delivering the same goods. A delay in delivery beyond the time specified in the contract is likely to be repudiatory and would therefore give rise to a right to reject on late tender of goods. In other words, the buyer can terminate the contract if delivery is effected later than the date agreed for delivery in the contract. Further, the buyer is entitled to bring a claim against the seller for damages for delay in delivery. The objective of such damages would be to place the buyer into the financial position he would have been in had the seller fulfilled his contractual obligation with regard to the time for delivery of the goods. Where there is an available market for the goods, the usual measure of the buyer s damages is the difference between (a) their market value at the time and place fixed for delivery by the terms of the contract, and (b) their market value at the time when (and the place where) the goods were in fact delivered to the buyer. The buyer may also seek damages for any extra expenses he incurs as a result of not having the goods delivered on time. The expenses must be such as were within the reasonable contemplation of the parties, at the time the contract was made, as not unlikely to result from a delay in delivery. The general rule (subject to a few, limited exceptions) is that the buyer cannot recover any loss of profit under a contract of resale when the seller makes a late delivery under the original contract. The remedies available for such breach of contractual terms as to quality, conditions, quantity or description will depend largely upon whether one classifies such terms as warranties, conditions or intermediate terms of the contract. The classification has been discussed in 8.9 above. By way of brief recap, a breach of condition gives rise to a right to terminate and claim damages whereas the remedy for a breach of warranty gives rise to claims for damages only. A breach of an intermediate term gives rise to a right to claim damages and may also give rise to a right to terminate the sale contract if the breach and/or its consequences is/are of a serious nature. 170 EUROPEAN LAWYER REFERENCE SERIES

40 England & Wales In general, it is thought that terms relating to quality and condition are likely to be construed as warranties in the majority of contracts for the sale of goods (except for the terms as to satisfactory quality and fitness for purpose implied by SoGA and referred to above, which are conditions) whilst terms relating to quantity and description would be treated as conditions (in the case of description, the term that the goods will comply with their description, as implied by SoGA, is expressly stated to be a condition in section 13(1A) of SoGA). However, this is a general rule and caution is to be exercised in this regard as the dichotomy between conditions and warranties is not always that sharp and the parties may agree express provisions that deviate from the general position (for example, certificate final provisions on quality and condition). Accordingly, a right to reject goods and/or documents tendered in respect of goods is likely to arise where there has been a breach of the terms of the sale contract relating to quantity and description. A similar right to reject goods is likely to arise in respect of a breach of terms relating to quality and condition provided the breach or its consequences are of a serious nature. In these cases, the right to reject goods (and documents) will invariably be accompanied by a right to claim damages, for example, for non-delivery by the seller. As regards the damages recoverable by an innocent buyer in circumstances where such breaches occur, the position may be broadly summarised as follows: Where a breach of a contractual term as to quality occurs, the buyer is entitled to bring an action against the seller for damages. The measure of damages for such breach is generally the difference between the actual value of the goods at the time of delivery to the buyer and the value they would have had, had they complied with the terms of the contract with respect to quality (section 53(3) of SoGA). In addition to the above, the buyer may recover special damages under section 54 of SoGA in respect of losses suffered by him as the result of special circumstances provided that these were communicated to or known by the seller at the time the contract was made, such as the costs of remedying the defect, the cost of acquiring substitute goods or expenses wasted as a result of the defect in quality. The buyer also has the right to recover interest. A similar measure of damages applies in relation to breaches of condition and description of the goods. Where the seller delivers to the buyer a quantity of goods less than the minimum quantity he has contracted to sell, the buyer may sue for any losses arising out of the seller s breach. If the buyer accepts the goods so delivered, he must pay for them at the contract price (section 30(1) of SoGA). In the latter case, the buyer also has the right to claim damages from the seller for non-delivery of the balance. Where the seller delivers to the buyer a quantity of goods larger than the one he contracted to sell, the buyer may accept the contracted quantity and reject the rest, or he may reject all of the goods (section 30(2) of SoGA). The seller has no right to insist upon the buyer s accepting the correct quantity out of the larger quantity delivered. If the buyer accepts all of the goods so EUROPEAN LAWYER REFERENCE SERIES 171

41 England & Wales delivered, he must pay for them at the contract price. Lastly, where the buyer has paid the sale price in advance, the buyer is entitled to claim for the recovery of the sale price in circumstances where the seller fails to deliver the goods to the buyer in breach of his (the seller s) obligations to do so Are there any general limitations on the remedies available? As highlighted above, there are circumstances where the non-defaulting seller or buyer can recover consequential loss, wasted expenses, interest, loss of profit, and special damages. Unless the parties agree to a fixed limit of damages that may be recoverable for a breach of their contract, the nondefaulting party can claim damages for those losses arising from the breach and which are not too remote. When considering the issue of remoteness, consideration must be given to the circumstances that were reasonably in the contemplation of the parties at the time of concluding the contract. 8.8 Time limit What is the statutory limitation period? Under English law, limitation is a matter of procedural law and provides a complete defence to a claim. It is for the defendant to plead limitation as a defence. The various limitation periods are laid down by statute, the most important of which is the Limitation Act The limitation period for contract and tort claims is six years, with the time starting to run respectively from the breach of contract, and generally from the date on which the cause of action occurred. In certain limited circumstances the limitation period may be extended, for example, in cases of fraud or concealment Do your courts uphold shorter contractual limitation periods? Courts will uphold shorter contractual limitation periods. The limitation periods set down in the Limitation Act 1980 are subject to any agreement between the parties to a dispute that varies such limitation periods. Contracts may lay down time limits to presenting claims as opposed to commencing suit. For example, they frequently stipulate that a claim for demurrage must be presented, complete with supporting documents, within a stated period (say, 90 days), failing which the claim will be deemed waived. English law will generally uphold such stipulations. 8.9 Finance In what circumstances is it possible for your courts to prevent payment out under: a letter of credit? The crucial autonomy principle applies: the court will not interfere to block the operation of a letter of credit on the ground of matters extraneous to the credit itself. Thus, an allegation by the buyer (the applicant under the letter of credit) that, for example, the goods are uncontractual will of itself not justify an injunction to restrain payment to the seller (the beneficiary under the letter of credit). 172 EUROPEAN LAWYER REFERENCE SERIES

42 England & Wales In general, public policy imposes a heavy burden on a party seeking to restrain by injunction payment under a letter of credit, which has been described as the life-blood of international commerce (RD Harbottle (Mercantile) Ltd v National Westminster Bank Ltd [1978] QB 146). To succeed, he must show that he has a good arguable claim against the party he is seeking to injunct. Fraud is an exception to the autonomy principle, whether it is fraud in the documents themselves or possibly a wider fraud in the underlying transaction. Where the applicant for a documentary credit considers that the beneficiary is going to make or has made a presentation under the credit which he should not make and which should not be met with payment by the paying bank, he may seek to prevent the presentation or payment or both by applying for injunctions against relevant parties performance bonds? Most of the cases concerning performance bonds (or demand guarantees as they are often called) considered by the English courts have emphasised the autonomy of the contract between the bank issuing the guarantee or bond and the beneficiary. The analogy with documentary credits in this respect has been strongly emphasised. Accordingly, those aspects of fraud and the obtaining of injunctions set out above are equally applicable to performance bonds What does one have to show to prevent payment out? In respect of documentary credits, the party alleging fraud must demonstrate a case of fraud to the knowledge of the party to be injuncted and he must establish a duty owed to him by that party, either in contract or in tort. He must also satisfy the court that the grant of the injunction is the correct exercise of the court s discretion after considering the balance of convenience. So, even if fraud has been established, the court may refuse the injunction where the party to be injuncted is a bank because damages may be a sufficient remedy for any breach of duty by the bank. In seeking injunctive relief, the evidence of fraud must be clear; the mere assertion of allegation of fraud would not be sufficient to succeed with an application for an injunction. The burden of proving fraud in the context of documentary credits will similarly apply to performance bonds Security What remedies are available to obtain security for the claim: where the substantive claim is being litigated? In certain circumstances, injunctive relief in the form of a freezing order or injunction (previously known as a Mareva injunction) can be sought upon application (see above). Obtaining such an order will restrain the party subject to that order from removing his monies or other assets out of the jurisdiction. A freezing order can also be obtained against assets that are located outside the jurisdiction of the courts of England and Wales; this has become known as a worldwide freezing order. Whether it has practical EUROPEAN LAWYER REFERENCE SERIES 173

43 England & Wales effect may depend on the willingness of the court in the foreign jurisdiction to recognise and enforce it. The amount in question that will be frozen under the order will usually be limited to the amount of the claimant s claim, together with an allowance for his likely costs. Where there is an admiralty claim, the arrest of a ship, sister ship, or a ship s cargo or bunkers may be possible in order to obtain security for the substantive claim being litigated in England (see 7 above) where the substantive claim is not being litigated in your jurisdiction? The English courts are empowered to grant domestic freezing orders in aid of substantive proceedings in foreign jurisdictions without it being necessary to commence substantive claims within England and Wales. Additionally, the English courts have shown an appetite for granting worldwide freezing orders in relation to foreign proceedings in certain circumstances, for example, when the respondent or dispute in question has a sufficiently strong link with England and Wales Must the applicant have already commenced substantive proceedings (whether by litigation or arbitration) to be able to obtain security? In the case of seeking interim relief in the form of a freezing order (see above), the applicant does not have to have already commenced substantive proceedings (whether by litigation or arbitration) to obtain security. However, the courts will require that the matter in question is urgent, or it is in the interests of justice to grant a freezing order. The court may in these cases give directions as to when substantive proceedings should be commenced Is there a distinction between the remedies available for a claim which is subject to litigation and one which is referred to arbitration? There is no distinction between the remedies available for a claim that is subject to litigation and one that is referred to arbitration. However, an arbitration agreement may contain a provision known as a Scott v Avery clause, which precludes a party to the agreement seeking a court remedy until the arbitral process has been completed. It is a matter of construction of each such clause whether it amounts to a blanket exclusion of any court proceedings, ie, not merely substantive proceedings but also those limited to applications for security, or whether it permits such applications. In the decision of B v S [2011] EWHC 691, Flaux J. decided that the standard FOSFA (Federation of Oilseeds and Fats Associations Ltd) arbitration clause was broad enough to exclude a party s right to seek a freezing injunction What tests are applied to establish a right to each remedy? A freezing order can be obtained only if the claimant can establish that it has a strong prima facie case in relation to the underlying claim and that there is a genuine risk that the defendant will avoid payment by dissipating 174 EUROPEAN LAWYER REFERENCE SERIES

44 England & Wales assets unless the order is granted. Because an application for such an order has by its nature to be made ex parte (ie, without notice to the defendant and without his representation in court), there is a heavy burden on the claimant to make full and frank disclosure to the court of all relevant facts, including any defences which might be available to the defendant (see above also) Is the applicant required to provide counter security, and if so by what means? An applicant for a freezing injunction will normally be required to give an undertaking that if the court later finds that this order or carrying it out has caused loss to the respondent, and decides that the respondent should be compensated for that loss, the applicant will comply with any order the court may make. The court may also require the provision by the claimant of a bank guarantee for a stated amount to secure the undertaking What exposure does an applicant have for damages if the attachment is deemed wrongful? When a freezing order is discharged on the basis that the applicant was not entitled to it, it is open to a party who has suffered loss from the imposition or operation of the order to seek an enquiry as to the damages they may have suffered. The court is entitled to grant full compensation for proven damages. It has been suggested that exemplary damages could be awarded against a party that has obtained a freezing order fraudulently or maliciously Enforcement Is your country a signatory to the New York Convention? The UK is a signatory to the New York Convention. By section 101(2) of the Arbitration Act 1996, a New York Convention award (that is, an award made, in pursuance of an arbitration agreement, in the territory of a state (other than the UK) which is a party to the Convention) may, with the leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect. Furthermore, such an award may be relied upon by way of defence, set-off or otherwise in legal proceedings: section 101(1) To what extent is the New York Convention applied in practice? The English courts apply the Convention very readily and with considerable speed Vienna Convention Is your country a signatory? The UK is one of the few major trading nations that haven t become a signatory to the Vienna Convention. 9. GENERAL FORMALITIES 9.1 Does a lawyer require a formal power of attorney to be able to act? Lawyers do not require a formal power of attorney to act. EUROPEAN LAWYER REFERENCE SERIES 175

45 England & Wales 9.2 Do claim documents (and their translation) require notarisation? Where service of a claim is effected through foreign governments or foreign judicial authorities or on a state where English is not the official language, it must be accompanied by a translation of the claim. Whilst notarisation is not a requirement of English law in these instances, it may be a requirement of the local law of the foreign state and it is advisable to consider the relevant local requirements in relation to notarisation before serving the claim. 176 EUROPEAN LAWYER REFERENCE SERIES

46 Hong Kong Hong Kong Laracy & Co in Association with Hill Dickinson Hong Kong LLP Damien Laracy & Michael Ng; and Hill Dickinson Hong Kong LLP in Association with Laracy & Co Mike Mallin INTRODUCTION: HONG KONG S LEGAL SYSTEM Since the handover of sovereignty by the United Kingdom to the People s Republic of China on 1 July 1997, Hong Kong has operated under the Basic Law, which has been described as a mini-constitution for the region. The Basic Law provides for the underlying principle of one country, two systems. A key feature of this principle is that the socialist system and policies of the PRC are not and will not be practised in Hong Kong, and the previous capitalist system is to stay unchanged for 50 years. Part and parcel of that is the maintenance of all the laws previously in force in Hong Kong before the handover, including the common law, the rules of equity, statutes, subordinate legislation and Chinese (pre-revolution, Qing Dynasty) customary law provided that they do not contravene the Basic Law and legislation enacted by the legislature of Hong Kong. As a result, Hong Kong s shipping and international trade law has been largely unaltered by the handover. Furthermore, a hallmark of the common law system is growth and evolution through judicial decisions, and it is not the case that Hong Kong s common law became frozen as from 1 July In fact, even after the handover, the Hong Kong courts continue to derive assistance from overseas jurisprudence, including the decisions of final appellate courts in various common law jurisdictions as well as decisions of supra-national courts (Solicitor (24/07) v Law Society of Hong Kong (2008) 11 HKCFAR 117 at [16]). In particular, due to Hong Kong s legal system having its origins in the British legal system, the decisions of the English Privy Council and the House of Lords (now Supreme Court) are to be treated with great respect by the Hong Kong Courts (Solicitor (24/07) v Law Society of Hong Kong (2008) 11 HKCFAR 117 at [17]). Therefore not only has Hong Kong s shipping and international trade law been preserved after 1997, its judicial development has continued to be influenced by other jurisdictions (especially common law jurisdictions). Accordingly, for this chapter reference will be made to English and other common law authorities, as the Hong Kong courts themselves do in practice. As such, there will inevitably be some degree of overlap with this work s chapter on England & Wales. EUROPEAN LAWYER REFERENCE SERIES 271

47 Hong Kong One main area in which Hong Kong law has not developed in line with English law is where international/treaty law is involved. This effect has been especially pronounced in circumstances where English law has changed as a result of the United Kingdom s EU membership. Hong Kong judges obviously cannot import treaties into Hong Kong law where Hong Kong has not ratified those treaties, simply out of the desire to follow English precedents. Though they are few and far in between, there are several examples of this issue leading to Hong Kong law diverging from English law. 1. CONTRACTS OF CARRIAGE 1.1 Jurisdiction/proper law In the absence of express provisions in a bill of lading (or charterparty), by what means will the proper law of the contract be determined? Unlike current English law, which gives effect to the EEC Convention on the Law Applicable to Contractual Obligations (the Rome Convention ) through domestic legislation, the Hong Kong courts continue to apply the traditional common law principles for determining the proper law of a contract. This is a distinction of some significance because there are certain presumptions contained in the Rome Convention that are not available under common law, such as the presumption of characteristic performance and the presumption that the contract is most closely connected with the principal place of business of the party who is to effect the characteristic performance. Thus in First Laser Ltd v Fujian Enterprises (Holdings) Co Ltd, both the Hong Kong Court of Appeal and the Court of Final Appeal found that the first instance judge had been influenced by the presumptions in the Rome Convention, which led to insufficient weight being given to the subject matter of the agreement and its place of performance ([2011] 2 HKLRD 45; and (2012) 15 HKCFAR 569). The Court of Final Appeal observed The Rome Convention rule does not reflect the common law, because it emphasises the place where the party is based, rather than the place where performance is to be effected (First Laser Ltd v Fujian Enterprises (Holdings) Co Ltd (2012) 15 HKCFAR 569 at [55]). Under traditional common law principles, in the absence of an express choice of law clause, the Hong Kong courts will examine two matters to determine the proper law of the contract: whether the facts of the case justify inferring an implied choice of law clause into the contract of carriage; and failing that which system of law has the closest and most real connection to the contract. As to the first matter, the courts will consider whether the parties intended by implication that their contract should be governed by Hong Kong law. This is assessed by what ordinary reasonable businessmen would be likely to have agreed to if they had directed their minds to the question (Century Yachts Ltd v Xiamen Celestial Yacht Ltd [1994] 1 HKLR 385, at 393). Regarding the second matter, it is useful to refer to Bokhary JA s judgment in S Megga Telecommunications Ltd v Etowaru Co Ltd [1995] 2 HKC 761, at 767 (Court of Appeal): 272 EUROPEAN LAWYER REFERENCE SERIES

48 Hong Kong In the present case, there was no express choice of the proper law. Nor can one reliably draw any inference as to the intention of either side in that regard. It seems very likely that the parties deliberately refrained from making an express choice as to the proper [sic] because they could not agree upon one. In those circumstances, our task is to decide which system of law is the one with which the contract has the closest and most real connection, and to hold that the contract is governed by that system and its laws. In the context of a contract of carriage, the following factors have been cited as relevant to the question of which system of law has the closest and most real connection to the contract (The Dong Do [1991] 2 HKLR 563, at 566; and Trane Co v Hanjin Shipping Co Ltd (Unreported, 31 July 2001, Court of First Instance, Stone J, HCCL 215/1999) at [18]): where the bill of lading is issued; the place(s) of incorporation/residence of the relevant parties; the place of shipment; the place of delivery (ie, where the consignees are located); and the applicable carriage of goods by sea regime or legislation Will a foreign jurisdiction or arbitration clause necessarily be recognised? Lord Wright in the Privy Council s decision of Vita Food Products v Unus Shipping Co stated that the (English) courts will allow contracting parties a free choice of their governing proper law subject only to three qualifications ([1939] AC 277, at 290). These three exceptions have been adopted by the Hong Kong courts (The Cavalry [1987] HKLR 287, at 294), and they are that the clause must be: bona fide; legal; and not contrary to public policy. These exceptions seldom arise in practice. Therefore the Hong Kong courts will almost invariably recognise and give effect to foreign jurisdiction clauses. A plaintiff who brings court proceedings in Hong Kong in breach of a foreign jurisdiction clause bears the burden to show that there is strong cause for not granting a stay (The Thorscan [1998] 1 HKLRD 881, at 886, following The El Amria [1981] 2 Lloyd s Rep 119). In respect of foreign arbitration clauses, under Article 8(1) of the UNCITRAL Model Law, which is reproduced in section 20(1) of Hong Kong s Arbitration Ordinance (Cap. 609), it is mandatory for the Hong Kong courts to stay proceedings brought in breach of an arbitration agreement if a party so requests not later than when submitting his first statement on the substance of the dispute unless the arbitration agreement is null and void, inoperative or incapable of being performed. EUROPEAN LAWYER REFERENCE SERIES 273

49 Hong Kong In the event that an injunction or order preventing proceedings is obtained in the agreed jurisdiction (whether court or arbitration), will this be recognised in your court? There are a number of authorities on the circumstances under which the Hong Kong courts would grant anti-suit/anti-arbitration injunctions to prevent proceedings from being commenced abroad in breach of a jurisdiction/arbitration clause in favour of Hong Kong. However there appears to be no reported case precisely on the point of whether the Hong Kong courts will recognise an anti-suit/anti-arbitration injunction obtained in a foreign agreed jurisdiction. It is not difficult to imagine why, however. This is because under the analysis in above, the very fact that a plaintiff has attempted to bring proceedings in Hong Kong in breach of a foreign jurisdiction/arbitration clause will almost, in and of itself, be sufficient ground for the defendant to obtain a stay from the Hong Kong court. If on top of breaching the said foreign jurisdiction/arbitration clause, there is also a foreign anti-suit/antiarbitration injunction given by an overseas court in the agreed jurisdiction, it becomes even more likely that the Hong Kong court will grant a stay of the Hong Kong proceedings Arbitration clauses Will an arbitration and/or a jurisdiction clause set out in an incorporated document (such as a charterparty referred to in a bill of lading) be recognised if its text is not set out in the contract in question? Section 19(1) of Hong Kong s Arbitration Ordinance (Cap. 609) incorporates, inter alia, Article 7(6) of the UNICITRAL Model Law, which provides: The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract. Furthermore, section 19(3) of the Arbitration Ordinance (Cap. 609) adds: A reference in an agreement to a written form of arbitration clause constitutes an arbitration agreement if the reference is such as to make that clause part of the agreement. Therefore so long as reference is made to either a document containing an arbitration clause, or a written form of arbitration clause so as to make that clause part of the agreement, then it matters not that the actual text of the arbitration agreement is not set out in the contract in question Will the incorporation of an unsigned arbitration agreement into a contract be recognised? Section 19(2)(a) of the Arbitration Ordinance (Cap. 609) specifically provides that an arbitration agreement is in writing if the agreement is in a document whether or not the document is signed by the parties to the agreement. Therefore there is no doubt that the incorporation of an unsigned arbitration agreement into a contract will be recognised. 274 EUROPEAN LAWYER REFERENCE SERIES

