Maritime Law of Australia - Assignment Example

Maritime Law of Australia Abstract This work deals with the maritime law of Australia. In this regard, the General Average and Particular Average clauses that pertain to the loss undergone by a ship or its cargo were described. In addition, the legal consequences of collision were discussed. In this context, inquiry, criminal action and civil action were described. Moreover, the role of the Protection and Indemnity Clubs was discussed. Finally, the role and responsibilities of a forwarder of freight were described. Introduction Maritime claims of a general nature consist of a claim for the damage done by a ship, liability under the provisions of the Protection of the Sea (Civil Liability) Act 1981, personal injury or loss of life. The Admiralty Act 1988 provides wide jurisdiction to the Australian courts in rem and in personam. In cases of collision of ships, the legal consequences are inquiry, civil action and criminal action. The Law of the Sea Convention is an important treaty aimed at the protection and use of the seas. Question 1 Answer A The general average relates to any voluntary damage or loss that is undergone, in order to protect the ship and its cargo. An example is provided by the jettisoning of goods during a storm at sea. In such instances, the entities with an interest in the ship, freight and cargo have to contribute proportionately, so as to provide indemnity to the individual whose goods had to be discarded or destroyed. This is in accordance with the provisions of section 72 of the Marine Insurance Act 1909 (Levingston). Damage to cargo falls under two categories, namely General Average and Particular Average. The cargo that is discarded in a General Average has to be compensated from the General Average. If the carrier fails to declare General Average, then he will be liable for failure to do so. The damages in General Average are usually calculated on the basis of the invoice value (Chandler, 1997, p. 560). On occasion, it could be more advantageous to resort to the Particular Average, as the Sound Market Value would prevail. If the General Average is caused by a collision, damages could be recovered from the non-carrying vessel towards the General Average and the physical damage (Chandler, 1997, p. 560). Answer B The General Average clause was discussed in the decision in Pirie v Middle Dock Col. The elements required for invoking this clause are the presence of a common danger, indispensability of the sacrifice, voluntary nature of the sacrifice and the requirement that the sacrifice is to be true and not the mere discarding or destruction of goods (Eke). A loss that impinges directly upon the party that has been put to loss is termed particular average loss. On the other hand, a general average loss is loss that is finally to be borne, in a proportionate manner, by all the parties that had benefitted from the general average sacrifice or expenditure. The owner of the damaged property has to bear the damage caused to a ship, freight or cargo, if such damage is not compensated by all the parties with an interest in the venture. This is as per the provisions of maritime law. The term particular average loss connotes contribution from the diverse interests that are involved in a maritime adventure. Such contribution is aimed at recovering the loss undergone by any one of them. Such loss should be a voluntary sacrifice of some portion of the cargo or ship, and it should have the objective of protecting the rest of the property. It should also be aimed at protecting those who are on board the vessel (Particular Average Loss, 2011). Question 2 Answer A Marine Inquiries are performed to deal with marine accidents and other serious incidents. They are similar to judicial investigations and are very popular in the marine industry. Usually, a marine inquiry is an investigation that probes into the circumstances of a serious incident. The members of the inquiry make findings of facts of the incident to determine liability. The inquiry team comprises of nautical experts and assessors. Marine inquiries had the power to carry out disciplinary functions in the past. They were authorised to cancel or suspend the licences or certificates of marine operators and mariners (Kavanagh, 2008, p. 177). The usual outcome of a collision is a major legal proceeding. This could include claims against the responsible party for wrongful death, personal injury, criminal proceedings, and investigation into possible professional measures against the holders of professional qualifications. In addition, there might be claims from damage or loss to the ship or cargo (White, 2010, p. 336). Maritime claims also include an act of omission by the charterer or owner or their servants or agents. This act could be during the