P and I Rule Book. According to the American P and I Club Rule Book, there is a clause about claims that are payable at the discretion of the Directors. Section 20 of the Rule book, titled “Ominbus” clause outlines that there may be circumstances where the Directors may choose to pay on claims that they collectively decide should be paid.
If the liability is not excluded elsewhere in any of the previous nineteen clauses, then the Directors can choose to pay a claim. This seems to be a fair way for the organization to establish that there may be unusual circumstances that my call this Omnibus clause into play.
Sunshine Skyway bridge disaster . The vessel Summit Venture struck the Sunshine Skyway Bridge on a rainy day when the roads were slick and cars on the bridge were having a hard time seeing due to visibility. Tragically, a greyhound bus with thirty passengers and several vehicles with passengers fell off the bridge and into the water when the bridge collapsed. There were not many survivors. All thirty four people on the Greyhound bus, mostly women, died.
The US Limitation of Liability Act dates back to 1851 when it was first established and is still the Law that governs what a vessel is liable for in terms of damages. This law protects the owners of the vessel in the event of a tragedy such as the Sunshine Skyway disaster. First, the law states that all claims must be combined into a single suit and argued as a single case against the vessel owner. In the case of the Summit Venture, all claimants combined their suits into one case and settlements were paid out by family.
The vessel owner is entitled to claim limitation of liability under this law, and by doing so, the owner is not admitting any fault or guilt. The US Limitation of Liability Law was put into law in 1851 to promote more shipping business. It was intended to protect vessel owners in order to grow the business of shipping and the development of the American fleet.
Purchase a vessel. When a vessel is purchased, and after payment has been made by the buyer to the seller, several varieties of documents shall be provided to the buyer, including the bill of sale. The bill of sale will outline all of the transactions that have taken place and the costs associated with those transactions. The bill of sale will outline the expenses associated with the proper registration of the vessel to the new owner.
The seller will also provide the classification information for the vessel that is being purchased. Drawings, schematics and other information documents about the physical attributes of the vessel will also be provided.
The owner will also receive a copy of the title for the vessel, which will provide proof that the vessel is registered in the owner’s name. Liberty Ship and Victory Ship. Liberty ships were cargo ships built during World War II to transport cargo from the United States to Britain and to the Soviet Union. Liberty ships gained popularity during World War II because they were easy and cost effective to construct and represented the ability of the United States to ship its output abroad to support war efforts. Britain suffered a great loss to their fleet during World War II and contracted the United States to build sixty of these vessels. The United States improved upon the original British design by replacing several components that had originally required skilled and specialized workers. With these modifications, the ships could be built, and therefore supplied faster and more cost economically.
Victory Ships were produced by North American shipyards during World War II. They were manufactured to make up for all the losses in fleets due to German submarines. The Victory ship was based on the Liberty ship design, and it too was also a cargo vessel. The Victory ship had a much more powerful engine that its Liberty ship predecessors.
International Transport Workers Federation. The International Transport Workers Federation (ITF) is a trade union federation which is managed by its own constitution. There are 700 unions, representing more than four and a half million transport workers from approximately one hundred fifty countries.
A flag of convenience (FOC) refers to the practice of a ship owner registering their ship with another nation for cost benefits, or as a way to minimize the regulations imposed in the native country. Meaning, the merchant ship owner operates his business in a country other than the one where his ship is registered. The ITF aims to ensure that the FOC practice remains practical and does not bring on unnecessary problems. The ITF believes there should be a true and real connection among the real owner of the vessel and the flag which this vessel is flying.
The ITF voiced its concern about FOC by stating that all FOC should be governed by the United Nations Convention on the Law of the Sea (UNCLOS). Liberian Flagged Ships and MoU. The video explains, with great pride that it has established a reputation for excellence as a result of its achievements, innovations and professionalism in the maritime industry for over sixty years. Currently, the Liberian nation enjoys a stable economic and financial environment, making it attractive for vessels to be flagged in this country. Liberian registered vessels are trusted with more than one third of the oil imported into the United States. This speaks highly of the safety and discipline measures that the Liberian Registry has implemented and maintained.
The Paris MoU and other similar organizations seek to ensure that maritime vessels meet safety and other regulatory standards. The Paris MoU includes the administration of twenty seven European nations and administers maritime excellence in European coastal countries. This area also includes the North Atlantic basin spanning the area between North America to Europe. Safety inspections are conducted annually to ensure that standards are met. The “white list” was developed by the International Maritime Organization (IMO). This list itemizes those nations that conform with the safety and standards for International maritime and the proper implementation of the STCW-95 convention.
The International Group of P and I. The International Group of P and I is the association that protects its members against large insurance claims. The Pooling Agreement in the International Group of P and I is an agreement that is annually renewed among the clubs so that they mutually insure themselves, therefore sharing the claims amongst themselves. There is an established limit on these claims – they must be in the range of more than nine million US Dollars and less than seven and a half billion US Dollars.
There are thirteen principal clubs in the International Group of P and I. Some of the clubs include The American Club; SKULD; gard; Britannia;The London P and I Club; and Shipowner’s.Lloyd’s of London: The Lutine Bell. The Lutine Bell is proudly displayed at Lloyd’s of London and it is used to convey that there is some sort of news. When it is rung once, it is bad news. When rung twice, it is good news. The Lutine Bell came from the frigate French ship, La Lutine. This ship surrendered to the British in 1793 at Toulon.
When first discovered in the wreckage of the frigate, the Lutine Bell was hung in the room of Lloyd’s Underwriting staff. When first there, the bell would be rung to signify an overdue ship. The Underwriter’s would use the bell to communicate that an overdue ship may cause a loss for the company. Nowadays, the bell is housed on the floor at the Lloyd’s of London, and rung only for ceremonial reasons.