50 Hong Kong In any event, will all of the provisions of a charterparty incorporated into a bill of lading contract be recognised? Specifically, if a charterparty with an arbitration clause is incorporated into a bill of lading, is it necessary for the incorporating words to make express mention of the arbitration clause of the charter? Thomas v Portsea [1912] AC 1 and The Federal Bulker [1989] 1 Lloyd s Rep 103 are both English authorities for the principle that general words of incorporation in a bill of lading are not sufficient to incorporate an arbitration clause contained in a charterparty. In other words, express mention of the arbitration clause in the bill of lading s incorporation clause is necessary to incorporate the arbitration clause into the bill of lading. These English cases were examined by the Hong Kong High Court in Astel-Peiniger Joint Venture (A Joint Venture Partnership) v Argos Engineering & Heavy Industries Co Ltd [1995] 1 HKLR 300. In obiter, Kaplan J tentatively affirmed Thomas v Portsea and The Federal Bulker but only in the context of dealing with negotiable instruments like bills of lading (His Lordship distinguished the case before him which was a construction dispute not involving shipping documents) (Astel-Peiniger Joint Venture (A Joint Venture Partnership) v Argos Engineering & Heavy Industries Co Ltd [1995] 1 HKLR 300, at 310). It would therefore be prudent to make express mention of the arbitration clause contained in the charterparty if one is minded to incorporate it into a bill of lading under Hong Kong law If a bill of lading refers to the terms of a charterparty, but without identifying it (eg, by date): See above at In the case of a Congen bill of lading, and to avoid any issue as to which particular charterparty terms are incorporated, care should be taken to insert the date of the relevant incorporated charterparty on the face of the bill of lading. This avoids the Re Yaoki type problems see following Will incorporation be recognised without such detail? See above and below If so, which charterparty will be incorporated? Practical difficulties may of course arise where the bill of lading refers to or purports to incorporate the terms of a charterparty, but it is not completely clear which charterparty in the chain of charterparties concerning the vessel the parties intended to incorporate. For instance, in Re Yaoki (Unreported, 15 May 2006, Court of First Instance, Waung J, HCAJ 134/2005) the bill of lading contained the following terms: Charter Party dated AS PER CHARTER PARTY at PER CHARTER PARTY at PER CHARTER PARTY between AS PER CHARTER PARTY and AS PER CHARTER PARTY as Charterer and all the terms whatsoever of the said Charter Party including the Arbitration clause ; and EUROPEAN LAWYER REFERENCE SERIES 275

51 Hong Kong Arbitration Any and all differences and disputes of whatsoever nature arising out of this Bill of lading shall be put to Arbitration in the City of New York or in the City of London, whichever place is specified in the Charter and in accordance with the Arbitration clause therein. The problem was that there were two charterparties in existence: (1) a head time charter which had a London arbitration clause; and (2) a voyage charter which had no arbitration but only an exclusive jurisdiction clause for the London High Court. The fact that the charterparty was not specifically identified (eg, by date) was not an impediment to the incorporation of its terms into the bill of lading. Waung J held that the relevant charterparty the parties intended to incorporate was the head time charter, and His Lordship commented that this conclusion was consistent with the general rule (repeatedly stated in various editions of Scrutton) that general reference will normally be construed as relating to the head charter (Re Yaoki (Unreported, 15 May 2006, Court of First Instance, Waung J, HCAJ 134/2005), at [8]). Accordingly, the plaintiff s argument that the voyage charter s exclusive jurisdiction clause somehow ousted the arbitration clause in the bill of lading was rejected. The plaintiff s Hong Kong proceedings were therefore stayed in favour of London arbitration. 1.2 Parties to the bill of lading contract How is the carrier identified? In particular, what is the relationship between statements on the face of the bill and/or the signature by or on behalf of the Master and demise clauses/identity of carrier clauses? As is discussed in the chapter on England & Wales in this work (see section in that chapter) the House of Lords decision in The Starsin [2003] 1 Lloyd s Rep. 571 shifted the emphasis on the identity of the carrier problem to the face of the bill of lading, and away from the standard terms on the back. This was said to be how a reasonable person, versed in the shipping trade, would read a bill of lading. The Starsin has been followed in Hong Kong: Esgame Co Ltd v Freight Overseas Co Ltd (Unreported, 27 July 2007, District Court, Judge Wong, DCCJ 1845/2006), at [17]; and Vastfame Camera Ltd v Birkart Globistics Ltd [2005] 4 HKC 117, at [58] [59]. In the latter case, Stone J held: On this issue I bear in mind the observations of their Lordships in The Starsin to the effect that when a bill of lading contains on its face an apparently clear and unambiguous statement of who is the carrier it is difficult to accept that a shipper would expect to have to resort to the detailed conditions on the reverse of the bill in an attempt to discover with whom he was contracting. This approach means that shippers and holders of bills of lading can literally take a bill of lading at face value so far as the identity of the carrier issue is concerned. 276 EUROPEAN LAWYER REFERENCE SERIES

52 Hong Kong Who is entitled to sue for loss or damage arising out of the carrier s alleged default? In particular, by what means, if at all, are rights under the contract of carriage transferred? The original shipper who contracts with the carrier can sue for loss or damage to his/her cargo. Due to the concept of privity of contract in English and Hong Kong contract law, however, the rights of the shipper were not available to the consignee as a matter of common law. Therefore statutory provisions were enacted to allow the shipper s rights to be transferred. Hong Kong s Bills of Lading and Analogous Shipping Documents Ordinance (Cap. 440), BLASDO ) is in all material respects identical to the English Carriage of Goods by Sea Act ( CGSA ) Section 4(1) of BLASDO supplements the common law position and also confers the right to sue the carrier to the lawful holder of a bill of lading, the consignee identified in a sea waybill, or the person entitled to delivery under a ship s delivery order, regardless of whether they are the owners of the goods covered by the document. If a bill of lading no longer gives a right to possession of the goods, or also known as a spent or stale bill of lading, and a person becomes the lawful holder of it, the person shall not have any rights transferred to him/ her by virtue of section 4(1) of BLASDO, subject to two exceptions. These two exceptions are the only scenarios in which a transferee can obtain contractual rights under a spent/stale bill of lading (section 4(2) of BLASDO): he/she becomes the holder of the bill by virtue of a transaction effected pursuant to any contractual or other arrangements made before the bill became spent; or he/she is a seller who becomes holder of the bill as a result of the goods being rejected by the buyer and the bill is returned to the seller as a result. Once rights are transferred pursuant to BLASDO, the rights of the original shipper and any intermediate holder(s) will be extinguished (section 4(5) of BLASDO). BLASDO mirrors the English CGSA 1992 in that it does not require the transferee of rights to have property in the goods (cf the old English CGSA 1855 which did require the transferee of rights to have obtained property by reason of indorsement or consignment). The liability of the original shipper, eg, for unpaid freight or shipping dangerous cargo, is not extinguished by virtue of any transfer of rights and/ or liabilities to another party (section 5(3) of BLASDO). 1.3 Liability regimes Which cargo convention applies Hague Rules/Hague Visby Rules/ Hamburg Rules? If such convention does not apply, what, in summary, is the legal regime? Hong Kong applies the Hague Rules as amended by the Visby Protocol (the HVR ). The HVR are given the force of law in Hong Kong by way of legislation, namely the Carriage of Goods by Sea Ordinance (Cap. 462, COGSO ). EUROPEAN LAWYER REFERENCE SERIES 277

53 Hong Kong Have the Rotterdam Rules been ratified? Hong Kong has not ratified the Rotterdam Rules. The People s Republic of China has however given its verbal support for the Rotterdam Rules. Under Article 153 of the Basic Law, treaties to which the People s Republic of China is or becomes a party do not automatically apply to Hong Kong, but the Central People s Government can decide whether or not an international agreement shall apply to Hong Kong in accordance with the circumstances and needs of the Region, and after seeking the views of the government of the Region. The Hong Kong Special Administrative Region has, so far as the authors are aware, not expressed any view regarding the Rotterdam Rules Do the Hague/Hague Visby Rules apply to straight bills of lading? The HVR are applicable to straight bills of lading under Hong Kong law. Put another way, straight bills are treated as similar documents of title for the purpose of applying Article I(b) of the HVR. See Carewins Development (China) Ltd v Bright Fortune Shipping Ltd [2007] 3 HKLRD 396, in which the Hong Kong Court of Final Appeal followed the English House of Lords decision in The Rafaela S [2005] 2 AC Are any such rules compulsorily applicable to shipments either from your jurisdiction or to it (or both)? Hong Kong s COGSO gives the HVR the force of law. Article X of the HVR has also been adopted without modification. Accordingly, the HVR will apply compulsorily to every bill of lading relating to the carriage of goods between ports if: the bill of lading is issued in a contracting state; or the carriage is from a port in a contracting state; or the contract contained in or evidenced by the bill of lading provides that the HVR or legislation of any state giving effect to them are to govern the contract regardless of the nationality of the ship, carrier, shipper, consignee or any other interested person. Therefore the HVR will be applied to: all bills of lading issued in Hong Kong/any contracting state to the HVR; all bills of lading for the carriage of goods ex any port of Hong Kong/any contracting state to the HVR; and any bill of lading containing a clause paramount in favour of the HVR. 1.4 Lien rights To what extent will a lien on cargo be recognised? Specifically: There is no Hong Kong case law authority analysing the nature of the lien on cargo in detail. That is not to say, however, that the concept is unknown to Hong Kong shipping practice and the Hong Kong courts. There have been a few cases in which a carrier purported to exercise a lien over cargo to secure the charterer s liabilities (for freight and other liabilities) under the charterparty, resulting in the consignee of the cargo having to put up a guarantee, 278 EUROPEAN LAWYER REFERENCE SERIES

54 Hong Kong under protest, to obtain delivery/release of their cargo see The Jalagopal (Unreported, 31 March 1987, Court of Appeal, Kepmster JA & Power J, 1987 No. 10 (Civil), [1987] HKEC 283; and The Thorscan [1998] 4 HKC 536. The Jalagopal involved an alleged common law lien, while The Thorscan involved an alleged contractual lien as per the terms of the charterparty. In both of these cases, the consignee then sued the carrying vessel in rem, in Hong Kong, for wrongful exercise of a lien on their cargo, claiming a refund for sums paid under the guarantee and damages. The issue of whether the carrier s exercise of a lien over cargo was wrongful or not as a matter of Hong Kong law, was not ultimately addressed by the courts as both cases were disposed of on jurisdictional/procedural grounds. It is submitted that if the topic of lien on cargo were to be determined by the Hong Kong courts, it is likely that reliance will be placed on the existing, well-developed, body of English case law dealing with matters such as: the ambit of the common law lien on cargo; the ambit of the contractual lien on cargo; and when the shipper s liabilities under the bill of lading would be enforceable against the consignee of the cargo. Please see section of the England & Wales chapter in this work Will liens arising out of obligations under the bill of lading contract be enforceable as against the receiver for, eg, freight, deadfreight, demurrage, general average and any shipper s liabilities in respect of the cargo? See above Can the Owner lien cargo for time charter hire? If so, is this limited to hire payable by the cargo owners? See above Is it necessary for the owners to register its right to lien subfreights as a charge against a charterer incorporated in your jurisdiction for that lien to be recognised in the event of the charterer s insolvency? Hong Kong s legislative provisions on securities over personal property, as distinct from real property, is essentially the same as the position in England & Wales (cf the reforms in Canada, Australia and New Zealand). A lien over sub-freights must therefore be registered as a charge with the Hong Kong Companies Registry against the charterer (sections of the Companies Ordinance, Cap. 622). Failure to register the lien as a charge would result in the security interest being void as against any liquidator and creditor of the charterer in the event of the charterer s insolvency. In most cases, the lien would be a floating charge as the charterer would essentially be promising to make sub-freights (ie, a future receivable/book debt) a collateral in favour of the owner. The owner should thus be mindful of crystallisation issues surrounding the floating charge. In this connection, an automatic crystallisation provision in the charterparty may be of utility. EUROPEAN LAWYER REFERENCE SERIES 279

55 Hong Kong 2. COLLISIONS 2.1 Is the 1910 Collision Convention in force? The 1910 Collision Convention is in force in Hong Kong, and it is enacted as domestic legislation via the Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (Cap. 508, the CDLSO ). One must be mindful of the enactment history of CDLSO, however, when applying or referring to the provisions of the 1910 Collision Convention in Hong Kong proceedings. The Hong Kong CDLSO was enacted in June 1997, in the lead-up to the handover of sovereignty to the PRC. Before June 1997, the UK Maritime Convention Act 1911 extended to Hong Kong. The CDLSO localised the part of the UK Maritime Convention Act 1911 which gave effect to the 1910 Collision Convention. The articles of the 1910 Collision Convention were not copied verbatim into the Maritime Convention Act 1911, and therefore Hong Kong s CDLSO is not completely in line with the articles of the 1910 Collision Convention either. The plaintiff in Chan Kwai Ha v Wong Chick Bun [2008] 2 HKLRD 259 commenced collision proceedings five years after her barge sank, allegedly due to the defendant s tugging service. The plaintiff was time-barred pursuant to the two year time bar as enacted in the CDLSO. It was suggested by the plaintiff that the court should construe the CDLSO in light of the 1910 Collision Convention, in such a manner so as to allow her to overcome the time bar issue. This approach was rejected by the Court of Appeal: The 1910 Collision Convention is only part of Hong Kong law to the extent that it is enacted by statute. Even where the court construes an ordinance in light of a convention, it must be the text of the ordinance that ultimately governs, not that of the convention. This is because the Legislature may not have enacted a convention in its entirety. A statute may modify the terms of a convention. However wide art. 10 may be, the court can only enforce that part of it which has been brought into effect by the Ordinance. 2.2 To what extent are the Collision Regulations used to determine liability? The International Regulations for Preventing Collisions at Sea 1972 as amended by Resolution A464 (XII) are enacted in Hong Kong via the Merchant Shipping (Safety) (Signals of Distress and Prevention of Collisions) Regulations (Cap. 369N). The extent to which the Collision Regulations are used to determine liability in Hong Kong is neatly encapsulated in Re the Magway (Unreported, 1 August 2002, Court of First Instance, Waung J, Admiralty Action Nos. 14 & 246 of 1999, [2002] HKEC 1023, at paragraph [6]): It is to be noted that in collision cases, what is always important is the percentage of blame and cases would often be decided where the court would hold one party 280 EUROPEAN LAWYER REFERENCE SERIES

56 Hong Kong to be 60%, 70%, 80% or 90% to blame. Each percentage involves very often a great deal of money. So, the correct assessment of the various manoeuvres of the ship which results in the final percentage of blame is vitally important. That assessment of the proper manoeuvre or good seamanship involves knowledge not only of the collision regulations but very often of what could be said to be good seamanship. 2.3 On what grounds will jurisdiction be founded what essentially is the geographical reach? Jurisdiction of the Hong Kong courts is founded by service. For in personam claims, jurisdiction is founded by personal service of the writ on the defendant. This is not likely to be problematic if the in personam defendant is based in Hong Kong. Where the claim is for damage, loss of life or personal injury arising out of a collision between ships or the carrying out of or omission to carry out a manoeuvre, or non-compliance with the collision regulations, and the in personam defendant is located overseas, leave of the Hong Kong Court to serve out is required. Furthermore, service out is only permissible in such cases if one of the following conditions applies (Order 75, rule 4 of the Rules of the High Court ( RHC ); and sections 12C(1) (2) of the High Court Ordinance, Cap. 4): the defendant has his/her habitual residence or a place of business in Hong Kong; the cause of action arose within the territorial waters of Hong Kong; an action arising out of the same incident or series of incidents is proceedings in the Hong Kong court or has been heard and determined in the Hong Kong Court; or the defendant has submitted or agreed to submit to the jurisdiction of the Hong Kong Court. As for in rem claims, jurisdiction is founded by service on the ship, which is effected by affixing the warrant of arrest or a sealed writ on any mast or on the outside of any suitable part of the ship s superstructure (Order 75, rule 11 of the RHC). In theory, the in rem jurisdiction of Hong Kong courts extends to all ships within Hong Kong s territorial waters. In practice, though, the Bailiff of the Hong Kong High Court will only serve in rem proceedings on vessels that call into a Hong Kong port, including anchorages within port limits. As a matter of procedure, time is protected by the filing of a writ at the High Court. The High Court of Hong Kong has exclusive jurisdiction for admiralty claims. As between competing vessel interests involved in a collision, preliminary acts are then filed at court (Order 75, rule 18 RHC). Preliminary acts are designed to obtain statements of facts from the parties, and these statements are to be made blind when matters are still fresh in the parties minds. Statements of fact in a Preliminary Act amount to formal admissions and cannot generally be departed from without special leave of the court. EUROPEAN LAWYER REFERENCE SERIES 281

57 Hong Kong The plaintiff s preliminary act is, subject to agreement between the parties as to time extension(s), to be filed within two months of the service of the relevant Writ (Order 75, rule 18(2) of the RHC). Thereafter the defendant(s) also file their preliminary act(s). Part two of each preliminary act serves as the equivalent of a formal pleading in a non-admiralty context (ie, as statement of claim, and statement of defence, respectively). Preliminary acts are filed at the High Court Registry in sealed envelopes (Order 75, rule 18(5) of the RHC) and cannot be viewed by other interested parties unless the consent of the solicitor or party filing the preliminary act is given, or by special order of the court. If liability issues as between vessels are not resolved by way of negotiation, then the respective preliminary acts would be opened and circulated to the parties (at latest) at such time as there is a contested argument before the Admiralty Judge as to liability apportionment. Such contested hearings are extremely rare in Hong Kong as inter-vessel liability apportionment is normally negotiated and agreed. 2.4 Can a party claim for pure economic loss in the event of a collision? Collision claims are invariably in tort, rather than contract. Similar to the position under English law, pure economic loss can only be recovered in tort if such loss arose as a consequence of physical damage to, or interference with, the property of the claimant. Thus in Owners and/or Demise Charterers of OOCL China v Owners and/ or Demise Charterers of Darya Bhakti (Unreported, 14 August 2014, Court of Appeal, CACV 70/2013, [2014] HKEC 1373, at paragraph [15]), the time charterer s claim for pure economic loss following a collision was disallowed as the time charterer did not have any proprietary interest in the vessel. 3. SALVAGE 3.1 Has your country enacted any salvage conventions? If so, which one? Section 9 of the CDLSO (see 2.1 supra) gives the International Convention on Salvage 1989 (the Salvage Convention 1989 ) the force of law in Hong Kong. 3.2 In any event, what are the principal rules for obtaining noncontractual salvage? In the event that a salvage contract is signed, will this clearly displace any general law on salvage liabilities? Given the commonalities between Hong Kong and the UK in respect of: non-contractual/common law salvage (both jurisdictions apply the Salvage Convention 1989; and contractual salvage (usually pursuant to the Lloyd s Open Form), the Hong Kong courts are likely to follow the principal rules established by the courts of England & Wales. See section 3.2 of the chapter on England & Wales in this work. 282 EUROPEAN LAWYER REFERENCE SERIES

58 Hong Kong 3.3 What is the limitation period for enforcing salvage claims in your jurisdiction? Pursuant to Article 23(1) of the Salvage Convention 1989, which has the force of law in Hong Kong (see section 3.1 supra), the limitation period for enforcing salvage claims is two years, with time accruing from the day on which the salvage operations are terminated. 3.4 To what extent can the salvor enforce its lien prior to the redelivery of ship/cargo? At both Common Law and under the Lloyd s Open Form, no maritime lien for salvage arises in favour of the salvor prior to redelivery because there has been no cure at that stage. Furthermore, the salvor may not enforce his/her maritime lien when satisfactory security for his claim, including interest and costs, has been tendered or provided under Article 20(2) of the Salvage Convention 1989 (again, see section 3.1 supra). The observations regarding the LOF 2000 and the requirement that the ship owner use best endeavours to ensure that the cargo interests provide security at section 3.2 of the chapter on England & Wales of this work are likely to be adopted in Hong Kong should the issue ever come up for determination before the Hong Kong courts. 4. GENERAL AVERAGE 4.1 Will any general average claim (whether under the contract, generally or GA securities) necessarily follow the contractual provisions in relation to general average, in particular, the chosen version of the York Antwerp Rules ( YAR )? The Hong Kong courts will normally follow the contractual provisions on general average, otherwise, the common law position will apply. See Hong Kong Islands Shipping Co Ltd v Castle Insurance Co Ltd (Formerly Pacific & Orient Underwriters (HK) Ltd) and 84 Others [1981] HKLR Time bars Will general average claims under the contract of carriage be governed by any contractual time bar in particular, any which might be set out in the YAR (eg, YAR 2004)? Referring again to Hong Kong Islands Shipping Co Ltd v Castle Insurance Co Ltd (Formerly Pacific & Orient Underwriters (HK) Ltd) and 84 Others (supra), the Hong Kong courts will apply contractual time bars. In this particular case, the contractual general average provisions incorporated into the contract of carriage were the York Antwerp Rules ( YAR ) It was held that the second plaintiff s claim for general average was time-barred as a matter of common law and Hong Kong statute (ie, commenced six years after the casualty), and nothing in the YAR 1950 postponed the second plaintiff s cause of action. The key point is, however, that the Hong Kong courts are prepared to give effect to contractual provisions relating to limitation periods and accrual of time. EUROPEAN LAWYER REFERENCE SERIES 283