loading or unloading of the vessel, embarkation or disembarkation, carriage of goods or persons, claims relating to general average, salvage, pilotage, construction, liability for port, harbour or canal, fees, insurance or wages (White M. D., 1990, p. 129). Answer B A marine inquiry is independent of any regulatory agency. It is empowered to carry out inquirial functions. The government cannot influence a marine inquiry, which operates in and independent manner. Moreover, it plays an important role in maintaining marine safety. Such inquiry permits an independent analysis of the findings, so as to determine the culpability of the parties involved in an incident. Although its plays a regulatory role, it attempts to restore marine safety by implementing all possible measures (Kavanagh, 2008, p. 179). Part IX of the Navigation Act 1912 (Cth) deals with the provisions relating to marine inquiries. This Act adopts the provisions of the Merchant Shipping Act 1894 of the UK to formulate the provisions related to marine inquiries. It empowers a marine inquiry to make investigations into the circumstances of a casualty. This Act permits the marine inquiry to inquire into the conduct of the master, mate, engineer or pilot. It empowers the marine inquiry to cancel or suspend the licences or certificates of mariners. According to this Act, the marine inquiry is of the same legal standing as a court proceeding (Kavanagh, 2008, p. 182). A number of marine inquiries were conducted under the provisions of Part IX of the Act. In January 1975, a Commonwealth Court of Marine Industry was established in Hobart to conduct an inquiry into the major accident in the Derwent River at Hobart, Tasmania. In this collision, the ship SS Lake Illawarra had collided with the Tasman Bridge. The bridge collapsed and twelve people were killed as they plummeted with their cars into the river. The ship was also severely damaged, due to parts of the bridge having fallen on it (Kavanagh, 2008, p. 182). Criminal action is conducted in cases of collision resulting in death or personal injury. Civil action is initiated in claims relating to charter parties, loss of life or personal injury, salvage, general average, pilotage, goods, materials or services supplied, and construction. Question 3 Answer Some 83 parties from the developed and developing countries displayed interest in the United Nations Law on the Sea Convention. In addition, several other nations exhibited a keenness to become the members of this Convention. A dispute settlement mechanism, in the context of the application and interpretation of its provisions, has been established in Part XV of the United Nations Law on the Sea Convention. As such, this Convention favours dispute settlement by mutual choice (Charney, 1996, p. 70). The system of compulsory binding dispute settlement comes into play when dispute settlement by mutual choice fails. The parties to the dispute are in general, provided with three forums to settle their disputes. These are first, the Tribunal for the Law of the Sea. Second, the International Court of Justice. Third, Arbitration and with regard to certain subjects, special arbitration. The latter is applied to disputes related to marine environment, navigation and scientific research, and fisheries (Charney, 1996, p. 70). In disputes, where the parties had selected the same forum, the latter enjoys jurisdiction on the dispute, consequent to the unilateral application of the disputants. On the other hand, if no forum had been selected or if the forums selected were not the same, then arbitration proves to be the only resort. Moreover, the Tribunal for the Law of the Sea provides for a special chamber that undertakes disputes related to deep seabed mining. These procedures are mandatory and their ruling is binding upon the disputants (Charney, 1996, p. 70). The Law of the Sea Convention constitutes an international treaty that is seized with the protection and use of the entire sea. It has been termed as the constitution for the oceans. A significant amount of order and justice stands to be effected with the whole hearted support and implementation of this Convention. Countries with a coastline proved to be very active in garnering the rights and jurisdiction derived from the Convention (Oxman, 1994). The restraining power of the Convention could be adversely affected, if widespread participation is not achieved. There is considerable temptation to flout the rules of the Convention, among the various countries, in order to promote their vested interests. This could bring about a decline in the willingness and political ability to ratify the Convention (Oxman, 1994). An example of such conduct was provided by the Canadian initiative of 1994. This nation undertook unilateral actions that were not in compliance with