Transport & Logistics News - September 2016

In brief - Local and international news about shipping, aviation, rail and road transport In this quarterly issue we cover local and overseas transport and logistics news and summarise some interesting cases from Australia and around the world which have been handed down in the last three months.

Colin Biggers & Paisley news Client seminars were presented in both Sydney and Melbourne on 21 and 27 July at which papers were given by Stuart Hetherington and Stephen Thompson. Stuart spoke on three topics including the York Antwerp Rules 2016, which had been agreed at the CMI Conference in May 2016 and will now form part of most international carriage contracts by way of incorporation into bills of lading and charter parties. He also reported on the two topics of Unmanned Ships and Cybercrime that generated considerable interest at the CMI Conference in New York. A copy of his paper can be found here.

Stephen Thompson explained the much publicised arbitration decision in the case of The Republic of the Philippines v The People's Republic of China (PCA Case Nº 2013-19 in an arbitral tribunal constituted under Annex VII to the 1982 United Nations Convention on the Law of the Sea), which dealt with the PRC's claims to territory in the South China Sea.

At the Melbourne seminar, Andrew Probert also discussed the recent decision in the Supreme Court in the United Kingdom in Versloot Dredging v HDI Gerling Industrie Versicherung AG and Ors [2016] UKSC 45: the DC Merwestone (2014) EWCA CW. 1349 abolishing the fraudulent devices rule. This decision had been handed down in the United Kingdom a couple of days before the Melbourne seminar. (See below for case summary and link to Andrew's paper).

Shipping International news Hanjin Shipping collapse

As is well known in the shipping industry worldwide, the world's seventh largest carrier of containers Hanjin Shipping applied for court rehabilitation in South Korea at the end of August and rehabilitation proceedings commenced pursuant to court order on 1 September. The failure of Hanjin Shipping has caused worldwide disruption to liner shipping services.

We have been called upon to advise clients in the freight forwarding, insurance and stevedoring industries. In addition to advising in relation to contractual rights and in the exercise of liens and the like, we are advising clients in relation to pursuing their claims by way of admiralty arrest or lodging claims with the Korean Rehabilitation Court by 4 October 2016.

A number of insurance issues have arisen - principally in relation to the recoverability of losses under the Institute Cargo Clauses (A) 1.1.09 and the effect of the delay and insolvency exclusions. Issues have arisen in relation to additional forwarding costs, but also insurers have been required to deal with demands being made by Hanjin Shipping or its agents for security deposits in relation to containers and how they should advise their insured cargo owners in relation to any such demands. Claims for these costs are being considered in the first instance by cargo insurers but very much on a case-by-case basis.

At the time of publication, the "Hanjin California" was under arrest in Sydney, while the "Hanjin Milano" awaited instructions from owners outside the Port of Melbourne and had done so for over two weeks.

International Conventions

The Nairobi International Convention on the Removal of Wrecks 2007, upon which we reported on 30 September 2015, and which entered into force on 14 April 2015, was the subject of a forum in mid-June 2016, organised at the National Maritime Museum by the Australian Maritime Safety Authority. Stuart Hetherington was a panellist who discussed the pros and cons of Australia's ratification of that treaty.

The Ballast Water Convention 2004

With the recent announcement by Finland that it will ratify the Ballast Water Convention within a matter of weeks, it is likely that this Convention will enter into force during 2017.

Shipping industry after Brexit

Although we are yet to see the full impact of the UK decision to leave the European Union (which will largely depend on the form of the - so called - Brexit and it may take years rather than months), there is no doubt that the UK, which is the EU's biggest trading partner, will want to retain free access to the European single market. The UK could achieve this by becoming a member of the European Economic Area (EEA) as an associate state of the EU (like Norway or Switzerland) or it could enter into new trading agreements with the EU.

Some people consider this is an opportunity to strengthen the UK market but the majority seems to be concerned that operating within the EU may become complex and more expensive for the UK operators, at least initially. Some degree of uncertainty is also expected in dealings with non-EU countries. The UK will most likely lose the benefit of the EU bilateral and multilateral external trade arrangements and it will need to negotiate individual trade agreements with those countries.

Australian news Federal politics

The Coalition government was returned to office at the 2 July general election, but with a much reduced majority of only one seat. The half Senate election has returned a large number of independents, many of whom may not support some of the government's agenda. The Minister of Infrastructure and Transport remains Darren Chester MP, the member for Gippsland.

Compensation for Great Barrier Reef damage: "Shen Neng 1"

The Australian Government has recently settled a claim brought against the owners of the "Shen Neng 1" for compensation for damage sustained to the Great Barrier Reef when the coal carrier ran aground in April 2010.

The owners have agreed to pay AU$39.3 million, of which $4.3 million was for costs incurred in the immediate aftermath of the grounding, and the balance is to be spent on clean-up of residue, including anti-fouling paint from the reef. The work will commence in mid-2017 as seasonal weather limits the opportunity for this work to be undertaken.

It is believed that the settlement amount is a little more than the limitation sum calculated with reference to the Limitation of Liability for Maritime Claims Protocol of 1996 but it was being litigated, it is understood, on the basis of the decision in the "APL Sydney" case, that more than one limitation fund was payable as the damage was attributable to more than one grounding incident.

Coastal Shipping Reform

The result of the election, particularly in so far as the Senate is concerned, makes it difficult but not impossible for the much needed reforms in the area of coastal shipping (or union reform in the construction industry a trigger for the double dissolution election) to be passed.

Treasury release of exposure draft for a Bill to amend the Competition and Consumer Act 2010

On 5 September 2016, an exposure draft Explanatory Memorandum and an exposure draft Bill was released by Treasury seeking submissions by 30 September 2016. It contains two areas of reform which would be of interest to the shipping community.

The first is that the maximum pecuniary penalty, which currently stands at $750,000 for breach of the secondary boycott provisions, is being brought into line with other penalties for breaches of competition law provisions and which provide for maximum penalties of the greater of $10 million, three times the total value of the benefit obtained from the secondary boycott or 10% of the annual turnover of the corporation for the 12 months leading up to when the secondary boycott occurred.

The second significant change is to grant the commission a "class exemption" power. This is a forerunner to the repeal of Part X as recommended by the Harper Review.

Sale of Port of Melbourne lease

The Victorian Government confirmed this week that the successful bidder for the 50 year lease was the Lonsdale Consortium which comprises the Future Fund, Queensland Investment Corporation, Global Infrastructure Partners and OMERS Private Markets.

National system for domestic commercial vessel safety

In our Shipping News dated 21 December 2011, we reported on the introduction of a single national maritime regulator by which Commonwealth law was to apply to all commercial vessels. This was enacted in the Marine Safety (Domestic Commercial Vessel) National Law Act 2012 (Cth) about which we reported in Transport & Logistics News December 2013 issue.

As part of the unification process, the Queensland Parliament has passed two pieces of legislation in February 2016 for the regulation of all domestic commercial vessels, including non-commercial vessels in Queensland, allowing nation-wide consistency on marine safety.

Queensland's passing of...