59 Hong Kong By analogy, there is no reason to believe that the Hong Kong courts would not uphold the contractual time bar found in Rule XXIII of YAR 2004 (see also section infra) In the event that claims should be pursued under general average securities in your jurisdiction, what is the applicable time bar for such claims? Will this be affected by the provision of YAR 2004 Rule XXIII if 2004 YAR is specified in the relevant contract? There is no Hong Kong case law specifically concerning Rule XXIII of YAR 2004 and its effect on the time bar for general average securities (bond or guarantee). Older cases have referred to English authorities to the effect that for general average securities, time runs from the time of the General Average adjustment (Hong Kong Islands Shipping Co Ltd v Castle Insurance Co Ltd (Formerly Pacific & Orient Underwriters (HK) Ltd) and 84 Others [1981] HKLR 510, at page 516, citing Union of India v EB Aaby s Rederi A/S [1975] AC 797) To what extent is any general average adjustment binding? Unless there is agreement between the parties, general average adjustments are not legally binding on the parties. It is open to the parties to scrutinise and, if necessary, challenge the adjusters figures. In Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1983] 1 HKC 32, a Privy Council decision on appeal from Hong Kong, Lord Diplock held: The York-Antwerp Rules do not make the average adjuster s assessments of liability to contribute contained in his general average statements binding upon cargo owners nor do the rules impose any legal obligation on cargo owners to settle general average claims by paying the amount so assessed. 5. LIMITATION 5.1 What is the tonnage limitation regime in respect of claims against the vessel? Section 12 of the Merchant Shipping (Limitation of Shipowners Liability) Order (Cap. 434) gives the Convention on Limitation of Liability for Maritime Claims, London 1976 ( LLMC ) the force of law in Hong Kong. Despite ongoing discussions and consultation, Hong Kong has not adopted the 1996 Protocol (cf the UK). Limitation proceedings are commenced with the filing of an in personam writ on behalf of the persons entitled to limit to constitute the limitation fund following a collision. Assuming that there is then the required payment into court of the LLMC limitation fund, the High Court will normally allow a 90-day period within which all parties wishing to make a claim against the limitation fund should notify their claims, by way of a claim in reference filed in the High Court. That 90-day period (which can be extended on application of a party/parties) is normally advertised locally and internationally pursuant to directions of the Registrar of the High Court (Ordinance 75, rule 39 of the RHC). 284 EUROPEAN LAWYER REFERENCE SERIES

60 Hong Kong The claims in reference will include reference to any salvage contributions made by cargo interests as well as any general average security provided, and of course all cargo loss, damage, wasted freight, etc. Once a limitation fund is constituted and the various claims in reference are filed, the focus as between the two vessel interests normally shifts to negotiation of percentage liability apportionment as between each vessel. Important evidence in this process is any Marine Department report, the transcripts from the respective voice data recorders, seaworthiness of the vessel, deployment of proper procedures and charts, training, competence and alertness of crew, compliance with port procedures and directions, etc. As in the UK, cargo interests normally treat themselves as bound by any agreed apportionment negotiated as between the two vessel interests. For solicitors representing cargo interests, once the claims in reference in the limitation fund action are filed, focus often shifts to obtaining further clarity/details from cargo interests and underwriters (care, as always, needs to be taken to avoid duplication of quantum elements), discussions are commenced between cargo interests to try and agree on respective heads of claim for the purpose of presenting a united case for at least an interim payment from the limitation fund, and thereafter once all quantum information has been collated final claim figures against the limitation fund can be presented to and negotiated with vessel interests. If settlement does not result then recourse to the Admiralty Court is required. See again section 2.3 supra. 5.2 Which parties can seek to limit? Under Article 1 of the 1976 Convention, the shipowners, salvors, persons for whose acts the owner or salvor is responsible and the insurers of liability for claims are entitled to seek to limit. The types of claims that are subject to limitation are listed in Article 2 of the LLMC. It is worth noting that Hong Kong has not reserved the right to exclude from limitation the claims set out in Article 2(1)(d) and (e) of the LLMC, which relate to: (d) 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 ship; and (e) claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship. Article 18 of the LLMC permits member states to reserve the right to exclude the abovementioned claims from limitation. Many countries (including the UK) have done so due to the high costs that tend to be associated with wreck removal in recent times. 5.3 What is the test for breaking the limitation? Article 4 of the LLMC sets out the test for breaking limitation. The person seeking to limit loses the entitlement to limit liability if it is proved that the loss resulted from his personal act or omission, committed with the intent EUROPEAN LAWYER REFERENCE SERIES 285

61 Hong Kong to cause such loss, or recklessly and with knowledge that such loss would probably result. 5.4 To what degree do any limitation provisions found jurisdiction for the substantive claim? Article 14 of the LLMC provides that where a limitation fund has been constituted any person having made a claim against the fund shall be barred from exercising any right in respect of such a claim against any other assets of a person by or on behalf of whom the fund has been constituted. There are, however, more complex conflict of laws issues arising from limitation funds. In The Peng Yan [2009] 1 HKLRD 144, the Hong Kong Court of Appeal held that (given the particular factual backdrop of this case), the fact that there was a limitation fund in Ningbo, PRC, which had been properly set up pursuant to the Maritime Code of the PRC, was not reason enough to stay the in rem action against the defendant s sister ship in Hong Kong. The Court of Appeal commented (at pages ): There is a certain attraction in the simplicity of the defendants submissions [that the Hong Kong in rem proceedings should be stayed in favour of proceedings in Ningbo, PRC], but upon closer analysis, it amounts to saying no more than, at its highest, there exist parallel proceedings in Hong Kong and in the Ningbo Maritime Court. As stated above, this is by no means unusual in admiralty matters and specifically within this rubric, limitation actions. 5.5 Which package limitation figure applies? Hong Kong applies the HVR compulsorily in certain scenarios (see section supra). Where the HVR apply compulsorily, any attempt to use contractual provisions to reduce the carrier s liability below the package or unit limitation calculation amount stipulated in the HVR will be null and void (Article III (8) of the HVR). Article IV (5)(a) of the HVR provides that the package or unit limitation figure is either: units of account per package or unit; or 2 units of account per kilogram of gross weight of the goods lost or damaged, whichever is higher. Unit of account means the Special Drawing Right ( SDR ) as defined by the International Monetary Fund (Article IV(5)(d)). In Hong Kong, SDRs are converted at the rate specified by the Hong Kong Monetary Authority (section 7 of the COGSO). If the HVR do not apply compulsorily to a contract of carriage, then the parties are free to contract for whatever package or unit limitation figure/ formula they please, subject to the provisions of the CECO (see generally section below, and more specifically, sections 7-8 of the CECO). 286 EUROPEAN LAWYER REFERENCE SERIES

62 Hong Kong 6. POLLUTION AND THE ENVIRONMENT 6.1 Which Civil Liability Convention ( CLC ) regime applies? Hong Kong applies the International Convention on Civil Liability for Oil Pollution Damage, 1992, as modified by Resolution LEG. 1(82), via the Merchant Shipping (Liability and Compensation for Oil Pollution) Ordinance (Cap. 414). 7. SECURITY AND ARREST 7.1 Is your jurisdiction a party to any particular arrest convention? If so, which one? Hong Kong is a party to the International convention on the Unification of Certain Rules relating to the Arrest of Sea-going Ships 1952 (the Arrest Convention 1952 ). Sections 12A 12B of the High Court Ordinance (Cap. 4) are the key provisions incorporating the Arrest Convention This means that as far as possible, the Hong Kong courts will construe the local legislative provisions relating to the arrest of vessels in rem consistently with the Arrest Convention 1952 (The Oriental Dragon [2014] 1 HKLRD 649, at [43], citing the House of Lords decision in The Eschersheim [1976] 1 WLR 430, at 436). 7.2 Which claims afford a maritime lien in your jurisdiction? Though statute allows for the arrest of vessels where there is a maritime lien, as in England, there is no statutory definition of maritime liens (section 12B(3) of the High Court Ordinance, Cap. 4). Following English admiralty case law, the following claims give rise to maritime liens: damage caused by a ship; salvage; seaman s wages; master s wages and disbursements; bottomry and respondentia (both outmoded). 7.3 In any event, to what extent does a mortgagee have priority over claims for loss and damage which are not maritime liens? The Hong Kong courts follow the same general rules of priority in admiralty claims as the English courts. In The Sparti [2000] 3 HKLRD 561, at 564, Waung J observed: [T]he general order of priority for maritime claims usually seen in the admiralty courts of the United Kingdom and Hong Kong is as follows: (1) Costs of arrest; (2) Possessory lien of repairer; (3) Salvage (maritime lien); (4) Collision (maritime lien); (5) Wages (maritime lien); (6) Mortgage; EUROPEAN LAWYER REFERENCE SERIES 287

63 Hong Kong (7) Statutory rights in rem such as necessaries claims, agent claims, cargo claims, charterer s claims, towage claims, etc. Therefore save for extreme circumstances, maritime lien claimants will usually rank ahead of mortgagees, who will in turn rank ahead of statutory right of action in rem claimants (for examples of such extreme circumstances, see The Eva (1921) 8 Lloyd s Law Rep 315, The Fairport (1885) LR 10 PD 13 and The Veritas [1901] P 304). As between mortgages, registered mortgages rank ahead of unregistered mortgages. The former rank by the date of registration between themselves, while the latter rank by the date of creation between themselves. 7.4 Is there any suggestion that an arrest claim might lead to the founding of substantive jurisdiction? In admiralty proceedings, the Hong Kong courts will apply the same principles as those enunciated by the House of Lords in The Spiliada [1987] AC 460. In basic terms, where jurisdiction in Hong Kong has been founded as of right, a stay will only be granted where it is shown that there is another forum which is clearly or distinctly more appropriate than Hong Kong. In the context of an arrest claim in Hong Kong giving rise to jurisdiction here, the res provides security for the claimant(s). This provision of security has been described as a unique feature of the admiralty jurisdiction (The Peng Yan [2009] 1 HKLRD 144, at [23]). As such, the burden on the party applying for a stay based on forum non conveniens grounds (ie, to show that there is another clearly or distinctly more appropriate forum than Hong Kong) where a vessel has been arrested in Hong Kong as of right will not be a light one. Possible ways for a person applying for a stay to discharge this burden may include (see The Ocean Friend [1981] HKLR 253): the plaintiff having brought the Hong Kong action in breach of a foreign jurisdiction clause/arbitration agreement; and/or the fact that alternative security (eg, payment into court) has been put up in the purported forum conveniens. 7.5 To what extent can sister/associated ships be arrested? Hong Kong does not allow for associated ship arrests in the wide sense that South Africa (famously) does. Sister ship arrests are permitted in Hong Kong, and Hong Kong law governing such arrests is mostly in line with the rest of the common law world (compare, eg, section 21(4) of the Senior Courts Act 1981 (UK); section 19 of the Admiralty Act 1988 (Australia, Cth); and section 5(2)(b) of the Admiralty Act 1973 (New Zealand) these legislative provisions all stem from the Arrest Convention 1952). Only a subset of all the possible heads of statutory rights of action in rem give rise to the ability to arrest a sister ship (listed in section 12A(2)(e) (f) of the High Court Ordinance, Cap. 4). It is not possible to arrest a sister ship in reliance on a maritime lien. Assume that Vessel A is the guilty ship, ie, the ship in connection with which the claim or question arose, and Vessel B is the sister ship. 288 EUROPEAN LAWYER REFERENCE SERIES

64 Hong Kong The first limb of the sister ship arrest test requires that when the cause of action arose, the person who would be liable in personam must be one of the following: owner of Vessel A; charterer of Vessel A; or in possession/ control of Vessel A. The second limb of the test requires that when the cause of action is brought (ie, when the writ in rem is issued), the same person who would be liable in personam must be the beneficial owner as respects all the shares in Vessel B. In the context of a registered ship, beneficial owner as respects all the shares usually just means the registered owner of the ship (Re Resource 1 (2000) 3 HKCFAR 187, at 209). If both limbs are satisfied, then a right of arrest exists against Vessel B, ie, the sister ship. See also The Decurion [2012] 6 HKC 1 at first instance and [2013] 5 HKC 125 affirmed on appeal. 7.6 Is it possible to arrest ships for claims arising out of (a) MOAs; (b) ship repair; and (c) ship construction contracts? It is possible to arrest ships pursuant to a memorandum of agreement ( MOA ). The relevant statutory right of action in rem is found in section 12A(2)(a) of the High Court Ordinance, any claim to the possession or ownership of a ship or to the ownership of any share therein. A claimant must be careful, however, to ensure that the underlying contractual arrangements are such that he/she can still legitimately assert a right of possession or ownership over the vessel when invoking this ground of arrest. For example, where the MOA has already been terminated so that no proprietary right in the vessel remained with the buyer/claimant, the buyer/claimant cannot arrest (The Hong Ming [2011] 5 HKLRD 139). The flipside is if title in the vessel has been irrevocably divested to the buyer/defendant, in circumstances where the seller/claimant can no longer assert a right of ownership and possession over the vessel, the seller/claimant may not arrest under the MOA even in the event of non-payment by the buyer/defendant (The Amigo (Unreported, 8 October 1991, Supreme Court, Barnett J, 1991 Folio No. AJ115) a case involving a dishonoured cheque drawn by the buyer/defendant). A claim based on ship repairs can give rise to a right of arrest, as can a claim based on a ship construction contract. Section 12A(2)(m) of the High Court Ordinance allows for arrests based on any claim in respect of the construction, repair or equipment of a ship. A shipbuilder or repairer who remains in possession of a vessel may also be able to assert a common law artificer s lien (as opposed to a maritime lien) over the vessel (Pacific Islands Shipbuilding Co Ltd v Don the Beachcomber Limited (No. 3) [1963] HKLR 515). 7.7 To what degree can an arrest be anticipated/prevented by the lodging of security? Arrest can be anticipated by filing a praecipe for a caveat against arrest under Order 75, rule 6 of the RHC (Cap. 4A). The party seeking to prevent arrest must undertake to: EUROPEAN LAWYER REFERENCE SERIES 289

65 Hong Kong acknowledge issue or service of any in rem writ in any action begun against the property described in the praecipe; and give bail or pay into court a sum not exceeding the amount specified in the praecipe in the action within three days after receiving notice that the action has begun. A caveat against arrest does not prevent a plaintiff from issuing or executing a warrant of arrest per se. Rather, the caveat works by making a plaintiff who arrests a vessel despite the existence of a caveat, and without good and sufficient cause, liable for damages to the defendant by reason of wrongful arrest (Order 75, rule 7 of the RHC). A caveat against arrest entered upon the application of a shipowner does not extend to cover a claim in rem against the same vessel where the person who would be liable in personam is the demise charterer (The Jian She 33 (Unreported, 28 March 2001, Court of First Instance, Waung J, HCAJ 221 & 232/2000 & HCAJ 7/2001)). 7.8 If a vessel can be arrested, by what means can the claim be secured? Specifically: Normally, the arrested vessel or her proceeds of sale represent(s) security for the plaintiff s claim. This has been described as the essence and purpose of admiralty jurisdiction in rem and this right to security is a statutory right for the plaintiff. As such, a defendant cannot demand that the action proceed in the absence of security as that would be tantamount to forcing an unsecured in personam action upon the plaintiff (The Al Dhabiyyah [1994] 4 HKC 414, at 422) Can an arresting party insist on a cash deposit or a bail bond? It is open to the in personam defendant not to provide alternative security and allow his/her property to remain under arrest and possibly be sold. Accordingly, an arresting party cannot usually demand that the in personam defendant provide a cash deposit or a bail bond. The exception is where the in personam defendant or its solicitors have given an undertaking to put in bail when applying for a caveat against arrest. Breach of a written undertaking can result in committal for contempt of court. Where the in personam defendant does seek the release of its res, he/ she needs to obtain the consent of the arresting party by giving bail to the arresting party s satisfaction. In such a scenario, the arresting party is entitled to insist on bail or payment into court. For practical reasons, though, it is commonly the case that an arresting party will be content with a guarantee or undertaking given out of court by the defendant s bank or P&I club Will the court accept a letter of guarantee from a protection and indemnity club? Whether an out of court letter of guarantee offered by the defendant s P&I club is acceptable is for the plaintiff to decide. Unlike bail and payment into court, which are both given by the defendant to the court, a letter 290 EUROPEAN LAWYER REFERENCE SERIES

66 Hong Kong of guarantee is a promise given by the defendant s bank or insurer to the plaintiff. Therefore the party offering a letter of guarantee is not immediately answerable to the courts, in the same way a party providing bail is. The courts will not enter into the arena and adjudicate upon competing proposals for the terms of a guarantee, as it has never been the function of the courts to write contracts for the parties (The Alacrity [1994] 2 HKC 659). If the plaintiff and defendant cannot come to terms on a letter of guarantee, the defendant should put up bail or make a payment into court to secure the release of the res Does any guarantee have to be provided by a domestic bank or other acceptable guarantor? In the case of a bail bond given on behalf of a defendant to the court to secure the vessel s release, the court will examine the adequacy of the security and creditworthiness of the issuer of the bond in deciding whether to accept or reject the bail bond (see, eg, The Hua Tian Long (No. 2) [2008] 4 HKLRD 740). As mentioned above, an out of court letter of guarantee given on behalf a defendant to the plaintiff is for the plaintiff to scrutinise. If the plaintiff adopts an overly relaxed assessment, then he or she takes on the surety s credit risk. 7.9 Briefly summarise the further security options: eg, freezing orders, attachment of debts due to the defendant, etc. Besides the arrest in rem for admiralty claims, Hong Kong law recognises four other security interests proper: the mortgage; the charge; the common law lien; and the pledge. A creditor may also protect himself/herself with the following mechanisms and quasi security interests: rights of set-off; Quistclose trusts; Romalpa clauses; conditional sales; hire-purchase agreements; finance leasing arrangements; and negative pledge clauses. Post-judgment enforcement options for a creditor include: Garnishee orders; charging orders; and writs of fieri facias. They serve the following functions: garnishee orders can be used to attach debts owed by third parties to the judgment debtor (ie, the judgment debtor s receivables). Commonly, garnishee orders are used against bank accounts in credit held by the judgment debtor; charging orders can be used to attach the judgment debtor s land and shares; and writs of fieri facias can be used against the judgment debtor s chattels. It is possible to seize the judgment debtor s vessels using writs of fieri facias so long as the bailiff is satisfied that the vessel in question belongs to the judgment debtor. A plaintiff can also apply for a Mareva injunction pre-judgment so as to prevent a defendant from frustrating the claim (and eventual/ possible judgment) by dissipating its assets. Section 21M of the High Court Ordinance (Cap. 4) further allows an applicant to freeze a debtor s assets even in the absence of substantive legal proceedings in Hong Kong. Generally speaking, both types of freezing injunctions require the applicant EUROPEAN LAWYER REFERENCE SERIES 291

67 Hong Kong to show: a good arguable cause of action against the debtor; that the debtor has assets within Hong Kong; and a risk of dissipation of assets. While it is possible to Mareva a ship or her proceeds of sale (see, eg, The Oriental Dragon [2014] 1 HKLRD 649), doing so would not elevate an unsecured creditor to the position of a preferred creditor in the way an admiralty action in rem would (The Cretan Harmony [1978] 1 Lloyd s Rep 425). This is because the Mareva injunction is purely a type of in personam relief and is not a true security interest. 8. CONTRACTS OF SALE OF GOODS 8.1 Jurisdiction / Proper Law In the absence of express provision in a contract of sale, by what means will the proper law of the contract be determined? Hong Kong does not have any legislative equivalent of England s Contracts (Applicable Law) Act Therefore in the absence of an express choice of law/jurisdiction clause, the Hong Kong courts continue to apply the old English case law regarding the proper law of the contract in an international sale of goods scenario. The almost one century old decision of the Privy Council in Benaim v Debono [1924] AC 514 held that there is a presumption that the proper law of a FOB sale of goods contract is the lex loci solutionis, ie, the place of delivery. Benaim v Debono was recently cited with approval by the Hong Kong Court of Appeal in First Laser Ltd v Fujian enterprises (Holdings) Co Ltd [2011] 2 HKLRD 45, at [58], though not specifically on the presumption regarding FOB contracts point. It has been suggested that no such presumption applies in the case of a CIF sale of goods contract (H Glynn (Covent Garden) Ltd v Wittleder [1959] 2 Lloyd s Rep 409; and Ferromin Ltd v Nittetsu Shoji Co Ltd (Unreported, 29 Jan 1999, Court of First Instance, Stone J, HCCL 41/1998). While the issue of proper law/jurisdiction in sale of goods contracts has been discussed in Hong Kong in several first instance authorities, there is no conclusive ratio that can be drawn from these cases. As such, the two rules pertaining to whether an implied choice of law/jurisdiction clause can be inserted into the sale of goods contract and the closest and most real connection test discussed at section above will have to be applied on a case-by-case basis to determine the proper law/jurisdiction of the contract. This present state of the law in Hong Kong in this regard has been criticised as undesirable and lacking in commercial certainty in legal academia (see Johnston, The Conflict of Laws in Hong Kong, 2nd edn (Hong Kong: Sweet & Maxwell 2012), paragraph 5.046) Will a foreign jurisdiction or arbitration clause necessarily be recognised? In the event that proceedings can be commenced before your court notwithstanding such provisions, can such proceedings be challenged? See section (supra). 292 EUROPEAN LAWYER REFERENCE SERIES