the provisions of the Convention. Canada made a strong attempt to charge US fishing vessels a fee, on its west coast. With regard to its east coast, Canada effected unilateral rights, in the context of fishing activities off Newfoundland. These measures were enforced in an area that was outside the limit specified by the Convention (Oxman, 1994). Thus, it becomes evident that this Convention cannot resolve all the extant problems. Its strength lies in the fact that it provides a more or less comprehensive system for reducing disputes and facilitating negotiation between countries. It also provides a procedural mechanism for dispute resolution, in instances where negotiation proves to be unsuccessful (Oxman, 1994). The United Nations Convention on the Law of the Sea cannot be deemed to be a constitution for the oceans. This is due to the fact that it has not been ratified by all the signatory nations. Question 4 Answer There were several shortcomings with the standard hull and machinery insurance policies, which were current during the second half of the nineteenth century, in England. In order to cover liabilities that were either partially covered or not covered at all, mutual Protection and Indemnity Clubs were formed. These clubs provided protection and indemnity insurance, in the areas that had been either neglected or partially addressed, by the extant insurance system (Bonner, 2011). This was a distressing age, and liability arising from collision was addressed by hull policies. However, an additional premium was to be paid for obtaining the necessary insurance cover. Thus, in De Vaux v Salvador, the court held that hull underwriters were exempt from payment of liabilities of the insured, in instances where the negligence of the owner had resulted in these liabilities (Bonner, 2011). A Protection and Indemnity Club provides marine insurance that is termed Protection and Indemnity Insurance. Such entities constitute a mutual insurance association, which cover its members. These members are in general, ship owners, demise charterers or ship operators. A Protection and Indemnity Club differs from a marine insurance company in that it is responsible only to its members. On the other hand a marine insurance company is accountable to its shareholders (Protection and Indemnity Insurance, 2011). The Marine Insurance Act 1906 applies to both marine insurance companies and Protection and Indemnity Clubs. It is the function of marine insurance companies to cover assessable risks. Thus they chiefly provide Hull & Machinery insurance for ship owners and Cargo Insurance for those who own the cargo. On the other hand, the Protection and Indemnity Clubs cover indeterminate risks, like third party liabilities, which marine insurers eschew at all costs. A few of these third party liabilities that are covered by the Protection and Indemnity Clubs are carrier’s liability to the owner of the cargo for damage caused to it, the liability of a ship after a collision, environmental pollution and the risk involved with war (Protection and Indemnity Insurance, 2011). The Protection and Indemnity Clubs; however, do not provide insurance cover to liabilities that result from the fraudulent wrong delivery of goods. This applies all the more to instances where the cargo had been delivered without requiring the original bill of lading (Protection and Indemnity Insurance, 2011). Question 5 Answer In Pioneer Container K H Enterprise (Cargo owners) v Pioneer Containers, the significance of the relationship between a second carrier and a shipper was brought to the fore. This case dealt with the trans-shipment of cargo and the relationship between the second carrier and the shipper as specified in the bill of lading. It was held that the voluntary acceptance of goods belonging to another person, rendered the received the bailee of the owner. Consequently, such a receiver of goods was restricted to invoking the terms of a subsidiary bailment, whereby he had received the goods from an intermediate bailee (The Liability of Carriers to Cargo Owners). These terms had a qualifying effect on his responsibility towards the cargo’s owner, provided this was acceptable to the owner. It was further held that the contract that was in existence with the forwarders of the freight had the effect of permitting the trans – shipment of the cargo, on the terms that had been agreed upon between the carrier and the forwarder of the freight. At the Privy Council, it was held that as the parties to the agreement relating to the forwarding of the freight, had agreed upon the clause relating to the choice of jurisdiction, in the sub – bailment, they were bound by it (The Liability of Carriers to Cargo Owners). The forwarder of freight has always played a pivotal role in the international carriage of goods and