Discussion On Non-cargo Claims - Case Study Example

Discussion On Non-cargo Claims 1 A) Discussion on Non-cargo Claims The instant case deals on the rights and liabilities of the one who owns the subject vessel, the cargo owner and the salvage contractors. The claim of O for demurrage against Horatio is not tenable and has no legal basis to prosper. The extended docking of the Flying Dustman in the port of Montebuffo was due to the fault or negligence of its (Flying Dustman’s) master and under the general law on tort the fault of the latter is the fault of the ship owner. As a matter of fact, it is O who is liable to Horatio because of the losses the latter incurs owing to the crude wastage. The purpose of the sanction for demurrage is to serve the interests of the public in that it will discourage hindrances and obstacles in the flow of commercial activities in ports. Loading and unloading of cargoes in piers must be fast and efficient. Parties who cause the slow pace of the turn-over of those goods do not contribute to the smooth movement of harbour activities and must be penalized. Imposing the sanctions will be an incentive for shippers, consigners and other parties to make use of port facilities and equipment with the needed efficiency especially within the context of global modernization. Cargo owners are therefore charged with the duty to see the expeditious and orderly loading and unloading of their merchandise and are liable to pay demurrage for any delay in that connection. The payment of such demurrage may not be imposed only in cases of fortuitous or unforeseen events and force majeure or in instances where the guilty party is the carrier which includes its ship captain or master. (Becerra, Robert J. THE DEMURRAGE DILEMMA. December 24, 2007. ShippingDigest. [internet]). In the case at bar, the guilty party is the master of Flying Dustman and his accountability to compensate for the damage is solidary with the owner of the ship. Horatio has thus nothing to do with the demurrage. It must be importantly noted that the contract between O and Horatio is one of voyage charter where the legal obligations are the burden of the carrier or the ship owner. These accountabilities cover the men and crew of the vessel including the master or the captain. (Compare and contrast the duties, responsibilities and liabilities of the charterer towards the ship owner under both time and voyage charter parties. LAW ESSAYS UK. the law essay website. [internet]) The execution of the LOF with SCOPIC appurtenant to the Flying Dustman relating to both salvage contractors Pugwash and Saviour does not have any bearing in the possible controversy because the vessel to be salvaged, Flying Dustman, or O, its owner, evidently failed to provide the initial security required by No. 4 of the SCOPIC CLAUSE of SCOPIC 2007 within two working or office days from the time that the said SCOPIC CLAUSE was invoked. (SCOPIC CLAUSE. SCOPIC 2007. [internet]) Under this set of facts, Pugwash and Saviour, may opt or choose not to apply the provisions of the said SCOPIC CLAUSE in its totality and may instead go back to the provisions of any subsisting contract in conjunction with Article 14 of the International Convention on Salvage, 1989 (also herein referred to as Convention for brevity) which defines, delineates and enumerates the terms of a special compensation available to salvors or salvage contractors. (Article 14. Special compensation. Chapter III RIGHTS OF SALVORS. International Convention on Salvage, 1989. Admiralty and Maritime Law Guide. International Conventions. [internet]) The rights of the salvors are clearly outlined in the above-cited Convention . At this juncture, it has to be mentioned that the parties are all citizens or subjects of states parties which are likewise members of the International Maritime Organization. The latter enacted the Convention. The states parties involved are the United States from where the cargoes came and the United Kingdom because of its territory Monserrat where the goods are to be delivered. Liverpool, the location of the port in which Flying Dustman is due for berthing, likewise forms part of the United Kingdom. On the other hand, Montebuffo, the island to where the Flying Dustman was safely towed, may either be part of Spain or of the United Kingdom or of the United States of America. Either way, it is likewise therefore covered by the Convention, since the United States, the United Kingdom and Spain are members of the International Maritime Organization. The salvage contractors or salvors, Pugwash and Saviour, have successfully carried out salvage operations upon Flying Dustman. As stated in the case, owing to the imprudence or recklessness of her master, the ill-fated ship it encountered trouble while nearing the Bunkum Bay, the supposed destination. On the part of Pugwash, it promptly and effectively gave aid and assistance to the problematic vessel. Then a passing tug boat, Saviour, had its boom quickly placed around Flying Dustman and was therefore able to control the further spillage of oil from the latter vessel thus minimizing the damage against the surrounding environment. In view of these circumstances, Pugwash and Saviour are both entitled to a special compensation under Article 14 of the Convention. It is only when salvors are guilty of negligence and have failed to prevent or minimize environmental damage that they can be deprived of total or partial payment under the provisions on special compensation. In the situation under analysis, the owners of Saviour and Pugwash have demanded of O for remuneration resultant of the successful salvage operations but in vain as O tries to avoid them. In the meantime, O caused the repair of Flying Dustman and has sold it to Jake, who has no knowledge of the oil spill incurred by O’s vessel nor of whatever is there between the owners of the salvors and O. The implications of this is that Saviour and Pugwash may petition the state party where Flying Dustman is docked to hold it and its departure as security for the obligations under the provisions for special compensation. Jake, despite his innocence, cannot have a better right than the owners of the salvors have. To protect their interests in the payment of the special compensation under Article 14, the owners of Saviour and Pugwash may require security from O for whatever is due them. If this is not feasible, the salvors may impose their maritime lien by which they can object, or refuse to give their consent, to the removal of Flying Dustman from the port of