68 Hong Kong In the event that an injunction or order preventing proceedings is obtained in the agreed jurisdiction (whether court or arbitration), will this be recognised by your court? See section (supra). 8.2 Arbitration clauses What are the essential elements for the recognition of an arbitration agreement? The essential elements for the recognition of an arbitration agreement under Hong Kong law are set out in the Arbitration Ordinance (Cap. 609). The statutory definition of arbitration agreement is in section 2(1) the Arbitration Ordinance. It is identical to the definition in Article 7 of the UNCITRAL Model Law: (1) Arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Arbitration agreements must be in writing (Article 7(2) of the UNCITRAL Model Law). The criteria for what in writing means can broadly be summarised as follows: the arbitration agreement itself need not be in writing. It is enough that the arbitration agreement s content is recorded in any form. It matters not that the arbitration agreement or contract has been concluded orally, by conduct, or by other means (Article 7(3) of the UNCITRAL Model Law); electronic communications stored by electronic, magnetic, optical or similar means are sufficient to meet the in writing requirement (Article 7(4) of the UNCITRAL Model Law); an arbitration agreement is also in writing where it is contained in an exchange of statements of claim and defence, and one party alleges its existence but the other party does not deny its existence (Article 7(5) of the UNCITRAL Model Law); reference in a contract to any contract containing an arbitration clause, so long as the reference is such as to make the clause part of the contract (Article 7(6) of the UNCITRAL Model Law) see section (supra); the document containing the arbitration agreement need not be signed see section (supra); the agreement, made otherwise than in writing, is recorded by one of the parties to the agreement (or by a third party) with the authority of each of the parties to the agreement (section 19(2)(b) of the Arbitration Ordinance). 8.3 Passing of title/property/risk Hong Kong s legislative provisions dealing with the passing of property, found in sections of the Sale of Goods Ordinance (Cap. 26, SOGO ), EUROPEAN LAWYER REFERENCE SERIES 293

69 Hong Kong are carbon copies of sections of the English Sale of Goods Act 1979 ( SOGA ). Thus, just like the law of England & Wales, property passes at the point in time when the parties intended it to pass (section 19 of the SOGO). There are a number of rules for ascertaining that intention (section 20 of the SOGO). The discussion in section 8.3 of the chapter on England & Wales of this book is equally applicable to Hong Kong law with one important caveat. The presumption in section 18 rule 5(3) (4) of the English SOGA, was inserted in 1995 upon the UK Law Commission s recommendation. The new presumption deals with sale of goods from a bulk, and it enables property in an undivided share of that bulk to pass before ascertainment of goods relating to a specific sales contract if three conditions are met (again, see the chapter on England & Wales of this work). No analogous provision has been inserted into Hong Kong s SOGO. This new presumption under the English legislation might have had an effect on the outcome on cases such as Kerry Foodstuffs Co Ltd v Phulsawat Navy Co Ltd (Unreported, 27 September 2000, Court of First Instance, Cheung J, HCCL 1/1992), where it was held: I agree that property in the subject goods, being part of the bulk at the time of shipment, did not pass to Arumugam unless and until they had become ascertained by being separated from the bulk. As the subject goods have not been separated from the bulk at the time of shipment, property therein did not pass to Arumugam. This is one of the rare instances in which Hong Kong s Sale of Goods law differs from that of England & Wales. In an international sale, where goods are shipped and a bill of lading is issued making the goods deliverable to the order of the seller or his agent, it is prima facie deemed that the seller reserved the right of disposal of property in the goods (section 21(2) of the SOGO) What terms if any are implied by your rules as to the passing of: See section 8.3 above title (property) to the goods? See section 8.3 above risk? Section 22 of Hong Kong s SOGO deals with the passing of risk. It is essentially the same as section 20 of the English SOGA (Hong Kong does not have an equivalent of section 20(4) SOGA, however, which is concerned with consumer contracts and is not the focus of this work in any event). Simply put, risk prima facie passes to the buyer at the same time property is transferred to the buyer (unless the parties otherwise agree). 294 EUROPEAN LAWYER REFERENCE SERIES

70 Hong Kong In relation to the passing of title and risk, do your rules apply even if the underlying contract applies another law? The provisions of the SOGO only apply to sale of goods contracts that are governed by Hong Kong law. 8.4 Description and quality Do your rules imply terms on (a) the description of the goods and / or (b) their quality? Section 15 of Hong Kong s SOGO deals with sales by description. It was copied from what is now section 13 of the English SOGA. For a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description. Section 16 of the SOGO is concerned with the implied condition as to merchantable quality. The concept of merchantable quality itself originates from the English Sale of Goods Act While Hong Kong has copied the statutory definition of satisfactory quality from what is now s 14(2A) (2C) of the English SOGA, the Hong Kong legislation continues to use the old term of merchantable quality (section 2(5) of the SOGO). The condition of merchantable quality is implied into a sale of goods contract where a seller sells goods in the course of business, except where: the defects were specifically drawn to the buyer s attention before the contract is made; the buyer examined the goods before the contract was made and he/she ought to have discovered those defects from the examination; or for a sale by sample, the defects would have been apparent on a reasonable examination of the sample by the buyer. The statutory definition of merchantable quality lists the following relevant considerations: whether the goods are fit for the purpose or purposes for which goods of that kind are commonly bought; the standard of appearance and finish; whether the goods are free from defects (including minor defects); if the goods are safe; and if the goods are durable. These considerations are to be applied to any description of the goods, the price (if relevant) and other relevant circumstances. It should come as no surprise that when assessing a real life dispute concerning merchantable quality, the statutory definition outlined above may often not provide a concrete answer save for the most straightforward of cases. The Hong Kong courts continue to refer to old 19th 20th Century English cases on merchantable quality (see, eg, Tung Ga Linen & Cotton (HK) Ltd v Winnitex Investment Co Ltd (Unreported, 21 July 2006, District Court, Judge CB Chan, DCCJ 7049/2003, [2006] HKEC 1373), where the judge referred to Bristol Tramways etc Carriage Co Ltd v Fiat Motors Ltd [1910] 2 KB 831.) The Hong Kong courts tend also to use the term merchantable quality interchangeably with the new UK term of satisfactory quality (see, eg, Cheng Wo Hung v Yip Shing Diesel Engineering Co Ltd (Unreported, 12 December 2003, Court of EUROPEAN LAWYER REFERENCE SERIES 295

71 Hong Kong Appeal, Chung J, HCA of 1999, [2003] HKEC 1479). 8.5 Performance Delivery: What provisions does your law make as to delivery of the goods (eg, on timing and method of delivery)? Except for some minor formatting differences, the provisions dealing with delivery of the goods in section 31 of Hong Kong s SOGO and section 29 of the UK s SOGA are exactly the same. Therefore it is for the parties to decide whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer. If there has been no such decision (impliedly or expressly), then it is assumed that the place of delivery is the seller s place of business, if he has one, and if not, his residence. If the contract is for the sale of specific goods, which to the knowledge of the parties when the contract is made, are in some other place, then that some other place is the place of delivery (s 31(1)). If no specific time for delivery is fixed, then the seller is bound to send the goods within a reasonable time (section 31(2)). The discussion of delivery obligations under CIF and FOB contracts at section 8.6 of the England & Wales Chapter of this work is equally applicable under Hong Kong law. For CIF contracts, see Anbest Electronic Ltd v CHU International Insurance Plc [2008] 4 HKLRD 202, at paragraph [75]. In this case, the goods were stolen at the port of discharge. It was held that where the buyer is charged a CIF price, the risk (and property) only passes to the buyer when the shipping documents had been paid for and delivered, together with an assignment of the insurance policy. See also New Optics Manufacturing Co Ltd v Lap Shing (Hong Kong) Freight Forwarding Ltd (Unreported, 28 April 2008, District Court, Judge Wong, DCCJ 5193/2005, [2008] HKEC 736), where it was held that under a FOB contract, the seller had passed property and risk in the goods to the buyer upon delivering the goods to the buyer s freight-forwarder (as agent) Acceptance: When is the buyer deemed to have accepted the goods? If a buyer accepts the goods, he/she will no longer be able to reject them. Where there has not been actual or express acceptance by the buyer, acceptance may nevertheless be deemed under section 37(1) of the SOGO in the following circumstances: where the buyer intimates to the seller that he has accepted the goods; or after delivery, the buyer does any act in relation to them which is inconsistent with the ownership of the seller. Intimation of acceptance, be it oral or written, must be clear. Writing a letter to the seller seeking an explanation (regarding an increase in the purchase price) has been held not to be clear intimation of acceptance (Vaswani v Italian Motors (Sales & Service) Ltd [1994] 2 HKC 753, at 762). If the goods are delivered to the buyer, but he/she had not previously examined the goods, he/she is not deemed to have accepted the goods 296 EUROPEAN LAWYER REFERENCE SERIES

72 Hong Kong until he/she has had a reasonable opportunity to examine the goods for the purpose of ascertaining conformity with the contract and comparing the bulk with the sample for a sale by sample (section 37(2)). Acceptance is also deemed where the buyer retains the goods but does not intimate to the seller that he/she has rejected the goods after a reasonable time has lapsed. What is a reasonable time is determined in conjunction with whether the buyer has had a reasonable opportunity to examine the goods (s 37(4) (5)). The mere fact that the buyer delivers the goods under a sub-sale or other disposition is not sufficient to amount to deemed acceptance (section 37(6)) Payment: In the absence of express provision, by when must a buyer pay for the goods? Unless otherwise agreed (and it is often otherwise agreed in the context of international sale of goods), the buyer must pay at the same time the seller makes delivery of the goods. Delivery and payment are described as concurrent conditions (section 30 of the SOGO). Stipulations as to the time of payment, however, are not deemed to be of the essence unless a contrary intention appears from the terms of the contract. That is to say, late payment by the buyer would not normally be a repudiatory breach entitling the seller to cancel the contract (section 12 of the SOGO). For an example of the parties expressly agreeing to a time of payment provision via documentary credit, and then subsequently agreeing to vary the terms of that provision, see Sinom (Hong Kong) Ltd v Swati International (Unreported, 30 May 2006, Court of Appeal, CACV 365/2005). 8.6 Other terms Classification of terms Do your rules differentiate between warranties (breach of which only entitles the innocent party to damages) and conditions (breach of which also entitles him to terminate the contract), and if so what is the effect? The differentiation between conditions and warranties in English law also exists under Hong Kong law. For example, as mentioned above in section 8.4.1, the implied term that the seller s goods must correspond with the description in a sale by description, is a condition. If the buyer finds that the seller s goods do not correspond with the description, the breach of a condition allows the buyer to treat the contract of sale as having been repudiated, and reject the goods (section 13 of the SOGO). The buyer may, however, elect to treat the seller s breach as a breach of warranty instead and sue for damages arising from the non-correspondence with description (see, eg, AB Hellenic v Au Sing-Man trading as Foreign Manufacturers Company [1966] HKLR 697). EUROPEAN LAWYER REFERENCE SERIES 297

73 Hong Kong In English law, we also have the concept of intermediate (or innominate) terms. Breach of such terms may have differing effects depending on the gravity of the consequences of the breach. Do you have a similar concept under your system? Hong Kong law shares the concept of intermediate (or innominate) terms with England & Wales, as well as other common law jurisdictions. For example, see Creatiles Building Materials Co Ltd v To s Universe Construction Co Ltd [2003] 2 HKLRD 309, which followed the English Court of Appeal s landmark decision in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (The Hongkong Fir) [1962] 2 QB 26. See section 8.9 of the chapter on England & Wales of this work Exemption clauses Do your courts recognise exemption (ie, exclusion) clauses, such as force majeure? The common law doctrine of frustration of contract applies where some supervening event makes performance of the contract impossible, illegal, or something radically different from what the parties originally envisaged. In such circumstances, there has been no breach by either party, and the contract is treated as discharged. The force majeure clause is a form of contractual risk allocation provision which circumvents the operation of the doctrine of frustration. Freedom of contract allows force majeure clauses to be broader in scope and more flexible than the doctrine of frustration. See Euramin SA v Shangxiang Minmetals Limited (Unreported, 25 March 1997, Supreme Court, Findlay J, 1994, No. A 10274) where the defendant/ seller unsuccessfully argued that floods in the PRC had frustrated its contract to sell antimony to the buyer CIF Rotterdam. The defendant then attempted to argue that the plaintiff s/buyer s indemnity claim was uncertain because the sub-sale contract between the plaintiff and the subpurchaser contained a force majeure clause. The defendant suggested that the plaintiff s alleged loss regarding the indemnity claim was not a given because the plaintiff could rely on the force majeure clause in response to a claim brought by the sub-purchaser. This also failed because the force majeure clause was not drafted widely enough to be triggered the plaintiff was still obliged to source antimony from the market under the sub-sale contract, notwithstanding the fact that the defendant had not supplied to it. Exclusion and/or limitation of liability clauses are also recognised by the Hong Kong courts, but they are subject the statutory restrictions, namely under the Control of Exemption Clauses Ordinance (Cap. 71, CECO ), which is based on the UK s Unfair Contract Terms Act What are the key requirements for relying on an exemption clause? In the sale of goods context, it is not possible for the seller to exclude his/her undertakings as to title, freedom from incumbrances and quiet possession (section 11(1) of the CECO). The implied conditions regarding correspondence with description or 298 EUROPEAN LAWYER REFERENCE SERIES

74 Hong Kong sample, merchantable quality and fitness for purpose cannot be excluded for consumer sales (section 11(2) of the CECO). For non-consumer sales, the implied conditions can be excluded, but only so far as the exclusion term satisfies the requirement of reasonableness (section 11(3) of the CECO). The burden is on the person relying on the exclusion clause to prove its reasonableness (section 3(6) of the CECO). Schedule 2 to the CECO sets out the statutory guidelines for the application of the reasonableness test. The relevant considerations for the court or tribunal are: the respective bargaining strengths of the parties; whether the customer was induced to agree to the term, or in accepting it had an opportunity to enter into a similar contract with someone else without such a term; whether the customer knew or ought to reasonably to have known of the existence and extent of the term; where the term excludes or limits liability if some condition is not met, whether it was reasonable to expect compliance with that condition; and whether the goods were manufactured, processed or adapted to the special order of the customer. In May Tik Decoration Co Ltd v Ronacrete (Far East) Ltd (Unreported, 29 April 2009, District Court, Deputy Judge K Lo, DCCJ 384/2005, [2009] HKEC 670)), an adhesives vendor had an exclusion clause in its standard terms and conditions which stated The Company shall not accept any responsibility whatsoever towards the Customers or any other person whatsoever for any injury loss or damage to property caused by the Products sold or arising in any way from the use there of. The court held that taken in isolation, this exclusion clause would apparently exclude all liability for the seller, and would definitely fail the reasonableness test in the CECO. The court, however, pointed out that the correct interpretation of the contract, which also required the buyer to undertake to use the adhesives in strict compliance with the seller s instructions, meant that the exclusion clause was only an attempt to exclude liability in the event that the buyer failed to follow the seller s instructions when using the adhesives (at paragraphs [50] [54]). 8.7 Remedies What are the seller s remedies where the buyer is in breach of contract? The seller may bring an action for the price of the goods against the buyer in the following situations (section 51 of the SOGO): where property in the goods has passed, but the buyer wrongfully neglects or refuses to pay; or where property in the goods has not passed, but the purchase price is contractually payable on a day certain irrespective of delivery (see section above), and the buyer wrongfully neglects or refuses to pay. In the case of wrongful non-acceptance of the goods by the buyer (regardless of whether property has passed), the seller may sue for damages EUROPEAN LAWYER REFERENCE SERIES 299

75 Hong Kong (section 52(1) of the SOGO). The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer s breach of contract (section 52(2) of the SOGO, being statutory codification of the first rule in Hadley v Baxendale (1854) 9 Exch 341 at 354). If there is an available market for the goods in question, the measure of damages is prima facie the difference between the contract price and the market or current price at the time when the buyer ought to have accepted the goods. If no time was fixed for acceptance, then damages are to be assessed at the time of the buyer s neglect or refusal to accept (s 52(3) of the SOGO). The seller has a duty to mitigate. The parties may also expressly agree to a liquidated damages clause (so long as it does not amount to a penalty clause), which would have the effect of bypassing the measures of damages discussed above. Further, the unpaid seller has the following rights (section 41 of the SOGO): the right to assert a possessory lien over the goods for the price; in case of the insolvency of the buyer, a right of stopping the goods in transitu after he/she has parted with possession of the goods, by retaking actual possession or giving notice to the carrier or bailee to redeliver the goods; a right of resale, the exercise of which rescinds the contracts, reverts property back to the seller and disentitles him/her from bringing an action for the price. The seller may nonetheless still sue for damages. Where property has not passed, the unpaid seller may also withhold delivery. This is in addition to the other remedies discussed above What are the buyer s remedies where the seller is in breach of contract? The buyer can sue for damages where the seller is in breach of contract. If the seller wrongfully neglects or refuses to deliver the goods, the measure of damages is generally the estimated loss directly and naturally resulting in the ordinary course of events from the seller s breach of contract (s 53(1) (2) of the SOGO). Where there is an available market for the goods, the measure of damages is prima facie the difference between the contract price and the market or current price of the goods at the time when the seller ought to have delivered. If no time was fixed, then damages are measured at the time of refusal to deliver (section 53(3) of the SOGO). The buyer has a duty to mitigate, though he/she need not run unnecessary risks (see Tung Guan Company PTE Ltd v Jih Dong Enterprises Co (being sued as a firm) [1992] 2 HKLR 225, at 248. Resale by the buyer gives rise to some problems. The courts will not simply presume in a sale of goods scenario that the contract of sale is contemplated by both parties to be for the buyer to resale the very same goods to a third party. Therefore damages suffered by a buyer as a result of a resale obligation in the case of non-delivery by the head seller is normally 300 EUROPEAN LAWYER REFERENCE SERIES

76 Hong Kong too remote. To succeed, the buyer must show that at the date of the contract, both parties contemplated that the buyer would resell the same goods. In commercial contracts, stipulations as to time are usually treated as being of the essence. Therefore late delivery by the seller would usually entitle the buyer to reject the goods and cancel the contract. If the buyer elects to accept late delivery, the seller may be liable for damages, with the measure of damages being what is required to put the buyer in the position he/she would have been in had the seller delivered on time. The breach of any (implied or express) condition by the seller, no matter how slight, would entitle the buyer to cancel the contract. Sufficiently grave breaches of any intermediate (or innominate) terms by the seller would also entitle the buyer to cancel the contract. For a breach of warranty, or where the buyer waives a condition or elects to treat such a condition as a breach of warranty (eg, by accepting the goods), the buyer cannot treat the contract as repudiated and must sue for damages instead (section 13 of the SOGO). The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty (section 55(2) of the SOGO). For a breach of warranty of quality, the measure of damages is the difference between the value of the goods at the time of delivery and the value they would have had if they had answered to the warranty, ie, been of merchantable quality (section 55(3) of the SOGO). In United Chemicals Industries Co Ltd v Telemac (HK) Ltd [1972] HKLR 420, the seller sued the buyer for the value of the goods supplied, but the buyer counterclaimed for a breach of warranty. Li J saw some difficulty with this as the damages counterclaimed by the buyer for its breach of warranty claim effectively cancelled out the seller s claim. In the end, it was held (at page 440): It is appreciated that this course amounts to giving the defendant [buyer] the remedy of total rescission of the contract for a breach of warranty. However, owing to special circumstances in this case I will follow the decision in Poulton s case, 9 B. & C. 259; 109 E.R. 96. Perhaps the severity of my decision is alleviated by the fact that the defendant is still in possession of the bulk of the materials supplied and is in a position to return them Are there any general limitations on the remedies available? As noted above, consequential loss can be recoverable if it was reasonably within the contemplation of the parties at the time of the contract. See also Holiday Products (HK) Ltd v Polyproducts Industrial Co [1974] HKLR 455 where it was held that the buyer could recover its loss of profits as well as advertising expenses arising from the seller s breaches because those losses and expenses were within the contemplation of the parties at the time of the contract. EUROPEAN LAWYER REFERENCE SERIES 301

77 Hong Kong 8.8 Time limit What is the statutory limitation period? Hong Kong s statutory time bar for claims founded on simple contract or tort is six years (section 4 of the Limitation Ordinance, Cap. 347). For contract claims, time usually accrues from the date of the defendant s breach. The limitation period is postponed in case of fraud or deliberate concealment by the defendant (section 26 of the Limitation Ordinance) Do your courts uphold shorter contractual limitation periods? Hong Kong courts will uphold shorter contractual limitation periods. It was recently observed in Possehl Electronics Hong Kong Ltd v China Taiping Insurance (HK) Co Ltd (Unreported, 19 December 2013, Court of First Instance, Deputy Judge Whitehead SC, HCA 2354/2012, [2013] HKEC 2050, at paragraph [20]: I accept that it is well established that parties may stipulate in a contract that legal or arbitral proceedings shall be commenced within a shorter period of time than provided under the Limitation Ordinance (Cap 347), failing which the right of action may be barred or extinguished. Such contractual limitation clauses may however (depending on specific facts) be struck down as unconscionable if one party is a consumer (see section 5 of the Unconscionable Contracts Ordinance, Cap. 458). 8.9 Finance In what circumstances is it possible for your courts to prevent payment out under: a letter of credit? The Hong Kong courts apply the Uniform Customs and Practice for Documentary Credits to letters of credit. This means that credits are separate transactions from the contracts on which they are based (Article 3, also known as the autonomy principle ) and all parties concerned with credit operations deal with the documents, not the goods (Article 4). Banks have no liability or responsibility for the genuineness of any documents or for the existence of the goods represented by any documents (Article 15). Accordingly, a bank which has issued a letter of credit must pay against presentation of compliant documents. Payment out can only be prevented where there is clear and obvious evidence of fraud and of the bank s knowledge of it at the time of payment (see Re Guang Xin Enterprises Ltd [2002] HKLRD (Yrbk) 30, at paragraphs [26] [27]) performance bonds? The essential character of a performance has been characterised as akin to cash, letters of credit and promissory notes payable on demand. It is an irrevocable undertaking to pay a specified sum to the beneficiary in the event of a breach of contract, and is not a promise to the beneficiary that the contract will be performed (Hyundai Engineering & Construction Co Ltd v UBAF (Hong Kong) Ltd [2012] 5 HKLRD 620). 302 EUROPEAN LAWYER REFERENCE SERIES