commerce. Historically, the connection between the carrier and owner of goods was provided by the freight forwarder. The latter provided clearing or forwarding services, with regard to goods. The forwarder of freight was the de facto agent of the cargo owner, and on occasion he was also the agent for the carrier. The forwarding agent had co – operating partners in other nations, and these partners were provided with instructions for obtaining customs clearance and receipt of the cargo (Riqtering, 2010). In this scheme of things, there transpired containerisation. Thereupon, the forwarder of freight took upon himself, the consolidation and packing of cargo, as principal. It is the current practice for the forwarder of freight to undertake the carriage of goods by employing transport belonging to him, or by entering into suitable arrangements with transport providers. Several designations are appended to these forwarders of freight, such as Multimodal Transport Operator, logistics service provider, and Non – Vessel Owning / Operating Common Carrier (Riqtering, 2010). The activities of the freight forwarder can be categorised as mandatum. However, a distinction has been drawn between the roles that a freight forwarder can undertake. Thus, a freight forwarder can act as the agent of the performing carrier or customer. He can also enact the role of the contract carrier who takes on carrier liability, even though he does not undertake the carriage. Finally, he can undertake the function of the performing carrier. The applicable legal system and the role of the freight forwarder determine his liability (Riqtering, 2010). Conclusion The objective behind the introduction of Protection and Indemnity cover is to preserve the interests of ship owners. Such protection relates to claims from third parties. Moreover, Protection and Indemnity cover is aimed at indemnifying the ship owner from liability arising from third party losses. Maritime law deals with the shipment of cargo and freight. An important area of this law is that related to damage caused to vessels, cargo and freight. Although there is the Law of the Sea Convention, which is meant for the protection and use of the sea, its implementation leaves much to be desired. References De Vaux v Salvador , 4 Ad&E 420 (1836). Pirie v Middle Dock Col, 44 LT 426 (1881). Merchant Shipping Act . (1894 ). Navigation Act (Cth). (1912). P&I. (2011). Retrieved June 18, 2011, from Marine Insurance Services: http://www.marineinsurance.lv/index.php?option=com_content&task=view&id=17&Itemid=31 Particular Average Loss. (2011). Retrieved June 18, 2011, from http://legal-dictionary.thefreedictionary.com/Particular+Average+Loss Protection and Indemnity Insurance. (2011). Retrieved June 18, 2011, from http://reference.findtarget.com/search/Protection%20and%20indemnity%20insurance/ Bonner, P. J. (2011). Marine Insurance Considerations. Retrieved June 18, 2011, from http://www.freehill.com/articles/marineinsurance.cfm Chandler, G. F. (1997). Damages to Cargo: The Measure of Damages to Cargo - Redux. Tulane Law Review, 72, pp. 539 – 564. Charney, J. I. (1996). The Implication of Expanding International Dispute Settlement Systems: The 1982 Convention on the Law of the Sea. American Journal of International Law, 90(1), pp. 69 – 75. Eke, J. A. (n.d.). The elements of insurance: a guide to the principles and practice of accident, fire, marine, and life insurance. Retrieved June 15, 2011, from http://www.ebooksread.com/authors-eng/j--alfred-eke/the-elements-of-insurance-a-guide-to-the-principles-and-practice-of-accident-f-hci/page-9-the-elements-of-insurance-a-guide-to-the-principles-and-practice-of-accident-f-hci.shtml Kavanagh, J. (2008). Marine Inquiries: Balancing the ‘No-Blame’ Investigation with the Regulatory Investigation to Achieve Marine Safety Outcomes. Australian & New Zealand Maritime Law Journal, 22, pp. 177 – 219. Levingston, J. (n.d.). Dictionary of words and phrases used in International trade, Transport, Payments and Marine Insurance. Retrieved June 14, 2011, from Admiralty : http://www.admiralty.net.au/index_Page1049.html Oxman, B. H. (1994, November – December). The Law of the Sea Convention. The American Society of International Law Newsletter – ARTICLE: ASIL INSIGHT The Law of the Sea Convention. The American Society of International Law. Riqtering, M. V. (2010, November 29). Functions of the Freight Forwarder. Retrieved June 18, 2011, from http://www.forwarderlaw.com/library/view.php?article_id=735 The Liability of Carriers to Cargo Owners. (n.d.). Retrieved June 18, 2011, from http://www.nadr.co.uk/articles/published/shipping/005CHAPTERFIVETRADE4.pdf White , M. (2010). Australian Offshore Laws. Federation Press. White, M. D. (1990). Jurisdictional Choices in Maritime Actions. Bond Law Review, 2(2), pp. 127 – 134. Read More