Montebuffo until they are paid. 1 B) The Duty to Disclose the Sale Horatio, owner of the vessel Black Pig, generally does not have to make any disclosure regarding his intended sale of the chattel before sending it to Liverpool. However, if there is a side agreement between Horatio and O for the security or insurance coverage over the crude oil cargo pursuant to Article 21 of the Convention, Horatio is tasked to make full disclosure to all concerned parties about the prospect of a sale. This becomes particularly imperative because the transaction can be interpreted as a clever manoeuvring in that Black Pig has been conveyed or transferred to a separate company which Horatio totally owns. Non-disclosure of the conveyance can be construed as an act in bad faith on the part of Horatio for which he can be made answerable. If bad faith is absent, the incidents in the probable conflict will not put Horacio under any legal obligation. However, if he surreptitiously executed the sale to the registered company fully owned by him to evade liability, he is accountable for that. Again, this applies only if indeed Horatio is found liable. In legal axioms, there is no evasion of liability if there is no liability in the first place. 1 C) Refusal of Refuge in Bunkum Bay It is the right of every party state involved in situations as affecting the environment or as causing pollution like oil spillage to take the appropriate steps in the interest of its territory and its people pursuant to the covenants and or understandings laid down by, or implied in, recognized principles of international law. It has also the right to give directions in connection with vessel salvage operations as may be reasonably necessary to undertake against harmful consequences. Upon the other hand, such party state, as a signatory to the Convention and as a member of the International Maritime Organization, may decide on matters pertaining to salvage operations on the condition that it takes into account cooperation among and between salvors and other interested parties with the end in view of ensuring efficiency and success for the purpose of protecting and saving life and of preserving properties in danger. Corollary to that, the environment has to likewise be a major consideration. These are all expressly stipulated in Articles 9 and 11 of the Convention. Experiences of coastal territories concerning humungous damage brought about by pollution in the waterfront pose serious problems. In the explanatory notes of a United Kingdom bill, one disastrous incident was recalled and narrated to rationalize the legislation. In November 2002, a certain vessel named Prestige spilled its heavy fuel oil cargo near the coast of Spain. The total compensation that could be recovered out of the mess was only one hundred sixteen million pounds while the total actual cost went up to a staggering seven hundred million pounds. (Summary of main points. Merchant Shipping (Pollution) Bill [HL]. Bill No 68 of 2005-06. RESEARCH PAPER 06/04.23 JANUARY 2006. HOUSE OF COMMONS LIBRARY. [internet]). In the instant case of Flying Dustman which is no longer allowed to go on with its suspended trip to Bunkum Bay, the authorities of the latter territory has the right to block the entry of the vessel into its coast or port. There can still be the possibility of damage from out of the residual bunker spillage which brings serious concerns on the environment of the island and its tourism industry. Furthermore, the safety of lives and of the properties in connection with the vessel’s misfortune has already been aptly addressed and resolved along the statutory mandates of the Convention. In short, there is no urgency for it to continue the travel to Bunkum. 2) Good Faith in Marine Insurance As provided for in No. 17 of the English Marine Insurance Act of 1906 (as modified and or amended), under the caption entitled Disclosures and Representations and sub-title “Insurance is uberrimae fidei”, marine insurance covenants must be observed and/or kept with utmost good faith by both parties. Appurtenant to that requirement, disclosure is important in the relation between the insurer and the insured. Hence, the party seeking insurance who is considered to know every material or significant circumstance or situation as is ordinary in the course of regular business and which ought to be known to him, has the obligation to disclose those material facts to the insurer. If the insured violates that precept, the contract may be cancelled or avoided by the insurer who may even sue for damages. (English Marine Insurance Act 1906. [internet]). Hence, a ship owner who is aware of certain unexposed defects and or other deficiencies in his vessel and does not disclose the same to the insurance company which will cover the chattel is guilty of bad faith and the insurance contract may be disregarded by the insurer. In the same vein though, circumstances known or presumed to be known to the insurer do not have to be disclosed by the insured to the insuring party. To illustrate, the fact that the vessel passes a regular route generally and commonly known for its turbulence and is the same way or course traditionally and usually followed by all other ships or boats does not have to be disclosed by the insured unto the insurer. For example, vessel X passes a definite route from Island A to Island B. This course or direction is noted for its unstable weather condition and is likewise the route followed by the other vessels plying between the two islands. Such fact, although material or significant, does not need to be disclosed by the owner of vessel X to the prospective insurer who is presumed to be conscious thereof. References Article 14. Special compensation. Chapter III RIGHTS OF SALVORS. International Convention on Salvage, 1989. Admiralty and Maritime Law Guide. International Conventions. [internet] Accessed August 18, 2009. Available at:< Becerra, Robert J. THE DEMURRAGE DILEMMA. December 24, 2007. ShippingDigest. [internet] Accessed August 18, 2009. Available at: Compare and contrast the duties, responsibilities and liabilities of the charterer towards the ship owner under both time and voyage charter parties. LAW ESSAYS UK. the law essay website. [internet] Accessible August 18, 2009. Available at:< http://www.law-essays- uk.com/free-essays/carriage-of-goods-by-sea.php> English Marine Insurance Act 1906. [internet] Accessed August 19, 2009. Available at: SCOPIC CLAUSE. SCOPIC 2007. [internet] Accessed August 18, 2009. 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