78 Hong Kong The autonomy principle is equally applicable to performance bonds under Hong Kong law. This means the performance bond is strictly distinct from the underlying contract, so it is not necessary to produce evidence or proof of any underlying breach in order to make a valid demand. The presumption is that a performance bond is to be conditioned upon documents, rather than facts (Hyundai Engineering & Construction Co Ltd v UBAF (Hong Kong) Ltd [2012] 5 HKLRD 620). Unless there is fraud, the Hong Kong courts will treat a performance bond as being equivalent of cash in hand (Hyundai Engineering & Construction Co Ltd v UBAF (Hong Kong) Ltd [2012] 5 HKLRD 620) What does one have to show to prevent payment out? For the above reasons, it is generally not difficult for a party seeking payment out pursuant to a performance bond or a letter of credit to obtain summary judgment. In most cases, the bank s only real defence is the defence of fraud. The test is as follows (Re Guang Xin Enterprises Ltd [2002] HKLRD (Yrbk) 30, at paragraphs [32]): whether standing in the shoes of the paying bank at the time of payment, the fraud was clear and obvious to it; if fraud was clear and obvious, then the bank pays the beneficiary at its own peril and it is not entitled to reimbursement; but if fraud was not clear and obvious, then it is not for a banker to question why the businessmen involved in the underlying transaction had chosen to conduct their business in any particular way. A bank that refuses to pay out on the ground of fraud must provide clear evidence and allege the fraud specifically with full particulars. It is not permissible for a bank to raise a vague unparticularised case of fraud in the hope of making it good after discovery (Re Guang Xin Enterprises Ltd [2002] HKLRD (Yrbk) 30). In Ever Eagle Co Ltd v Fortune Trading Co Ltd [1993] HKLY 96, the suggestion that the underlying goods were the proceeds of crime from a robbery was held to be merely a bare assertion and did not amount to clear evidence of fraud. The circumstances under which the Hong Kong courts would intervene and prevent payment out are thus extremely limited Security What remedies are available to obtain security for the claim: where the substantive claim is being litigated See section 7.9 above where the substantive claim is not being litigated in your jurisdiction? See section 7.9 above. EUROPEAN LAWYER REFERENCE SERIES 303

79 Hong Kong Must the applicant have already commenced substantive proceedings (whether by litigation or arbitration) to be able to obtain security? See section 7.9 above Is there a distinction between the remedies available for a claim which is subject to litigation and one which is referred to arbitration? Section 70 of the Arbitration Ordinance (Cap. 609) provides: (1) Subject to (2), an arbitral tribunal may, in deciding a dispute, award any remedy or relief that could have been ordered by the Court if the dispute had been the subject of civil proceedings in the Court. (2) Unless otherwise agreed by the parties, the arbitral tribunal has the same power as the Court to order specific performance of any contract, other than a contract relating to land or any interest in land. This work is not concerned with land. Therefore unless the parties agree to curtail the tribunal s power to order specific performance, there is no distinction between the remedies available for court and arbitral proceedings so far as civil remedies go. It should be noted however that arbitral tribunals do not have the power to commit a party/person to prison for contempt (of court). In sum, the following remedies may be granted by arbitral tribunals under Hong Kong law: monetary awards; specific performance (not for contracts relating to land and not if the parties agree not to have specific performance as an available remedy); injunctions; declaratory relief; indemnity; and interest (section 79 of the Arbitration Ordinance) What tests are applied to establish a right to each remedy? It is necessary to show a risk of dissipation of assets in order for one to obtain security by way of a Mareva injunction. See section 7.9 above Is the applicant required to provide counter security, and if so by what means? The applicant must give an undertaking as to damages. Technically, the court cannot compel the applicant to give an undertaking. Rather, the court would simply refuse to grant the Mareva injunction unless the applicant gives an undertaking What exposure does an applicant have for damages if the attachment is deemed wrongful? The purpose of the undertaking as to damages is for the applicant to compensate the respondent for any loss sustained by reason of the injunction, 304 EUROPEAN LAWYER REFERENCE SERIES

80 Hong Kong through the payment of damages, if it subsequently transpires that the Mareva/section 21M HCO injunction ought not to have been granted. The applicant s exposure is therefore practically full. When applying for the Mareva/section 21M HCO injunction, the applicant should provide information on his/her ability to meet damages pursuant to the undertaking. An additional condition may be that the applicant fortify the undertaking by providing security. Fortification may come in the form of a bond from an insurance company, or payment into court by some other means (eg, by the applicant s solicitors) Enforcement Is your country a signatory to the New York Convention? Hong Kong (as a Special Administrative Region, rather than as a country), is a signatory to the New York Convention. The Arbitration Ordinance (Cap. 609) makes specific reference to the New York Convention as well as to Convention awards (see sections 2 and 87 91) To what extent is the New York Convention applied in practice? In practice, the Hong Kong courts tend to apply the New York Convention with very little hesitation through the enforcement of Convention awards. Some commentators have even suggested that the Hong Kong courts do this to a fault. Section 89 of the Arbitration Ordinance sets out the limited grounds on which a Hong Kong court may refuse to enforce a Convention award. Even where a respondent has managed to show that the Convention award in question falls within one of the grounds listed in section 89, the court nevertheless retains a discretion as to whether to enforce the award anyway. This is because section 89 is phrased as Enforcement of a Convention award may not be refused except in cases mentioned in this section. Taking the double negatives away, this sentence could be read as the Court may (still) enforce a Convention award even in cases mentioned in this section. In China Nanhai Oil Joint Service Corp Shenzhen Branch v Gee Tai Holdings Co Ltd [1994] 3 HKC 375, the defendant asked the Hong Kong court to refuse to enforce a PRC award (NB this was pre-1997, thus it was regarded as a Convention award, whereas today it would be treated as a Mainland award ). The ground advanced, and proven, by the defendant was that the PRC tribunal was wrongly constituted in breach of the arbitration agreement. The Hong Kong Court held that it would exercise its residual discretion to enforce the Convention award despite the wrongful composition of the PRC tribunal, because the defendant s rights had not been violated in any material way Vienna Convention Is your country a signatory? Hong Kong, like the UK, is not a signatory to the Vienna Convention. EUROPEAN LAWYER REFERENCE SERIES 305

81 Hong Kong 9. GENERAL FORMALITIES 9.1 Does a lawyer require a formal power of attorney to be able to act? Hong Kong lawyers (solicitors and barristers) do not require a formal power of attorney to be able to act. 9.2 Do claim documents (and their translation) require notarisation? Hong Kong claim documents do not need to be notarised. The plaintiff must sign a statement of truth, however. Where a writ issued in Hong Kong is to be served abroad on a foreign defendant (the court s leave is required), the laws of the place in which the foreign defendant is to be served may require notarisation of the claim documents and/or their translations. In such a case, legal advice should be sought from lawyers in the jurisdiction where service is intended. 306 EUROPEAN LAWYER REFERENCE SERIES

82 Greece Greece Hill Dickinson International Maria Moisidou 1. CONTRACTS OF CARRIAGE 1.1 Jurisdiction/proper Law In the absence of express provisions in a bill of lading (or charterparty), by what means will the proper law of the contract be determined? Where there is no express provision dealing with which law should govern a charterparty/bill of lading this should be determined in accordance with Article 5 of EU Regulation 593/2008 ( Rome I ) which deals specifically with the applicable law for contracts of carriage. Rome 1 upholds the freedom of choice of the parties in relation to the law applicable to a contract (Article 3). Article 5 of Rome I deals specifically with contracts of carriage. Article 5 provides, essentially, that where no law applicable has been chosen for contracts of carriage (which include voyage, but not time charterparties), the applicable law shall be the law of the country of habitual residence of the carrier, provided that (1) the place of receipt or (2) the place of delivery or (3) the habitual residence of the consignor is also situated in that country. If those requirements are not met, then the applicable law shall be the law of the country where the place of delivery as agreed by the parties is situated unless it is clear from all the circumstances that the law of another country should apply, because the contract is most closely connected to that country Will a foreign jurisdiction or arbitration clause necessarily be recognised? As a general rule, Greek courts will recognise foreign law clauses which in the case of contracts of carriage are included in arbitration and foreign jurisdiction clauses. All commercial disputes are deemed capable of being the subject matter of arbitration and the Greek courts very rarely annul arbitration or jurisdiction clauses in such disputes. Furthermore, Greece is subject to Regulation (EU) No. 1215/2012, replacing Regulation (EC) No. 44/2001 ( Brussels I ) which is applicable from 10 January Article 25 of Brussels I confers exclusive jurisdiction on the courts of a member state which the parties have agreed to settle any disputes which have arisen or which may arise in connection with the particular legal relationship. Article 25 also provides that such an agreement conferring jurisdiction must be either (1) in writing or evidenced in writing; (2) in a form which accords with practices which the parties have established between themselves; (3) or in the case of international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned. EUROPEAN LAWYER REFERENCE SERIES 239

83 Greece Exchanges of faxes and, most likely by extension, s satisfy the requirement as to the written form. It is worth mentioning that Article 25(2) of the Brussels Regulation also provides that [a]ny communication by electronic means which provides a durable record of the agreement shall be equivalent to writing. Brussels I does not apply to arbitration clauses. However, the Greek courts will be guided by its terms when considering valid incorporation of such clauses on the basis of trade usage. Nonetheless, a party resisting the operation of jurisdiction/arbitration clauses can challenge them, for example on the grounds that the relevant clauses were not evidenced in writing, or that the signatory to the agreement in which such clauses were evidenced did not have the requisite authority to bind the relevant legal entity. There is a range of options available to a party in mounting such a challenge especially when arbitration clauses are incorporated indirectly, ie, through charterparties into contracts of carriage. However, the Greek courts will normally be reluctant to intervene in the choice of applicable law/jurisdiction/ arbitration provided that it can be shown that the relevant law, jurisdiction or arbitration clauses have been incorporated into the contract of carriage in accordance with the usual shipping practice. Further, in circumstances where a lawsuit is commenced in Greece, in breach of a foreign jurisdiction or arbitration clause, and the defendant mounts an objection to that, the Greek courts have the power to (and regularly do) either order a stay of proceedings (in view of the arbitration or adjudication of the lawsuit in the foreign jurisdiction) or dismiss the lawsuit on the grounds of a lack of substantive jurisdiction (where there is a foreign jurisdiction or arbitration clause) In the event that an injunction or order preventing proceedings is obtained in the agreed jurisdiction (whether court or arbitration), will this be recognised in your court? Anti-suit injunctions have been held to be contrary to Greek public policy (Piraeus Court of Appeal decision nos. 110/2004 and 31/2012) and would therefore not be recognised by a Greek court. In light of the above, the only option available to a defendant is to challenge a lawsuit commenced against it in Greece, either for want of the jurisdiction of the Greek courts, or in favour of arbitral proceedings, pursuant to an agreement to arbitrate. However, such a jurisdictional challenge cannot be determined as a preliminary issue before the Greek courts and will have to be raised at the same time of submission of a defence regarding the merits of the case Arbitration clauses Will an arbitration and/or a jurisdiction clause set out in an incorporated document (such as a charterparty referred to in a bill of lading) be recognised if its text is not set out in the contract in question? Article 25(1)(c) of Brussels I provides that agreements conferring jurisdiction, in cases of international trade or commerce, shall be: in a form which accords with a usage of which the parties are or ought to have been aware 240 EUROPEAN LAWYER REFERENCE SERIES

84 Greece and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned. Therefore, a jurisdiction clause set out in a document such as a standard form or institutional rules which is incorporated into (but not set out in full in) the principal contract, is generally recognised under Greek law. It needs to be clear, however, that the parties are in agreement regarding the terms of the documents which are incorporated by reference in the principal contract. Commentary suggests that the issue should be addressed on a caseby-case basis. The courts will apply a stricter view in relation to arbitration clauses which are considered to be separate agreements. Therefore the incorporation of such clauses in a document must be specifically referred to but not necessarily set out in their entirety. For example, an arbitration clause contained in a prior contract between the parties and incorporated by reference in a new contract relating to the same or different legal relationship has been deemed valid under the condition that the relevant agreement is in writing and specifically refers to the legal relationship from which disputes may arise (Piraeus Court of Appeal decision no. 10/2010, Thessaloniki Court of Appeal decision no. 2588/2008) Will the incorporation of an unsigned arbitration agreement into a contract be recognised? The general rule under Greek law is that an arbitration agreement as a distinct dispute resolution agreement must be signed by both parties. At a national level, Articles 867 and 903 of the Greek Code of Civil Procedure ( CCP ) govern the national arbitration proceedings. CCP imposes two conditions which have to be met for an arbitration clause to be valid: (a) it has to be in written form and (b) signed by both parties. If any of the parties is a corporate entity, the legal representative has to sign the arbitration agreement for and on behalf of the company. The parties signatures on the arbitration clause (or the underlying contract) and its form will be also scrutinised by the Greek courts when the time comes to enforce an award in Greece. Although the absence of separate signatures on the arbitration agreement itself does not preclude its incorporation into the contract, the contract containing the arbitration agreement should be in writing and signed by both parties authorised representatives. Trade usage has in certain cases extended the validity of such clauses in circumstances where a written contract is not signed by both parties but its terms are clearly accepted. If the arbitration agreement is valid, a valid incorporation of the agreement into a contract should be binding on the parties. Signature by the shipper of a bill of lading should be enough to incorporate the arbitration agreement into the bill of lading (Court of Appeal of Piraeus decision no. 944/2007 and Thessaloniki Single Member Court of First Instance decision no. 235/2009). Further, Supreme Court decision no. 1561/1998 provides, in relation to international contracts for the sale of goods that even tacit acceptance should suffice to properly evidence the validity of an arbitration agreement in line with good faith and proper trade usage principles. EUROPEAN LAWYER REFERENCE SERIES 241

85 Greece In any event, will all of the provisions of a charterparty incorporated into a bill of lading contract be recognised? Specifically, if a charterparty with an arbitration clause is incorporated into a bill of lading, is it necessary for the incorporating words to make express mention of the arbitration clause of the charter? The Greek courts will uphold trade usage and normally be reluctant to intervene in the choice of applicable law/jurisdiction/arbitration of the parties provided that it can be shown that the relevant clauses have been incorporated into the contract of carriage in accordance with the usual shipping practice. In view of the fact that arbitration clauses are separate agreements specific mention to such clauses will have to be made when contracts containing arbitration clauses, such as charterparties, are incorporated into contracts of carriage (see analysis below). The general terms of the bill of lading referring to incorporation of the law and arbitration clause of the accompanying charterparty have been held by the Greek courts to be valid arbitration agreements (Piraeus Court of Appeal decision no. 944/2007 and Thessaloniki Single Member Court of First Instance decision no. 235/2009) If a bill of lading refers to the terms of a charterparty, but without identifying it (eg, by date): Will incorporation be recognised without such detail? See below. References in a bill of lading to specific terms of a dated, signed and defined charterparty will be generally sufficient for their incorporation. In particular, for an arbitration clause of a charterparty to be incorporated into a bill of lading by reference, such clause must be specifically referred to in the bill of lading in a clear and specific manner in such a way so that it is obvious from a simple reading that the matter of arbitration is dealt with by a specific term of the charterparty. The general terms of the bill of lading referring to incorporation of the law and arbitration clause of the accompanying charterparty have been held by the Greek Courts to be valid arbitration agreements (Piraeus Court of Appeal decision no. 944/2007 and Thessaloniki Single Member Court of First Instance decision no. 235/2009). The arbitration clause will not be incorporated in the case of a bill of lading which refers to the terms of a charterparty, but not expressly to the arbitration clause in that charterparty. However, sufficient incorporation of an arbitration clause by reference will apply in the case of the 1994 Congenbill, which specifically states in the pre-printed terms that the terms of the Law and Arbitration clause should be incorporated If so, which charterparty will be incorporated? If a bill of lading refers to the terms of a charterparty, but does not clearly identify it, then the terms of the charterparty will not be incorporated into the carriage contract. Further, the Courts of Piraeus have repeatedly ruled that reference in a bill of lading to a standard type of charter of a trade association only (such as the NYPE, Centrocon, etc) will not be sufficient for its 242 EUROPEAN LAWYER REFERENCE SERIES

86 Greece incorporation (see, eg, Court of Appeal of Piraeus decision nos. 3894/1976 and 389/1994). 1.2 Parties to the bill of lading contract How is the carrier identified? In particular, what is the relationship between statements on the face of the bill and/or the signature by or on behalf of the Master and demise clauses/identity of carrier clauses? The party which has agreed to carry the goods is deemed to be the carrier which is established as a question of fact (Piraeus Court of Appeal hereinafter PAC 805/2008). If the contract of carriage has not been made with the shipowner, but is between the shipper and the charterer, the charterer and not the shipowner is deemed to be the carrier (Piraeus Multi Member First Instance Court hereinafter PMFIC 3273/2002 and PMFIC 605/1995) Demise charterer Accordingly, a demise charterer will be identified as the carrier if he has agreed to carry the goods. Where it is unclear whether the bill of lading has been issued by the master on behalf of the shipowner or the charterer on the face of the bill of lading, the shipowner is deemed to be the carrier, provided that (a) he has full control over the vessel and has not assigned control to the charterer (eg, by authorising the charterer to employ the master and the crew) or (b) the shipper or the legal holder of the bill of lading, acting in good faith, is not aware of an agreement transferring full control on to the charterer (PMFIC 488/1988). Time or voyage charterer Where the master signs bills of lading as the carrier s servant, then the shipowner will be identified as carrier, unless it can be proved that the master acted for the charterers and the parties suing under the bill of lading were aware of this (PAC 750/1992) as followed and approved by Thessaloniki Single Member First Instance Court no. 9025/1996. Factual matrix As mentioned above, the identity of the carrier is a matter of fact. The PAC has made the following factual decisions: A bill of lading issued on the shipping company s letterhead will be prima facie factual evidence that the shipping company agreed to carry the goods as a carrier (PAC 718/1988). Even if issued on the shipping company s letterhead, a bill of lading signed by the vessel s agent with the remark for the master as agent only, will be evidence that the shipowner is the party which has agreed to carry the goods (and is therefore deemed to be the carrier) and not the shipping company which does not own the vessel (PAC 1156/1991). A bill of lading issued on shipping company s letterhead of a company which did not own the vessel, and to whom freight has been paid is evidence that the shipping company acted as a carrier and not as a representative of the shipowner (PAC 256/1997). EUROPEAN LAWYER REFERENCE SERIES 243

87 Greece In general, the factual matrix relating to the conclusion of the contract of carriage of the goods will be taken into account by the court to establish the identity of the contractual carrier. 1 Demise clauses/identity of carrier clauses Demise/identity of carrier clauses are invalid if contradictory to the statements on the face of the bill of lading and/or the signature of the master or the agent acting on his behalf. An identity of the carrier or demise clause, which seeks to identify the shipowner of the vessel as the only carrier and party responsible to the shipper for the carriage of the goods, and excludes the company (liner, manager or agent) which issued the bill of lading, is invalid. Such clauses have been found to contain exclusions from the contractual liability of the carrier towards the shipper/cargo owner, contrary to Article 3 paragraph 8 of the Hague Visby Rules (HVR) (PAC 256/1997). The court will again review the full factual matrix when examining the validity of demise/identity of carrier clauses, including the statements made on the face of the bill of lading and/or the signature by or on behalf of the master. Therefore under judgment PAC 256/1997, when examining the validity of such a clause, the Court also bore in mind (a) that the bill of lading was issued in the letterhead of a liner company; and (b) that the liner company collected the freight; and (c) that the bill of lading was issued by its representative on the master s account Who is entitled to sue for loss or damage arising out of the carrier s alleged default? In particular, by what means, if at all, are rights under the contract of carriage transferred? General principle/exclusions In case of cargo lost or damaged during carriage, in principle, the party entitled to file a claim in its own name is the shipper who entered into a contract with the carrier. However, there are exceptions to this general principle. For example: If the original bill of lading has been issued to the order of the consignee (or has been endorsed by the shipper to the consignee) and the consignee is the holder of the original bill of lading, the consignee will be entitled to file a claim in its own name. The same applies for other legal holders of the bill of lading (for example other parties which bought the goods from the consignee), provided that they can establish their rights as legal holders of the bill of lading with an unbroken chain of lawful endorsements (or assignments see below). If an insurer of the cargo compensates the legal holder of the bill of lading for damages sustained from lost/damaged cargo, the insurer is 1 Under PAC 77/2008. This judgment relates to manager s liability for the payment of a commission to a chartering broker. The PAC ruled that the manager has personal liability when he enters into a contract without expressly stating that he acts on behalf of the shipowner or when from the circumstances surrounding the contract it cannot be reasonably assumed that he enters into the contract on the shipowner s behalf. 244 EUROPEAN LAWYER REFERENCE SERIES

