Newsletter 13 SEA VENTURE Luxury Yacht Liability Product Launched Slot–Charterer’s Right to Limit Confirmed Ship’s Doctor – Who is Responsible for Negligence? Due Diligence – Obligation to Maintain Forward Freight Agreements and Financial Woes Crew PEME Scheme Launched New Steamship Mutual Directors HIGHLIGHTS 4Steamship Mutual: The Beginning 6Luxury Yacht Liability Product Launched 6COSCO’s Capt. Wei Jiafu to Receive CMA Commodore Award 7OOCL Named “Best of the Best” Ocean Carrier 8Seminar in Korea 9Steel Coils – Minimising the Risk of Cargo Rejection 10 Carriage of Calcium Hypochlorite 11 Ship’s Doctor – Who is Responsible for Negligence? 12 Demurrage Timebars –hhThe Tide is Turning on “Sabrewing” 13 Due Dilligence – Obligation to Maintain 14 Forward Freight Agreements and Financial Woes 14 Enforcement of Arbitration Award – New York Convention 15 “Knock for Knock” Clauses – England v US 16 Financial Crises and Frustration 17 Wilful Concealment of Pre-Existing Injury – Defence to a Jones Act Claim 18 Philippines – 120 days becomes 240 days 19 Crew PEME Scheme Launched 20 New Steamship Mutual Directors 4 7 8 9 2 EDITORIAL TEAM Naomi Cohen Sue Watkins Malcolm Shelmerdine Sea Venture is available in electronic format. If you would like to receive additional copies of this issue or future issues in electronic format only please send your name and email address to seaventure@simsl.com. Feedback and suggestions for future topics should also be sent to this address. CONTACT For further information, please contact: Steamship Insurance Management Services Limited Aquatical House 39 Bell Lane London E1 7LU Telephone: +44 (0)20 7247 5490 and +44 (0)20 7895 8490 Website: www.simsl.com 3 INTRODUCTION Steamship Mutual was founded on the 16 October 1909. Accordingly, this year, 2009, marks the centenary of the Steamship Mutual and its century of service to shipping. Prior to the market downturn, a series of events had been planned to celebrate the anniversary. In view of the current financial and shipping markets, these will now be more restrained than originally planned. They will, however, include a book commemorating the centenary and the Club’s history, to be published later this year, and the launch of a website dedicated to the Centenary featuring many aspects of the Club’s development. In this edition of Sea Venture there are the usual mix of reports on recent case law, loss prevention issues, and Member news. In particular there are two articles reflecting the dramatic downturn in most shipping and commodity markets and consequent commercial pressures over the last year. One discusses Forward Freight Agreements, which have been the cause of substantial, and in some cases terminal, losses suffered by some operators. The other discusses whether a charterer is able to bring to an end what may, in the current climate, have become an uneconomic charter. Indeed the big story over the last two quarters of 2008 has been the recognition that most of the world’s economies have slipped into recession, causing dramatic falls in the freight and hire rates, reduced cargo volumes and overcapacity on trades, with resultant increases in the numbers of laid up vessels and turbulence in the S&P markets. Not surprisingly, those owners and charterers who continue to operate in this market have become wary of their trading partners and have been forced to walk a tightrope, balancing the need to protect earnings against the risk of insolvency of their contractual