Stavros Niarchos. Stavros Niarchos was a multi-billionaire, Greek, shipping tycoon. He attended Law school in Athens and began working in his family’s grain business. He convinced his family that they should own their own ships for the business, in order to be more profitable -- and that is how it all started! Niarchos served in the Greek Navy as an Officer during World War II. When the war ended, he came back to Greece and created one of the biggest fleets in the world. His shipping rival was the other Greek shipping tycoon, Aristotle Onassis.
Niarchos created a company titled Niarchos Limited, an International shipping company that owned and operated eighty tankers. With the opening of the Suez Canal in Egypt in 1956, there became a heightened demand for tankers that were capable of transporting much more tonnage than previously required. As a result of this, Niarchos’s company grew quickly, and he became a multi-billionaire.
BIMCO Shipman 2009. BIMCO Shipman 2009 is an agreement that is comprised of five sections. The sections include a first section covering the basis of the agreement. The second section outlines the services. The third section describes the obligations under the agreement. In section four of the agreement, the Insurance, Budgets Income, Expenses, and Fees are described. The fifth and last section of the BIMCO Shipman 2009 outline the Legal, General and Duration of the Agreement.
There are a variety of services that ship owners and investors can delegate to managers. Some ship owners may delegate the management of their ships as a way to get cost benchmarking data. Along the same lines, ship owners may delegate to ship managers in order to get a perspective on risk management. Ship managers can be appointed to provide services to the ship owners that the ship owner is not able to provide in-house.
The International Safety Management (ISM) code was developed by the International Maritime Organization (IMO) to ensure safe ship operation, and, for the prevention of pollution. This code was established to minimize accidents at sea that would cause injury to the vessel or the crew. The pollution component was to ensure that accidents at sea did not cause any unnecessary pollution.
ISPS stands for the International Ship and Port Facility Security Code. This consists of two parts. Part A is a set of rules that are mandatory to follow and Part B is a set of guidelines that are recommended. Tacking provision. The British Petroleum 3 (BPTIME3) Time Charter Party is a document that contains thirty six clauses. There is not a clause in the document for tacking. Since the tacking provision is not included, it is not possible to comment on what this would be used for.
Expectations from crew beyond customary services. Clause 34 describes Oil Pollution prevention and stipulates that the charterers are responsible for ensuring that there is no, or minimal oil pollution. The clause goes on to state that if there is oil pollution, that the charterers will have to take on the risk and expense of minimizing the damage due to the pollution.
Clause 8.4: Suspension of Performance versus withdrawal. Clause 8 titled “Hire” was similar in both documents, with the exception of clause 8.4, which was unique to the BPTIME3 document. Clause 8.4 details what the owner is able to do in the event of late payment of hire. There are two components to this clause. First, the owner can limit their liability by suspending the performance of the vessel. This is a warning and a further demand of payment. The clause then states that if another twenty four hours goes by and the situation is unchanged that the owners can lawfully withdraw the charter all together.
Time charterer responsible for losses. If charterers sign any bills of lading or waybills that impose conditions that are “more onerous” that the conditions previously agreed to, then the owner assumes no losses according to these new conditions that have been signed on for by the charterers. Further, there is a general indemnify clause that clearly states that the charterer agrees to indemnify the owner, and hence takes on the liability or potential loss himself if there is a necessity to change any of the previously agreed to terms. Hence, once at sea, if the charterers take on risk in any way, the owner will be held harmless and is protected from losses.
Vessel’s speed and consumption warranty. This clause is unique and different from other agreements in that it is written without a statement about the calculation of speed and performance. The warranty applies to weather conditions up Beaufort Force five only. If the charterers are not able to maintain the warranted capability, the clause states that they are compensated for their loss. This compensation is based on loss of vessel capability, not on the vessel’s loss of performance.
Clause 5: loss of hire. Clause 5 deals with delivery and redelivery and the issue of fuel consumption. In this clause, there is a statement about the need to deliver the vessel with the same amount of fuel as agreed to. If the vessel is delivered with less fuel than agreed to in the agreement, then this clause specifically states that the amount can be deducted as a loss of hire. There is analogy to renting a car. When a consumer rents a car from a Car Rental company such as Hertz or many others, they sign an agreement upfront, much like this BPTIME3 that obligates the driver to return the car with the same amount of fuel as when they rented the vehicle. The rental car fuel tank is usually full; hence failure to return the rental vehicle with a full tank incurs a fuel charge, at whatever rate the Rental Car company deems is the appropriate price per unit of fuel. This rice per unit is mutually agreed to prior to the rental of the vehicle.
Off hire causes/events that are unique to BPTIME 3. The most significant deviation is the clause in 8.4 which has been discussed previously. This clause was written to ensure clarity about the suspension and possible withdrawal of the vessel in the event of nonpayment. Clause 8, wholly dealing with HIRE issues is very tightly worded, but due to BP’s financial stature, there is some leeway to the way that the hire provisions are structured when compared to the case that we studied in class. After the BPTIME3 was developed by BP and BIMCO, it solidly represented a more structured, yet more succinct agreement than documents that preceded it.
BIMCO slow steaming process for time charters. here are many reasons why a vessel may be requested to enforce a slow steaming process. First, this can be done in order to make maximum use of fuel, and therefore used as a fuel conservation measure. Second, the slow steaming process can control the exact time that the vessel will arrive at port, hence making the arrival time coincide with the delivery date of the cargo. Third, the slow steaming process can be called into effect for safety reasons, and usually to protect the crew, marine life, or both. Lastly, the slow steaming process can be used in order to lower emissions and hence reduce the amount of pollution caused.