88 Greece subrogated in the rights of the assured/holder of the bill of lading and is entitled to file a claim in its own name against the carrier (Article 279 of the Code of Private Maritime Law ( CPML ) and Thessaloniki Court of Appeal no. 553/2008). The cargo s pledgee and/or the assignee of the consignee s rights have title to sue the carrier, provided they are legal holders of the bill of lading (PAC 142/2012, PMFIC 3312/2011 and PMFIC 3365/2006). A shipper/charterer is entitled to sue the carrier for damages or losses to the cargo if (a) it is the legal holder of the bill of lading or (b) has endorsed the bill of lading to the consignee or another third party but maintained the risk of carriage (for example in a CIF sale). On that basis, the shipper/charterer who has compensated the consignee/legal holder of the bill of lading for the relevant loss or damage and has become subrogated to the rights of the legal holder of the bill of lading will have title to sue the carrier (PAC 186/2006 and PAC 386/1999). See Articles of CPML, Article 3 HVR, PMFIC 3365/2006 and PAC 738/2009, 186/2006 as confirmed by judgments PAC 142/2012 and PMFIC 3312/2011. No title to sue The following parties have no title to sue: The purchaser of the cargo if not an assignee/consignee or endorsee of the bill of lading (PAC 201/2005). A seller who has the risk of transport but is not a shipper or charterer. The mere fact that the seller has the risk of transport does not give it the right to sue the carrier if it is not also a legal holder of the Bill of Lading (see Thessaloniki Court of Appeal 553/2008, PAC 186/2006 and PAC 386/1999). Transfer of rights under a contract of carriage Rights under a contract of carriage are transferred as follows: Straight bills of lading: by assignment and delivery of the bill of lading (PMFIC 3365/2006, PAC 186/2006, PAC 407/2007, PAC 786/2003 and Kavala Single Member First Instance Court 440/2011). Negotiable bills of lading: by endorsement and delivery of the bill of lading (PAC 407/2007, PAC 201/2005 and Kavala Single Member First Instance Court 440/2011). Charterparties: by assignment (if permitted under the charterparty), or by issuance of the bill of lading to the order of the charterer (usually when the charterer is also the cargo owner). To date, there have been no published court decisions on contracts of carriage under a charterparty without a bill of lading. In any event, under Greek law, the rights of a charterer under a charterparty can be assigned to a third party if this is not prohibited under the charterparty. Charterparty terms A reference in the bill of lading to the terms of the charterparty is binding on the receiver, (PAC 638/1979, Kamvysis Private Maritime Law, page EUROPEAN LAWYER REFERENCE SERIES 245

89 Greece 473) provided that (i) such terms are fitting to the relations between the carrier and the receiver; and (ii) reference is made in the bill of lading to specific terms of the charterparty and not to generally all the terms of the charterparty (Supreme Court 1436/1998, PAC 944/2007 and PMFIC 2142/1981). There is an exception to this general legal principle: Congenbill bills of lading are deemed to automatically incorporate all terms of the charterparty (PAC 25/1998 and PMFIC 3312/2011). The lawful holder of the bill of lading becomes the owner of the goods, but remains a third party to the contract of carriage and cannot demand performance from the carrier, only compensation in case of loss/damage (PMFIC 1096/1978 and Piraeus Single Member First Instance Court (hereinafter PSFIC) 12/1995). When the consignee takes delivery of the cargo, he is jointly liable with the charterer/shipper to pay the freight/hire and any other charges (such as demurrage) which were payable under the bill of lading (Article 153 CPML). 1.3 Liability regimes Which cargo convention applies Hague Rules/Hague Visby Rules/ Hamburg Rules? If such convention does not apply, what, in summary, is the legal regime? The Hague Visby Rules are applicable as mandatory provisions of Greek law since 1993 (Law 2107/1992) Have the Rotterdam Rules been ratified? Greece is signatory to the Rotterdam Rules (in 2009) but has not ratified the convention Do the Hague/Hague Visby Rules apply to straight bills of lading? There are contradictory decisions on the application of the HVR to straight bills of lading, namely bills of lading issued to a specific consignee (compare (i) PAC 944/2007 and 97/2004 (where it was held that the HVR apply to carriage between the ports of two different countries in both cases, ie, when a straight and a negotiable bill of lading have been issued) with (ii) PAC 240/2006 and 300/2004 (where it was held that the HVR apply to carriage between ports of two different countries only when a negotiable bill of lading has been issued) Are any such rules compulsorily applicable to shipments either from your jurisdiction or to it (or both)? The HVR have compulsory application to: international carriage by sea to or from Greek ports under a bill of lading or other document of title (incorporating the bill of lading holder s right so not a seaway bill, car ticket on ferry, or other transport receipts) (PAC 97/2004); local carriage by sea between Greek ports whether a bill of lading is issued or not (Article 2(1) Law 2107/1992; PAC 194/2009). In theory, the HVR 246 EUROPEAN LAWYER REFERENCE SERIES

90 Greece apply to all transportation between Greek ports, irrespectively of whether a bill of lading (negotiable or straight) has been issued (PAC 162/2004). However, in cases of carriage of goods between Greek ports which are not to be transferred to third parties (eg, transportation of vehicles or of passenger luggage) it is unclear whether the CPML or the HVR apply. There are contradictory decisions (compare PAC 1206/2005, ruling that the provisions of CPML apply, to PAC 543/2003 and 738/2009, ruling that the provisions of the HVR apply). In cases which fall outside the ambit of the HVR, Articles CPML will apply (with provisions similar to the Hague Rules) whereby: The carrier is obliged to exercise due diligence with respect to loading/ unloading, stowage, carriage, guarding and maintaining of the cargo; Article 135 CPML provides that the carrier is liable to cargo interests for any and all damages arising from a defect of the ship in relation to its suitability to carry out a voyage or properly care for and maintain the cargo, unless the defect is a latent one which was not detectable by the owner even through the exercise of due diligence. The carrier s duty of care is non-delegable. The carrier is therefore liable for damages caused by the negligence of its employees and in particular of the ship s master and crew, as if it was its own negligence. If, however, the damages were incurred due to an error in navigation, the carrier is liable only for its own negligence (Article 138 CPML) The carrier is liable to compensate cargo for loss/damage calculated on the value of goods of same type and quality at the port of destination at time of discharge (Article 139 CPML) but with some exceptions: (i) loss/damage due to force majeure or the negligence of a third party for which the carrier is not liable, for example for acts of the stevedores of the port administration if by law the carrier is obliged to use those stevedores and does not have the freedom of choice (see Thessaloniki Court of Appeal 1582/1997); and (ii) it is proved that the carrier, its employees and/or subcontractors exercised due diligence in the performance of their obligations (Articles 135 and 138 CPML (PAC 738/2009 and PAC 931/1993)). 1.4 Lien rights To what extent will a lien on cargo be recognised? Specifically: Will liens arising out of obligations under the bill of lading contract be enforceable as against the receiver for, eg, freight, deadfreight, demurrage, general average and any shipper s liabilities in respect of the cargo? The right of lien can apply to freight, sub-freight, dead-freight, demurrage ( freight and other supplies ) payable by cargo under the bill of lading or the charterparty (PSFIC 1084/1979; Article 153 CPML). There is no right of lien over cargo when freight is pre-paid under the bill of lading whether in fact paid or not (Kalamata Single Member Court of First Instance 93/1978; PSFIC 747/1990, 1084/1979; PSFIC 12/1995). The carrier has no automatic right by law to lien under a bill of lading contract. The carrier does not therefore have a right to lien cargo for non- EUROPEAN LAWYER REFERENCE SERIES 247

91 Greece payment of freight (nor demurrage, dead freight, etc). The carrier can however apply to court for: (a) sequestration of the cargo until the freight is paid (Article 152 CPML); and (b) to sell the cargo in case of perishable cargoes but only with court permission (PAC 944/2007). In light of (b) above, clauses under the bill of lading which provide the carrier with a right to lien are interpreted as entitling carriers to apply for sequestration (PSFIC 7603/2002), to withhold the cargo (PSFIC 2097/1991) and to compel storage of the cargo off the vessel (PMFIC 1838/1979, PSFIC 7603/2002, PSFIC 2299/1996, Athens Single Member First Instance Court 9949/1991 and PSFIC 738/1986). In case of non-payment of freight/deadfreight/demurrage by the receiver (not the charterer) sequestration will only be ordered if provided for explicitly in the bill of lading or if the lien clause under the charterparty is specifically incorporated into the bill of lading (PSFIC 7603/2002). Parties to a charterparty can however contractually agree to the carrier s right to lien the cargo for non-payment of freight, deadfreight, demurrage, etc (PSFIC 2097/1991): Under Article 152 CPML the carrier is not entitled to withhold delivery of the cargo to its receiver on the ground that the freight (or any other charges which are payable to him by law or under the contract of carriage, such as demurrage) has not been paid. He is however entitled to request permission from the court to deliver the cargo to a trustee, who will take custody of the cargo until all relevant disputes between the interested parties are resolved. NB: if the cargo has been delivered to a trustee (for example after the procedure of Article 152 CPML has been followed) only the trustee (and not the carrier) is entitled to an order for sale of the cargo on the grounds that it is perishable and/or if its maintenance expenses are disproportionally high (PSFIC 1777/1994). However, Article 152 CPML is not compulsorily applicable and the Greek courts have ruled that the parties are entitled to agree otherwise, and more specifically, if a lien clause is incorporated in the bill of lading under English law (depending on the precise wording of the clause) the carrier is entitled to refuse the delivery of the cargo to the receiver until the freight and all other charges of the carriage have been paid (PSFIC 2097/1991). Carriers cannot exercise a lien against the receiver for general average or in respect of any of the shipper s liabilities (if not related to freight and other supplies ) unless expressly stated under the bill of lading (see also I. Korotzis, Maritime Law (2005) Vol. II, 2005, page ) Can the owner lien cargo for time charter hire? If so, is this limited to hire payable by the cargo owners? Owners are allowed to make an application to sequester the cargo for unpaid time charter hire until such time it is paid (Article 152 CPML). No other form of lien is allowed unless expressly stated in the bill of lading or charterparty, provided that the contents of the lien clause are valid 248 EUROPEAN LAWYER REFERENCE SERIES

92 Greece under the applicable law. In case of non-payment of hire, the sequestration of the cargo belonging to the cargo owner (not the charterer) may only be ordered in respect of unpaid hire if such a right is expressly set out in the bill of lading or a charterparty clause incorporated into the bill of lading (PSFIC 7603/2002, 1084/1979 and 2142/1981) Is it necessary for the owners to register its right to lien sub-freights as a charge against a charterer incorporated in your jurisdiction for that lien to be recognised in the event of the charterer s insolvency? There is no legal procedure for the registration of a carrier s lien against a charterer (eg, right to lien sub-freights) as a charge for recognition abroad in the event of charterers insolvency. 2. COLLISIONS 2.1 Is the 1910 Collision Convention in force? Greece is a contracting party to the 1910 International Convention for the Unification of Certain Rules of Law related to Collision between Vessels ( Collision Convention ) which was ratified without reservations pursuant to Greek law ΓΩΠΣΤ/1911 and which remains in force. The Collision Convention forms the basis of the relevant domestic provisions regarding collision liability contained in the Greek Code of Private Maritime Law (section 12 of CPML Articles ), as enacted by Greek law 2816/ To what extent are the Collision Regulations used to determine liability? Greece has enacted the 1972 regulations for the Prevention of Collisions at Sea as amended ( Collision Regulations ) pursuant to Legislative Decree 93/1974 which remain in force as amended by Legislative Decree 635/1977, and Presidential Decrees 233/1981, 116/1989, 84/1991, 11/1996 and 171/2004. In determining and attributing liability, the Greek Courts will consider two main elements: namely (a) the compliance of the master and crew of each ship with the requirements of the Collision Regulations so as to determine whether there has been a breach thereof and (b) whether the identified breach is a proximate cause of the collision. Once a breach (or breaches) of the regulations and causation have been established the court will proceed to the apportionment of liability between the ships involved in a collision. If the collision is purely accidental or caused by force majeure the loss lies where it falls (Article 235 CPML). If the court cannot come to a reasonable conclusion on apportionment of liability the ships will be held liable in equal shares (Article 236 CPML). The court will apply the same apportionment of liability when dealing with damages to the ships themselves, claims from cargo interests and passengers and other property damage. The two ships will be jointly and severably liable for personal injury and death with the right of the paying party to counter-sue for damages (Article 237 CPML). EUROPEAN LAWYER REFERENCE SERIES 249

93 Greece 2.3 On what grounds will jurisdiction be founded what essentially is the geographical reach? The circumstances giving rise to the Greek court s jurisdiction over a collision claim are set out in Article 242 of CPML which provides that the Greek courts will assume jurisdiction over collision cases where (a) the defendant resides in Greece; (b) one of the colliding ships is registered in Greece; (c) the collision occurs within Greek territorial waters; and/or (d) one of the colliding ships has been arrested in Greece, even where the arrest is lifted before any collision claim is lodged with the court. Although the provisions of section 12 of the CPML refer to the liability of a ship, actions in rem are not recognised in Greece and any relevant suit can be brought only in personam, ie, against the registered owner of the vessel or the person responsible. Pursuant to Article 289 of CPML collision claims are subject to a one-year time bar, starting from the end of the year during which the collision took place. 2.4 Can a party claim for pure economic loss in the event of a collision? Damages for pure economic loss, including losses of profits, as a result of the interruption/delay in the vessel s employment as a result of a collision can be claimed under Greek law. In order to succeed, a claimant will need to prove that the profits claimed would have been earned in the ordinary course of business had the collision not occurred, or as a result of specific arrangements in place for the vessel s future employment (Court of Appeal of Piraeus 925/2007; Multi Member Court of First Instance of Piraeus 5803/2008). 3. SALVAGE 3.1 Has your country enacted any salvage conventions? If so, which one? Greek legislation contains three instruments that regulate the legal relationship created by salvage by sea. These are, in chronological order: (1) Assistance and Salvage Convention of Brussels 1910 which was ratified under national law; (2) the provisions of the 13th title of CPML in respect of requirements for salvage by sea ; and (3) the London International Convention on Salvage of 1989 (the 1989 Convention ), with two interpretative declarations which were ratified in Greece through Law 2391/1996. The 1989 Convention has been ratified into Greek law pursuant to Law 2391/1996. Supplementary to this legal instrument, Articles 251, 252, 254 and 255 of the CPML have been enforced pursuant to Article 1 paragraph 2 of the 1989 Convention. All provisions of the Convention are currently in force as no reservations have been made. In order to understand the purpose behind the 1989 Convention, one must first examine the definition of salvage. Salvage is any act or activity undertaken to assist a vessel or any other property in danger in navigable or other waters. This definition falls within the general provisions of Article 1 of the 1989 Convention. 250 EUROPEAN LAWYER REFERENCE SERIES

94 Greece The Piraeus Court of Appeal (Case nos. 830/2008 and 24/2011) has made a distinction between the concept of salvage operations and simple towage. Salvage requires the existence of a real danger of loss and/or damage to the vessel. On the other hand, when the vessel is unable to move due to an engine problem the relevant operation to restore its mobility qualifies as towage. 3.2 In any event, what are the principal rules for obtaining noncontractual salvage? In the event that a salvage contract is signed, will this clearly displace any general law on salvage liabilities? Duties of the parties The salvor has a duty to carry out salvage operations with due care and to use such due care in order to prevent or minimise damage to the environment and to seek assistance and accept intervention of other salvors when either circumstance reasonably requires or where they are requested to do so by the master of the vessel or property in danger. The owner and master of the vessel in turn have a duty to cooperate fully with the salvor during the course of the salvage operations. They must exercise due care to prevent or minimise damage to the environment and accept redelivery of the vessel when the salvor has brought the property to a place of safety. The award If the salvors are successful in providing a useful result, they are then entitled to an award (Article 12 of the 1989 Convention). The Piraeus Court of Appeal (Case no. 24/2011) found that the following conditions needed to be present in order to found a right for an award: an act of assisting a vessel which is in navigable waters or any waters whatsoever; danger of loss or damage; and a useful result arising out of such salvage. In terms of the risk or danger of loss or damage, the Court found that this must be real. Even though the danger need not be direct, it must be foreseeable on the balance of probabilities. This has been confirmed in Piraeus Court of Appeal Case nos. 906/2009 and 961/2000. In the former case, the Court found that there was in fact no danger or potential risk arising in the circumstances and therefore rejected the need for a third-party intervention and ultimately the right to an award. The risk of danger of loss or damage was also examined in the case of Piraeus Court of Appeal no. 73/2008, whereby it was determined that if a competent, capable and sensible master judges, on a appreciation of the full facts, that it is necessary for a third party to intervene, then there is a real danger within the meaning of the 1989 Convention. This approach was also followed in the above-mentioned Piraeus Court of Appeal Case no. 906/2009. In the 24/2011 case, it was highlighted that the award to the salvors may in no event exceed the value of the salved property. The only exception to this is when the salvage services were provided for the purpose of minimising EUROPEAN LAWYER REFERENCE SERIES 251

95 Greece or avoiding damage to the environment pursuant to Article 14 of the 1989 Convention. If, however, the salvors are negligent and as a result fail to present or minimise damage to the environment, they may be deprived of whole or part of any special compensation. The purpose of the award is to encourage salvage operations and various factors play a role in determining the amount of remuneration including but not limited to the value of the salved vessel and cargo, the nature and degree of the danger, skill and efforts of the salvors, availability of assistance and the risk of liability and other risks run by the salvors. These factors have been outlined in various Greek cases, including but not limited to Piraeus Court of Appeal Decision nos. 4/2008, 322/2007, 953/2005, 1172/2005 and 696/2000. The Court approaches the determination of the award as a balancing act and does so on a case-by-case basis. Payment of the award is made by the vessel and other property interests in proportion to their respective salved values. Notably, it is most often the case that the owner of a vessel ends up having to pay the salvor s award in full and then needs to claim back the respective proportions from the various interests (Article 13 of the 1989 Convention). Where salvage assistance has been rendered by a ship, the salvage remuneration is distributed as follows: (a) 50 per cent to the shipowner; (b) 25 per cent to the master; and (c) 25 per cent to the crew. Under Greek law the parties are not allowed to contract out of this provision. This does not apply to ships that are operated for the purpose of providing assistance at sea or salvage in accordance with Article 251 of the CPML. For the purposes of this article, the master represents the members of the crew in so far as they are not represented. The crew however, does have a direct claim against the salved properties for payment of remuneration; this is a right arising under Article 255 of the CPML. Life salvage does not attract any remuneration. A salvor of human life is however entitled to a reasonable share of the remuneration paid to the salvor of the vessel or property. This is set out in Article 16 of the 1989 Convention. Moreover, both Article 19 of the 1989 Convention and Article 250 of CPML make it clear that a salvor shall not be entitled to remuneration from the salved interests under the 1989 Convention unless the services rendered exceed what is reasonably required as due performance of a contract entered into before the said danger arose. A salvor shall also not be entitled to an award if services are rendered notwithstanding the express and reasonable prohibition of the master or owner of the endangered vessel (Article 19 of the 1989 Convention). The master and crew of the salved vessel are not entitled to any remuneration under Greek private shipping law pursuant to Article 249 of CMPL. Contents of a salvage contract There are no express provisions in the 1989 Convention or CMPL with regard to the content of a salvage contract. Any contract entered into by the parties must reflect the general provisions of the Greek Civil Code pertaining to 252 EUROPEAN LAWYER REFERENCE SERIES

96 Greece contracts, bilateral contracts and contracts for the performance of work and subcontracting. Any contract entered into under undue influence or under the influence of danger may at the request of any person having a legitimate interest be annulled or modified by an application to the court. In particular, if the contents of the contract are excessive or disproportionate to the services rendered. The CPML follows this approach by virtue of Article What is the limitation period for enforcing salvage claims in your jurisdiction? Salvage claims are time barred if proceedings are not initiated within two years from the day on which the salvage operations were terminated pursuant to Article 23 of the 1989 Convention. 3.4 To what extent can the salvor enforce its lien prior to the redelivery of ship/cargo? The salvor has a right to exercise a lien on the ship or cargo of the salved ship for any expenses and remuneration arising out of the salvage operations/ assistance at sea prior to delivery of the vessel and her cargo. This lien is the third in the list of priorities of maritime liens pursuant to Article 205 of the CPML. 4. GENERAL AVERAGE ( GA ) 4.1 Will any general average claim (whether under the contract, generally or GA securities) necessarily follow the contractual provisions in relation to general average, in particular, the chosen version of the York Antwerp Rules ( YAR )? General average is regulated in Articles of the CPML, which was based on the older version of the YAR Claims for general average contribution are governed by the 11th Title of the CPML (Articles ) however the parties are free to contract out of the CPML and agree to the application of an older or a more recent version of the YAR either before or after the incident giving rise to general average. 4.2 Time bars Will general average claims under the contract of carriage be governed by any contractual time bar in particular, any which might be set out in the YAR (eg, YAR 2004)? Under Articles 275 and 279 of the Greek Civil Code, any agreements amending prescription and/or time bar provided by Greek legislation (assuming it is applicable) are null and void (Supreme Court 202/1971). Therefore, contractual time bars will not apply to general average claims under Greek law. Given that the YAR do not constitute legislation, but are considered business terms which are incorporated in contracts of carriage by agreement, the time bar provisions under Greek law applicable to general average claims will prevail over those of YAR. EUROPEAN LAWYER REFERENCE SERIES 253

97 Greece In the event that claims should be pursued under general average securities in your jurisdiction, what is the applicable time bar for such claims? Will this be affected by the provision of YAR 2004 Rule XXIII if 2004 YAR is specified in the relevant contract? Under Articles 289(e) and 291 of the CPML, general average claims are time barred within one year starting from the end of the year within which the general average incident occurred and the time allowed to commence proceedings cannot be extended by agreement To what extent is any general average adjustment binding? The general average adjustment is considered to be expert evidence aiming to assist the court to reach its decision and does not have any binding effect on the court s ruling (Multi-Member Court of First Instance of Piraeus 419/1986 and 6035/1977; Court of Appeal pf Aegean 114/1987). 5. LIMITATION 5.1 What is the tonnage limitation regime in respect of claims against the vessel? The 1976 Convention on Limitation of Liability for Maritime Claims of London ( LLMC ) and the 1996 Protocol to the LLMC has been ratified by Greece by virtue of Law 1923/1991 and Law 3743/2009, respectively. Greece did not include any of the reservations in relation to Article 15 paragraphs 1(b), 2 and 3 of the LLMC and therefore this convention applies irrespective of the principal place of business and/or nationality of the party seeking limitation of liability. Furthermore, the LLMC is applicable irrespective of the size of the vessels involved, or whether it is intended for the navigation of inland waterways. Moreover, Greece has not included within national legislation a provision such as the one envisaged by Article 10 paragraph 1 of the LLMC. Therefore, limitation of liability is available whether or not the person who seeks it has set up a limitation fund. Additionally, Greece has not passed any legislation regarding the distribution of limitation funds. Certain commentators support the view that Presidential Decree 666/1982 (referring to the Civil Liability Convention ( CLC ) and pollution funds) applies by analogy, whereas others firmly suggest that the respective provisions of the PCML are better suited. There are precedents supporting this latter opinion, such as, the Single Member Court of First Instance of Piraeus 3505/2003, Court of Appeal of Piraeus 382/2005 and 149/2005. Limitation of liability (and therefore the constitution of the respective fund) may take place at any stage of the legal proceedings. Recent case law (Court of Appeal of Piraeus 37/2012, Supreme Court 1189/2007 and Court of Appeal of Piraeus 382/2005) agrees with the view that once the shipowner has constituted a limitation fund, then the creditors bringing claims against the fund cannot at the same time do so against any other party liable for the same claims. The above is true provided that any such party has the right to limit its liability pursuant to the LLMC. 254 EUROPEAN LAWYER REFERENCE SERIES

