2019 UK Medley

We here briefly review some of the main judgments, awards and other developments in the UK during 2019.

The year began with a pilot scheme for the Business and Property Courts. This will run for two years from 1 January and things are very different. For example, standard disclosure is replaced by one of several listed Models, selected according to the issues. The duties of parties and lawyers alike are set out, including as to cooperation and certification of various steps, and initial disclosure must accompany the statements of case.

On 17 January, in Kaefer Aislamientos v AMS Drilling ([2019] EWCA Civ 10), having ruefully observed that the “Courts have ... struggled to find a formulation which encapsulates in readily workable language what the test is and how it should be applied”, the CA reviewed the approach to jurisdiction disputes.

There is now a three pronged test : (i) the claimant must show a plausible foundation for his chosen jurisdictional route (ii) for any factual issue or other doubt, the court must take a view, if it reliably can, but (iii) whenever, in the nature of these things, no reliable assessment is possible at that time, there is a good arguable case if there is a plausible (though contested) evidential basis.

INSTEX, the Instrument in Support of Trade Exchanges, was established on 31 January. Paris-based INSTEX is intended to function as a clearing house to allow Iran to continue to sell oil and import other products or services via non USD and non SWIFT arrangements. However, despite recent sign up by six more EU countries (Belgium, Denmark, Finland, Netherlands, Norway and Sweden) the system’s success has to date been very limited.

On 19 February, Globalink v DHL ([2019] EWHC 225 (Comm)) was another case on the freight “no set-off” rule. This is an excellent review of the "ARIES" decision, which is said to capture over 200 years of jurisprudence, with commentary on the differing nature of freight-forwarding as prelude to re-emphasis of the rule by a seeming contrary decision :  though refusing to extend “ARIES” to a freight-forwarding contract, the judge nonetheless upheld the sanctity of freight payments, even there.

The 8 March “CMA CGM LIBRA” ([2019] EWHC 481) decided that a vessel with a materially defective passage plan is unseaworthy, and that this can (and we believe probably ordinarily would) be for lack of due diligence. Unseaworthiness and due diligence are being driven further ashore, and have now reached passage planning as a specific item.

Just 11 days later, the remarkable “LADY M” ([2019] EWCA Civ 388) involved a deliberate engine room fire. The judge ruled that the Article IV rule 2 (b) exception applies even to barratry, protecting the carrier unless there is (causative Article III rule 1) unseaworthiness or actual fault or privity. Beyond that, "fire" means fire, no matter who by, or why. 

2 May was another significant date in the sanctions arena, as OFAC published their “ … Framework for … Compliance Commitments”. This details US expectation by five main components (a) senior management commitment (b) risk assessment (c) internal controls (d) testing and auditing and (e) training. As often, the carrot precedes the stick - a suitable programme might mitigate, but lacking one would aggravate.

On 21 June, while considering late release (and thus lack) of bills of lading, and a familiar provision for discharge against an LOI, London Arbitration 14/19 ((2019) 1032 LMLN) reminds us that such usually means owners must accept an LOI if charterers offer one - it does not compel charterers to do that. 

The 26 June CA decision in Classic Maritime v Limbungan ([2019] EWCA Civ 1102) was frontier consideration of force majeure/exceptions clauses, "but for" causation, recovery of damages and "wait and see". 

The CA decided that (a) contrary to what may be common belief, a party relying on such a clause might well have to show that it would have performed “but for" the relevant event and (b) if a defendant fails in that, the claimant can recover even if the event had made performance impossible - the right comparison is the claimant’s contractual position and his actual one i.e. due to the breach in failure to perform. 

This ruling raises many questions, and we understand there is an application to take it to the Supreme Court.

The wrangle about what is a contractual condition came up again on 10 July in Ark Shipping v Silverburn ([2019] EWCA Civ 1161), where the CA ruled that a bareboat charterer’s obligation to “keep the vessel with unexpired classification ... and with other required certificates in force at all times” was not a condition, such that (if, say, the vessel was out of class or had some other invalidity for just a day) owners could end the fixture and claim damages. 

Such was a so-called innominate term - a term without a name. 

Back to sanctions, on 12 September Lamesa Investments Ltd v Cynergy Bank Ltd ([2019] EWHC 1877 (Comm)) provided another example of cross-border issues, and also perhaps influence. 

The claimant lender said the borrower still had to make interest payments, even though the lender’s UBO had become sanctioned. As regards applicable provisions, there was no US connection at all, but (under the relevant clause) the judge ruled that the borrower had validly withheld because of the risk of US secondary sanctions.

(Compare, by the way, Mamancochet Mining v Aegis, from  2018 - for underwriters to rely on the JHC sanctions clause, just being at risk of sanction was not enough.)

On 2 October, working hours were in focus in Bilgent Shipping v ADM International (the "ALPHA HARMONY") ([2019] EWHC 2522 (Comm)). The court said there was no problem with (i) rights to cancel if no NOR had been tendered by noon on a Sunday alongside (ii) stipulation for no valid tender after 11 am on the Saturday - the latter was clear and certain, and owners must tender in time. 

Lastly, on 4 November, in Navalmar v Ergo Versicherung AG (the “BSLE SUNRISE”) ([2019] EWHC 2860 (Comm)) , the Commercial Court approved what is probably settled practice by ruling that the York Antwerp Rule D “actionable fault” defence is also available to issuers of GA guarantees under the standard Association of Average Adjusters and Institute of London Underwriters form.

If you would like to discuss anything raised in this review please contact Chris Potts on +(852) 9461 4377 or at chris.potts@crumpslaw.com or Peter Lau on +(852) 9683 7439 or at peter.lau@crumpslaw.com.