98 Greece 5.2 Which parties can seek to limit? The following parties may seek to limit: shipowners the owner, charterer, beneficial owner and the manager of a seagoing ship; salvors any person rendering services in direct connection with salvage operations as they are defined in Article 2 paragraph 1(d), (e) and (f) of the LLMC; any persons connected under an employment agreement with a shipowner or a salvor (such as crew members) according to commentators the right to limit should also be available to independent contractors (stevedores, agents, wharfmen, etc) used by a shipowner, salvor, etc, for whose act, neglect or default the latter may be responsible; the liability insurer of claims which are subject to limitation in accordance with the LLMC is entitled to the benefits thereof to the same extent as the insured person. 5.3 What is the test for breaking the limitation? According to the LLMC, limitation invoked by any of the persons mentioned in Article 1 may be broken: If it is proved that the loss resulted from their personal act or omission, If committed with the intent to cause such loss, or if they were reckless and had knowledge that such loss would probably occur. The concept of recklessness under Greek law is described as gross negligence (Single Member Court of First Instance of Piraeus 3424/1997). Where the person seeking limitation of liability is a legal entity, the above acts or omissions, breaking the limits will be attributed to those representing the legal entity (Single Member Court of First Instance of Piraeus 3505/2003, Court of Appeal of Piraeus 149/2005). The burden of proof for the above scenarios of breaking limitation lies with the claimant. 5.4 To what degree do any limitation provisions found jurisdiction for the substantive claim? If the party seeking limitation of liability establishes a limitation fund in Greece, the Greek Courts will not have jurisdiction over claims against the fund, pursuant to Article 13 of the LLMC. Consequently, anyone raising a claim against the fund shall be barred from exercising such a claim against any other assets of the defendants. In any such cases, all claims should be submitted before the administrator of the limitation fund, who will be appointed by the court. When limitation of liability is being invoked without the establishment of a limitation fund (ie, by way of an objection in pending proceedings), then the usual rules as to founding jurisdiction will apply, mostly in favour of the courts of the country where the incident giving a right to limit took place. In relation to disputes between parties who are domiciled in EU states pursuant to Article 9 of Brussels I (Regulation (EU) No. 1215/2012) if a Member State has jurisdiction over the incident giving the right to limit then the courts of such State shall also have jurisdiction over limitation claims. EUROPEAN LAWYER REFERENCE SERIES 255

99 Greece 5.5 Which package limitation figure applies? As mentioned above, Greece has ratified the 1996 Protocol regarding the LLMC. Therefore, liability may be limited as follows: in respect of claims for loss of life or personal injury; (i) two million Special Drawing Rights ( SDR ) for a ship with a gross registered tonnage not exceeding 2,000 tonnes; (ii) for a ship with a tonnage in excess thereof, the following amounts in addition to that mentioned above: for each tonne from 2,000 to 30,000 tonnes, 800 SDR; for each tonne from 30,001 to 70,000 tonnes, 600 SDR; and for each tonne in excess of 70,000, 400 SDR; in respect to any other claims: (i) one million SDR for a ship with a gross registered tonnage not exceeding 2,000 tonnes, (ii) for a ship with a tonnage in excess thereof, the following amounts in addition to that mentioned above: for each tonne from 2,000 to 30,000 tonnes, 400 SDR; for each tonne from 30,001 to 70,000 tonnes, 300 SDR; and for each tonne in excess of 70,000, 200 SDR. Amendments to 1996 Protocol (adoption: 19 April 2012; entry into force: 8 June 2015) The new limits are expected to enter into force 36 months from the date of notification of the adoption, so in 2015, under the tacit acceptance procedure. New limits: under the amendments to the 1996 Protocol, the limits are raised as follows: the limit of liability for claims for loss of life or personal injury on ships not exceeding 2,000 gross tonnage is 3.02 million SDR (up from 2 million SDR). For larger ships, the following additional amounts are used in calculating the limitation amount: for each tonne from 2,001 to 30,000 tonnes, 1,208 SDR (up from 800 SDR); for each tonne from 30,001 to 70,000 tonnes, 906 SDR (up from 600 SDR); for each tonne in excess of 70,000, 604 SDR (up from 400 SDR). The limit of liability for property claims for ships not exceeding 2,000 gross tonnage is 1.51 million SDR (up from 1 million SDR). For larger ships, the following additional amounts are used in calculating the limitation amount: for each tonne from 2,001 to 30,000 tonnes, 604 SDR (up from 400 SDR); for each tonne from 30,001 to 70,000 tonnes, 453 SDR (up from 300 SDR; for each tonne in excess of 70,000 tonnes, 302 SDR (up from 200 SDR). It should be noted that Greece is a member of the International Monetary Fund ( IMF ) and thus the SDR is given the euro value, according to the date of establishment of the limitation fund, aligned with the method applied by 256 EUROPEAN LAWYER REFERENCE SERIES

100 Greece the IMF on that date. 6. POLLUTION AND THE ENVIRONMENT 6.1 Which Civil Liability Convention ( CLC ) regime applies? The International Convention on Civil Liability for Oil Pollution Damage 1969 ( CLC 1969 ), which was ratified in Greece by Law 314/1976, was adopted to ensure that adequate compensation is available where oil pollution damage is caused by maritime casualties involving laden tankers. The convention introduces strict liability for shipowners: where the shipowner is deemed guilty of fault for an incident of oil pollution, the CLC 1969 does not cap liability. When the shipowner is, however, not at fault, the convention caps liability in accordance with the ship s gross tonnage. The CLC 1969 was amended by Protocol 1976, ratified by Presidential Decree 81/1989 and further amended by Protocol 1992, ratified by Presidential Decree 197/1995. On 24 June 1997, Greece announced that it would cease to be a party to the CLC This was implemented by all parties to the 1992 Protocol, due to a mechanism for compulsory denunciation of the old regime thereby replacing the CLC 1969 with the 1992 Civil Liability Convention ( CLC 1992 ). The CLC 1992 was further amended by the IMO s Legal Committee s Resolution No. 1 (82)/ , which was ratified by Presidential Decree 286/2002. Under the 2000 amendments the compensation limits were raised by 50 per cent compared to the limits set in the 1992 Protocol. Liability of a shipowner was capped between 4.51 million SDR for a ship with 5,000 gross tonnage to million SDR for ships over 140,000 gross tonnage. The procedure for the establishment and distribution of the limitation fund is governed by Presidential Decree 666/1982 as amended by Presidential Decree 494/1989. Greece has also ratified the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971 (the 1971 Fund ) by Law 1638/1986. This is a supplementary convention to the CLC 1969 with the dual purpose of, on the one hand, relieving the shipowner of the burden by the requirements of the new convention and, on the other hand, providing additional compensation to the victims of pollution damage in cases where compensation under the CLC 1969 was either inadequate or unobtainable. In line with the Protocols to the CLC 1969, the Protocols of 1976 and 1992 to the 1971 Fund were ratified by Presidential Decree 270/1995. Their main purpose was to modify the entry into force requirements and increase compensation amounts. Under the 1992 Protocol to the 1971 Fund (referred to as the 1992 Fund), the maximum amount of compensation payable from the Fund for a single incident, including the limit established under the 1992 Protocol to the CLC 1969, is 135 million SDR. The 1992 Fund was further amended by the Protocol of 2000, which was ratified by Greek Law 3482/2006 and whose purpose was to terminate the 1971 Fund, in favour of the 1992 Fund. The latest amendments were made by the Protocol of 2003, which was EUROPEAN LAWYER REFERENCE SERIES 257

101 Greece ratified by Law 3482/2006. This Protocol established an International Oil Pollution Compensation Supplementary Fund in the aim of supplementing the compensation available under the CLC 1992 and the 1992 Fund with an additional, third tier of compensation: the total amount of compensation payable for any one incident will be limited to a combined total of 750 million SDR including the amount of compensation paid under the existing CLC/Fund. The International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 was ratified by Law 3393/2005, as amended by Law 4160/2013 (Article 16). It was adopted to ensure that adequate, prompt, and effective compensation is available to persons who suffer damage caused by spills of oil, when carried as fuel in ships bunkers. Greece also signed the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances By Sea 1996 ( HNS ) and its 2010 Protocol. The HNS was adopted in 1996 to make it possible for up to 250 million SDR to be paid out in compensation to victims of accidents involving HNS, such as chemicals. However, neither the HNS nor its Protocol has entered into force yet. Apart from the aforementioned International Conventions, two voluntary compensation arrangements were introduced in 2006 on behalf of the majority of ship owners insured through the International Group of P&I Clubs, in order to maintain an equitable balance between the financial burdens of the ship owners and cargo owners. These two arrangements are known as the Small Tanker Oil Pollution Indemnifications Agreement ( STOPIA ) and the Tanker Oil Pollution Indemnification Agreement ( TOPIA ). 7. SECURITY AND ARREST 7.1 Is your jurisdiction a party to any particular arrest convention? If so, which one? Greece has ratified the International Convention Relating to the Arrest of Sea Going Ships 1952 (the 1952 Convention ) pursuant to Legislative Decree 4570/1966. There has been no additional implementation of rules enacted. In relation to arrests of vessels flying the flags of non-signatory states to the 1952 Convention the wider provisions of Articles of the CCP will apply. 7.2 Which claims afford a maritime lien in your jurisdiction? Greece has not ratified the 1926 Arrest Convention on Maritime Liens and Mortgages, although the CPML has been influenced by the provisions thereof. In accordance with Article 205(1) of the CPML, the following maritime liens take priority over a maritime mortgage: court fees and expenses incurred for the common interest of the creditor; dues and charges burdening the ship, guarding and maintenance expenses incurred after the ship s arrival at its last port; master and crew claims arising under their respective employment contracts of employment, seamen s pension fund contributions and certain fines of the seamen s employment office; salvage fees and expenses; and compensation for collision, payable to ships, passengers and cargo. 258 EUROPEAN LAWYER REFERENCE SERIES

102 Greece 7.3 In any event, to what extent does a mortgagee have priority over claims for loss and damage which are not maritime liens? A mortgagee has priority over claims for loss and damage which do not consist of maritime liens. In addition to the above and in respect of preferred mortgages, the following special status exists for Greek vessels registered under the Greek flag under ministerial approval: for vessel s registered before 1982, preferred mortgages have priority over all maritime liens apart from liens under Article 2 of the Liens and Mortgages Convention 1926 ( LMC ); and for those registered after 1982, preferred mortgages have priority over all maritime liens apart from liens under Article 2 of the LMC, insofar as those are recognised by Greek law. 7.4 Is there any suggestion that an arrest claim might lead to the founding of substantive jurisdiction? An arrest can found substantive jurisdiction of the Greek courts to decide on the merits of a case on the basis of the presence of a vessel within the jurisdiction of a Greek court at the time of the hearing and to the extent that this is permitted by the international conventions/instruments that govern jurisdiction within EU Member States such as EU Regulation 44/2001. An arrest cannot found jurisdiction if the vessel is released in exchange for alternative security before the hearing of the arrest petition. 7.5 To what extent can sister/associated ships be arrested? In accordance with the 1952 Convention (Article 3), any ships belonging to the same defendant may be arrested, subject to the limitations set out therein. This is applicable to contracting member states to the Convention, subject always to the provisions of Articles 8 and 9 of the 1952 Convention, alternatively for non-contracting members to the 1952 Convention, Articles of the CCP apply. Although under Greek law two ships are regarded as sister ships if owned beneficially by the same person or body corporate albeit registered under different ownerships, such sister ship arrests will be upheld by the Greek courts only in very limited circumstances. In fact, Greek courts rarely order the arrest of one ship for the debts of the owner of another ship by piercing the corporate veil. Under Greek Law, actions in rem against the vessel are not possible, as a ship per se has no locus standi before the Greek courts. Therefore, any claim against the debtor (natural or legal entity) may only be brought in personam. Claims relating to the ship s operation or arising from a contract or tort, can be brought against the registered owner or other debtors such as the demise charterers, the operators or the ship managers, if it can be proved that they acted as beneficial owners. Further, in accordance with Articles 105 and 106 of the CPML, if it is established that a person who for his own account has the commercial exploitation of a ship belonging to a third party (termed in Greek law as the EUROPEAN LAWYER REFERENCE SERIES 259

103 Greece εφοπλιστής (efoplistis), ie, beneficial owner) that person shall be liable for any debts arising out of such activity and any claim so arising may be exercised against such a person. In relation to claims against a demise charterer the claimant must be able to prove that the demise charterer has effectively been in control of the nautical command of the ship and/or has received the benefit from the commercial exploitation of the vessel. Long-term time charters, which grant charterers certain rights such as to register the ship in a parallel ship registry or to paint the ship s funnel, with the charterers logo, colours and/or trading name, thus reasonably causing a third party to believe that the particular ship is in the ownership of the time charterers, have been found to meet the nautical command and/or commercial exploitation of the ship criterion/test. 7.6 Is it possible to arrest ships for claims arising out of (a) MOAs; (b) ship repair; and (c) ship construction contracts? Maritime claims under the 1952 Convention Greece has adopted the closed list of maritime claims as defined in Article 1.1 of the 1952 Convention and therefore an arrest of a vessel flying the flag of a convention state will be possible in Greece only in relation to the following maritime claims: (a) collisions; (b) loss of life or personal injury; (c) salvage; (d) agreements for the use of a ship; (e) contracts of carriage; (f) loss or damage to property carried on board a ship; (g) general average; (h) bottomry; (i) towage; (j) pilotage; (k) ship supplies; (l) ship construction or repairs; (m) wages of the master and crew; (n) master s disbursements; (o) ownership disputes; (p) disputes between co-owners; and (q) ship mortgages. Arrest of vessels flying the flag of non-contracting states The arrest of a vessel which is not governed by the 1952 Convention is carried out in accordance with the CCP. Accordingly the limitation of claims under Article 1.1 of the 1952 Convention does not apply, and an arrest may be sought for claims of any type and nature. 7.7 To what degree can an arrest be anticipated/prevented by the lodging of security? Greek law does not recognise the concept of a caveat against arrest and a security order cannot be prevented by the lodging of voluntary security with the court. Of course the parties are free to negotiate security arrangements. 7.8 If a vessel can be arrested, by what means can the claim be secured? Specifically: Can an arresting party insist on a cash deposit or a bail bond? See section below Will the court accept a letter of guarantee from a protection and indemnity club? See section below. 260 EUROPEAN LAWYER REFERENCE SERIES

104 Greece Does any guarantee have to be provided by a domestic bank or other acceptable guarantor? It is possible to apply for a ship arrest in Greece out of office hours, during weekends and even national holidays as there is always a judge on duty. The documentary requirements are very straightforward and there is no requirement for the production of a formal power of attorney or original documents for the case to be heard. An arrest may be ordered by a court judgment only, issued following summary proceedings initiated by the filing of the claimant s petition. Once the arrest petition is filed with the court, it is usually accompanied with a request for the issuance of a provisional order, which temporarily prohibits the sailing of the ship until the hearing of the arrest petition. At the hearing, the provisional order can be extended until the issuance of the judgment on the petition. The Greek court will entertain an arrest petition if it is satisfied that the claimant has a prima facie claim and also if there is a situation of urgency and an imminent risk of dissipation of the defendant s assets. The provisional orders as well as the judgments issued on the basis of arrest petitions cannot be appealed. The provisional arrest is valid until the issuance of a judgment on the arrest petition. If the court upholds the arrest, the claimant will have to file and serve the main action on the merits within 30 days from the publication of the judgment otherwise the arrest is lifted. The preliminary order and the final judgment of the court become effective by way of service of an official copy thereof on the defendant and the competent port authorities who enforce the arrest. In accordance with Article 705 of the CCP the court can order the release of the vessel on the condition that a guarantee is lodged. Such guarantee may be in the form of a cash deposit with the Bails and Loans Fund or a guarantee issue by a Greek bank. Usually however, a bank guarantee from a recognised solvent foreign bank or guarantee from a protection and indemnity club can also be accepted provided that the claimant agrees to the form of such security. 7.9 Briefly summarise the further security options: eg, freezing orders, attachment of debts due to the defendant, etc On the basis of a judgment for the conservative arrest receivables may be attached in the hands of third parties (such as hire or freight due to the defendant from a third party). The same procedure is available for the purposes of freezing the defendant s bank accounts or other property including real estate. Provisional freezing orders may also be issued by the Court so as to prevent the dissipation of any assets of the defendant until a final judgment is issued. The procedure is similar to that of ship arrest but there is no restriction as to the type of claims which can become the subject matter of conservative measures against receivables, bank accounts or other property. EUROPEAN LAWYER REFERENCE SERIES 261

105 Greece 8. CONTRACTS OF SALE 8.1 Jurisdiction/proper law In the absence of express provision in a contract of sale, by what means will the proper law of the contract be determined? Where there is no express provision dealing with which law should govern a sale contract this should be determined in accordance with Rome I. With the exception of consumer contracts Rome 1 upholds the freedom of choice of the parties in relation to the law applicable to a contract (Article 3). In the absence of the parties agreement as to the applicable law to a sale contract, then pursuant to Article 4(a) of Rome 1, the applicable law shall be the law of the country where seller has its habitual residence. From 15 January 2015 Greece applies, as domestic law, Regulation (EU) No. 1215/2012 which also upholds the freedom of the parties as to the choice of jurisdiction (Article 25). Pursuant to Regulation (EU) No. 1215/2012, in relation to sale contracts suit may also be brought in the courts of a member state where the goods in question were delivered or should have been delivered (Article 7.1(b)). Greece has ratified the Vienna Convention by way of Greek Law 2532/1997. As a result, the Vienna Convention provisions are deemed applicable when a contract is concluded between two parties that have their registered seat in countries that have ratified the aforementioned Convention. However, parties have the freedom to contract out of it Will a foreign jurisdiction or arbitration clause necessarily be recognised? In the event that proceedings can be commenced before your court notwithstanding such provisions, can such proceedings be challenged? Greece applies: (a) Regulation (EU) No. 1215/2012; (b) the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Article 36 of Law 2735/1999); and c) the Model Law of the United Nations Commission on International Trade Law (UNCITRAL). The Greek Courts will dismiss or stay proceedings on the basis of a valid jurisdiction or arbitration clause appearing in a sale contract (with the possible exception of consumer contracts). Moreover foreign judgments or awards based on valid jurisdiction and arbitration agreements will be generally upheld by the Greek courts In the event that an injunction or order preventing proceedings is obtained in the agreed jurisdiction (whether court or arbitration), will this be recognised by your court? On the grounds of being contrary to the Greek public order/morals anti-suit injunctions are not recognised by Greek courts. 8.2 Arbitration clauses What are the essential elements for the recognition of an arbitration agreement? Greece is a signatory party to UNCITRAL on International Arbitration 262 EUROPEAN LAWYER REFERENCE SERIES

106 Greece by virtue of Law 2735/1999. In Article 1 of Law 2735/1999, the criteria differentiating between international and national arbitration are set out. For the avoidance of any doubt and in order to prevent any future challenges, it is advisable to the contracting parties to determine specific details stipulating the procedure that needs to be followed. Such details, amongst others, are in relation to the place of proceedings, the number of arbitrators and their expertise, the applicable law and the designated timeframes. The Athens Chamber of Commerce and Industry ( ACCI ) and the Hellenic Chamber of Shipping ( HCS ) are the two main arbitral bodies in Greece. Rules regulating the ACCI are provided by the Presidential Decree 31/1979 and rules regulating the HCS are provided by the Royal Decree 447/ Passing of title/property/risk What terms if any are implied by your rules as to the passing of: title (property) to the goods? The basic principles applicable to sale contracts (of both movable and immovable property) are found in the Greek Civil Code ( CC ). The seller has two obligations: (i) to transfer the ownership of the goods; and (ii) to deliver the goods to the buyer risk? However, these two obligations do not always take place simultaneously and as a result there is a grey area as to who bears the risk until the fulfilment of seller s obligations. Article 522 of CC deals with the passing of title and risk and applies both to movable and immovable property. Risk means the incidental damage or deterioration of the goods. By virtue of Article 522 CC, following delivery of the goods, the risk passes to the buyer. In case of the sale of immovable property, risk passes upon completion or registration at the Land Registry if the latter precedes completion. Article 522 CC can be contracted out if the parties explicitly agree otherwise in relation to the transfer of title and risk in their contract. In maritime transactions, seller s obligations are based on commonly used CIF, FOB or CF terms and their variations In relation to the passing of title and risk, do your rules apply even if the underlying contract applies another law? Greek courts will uphold the choice of law of the parties and will consider aspects of the passing of title and risk on the basis of the applicable law which is evaluated by the Greek courts in the form of expert evidence. 8.4 Description and quality Do your rules imply terms on (a) the description of the goods and/or (b) their quality? The description and quality of the goods can be in an oral or written form. It is advisable, however, to incorporate the specific description of the goods EUROPEAN LAWYER REFERENCE SERIES 263

107 Greece into the sale contract in order to avoid subsequent challenges on the grounds of non-conformity. Pursuant to Article 535 CC, goods are different to what a buyer contracted to purchase if: the goods are different to what the seller described; or the goods are different to the sample the seller has presented to the buyer. Minor discrepancies that do not prevent or limit the usage of the goods do not constitute mis-description or valid grounds for non-conformity of goods. Goods do not correspond to the goods the buyer contracted to purchase, when they are not what the buyer reasonably expected, taking into consideration goods of same type and goods as advertised and publicly stated by the seller. By virtue of Article 519 CC, the seller is under the obligation to provide the buyer with all information in relation to the contractual status of the goods and transfer to him all documents of title in his possession, unless otherwise agreed, so as to enable the buyer to subsequently enforce his rights. All documents must be provided in original form. Omission of providing the buyer with adequate information constitutes breach/fraud as Article 914 CC prescribes. 8.5 Performance Delivery: What provisions does your law make as to delivery of the goods (eg, on timing and method of delivery)? In accordance with Article 526 CC, expenses/costs for the delivery of the goods, such as weighting, numbering and sorting costs, fall under the seller s obligations while the buyer shall bear the costs in relation to the receipt of the goods such as the packing costs and examination and control of goods. In the event that goods are shipped to a different place than the place of performance, then buyers shall bear the relevant expenses (Article 524 CC). Under Article 320 CC in the absence of an agreement to the contrary, the goods are considered delivered at the place of the seller s residence Acceptance: When is the buyer deemed to have accepted the goods? In accordance with Article 545 CC (as replaced with Article 1 of Law 3043/2002), if the buyer receives the goods without reservations, in full knowledge of the fault or the lack of conformity with the agreed characteristics, he is deemed to have accepted the goods. Payment: In the absence of express provision, by when must a buyer pay for the goods? The parties are free to decide the method of payment and agree the sale price. However, it should be borne in mind that payment can be monetary or may be settled by other means (such as the exchange of goods). There is no requirement for the payment to be reasonable as long as it is not abusive or contrary to the public order/morals (Articles 178 and 179 CC). Unless otherwise agreed by the parties, payment is due immediately. 264 EUROPEAN LAWYER REFERENCE SERIES

108 Greece 8.6 Other terms Classification of terms Do your rules differentiate between warranties (breach of which only entitles the innocent party to damages) and conditions (breach of which also entitles him to terminate the contract), and if so what is the effect? There is no distinction in the strict sense between warranties and conditions under Greek law. There is a distinction between primary and secondary obligations in various areas of the law of contract. However, the effects of their breach will vary. The parties are generally free to agree the terms that will govern their sale contract and the consequences of their breach (provided that such terms are not abusive or against public policy/morals). The Greek CC will supplement such terms to the extent necessary. Pursuant to Article 540 CC (as modified by Law 3043/2002) in cases of sales of goods where the property sold is materially defective or lacks the agreed quality then the buyer can ask for (1) the repair or replacement of the goods; (2) a reduction of the sale price; or (3) to rescind the contract. Pursuant to Article 387 CC the innocent party proceeding to the rescission of a contract may be also entitled to compensation at the discretion of the court for damages caused by non-performance. Therefore, the parties rights and obligations under a sale contract can be governed by the CC, contractual agreements, standard terms of sale, good faith and customary practice; and all such terms and requirements (express or implied) may impose a number of additional or secondary obligations on the seller (and the buyer, as the case may be). A breach of the main or the additional/secondary/implied obligations by one of the parties can constitute defective/ inappropriate performance of the contract of sale, entitling the other party to restitution, a discount, or in the more serious cases of defects or quality problems, cancellation and damages In English law, we also have the concept of intermediate (or innominate) terms. Breach of such terms may have differing effects depending on the gravity of the consequences of the breach. Do you have a similar concept under your system? There is no concept of intermediate (or innominate) terms under Greek law. The gravity and effect of every contractual breach will be determined on a case-by-case basis Exemption clauses Do your courts recognise exemption (ie, exclusion) clauses, such as force majeure? As per Article 332 CC, any agreement that limits or excludes liability of the seller for intentional acts or gross negligence will be deemed null and void and as a consequence will not be upheld. Greek law recognises the concept of force majeure. In particular pursuant to Article 388 (change of circumstances) if the factual matrix forming the basis EUROPEAN LAWYER REFERENCE SERIES 265

109 Greece of a contract has subsequently changed in an unpredictable and unexpected manner rendering the performance of the contract vexatious and oppressive for one of the contracting parties, the court may order the termination of the contract or the adaptation of the contractual obligations to the extent that these remain unperformed What are the key requirements for relying on an exemption clause? To the extent that there is no conflict with mandatory provisions (as for example the provisions of the HVR) the parties are free to contractually agree exclusions of their liability. However, exclusion clauses which are considered as abusive, vexatious, oppressive and against the principles of good faith and public morals will not be upheld by the Greek courts. 8.7 Remedies What are the seller s remedies where the buyer is in breach of contract? The primary contractual obligations of the buyer under the CC and the Vienna Convention (Articles 53 60) are the obligation for the payment of the contractual price and the obligation of taking delivery of goods. An unpaid seller may on the basis of the buyer s non-performance of its obligation to pay the contractual price, file a claim in accordance with articles 623 and 624 of the Greek CCP, seeking the issuance of a summary judgment compelling the buyer to pay. The unpaid seller may also claim damages; and all types of damages, direct/indirect or losses of profit are deemed recoverable. The rescission of the contract on grounds of nonperformance will not affect a claim for damages by the seller. Under the Vienna Convention interest is due without notice being necessary and shall accrue from the date that payment was due from the buyer What are the buyer s remedies where the seller is in breach of contract? Pursuant to Article 540 CC, in case of a lack of conformity with the description of the goods or defects, the buyer is entitled to claim: a reduction in price; seek the replacement of the goods with goods of the appropriate quality or the repair/rectification of the goods; or rescind the contract and seek the corresponding refund of any payment made. Rescission is not an option when the non-conformity is of minor importance. Where the seller does not perform its main obligations, (such as delivery of goods, transfer of ownership, etc) the buyer will have the same remedies as set out above in respect of the seller. The buyer can require performance by the seller and if the non-performance by the seller constitutes a fundamental breach the buyer may avoid the contract. Damages can also be claimed Are there any general limitations on the remedies available? No punitive or exemplary damages are available under Greek law. 266 EUROPEAN LAWYER REFERENCE SERIES

110 Greece 8.8 Time limit What is the statutory limitation period? Different limitation periods apply to different causes of action. The Greek CC sets the general rule of a 20-year limitation period with numerous exceptions, such as a five-year limitation, applying to most commercial claims: and twoyear and one-year time limits which apply to special contracts. Usually time limitation under Greek law starts from the end of the year in which the cause of action arose. Tort claims are also subject to a five-year time limit which, however, starts counting from the date on which the tortuous action was committed. In relation to sale contracts in particular, the buyer can raise any claims within five years in relation to immoveable property and two years for other goods otherwise his claim is time-barred (554 CC as replaced by Article 1 of Law 3043/2002). Pursuant to Article 555 CC (as replaced by Article 1 of Law 3043/2002), the limitation period commences upon delivery of the goods, even if the buyer discovered the fault/non-conformity of the goods at a later stage. When the seller is liable for a fixed period, pursuant to the parties agreement to that effect, the limitation period begins from the time of the breach (Article 556 CC as replaced by Article 1 of Law 3043/2002). By virtue of Article 557 CC (as replaced by Article 1 of Law 3043/2002), the seller will not be able to rely on limitation, if he maliciously concealed the defects or the absence of agreed characteristics Do your courts uphold shorter contractual limitation periods? Time limits cannot generally be shortened or extended by the agreement of the parties and such agreements are void (Article 275 CC). However, the Greek courts will uphold time limits imposed by applicable foreign law or applicable international conventions. 8.9 Finance Under Greek law there is no particular formality required for the purposes of the validity of sale contracts (which can even be in oral form). The Greek courts will generally uphold the freedom of the parties in relation to the contractual arrangements governing a sale contract (provided that such terms are not abusive or against public policy/morals). The Greek CC will supplement such terms and along with all contractual agreements, standard terms of sale, good faith and customary practise will provide a complete code which will govern the relationship of the parties. The position is different when it comes to letters of credit or performance bonds issued under sale contracts. Letters of credit will have to be in written form and signed by the guarantor. Greek law will also apply strict requirements as to the form, the effect and validity of such letters/bonds. Care must be taken when dealing with letters of credit or performance bonds as specific provisions of Greek law will have to be overridden in order to make a guarantee an effective instrument of security. For example, pursuant to Article 855 CC, the guarantor can object to making a payment until enforcement procedures take place against the EUROPEAN LAWYER REFERENCE SERIES 267

111 Greece debtor and are unsuccessful. However, this right of the guarantor (as well as its entitlement to invoke other rights and defences of the debtor) can (and should) be waived by the express terms of the bond/guarantee. The Greek courts when enforcing the terms of a bond/guarantee or affording interim relief by blocking payment under the bond/guarantee will scrutinise its compliance with the requisite legal requirements for its validity In what circumstances is it possible for your courts to prevent payment out under: a letter of credit? In principle almost all letters of credit are irrevocable and the payment obligation is independent from the underlying contract of sale or any other existing contract arising from the transaction. As a result the payment bank s obligation is defined by the terms of the letter of credit alone irrespective of the proper performance of the underlying transaction. In some circumstances the Greek courts have awarded interim orders to block/prevent the payment letters of credit, where goods were not delivered or where goods were significantly defective or if the buyer presented a counter-claim leading to valid and lawful set-off performance bonds? The same considerations will apply in the case of performance bonds What does one have to show to prevent payment out? Provisional remedies in the Greek procedural system are subject to two conditions which must be satisfied by the petitioner. The first condition is that the petitioner must be able to prove that its application is based on proper right with sufficient legal basis. The second condition, in accordance with Article 682 CCP, is to prove the existence of an urgent situation or imminent and real danger of dissipation of assets Security What remedies are available to obtain security for the claim: Apart from blocking payment under a bond (if payment has already taken place), the seizure of assets, receivables or bank accounts belonging to the defaulting party may be also possible where the substantive claim is being litigated? The Greek courts will generally uphold the law and jurisdiction clause appearing in a letter of credit (which may be different from the underlying contract). In the absence of such a choice the court will look again to the place of the performance of the contract as a basis of jurisdiction, which in the case of letters of credit will be the place of payment thereunder where the substantive claim is not being litigated in your jurisdiction? The Greek courts will entertain security measures applications for the purposes of securing claims litigated elsewhere. 268 EUROPEAN LAWYER REFERENCE SERIES

112 Greece Must the applicant have already commenced substantive proceedings (whether by litigation or arbitration) to be able to obtain security? It is not necessary for the applicant to have commenced substantive proceedings in order to invoke security measures in Greece. If the court upholds an arrest/seizure of assets and/or receivables and/or accounts, the claimant will have to file and serve the main action on the merits (in the appropriate jurisdiction, including arbitration) within 30 days from the publication of the judgment otherwise the arrest/seizure is lifted Is there a distinction between the remedies available for a claim which is subject to litigation and one which is referred to arbitration? Greek Civil Procedure makes no such distinction What tests are applied to establish a right to each remedy? Provisional remedies in the Greek procedural system are subject to two conditions which must be satisfied by the petitioner. The first condition is that the petitioner must be able to prove that its application is based on proper right with sufficient legal basis. The second condition, in accordance with Article 682 CCP, is to prove the existence of an urgent situation or imminent and real danger of dissipation of assets. These conditions must be satisfied in every case of security measures, irrespective of its subject matter which can be the arrest of a ship, assets, receivables or bank accounts Is the applicant required to provide counter security, and if so by what means? Under Article 694 CCP the Greek courts may seek counter security from the petitioner prior to granting any provisional relief. This is very rare and the court will order counter security in cases where it has reason to believe the petitioner will not be able to remedy any damage caused by a provisional measure if the petitioner s principal claim fails. Where the courts do order counter security (and this is very uncommon) the effect of a judgment granting a provisional remedy upon the condition of security from the part of the petitioner shall be suspended, until such security has been paid or deposited (Article 701 CCP) What exposure does an applicant have for damages if the attachment is deemed wrongful? In the event that the petitioner fails in its principal claim and the claim is irrevocably rejected, the petitioner is deemed to be liable, under Article 703 CCP, for damages arising from the enforcement of any provisional measure on the basis that the petitioner was aware of the non-existing merits of the case or that the petitioner chose to ignore the non-existing merits out of gross negligence both making the claim for provisional measures unjustified. As a rule, any compensation granted will usually be of pecuniary form. Compensation for damages arising from the enforcement of a provisional remedy may also be granted pursuant to Article 940 III CCP. EUROPEAN LAWYER REFERENCE SERIES 269

113 Greece 8.11 Enforcement Is your country a signatory to the New York Convention? Greece applies from 15 January 2015 as domestic law EU Regulation 1215/2012. On the basis of Regulation 1215/2012 enforcement in Greece of judgments issued by the courts of EU Member States is a straightforward process and the Greek courts will only consider objections as to the formality of the judgment (and proper service) and will not re-examine the merits of the case. Greece is moreover a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, pursuant to Law 4220/1961, ratified without any declarations or reservations and in force since 14 October To what extent is the New York Convention applied in practice? The New York Convention is widely recognised and applied by the Greek courts regarding the enforcement of foreign arbitral awards Vienna Convention Is your country a signatory Greece has also ratified the Vienna Convention by Law 2532/ GENERAL FORMALITIES 9.1 Does a lawyer require a formal power of attorney to be able to act? The formalities required for the representation of the parties before the Greek courts in civil and commercial matters are very basic. In most cases, the legal representatives of the parties can come on the record, attend hearings and take legal steps without the presentation of a power of attorney. 9.2 Do claim documents (and their translation) require notarisation? The documents submitted to court need to be in the form of true and certified copies from the originals and translated into Greek. Greek lawyers have the power to certify true copies and to produce certified translations. 270 EUROPEAN LAWYER REFERENCE SERIES

114 Contact details Contact details GENERAL EDITOR David Lucas Hill Dickinson LLP The Broadgate Tower 20 Primrose Street London EC2A 2EW T: F: E: W: ANGOLA João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & Associados in association with Fátima Freitas Advogados Av. Engenheiro Duarte Pacheco, Lisboa Portugal Ed. Monumental - Rua Major Kanhangulo, 290, 1st Floor Luanda, Angola T: F: E: [email protected] E: [email protected] W: ARGENTINA Fernando Ramón Ray & Alejandro José Ray Edye, Roche, De La Vega & Ray 25 de mayo 489 5to CPA C1002ABI C.A.B.A. Buenos Aires T: F: E: [email protected] E: [email protected] W: AUSTRALIA Geoff Farnsworth & Natalie Puchalka Holding Redlich Level 65, MLC Centre 19 Martin Place Sydney NSW 2000 Australia T: F: E: geoff.farnsworth@holdingredlich. com E: natalie.puchalka@holdingredlich. com W: CANADA Douglas G Schmitt Alexander Holburn Beaudin + Lang LLP West Georgia Street Vancouver, BC Canada V7Y 1B8 T: F: E: [email protected] W: CHINA Chen Xiangyong & Wang Hongyu Wang Jing & Co Rm , 28/F., Bank of China Tower, 200 Yincheng Road Central, Pudong, Shanghai, P. R. China T: F: E: [email protected] E: [email protected] W: EUROPEAN LAWYER REFERENCE SERIES 755

115 Contact details CYPRUS Vassilis Psyrras, Andreas Christofides & Costas Stamatiou Andreas Neocleous & Co LLC Neocleous House 195 Makarios Avenue Limassol CY 3608 T: M: E: E: com E: W: DENMARK Johannes Grove Nielsen Bech-Bruun Langelinie Allé Copenhagen T: M: E: W: ENGLAND & WALES David Lucas Hill Dickinson LLP The Broadgate Tower 20 Primrose Street London EC2A 2EW T: F: E: W: FINLAND Ulla von Weissenberg & Linda Ojanen Attorneys at Law Borenius Ltd Yrjönkatu 13 A FI Helsinki T: (Ulla) T: (Linda) F: E: [email protected] E: [email protected] W: FRANCE Laurent Garrabos BCW & Associés 25, rue du général Foy Paris T: F: E: [email protected] W: GERMANY Jobst von Werder & Ingo Gercke REMÉ Rechtsanwälte Ballindamm 26 D Hamburg T: F: E: [email protected] E: [email protected] W: GREECE Maria Moisidou Hill Dickinson International 2 Defteras Merarchias St Piraeus 185, 35 T: F: E: maria.moisidou@hilldickinson. com W: HONG KONG Damien Laracy Hill Dickinson Hong Kong LLP in Association with Laracy & Co. Room 3205, 32nd Floor Tower Two, Lippo Centre 89 Queensway Admiralty Hong Kong T: F: E: [email protected] W: EUROPEAN LAWYER REFERENCE SERIES

116 Contact details INDIA Prashant S Pratap Senior Advocate Maker Chambers III # 151, 15th Floor Nariman Point Mumbai T: F: E: [email protected] W: psplawoffice.com INDONESIA Juni Dani Budidjaja & Associates The Landmark Center II, Floor 8 Jl. Jend. Sudirman No. 1 Jakarta T: F: E: [email protected] W: ISRAEL Amir Cohen-Dor S Friedman & Co One Matam Towers 9 Andrei Sakharov St, P.O.Box Haifa T: F: E: [email protected] W: ITALY Paolo Manica & Michele Mordiglia Studio Legale Mordiglia Via XX Settembre 14/ Genova T: F: / E: [email protected] E: [email protected] W: JAPAN Tetsuro Nakamura, Tomoi Sawaki & Minako Ikeda Yoshida & Partners 4th fl. Suitengu Hokushin Bldg Nihombashi-Kakigaracho Chuo-ku, Tokyo T: F: W: MALTA Dr Ann Fenech & Dr Adrian Attard Fenech and Fenech Advocates 198, Old Bakery Street Valletta, VLT1455 T: F: E: [email protected] E: [email protected] W: MEXICO Enrique Garza Garza Tello & Asociados SC Camino Sta. Teresa 187C 5 piso México DF T: F: E: [email protected] W: MOZAMBIQUE João Afonso Fialho & Sofia Paramés Miranda Correia Amendoeira & Associados in association with Pimenta Dionísio & Associados Av. Engenheiro Duarte Pacheco, Lisboa Portugal Rua Changamire Dombe (D. Diniz), 14, Sommerschild Maputo Mozambique T: EUROPEAN LAWYER REFERENCE SERIES 757

117 Contact details F: E: E: com W: NETHERLANDS Rene Van Leeuwen Hampe Meyjes Advocaten Sluisjesdijk 151, 3087 AG Rotterdam P.O. Box 55288, 3008 EG Rotterdam T: F: E: nl W: NIGERIA Emmanuel Achukwu The Campbell Law Firm Eleganza House, 2nd Floor 15B Joseph Street Lagos T: E: W: PANAMA Jorge Loaiza III Arias, Fabrega & Fabrega Plaza 2000, 16th Floor 50th Street T: F: /02 E: W: PERU Percy Urday Moncloa, Vigil, Del Rio & Urday Calle Chacarilla Nº 485, San Isidro Lima, 27 T: / F: / E: [email protected] E: [email protected] POLAND Sławomir Nowicki, Alina Łuczak, Katarzyna Bielarczyk & Agnieszka Nowicka Wybranowski Nowicki Law Office Energetykow ¾ Street Szczecin T: F: E: [email protected] E: [email protected] E: [email protected] E: [email protected] W: PORTUGAL João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & Associados Av. Engenheiro Duarte Pacheco, 7, Lisboa T: F: E: [email protected] E: [email protected] W: RUSSIA Elena Popova Sokolov, Maslov and Partners Barklaya Street Moscow T: F: E: [email protected] W: SINGAPORE Raghunath Peter Doraisamy Selvam LLC 16 Collyer Quay #17-00 Singapore T: F: E: [email protected] W: EUROPEAN LAWYER REFERENCE SERIES

118 Contact details SOUTH AFRICA Shane Dwyer & Jennifer Finnigan Shepstone & Wylie PO Box 305, La Lucia, 4153 Durban T: F: E: E: W: SOUTH KOREA Byung-Suk Chung Kim & Chang 1st Floor, 223 Naeja-dong, Jongno-gu, Seoul T: F: E: [email protected] W: kimchang.com SPAIN Verónica Meana Larrucea & Santiago López-Caravaca Boluda Meana Green Maura & Co C/ Velázquez 92-2º Dcha Madrid T: F: E: [email protected] E: [email protected] W: TURKEY Zihni Bilgehan & Emre Ersoy Ersoy Bilgehan Maya Akar Center, Buyukdere Cad. No: K: Esentepe, Istanbul T: F: E: [email protected] W: ersoybilgehan.com UKRAINE Alexander Kifak & Artyom Volkov ANK Law Firm 9 Lanzheronovskaya Street, Odessa, Ukraine T: F: E: [email protected] E: [email protected] W: UAE Adrian Chadwick & Raymond Kisswany Hadef & Partners Emaar Square Building 3, Level 5 Downtown Dubai PO Box Dubai, UAE T: (Adrian) T: (Raymond) T: F: E: [email protected] E: [email protected] W: UNITED STATES John Kimball & Emma Jones Blank Rome LLP The Chrysler Building 405 Lexington Avenue New York, NY T: (John) T: (Emma) F: E: [email protected] E: [email protected] W: EUROPEAN LAWYER REFERENCE SERIES 759